rva-def14a_20180516.htm

 

 

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

 

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

 

REVA Medical, Inc.

(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14(a)‑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 (sets 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.

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:

 

 

 

 

 


 

April 5, 2018

 

 

 

Dear Stockholders:

 

We cordially invite you to attend our Annual General Meeting of Stockholders, also referred to as the “AGM” or the “Annual Meeting.” The meeting will be held Wednesday, May 16, 2018 at 4:00 p.m., US Pacific Daylight Time (which is 9:00 a.m. Thursday, 17 May 2018 Australian Eastern Standard Time), at the offices of DLA Piper LLP (US), 4365 Executive Drive, Suite 1100, San Diego, California 92121, U.S.A.

 

The matters to be acted upon are described in the accompanying Notice of 2018 Annual Meeting of Stockholders and Proxy Statement and consist of the following:

 

 

1)

Election of two Class II board members

 

2)

Election of one Class I board member

 

3)

Ratification of auditors

 

4)

Approve issuance of equity securities up to 10% of the issued capital of the company

 

5)

Advisory vote on the frequency of a stockholder vote on executive compensation

 

6)

Advisory vote on executive compensation

 

7)

Approval of the issuance and transfer of securities under the Amended and Restated 2010 Equity Incentive Plan

 

8)

Approval of stock options and RSUs to directors

 

9)

Approval to transact any other business to come before the meeting

 

Following the formal business of the meeting, management will provide an update on REVA’s operations; a copy of the management presentation will be posted on our website the day of the meeting.

 

All stockholders are invited to attend the Annual Meeting in person. Whether or not you expect to attend the Annual Meeting, you are urged to vote or submit your Proxy Card or CHESS Depositary Interest (or “CDI”) Voting Instruction Form as soon as possible so that your shares can be voted at the Annual Meeting in accordance with your instructions. Telephone and Internet voting are available. For specific instructions on voting, please refer to the instructions in the Notice of Annual Meeting of Stockholders or the Proxy Card or CDI Voting Instruction Form. If you hold your shares through an account with a brokerage firm, bank, or other nominee, please follow the instructions you receive from them to vote your shares.

 

We look forward to seeing you at our Annual Meeting.

 

Very Truly Yours,

 

/s/ C. Raymond Larkin

 

C. Raymond Larkin

Chairman of the Board

 

 


 

 

 

 

 

NOTICE OF

2018 ANNUAL MEETING OF STOCKHOLDERS

 

To Be Held 17 May 2018 (Australian Eastern Standard Time)

May 16, 2018 (U.S. Pacific Daylight Time)

 

 

 

 

 

The 2018 Annual General Meeting (the “AGM” or “Annual Meeting”) of Stockholders of REVA Medical, Inc. will be held on 17 May 2018, at 9:00 a.m., Australian Eastern Standard Time (which is 4:00 p.m. on May 16, 2018 U.S. Pacific Daylight Time) at the offices of DLA Piper LLP (US), 4365 Executive Drive, Suite 1100, San Diego, California 92121, U.S.A., for the following purposes:

 

1.

To elect the two Class II directors named in the Proxy Statement to hold office for a term of three years, and until their successors are duly elected and qualified, or until their earlier resignation or removal;

 

2.

To elect one Class I director named in the Proxy Statement to hold office for a term of two years, and until his successor is duly elected and qualified, or until his earlier resignation or removal;

 

3.

To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018;

 

4.

For the purposes of Australian Securities Exchange (“ASX”) Listing Rule 7.1A and for all other purposes, to approve the issuance of equity securities up to 10% of the issued capital of the Company (calculated in accordance with the formula prescribed in ASX Listing Rule 7.1A) on the terms and conditions set forth in the Proxy Statement;

 

5.

To vote, on an advisory basis, on the frequency of a stockholder vote on executive compensation;

 

6.

To approve, on an advisory basis, the compensation of the named executive officers for the fiscal year ended December 31, 2017, as set forth in the Proxy Statement;

 

7.

For the purposes of ASX Listing Rule 7.2 (Exception 9) and for all other purposes, to approve the issuance and transfer of securities under the Amended and Restated 2010 Equity Incentive Plan on the terms and conditions set forth in the Proxy Statement, as an exception to ASX Listing Rule 7.1;

 

8.

For the purposes of ASX Listing Rule 10.14 and for all other purposes, to approve the grant of 25,000 options to purchase 25,000 shares of common stock to Dr. Ross A. Breckenridge on the terms and conditions set forth in the Proxy Statement;

 

9.

For the purposes of ASX Listing Rule 10.14 and for all other purposes, to approve the grant of 25,000 options to purchase 25,000 shares of common stock to Brian H. Dovey on the terms and conditions set forth in the Proxy Statement;


 


 

 

10.

For the purposes of ASX Listing Rule 10.14 and for all other purposes, to approve the grant of 226,000 options to purchase 226,000 shares of common stock and the award of 114,000 restricted stock units for 114,000 shares of common stock to Regina E. Groves on the terms and conditions set forth in the Proxy Statement;

 

11.

For the purposes of ASX Listing Rule 10.14 and for all other purposes, to approve the grant of 61,095 options to purchase 61,095 shares of common stock to C. Raymond Larkin on the terms and conditions set forth in the Proxy Statement;

 

12.

For the purposes of ASX Listing Rule 10.14 and for all other purposes, to approve the grant of 86,917 options to purchase 86,917 shares of common stock to Dr. Stephen N. Oesterle on the terms and conditions set forth in the Proxy Statement;

 

13.

For the purposes of ASX Listing Rule 10.14 and for all other purposes, to approve the grant of 25,000 options to purchase 25,000 shares of common stock to Robert B. Stockman on the terms and conditions set forth in the Proxy Statement;

 

14.

For the purposes of ASX Listing Rule 10.14 and for all other purposes, to approve the grant of 25,000 options to purchase 25,000 shares of common stock to Robert B. Thomas on the terms and conditions set forth in the Proxy Statement;

 

15.

To transact such other business as may properly come before the meeting or any adjournment or postponement of the meeting.

Our Board of Directors recommends that our stockholders vote “FOR” the three nominees for director, “1 YEAR” for Proposal 5, and “FOR” all other Proposals, except for Dr. Ross A. Breckenridge with respect to Proposal 8 only; Brian H. Dovey with respect to Proposal 9 only; Regina E. Groves with respect to Proposal 10 only; C. Raymond Larkin with respect to Proposal 11 only; Dr. Stephen N. Oesterle with respect to Proposal 12 only; Robert B. Stockman with respect to Proposal 13 only; and, Robert B. Thomas with respect to Proposal 14 only, all of who abstain from making a recommendation on those Proposals due to their personal interests in the Proposals.

You are entitled to vote only if you were a REVA Medical, Inc. stockholder as of 4:30 p.m. on 28 March 2018 Australian Eastern Daylight Time (which was 10:30 p.m. on March 27, 2018 U.S. Pacific Daylight Time), the Record Date for the Annual Meeting. The owners of common stock as of that date are entitled to vote at the Annual Meeting and any adjournment or postponement of the meeting. Record holders of CHESS Depositary Interests (or “CDIs”) as of the close of business on the Record Date, are entitled to receive notice of and to attend the meeting or any adjournment or postponement of the meeting and may instruct our CDI Depositary, CHESS Depositary Nominees Pty Ltd (or “CDN”) to vote the shares underlying their CDIs by following the instructions on the CDI Voting Instruction Form or by voting online at www.investorvote.com.au. Doing so permits CDI holders to instruct CDN to vote on behalf of the CDI holders at the meeting in accordance with the instructions received via the CDI Voting Instruction Form or online.

For ten days prior to the meeting, a complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder, for any purpose relating to the meeting, during ordinary business hours at our principal offices located at 5751 Copley Drive, San Diego, California 92111, U.S.A.

The Proxy Statement that accompanies and forms part of this Notice of Annual Meeting provides information in relation to each of the matters to be considered. This Notice of Annual Meeting and the Proxy Statement should be read in their entirety. If stockholders are in doubt as to how they should vote, they should seek advice from their legal counsel, accountant, solicitor, or other professional advisor prior to voting.

By order of the Board of Directors:

/s/ Brandi L. Roberts

Brandi L. Roberts

Chief Financial Officer and Secretary

 


 

IMPORTANT:  To ensure that your shares are represented at the meeting, please vote your shares (or, for CDI holders, direct CDN to vote your CDIs) via the Internet, by telephone, or by marking, signing, dating, and returning a Proxy Card or CDI Voting Instruction Form to the address specified. If you attend the meeting, you may choose to vote in person even if you have previously voted your shares, except that CDI holders may only instruct CDN to vote on their behalf by completing and signing the CDI Voting Instruction Form or voting online at www.investorvote.com.au and may not vote in person.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF

PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS:

Our Proxy Statement and 2017 Annual Report on Form 10-K

are available at

www.envisionreports.com/RVA (for holders of shares)

and at

www.investorvote.com.au (for holders of CDIs)

 


 

TABLE OF CONTENTS

 

 

 

 

 

PAGE

 

 

GENERAL INFORMATION

1

 

 

PROPOSALS 1 and 2 — ELECTION OF DIRECTORS

6

 

 

PROPOSAL 3 — RATIFICATION OF INDEPENDENT AUDITOR

7

 

 

PROPOSAL 4 — APPROVAL OF THE ISSUANCE OF SECURITIES UP TO 10% OF THE ISSUED CAPITAL OF THE COMPANY

7

 

 

PROPOSAL 5 — ADVISORY VOTE ON FREQUENCY OF A STOCKHOLDER VOTE ON EXECUTIVE COMPENSATION

11

 

 

PROPOSAL 6 — ADVISORY VOTE ON EXECUTIVE COMPENSATION

12

 

 

PROPOSAL 7 — APPROVAL OF THE ISSUANCE AND TRANSFER OF SECURITIES UNDER THE AMENDED AND RESTATED EQUITY INCENTIVE PLAN

13

 

 

PROPOSALS 8 through 14 — STOCK OPTION AND RSU GRANTS TO DIRECTORS

19

 

 

BOARD OF DIRECTORS INFORMATION

22

 

 

GOVERNANCE OF OUR COMPANY

28

 

 

AUDIT-RELATED MATTERS

30

 

 

EXECUTIVE COMPENSATION

32

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

46

 

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

48

 

 

RELATED PARTY TRANSACTIONS

48

 

 

ADDITIONAL INFORMATION

49

 

 

OTHER BUSINESS

49

 

 

 

 

 


 

 

 

 

REVA MEDICAL, INC.
5751 Copley Drive, San Diego, California 92111, U.S.A.

PROXY STATEMENT FOR THE ANNUAL GENERAL MEETING OF STOCKHOLDERS
17 MAY 2018 (AUSTRALIAN EASTERN STANDARD TIME)

MAY 16, 2018 (U.S. PACIFIC DAYLIGHT TIME)

This Proxy Statement, along with a Proxy Card and/or CDI Voting Instruction Form,

is being made available to our stockholders and CDI holders on or about April 5, 2018

 

 

 

GENERAL INFORMATION

Why am I receiving these materials?

We have made these proxy materials available to you in connection with the solicitation by the Board of Directors (the “Board”) of REVA Medical, Inc. (the “Company” or “REVA”) of proxies to be voted at our 2018 Annual General Meeting of Stockholders (the “AGM” or “Annual Meeting”) to be held on 17 May 2018, at 9:00 a.m., Australian Eastern Standard Time (which is 4:00 p.m. on May 16, 2018 U.S. Pacific Daylight Time), at the DLA Piper LLP (US) offices in San Diego, CA, and at any postponements or adjournments of the Annual Meeting. If you held shares of our common stock as of 4:30 p.m. on 28 March 2018 Australian Eastern Daylight Time (which was 10:30 p.m. on March 27, 2018 U.S. Pacific Daylight Time), the Record Date for the Annual Meeting, you are invited to attend the Annual Meeting and vote on the proposals described below under the heading “On what proposals am I voting?” Those persons holding CHESS Depositary Interests (“CDIs”) are entitled to receive notice of and to attend the AGM and may instruct CHESS Depositary Nominees Pty Ltd. (“CDN”) to vote at the Annual Meeting by following the instructions on the CDI Voting Instruction Form or by voting online at www.investorvote.com.au.

On what proposals am I voting?

There are 14 proposals scheduled to be voted on at the Annual Meeting:

 

1)

Election of the two Class II directors named in this Proxy Statement to hold office for a term of three years, and until their successors are duly elected and qualified, or until their earlier resignation or removal;

 

2)

Election of the Class I director named in this Proxy Statement to hold office for a term of two years, and until his successor is duly elected and qualified, or until his earlier resignation or removal;

 

3)

Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018;

 

4)

For the purposes of Australian Securities Exchange (“ASX”) Listing Rule 7.1A and for all other purposes, to approve the issuance of equity securities up to 10% of the issued capital of the company (calculated in accordance with the formula prescribed in ASX Listing Rule 7.1A) on the terms and conditions set forth in the Proxy Statement;

 

5)

To vote, on an advisory basis, on the frequency of a stockholder vote on executive compensation;

 

6)

Approval, on an advisory basis, of the compensation of the named executive officers for the fiscal year ended December 31, 2017, as set forth in this Proxy Statement;

 

7)

Approval of the issuance and transfer of securities under the Amended and Restated 2010 Equity Incentive Plan on the terms and conditions set forth in this Proxy Statement;

 

8)

Approval of the grant of 25,000 options to purchase 25,000 shares of common stock to Dr. Ross A. Breckenridge on the terms and conditions set forth in this Proxy Statement;

 

9)

Approval of the grant of 25,000 options to purchase 25,000 shares of common stock to Brian H. Dovey on the terms and conditions set forth in this Proxy Statement;

 

10)

Approval of the grant of 226,000 options to purchase 226,000 shares of common stock and the award of 114,000 restricted stock units for 114,000 shares of common stock to Regina E. Groves on the terms and conditions set forth in this Proxy Statement;

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11)

Approval of the grant of 61,095 options to purchase 61,095 shares of common stock to C. Raymond Larkin on the terms and conditions set forth in this Proxy Statement;

 

12)

Approval of the grant of 86,917 options to purchase 86,917 shares of common stock to Dr. Stephen N. Oesterle on the terms and conditions set forth in this Proxy Statement;

 

13)

Approval of the grant of 25,000 options to purchase 25,000 shares of common stock to Robert B. Stockman on the terms and conditions set forth in this Proxy Statement;

 

14)

Approval of the grant of 25,000 options to purchase 25,000 shares of common stock to Robert B. Thomas on the terms and conditions set forth in this Proxy Statement;

How does the Board recommend that I vote?

Our Board recommends that you vote your shares “FOR” all Proposals, except for:  Dr. Ross A. Breckenridge with respect to Proposal 8 only; Brian H. Dovey with respect to Proposal 9 only; Regina E. Groves with respect to Proposal 10 only; C. Raymond Larkin with respect to Proposal 11 only; Dr. Stephen N. Oesterle with respect to Proposal 12 only; Robert B. Stockman with respect to Proposal 13 only; and, Robert B. Thomas with respect to Proposal 14 only. Those directors abstain from making a recommendation on those specific Proposals due to their personal interests in the Proposals.

Who is entitled to vote at the Annual Meeting?

If you were a holder of REVA common stock, either as a stockholder of record or as the beneficial owner of shares held in street name as of 4:30 p.m. on 28 March 2018 Australian Eastern Daylight Time (which was 10:30 p.m. on March 27, 2018 U.S. Pacific Daylight Time), the Record Date for the Annual Meeting, subject to the voting exclusions below, you may vote your shares at the Annual Meeting. As of the Record Date, there were 41,245,820 shares of our common stock outstanding (equivalent to 412,458,200 CDIs assuming all shares of common stock were converted into CDIs on the Record Date). Each stockholder has one vote for each share of common stock held as of the Record Date. Each CDI holder is entitled to direct CDN to vote one vote for every ten (10) CDIs held by such holder. As summarized below, there are some distinctions between shares held of record and those owned beneficially and held in street name.

What does it mean to be a “stockholder of record?”

You are a “stockholder of record” if your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A. As a stockholder of record, you have the right to grant your voting proxy directly to REVA or to vote in person at the Annual Meeting. You may vote by Internet, telephone, or mail, as described below under the heading “How do I vote my shares of REVA common stock?” Holders of CDIs are entitled to receive notice of and to attend the Annual Meeting and may direct CDN to vote at the Annual Meeting by following the instructions on the CDI Voting Instruction Form or by voting online at www.investorvote.com.au.

What does it mean to beneficially own shares in “street name?”

You are deemed to beneficially own your shares in “street name” if your shares are held in an account at a brokerage firm, bank, broker‑dealer, trust, custodian, or other similar organization. If this is the case, proxy materials were forwarded to you by that organization. As the beneficial owner, you have the right to direct your broker, bank, trustee, or nominee how to vote your shares, and you are also invited to attend the Annual Meeting.

If you hold your shares in street name and do not provide voting instructions to your broker, your shares will not be voted on any proposals for which your broker does not have discretionary authority to vote (a “broker non‑vote”). Since a beneficial owner is not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you obtain a “legal proxy” from the broker, bank, trustee, or nominee that holds your shares giving you the right to vote at the meeting. If you do not wish to vote in person or will not be attending the Annual Meeting, you may vote by proxy. Proxies can be lodged by Internet or telephone, as described below under “How do I vote my shares of REVA common stock?”

How many shares must be present or represented to conduct business at the Annual Meeting?

The quorum requirement for holding the Annual Meeting and transacting business is that holders of one-third of the voting power of the issued and outstanding shares of our common stock entitled to vote generally in the election of directors must be present in person or represented by proxy. Abstentions and shares represented by “broker non‑votes” are counted for the purpose of determining the presence of a quorum. As of the Record Date, there were 41,245,820 shares of our common stock outstanding, and each share is entitled to one vote at the Annual Meeting.

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What is the voting requirement to approve each of the proposals?

Subject to voting exclusion statements for a Proposal, the vote required to approve each Proposal is set forth below. Information on voting exclusion statements are set forth in the additional information provided for each Proposal.

Proposals 1 and 2 — Election of Directors

Directors are elected by a plurality of the votes cast by the stockholders entitled to vote at the election, which means that the director nominees receiving the highest number of “FOR” votes will be elected. Neither abstentions nor broker non‑votes will count in determining which nominees received the largest number of votes cast and they will have no direct effect on the outcome of the election of directors.

Proposal 3 — Ratification of the Appointment of our Independent Registered Public Accounting Firm

The proposal to ratify the appointment of Grant Thornton LLP requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions are considered shares present and entitled to vote and thus will have the effect of a vote “AGAINST” this proposal. Broker non-votes will have no direct effect on the outcome of this proposal.

Proposal 4 — Approval of Issuance of up to 10% of the Issued Capital of the Company

The proposal to approve the issuance of equity securities of up to 10 percent of the issued capital of the Company requires the affirmative vote of the holders of 75 percent of the shares present in person or represented by proxy at the Annual Meeting and voting on such proposals. Abstentions are considered shares present and entitled to vote and thus will have the effect of a vote “AGAINST” this proposal. Broker non-votes will have no direct effect on the outcome of this proposal.

Proposal 5 Advisory Vote on the Frequency of a Stockholder Vote on Executive Compensation

The proposal on whether advisory votes on executive compensation should be conducted annually, biennially or triennially will be determined by a plurality of votes, which means that the choice of frequency that receives the highest number of votes will be considered the advisory vote of the Company’s stockholders. Abstentions and broker non-votes will not count in determining which frequency choice received the largest number of votes, and will have no direct effect on the outcome of this proposal.

Proposal 6 — Approval, on an Advisory Basis, of Executive Compensation

The proposal to approve, on an advisory basis, the compensation awarded to the named executive officers for the fiscal year ended December 31, 2017 requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions are considered shares present and entitled to vote and thus will have the effect of a vote “AGAINST” this proposal. Broker non-votes will have no direct effect on the outcome of this proposal.

Proposal 7 – Approval of the Issuance and Transfer of Securities under the Company’s Amended and Restated 2010 Equity Incentive Plan

The proposal to approve the issuance and transfer of securities under the Amended and Restated 2010 Equity Incentive Plan requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions are considered shares present and entitled to vote and thus will have the effect of a vote “AGAINST” this proposal. Broker non-votes will have no direct effect on the outcome of this proposal.

Proposals 8 through 14 — Approval of the Grant of Stock Options and Restricted Stock Units to Directors

Each of the proposals to approve the grants of options to purchase shares of common stock or restricted stock units under the 2010 Equity Incentive Plan, as amended, to each of the non-executive directors of the Company requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions are considered shares present and entitled to vote and thus will have the effect of a vote “AGAINST” these proposals. Broker non-votes will have no direct effect on the outcome of these proposals.

Voting exclusion statement:  

The Company will disregard any votes cast on Proposals 7 through 14 by any director of REVA and by any associate of any director of REVA.

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However, the Company need not disregard a vote cast on Proposals 7 through 14 if:  

 

it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy card; or

 

it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy card to vote as the proxy decides.

How do I vote my shares of REVA common stock?

If you are a stockholder of record, you can vote in the following ways:

 

By Internet:  

CDI holders:  by following the Internet voting instructions included in the Notice of Annual Meeting of Stockholders at any time up until 9:00 a.m. on 14 May 2018 Australian Eastern Standard Time (which is 4:00 p.m. on May 13, 2018 U.S. Pacific Daylight Time);

U.S. stockholders: by following the Internet voting instructions included in the Notice of Annual Meeting of Stockholders at any time up until 1:30 a.m. U.S. Central Time on May 15, 2018

 

By Telephone:  

U.S. stockholders: by following the telephone voting instructions included in the Notice of Annual Meeting of Stockholders at any time up until 1:30 a.m. U.S. Central Time on May 15, 2018

 

By Mail:  by marking, dating, and signing your proxy card in accordance with the instructions on it and returning it by mail in the pre‑addressed reply envelope. The proxy card must be received prior to the Annual Meeting.

If your shares are held through a benefit or compensation plan or in street name, your plan trustee or your bank, broker, or other nominee should give you instructions for voting your shares. In these cases, you may vote by Internet, telephone, or mail by submitting a Voting Instruction Form.

If you satisfy the admission requirements to the Annual Meeting, as described below under the heading “How do I attend the Annual Meeting?” you may vote your shares in person at the meeting. Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by Internet, telephone, or mail so that your vote will be counted in the event you later decide not to attend the Annual Meeting. Shares held through a benefit or compensation plan cannot be voted in person at the Annual Meeting.

How do I vote if I hold CDIs?

Each CDI holder is entitled to direct CDN to vote one vote for every ten (10) CDIs held by such holder. Those persons holding CDIs are entitled to receive notice of and to attend the Annual Meeting and any adjournment or postponement thereof, and may direct CDN to vote their underlying shares of common stock at the Annual Meeting by voting online at www.investorvote.com.au, or by returning the CDI Voting Instruction Form to Computershare, the agent we designated for the collection and processing of voting instructions from our CDI holders, no later than 9:00 a.m. on 14 May 2018 Australian Eastern Standard Time (which is 4:00 p.m. on May 13, 2018 U.S. Pacific Daylight Time) in accordance with the instructions on such form. Doing so permits CDI holders to instruct CDN to vote on their behalf in accordance with their written directions.

Alternatively, CDI holders have the following options in order to vote at the Annual Meeting:

 

informing REVA that they wish to nominate themselves or another person to be appointed as CDN’s proxy for the purposes of attending and voting at the meeting; or

 

converting their CDIs into a holding of shares of REVA’s common stock and voting these at the meeting (however, if thereafter the former CDI holder wishes to sell their investment on ASX, it would be necessary to convert shares of common stock back into CDIs). This must be done prior to the record date for the meeting.

As holders of CDIs will not appear on REVA’s share register as the legal holders of the shares of common stock, they will not be entitled to vote at our stockholder meetings unless one of the above steps is undertaken.

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How do I attend the Annual Meeting?

Admission to the Annual Meeting is limited to REVA stockholders and CDI holders, one member of their immediate families, or their named representatives. We reserve the right to limit the number of immediate family members or representatives who may attend the meeting. Stockholders of record, holders of CDIs of record, immediate family member guests, and representatives will be required to present government‑issued photo identification (e.g., driver’s license or passport) to gain admission to the meeting. Please be advised that no cameras, recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the meeting.

To register to attend the Annual Meeting, please contact REVA’s investor relations as follows:

 

by e‑mail at IR@revamedical.com;

 

by phone at (858) 966-3045 in the U.S. or at +61 3 9866 4722 in Australia; or

 

by mail to Investor Relations at 5751 Copley Drive, San Diego, California 92111, U.S.A.

Please include the following information in your request:

 

your name and complete mailing address;

 

whether you require special assistance at the meeting;

 

if you will be naming a representative to attend the meeting on your behalf, the name, complete mailing address, and telephone number of that individual;

 

proof that you own shares of REVA’s common stock or hold CDIs as of the Record Date (such as a letter from your bank, broker, or other financial institution; a photocopy of a current brokerage, Computershare, or other account statement; or, a photocopy of a holding statement); and,

 

the name of your immediate family member guest, if one will accompany you.

What does it mean if I receive more than one Notice of Annual Meeting of Stockholders?

It generally means you hold shares registered in multiple accounts. To ensure that all your shares are voted, please submit proxies or voting instructions for all of your shares.

May I change my vote or revoke my proxy?

Yes.

If you are a stockholder of record, you may change your vote or revoke your proxy by:

 

filing a written statement to that effect with our Corporate Secretary at or before the taking of the vote at the Annual Meeting;

 

voting again via the Internet or telephone at a later time before the closing of those voting facilities for:

CDI holders:  at any time up until 9:00 a.m. on 14 May 2018 Australian Eastern Standard Time (which is 4:00 p.m. on May 13, 2018 U.S. Pacific Daylight Time) or

U.S. stockholders: at any time up until 1:30 a.m. U.S. Central Time on May 15, 2018;

 

submitting a properly signed proxy card with a later date that is received at or prior to the Annual Meeting; or,

 

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

The written statement or subsequent proxy should be delivered to REVA Medical, Inc., 5751 Copley Drive, San Diego, California 92111, U.S.A., Attention:  Corporate Secretary, or hand delivered to the Corporate Secretary, before the taking of the vote at the Annual Meeting. If you are a beneficial owner and hold shares through a broker, bank, or other nominee, you may submit new voting instructions by contacting your broker, bank, or other nominee. You may also change your vote or revoke your voting instructions in person at the Annual Meeting if you obtain a signed proxy from the record holder (broker, bank, or other nominee) giving you the right to vote the shares.

If you are a holder of CDIs and you direct CDN to vote by completing the CDI Voting Instruction Form, you may revoke those directions by delivering to Computershare, no later than 9:00 a.m. on 14 May 2018 Australian Eastern Standard Time

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(which is 4:00 p.m. on May 13, 2018 U.S. Pacific Daylight Time), a written notice of revocation bearing a later date than the CDI Voting Instruction Form previously sent.

Could other matters be decided at the Annual Meeting?

We are currently unaware of any matters to be raised at the Annual Meeting other than those presented in this Proxy Statement. If other matters are properly presented for consideration at the Annual Meeting and you are a stockholder of record and have submitted your proxy, the persons named in your proxy will have the discretion to vote on those matters for you.

Who will pay for the cost of soliciting proxies?

We will pay the cost of soliciting proxies, including the cost of preparing and mailing proxy materials. Proxies may be solicited on our behalf by directors, officers, or employees (for no additional compensation) in person or by telephone, electronic transmission, and facsimile transmission.

If we hire soliciting agents, we will pay them a reasonable fee for their services. We will not pay directors, officers, or other regular employees any additional compensation for their efforts to supplement our proxy solicitation. We anticipate that banks, brokerage houses, and other custodians, nominees, and fiduciaries may forward soliciting material to the beneficial owners of shares of common stock entitled to vote at the Annual Meeting and that we will reimburse those persons for their out‑of‑pocket expenses incurred in this connection.

 

PROPOSAL 1 — ELECTION OF class ii DIRECTORS

At the Annual Meeting, our stockholders will be asked to elect the two directors nominated for election as Class II directors. Our Board of Directors currently consists of eight members and is divided into three classes; Class I and II comprise three directors each and Class III comprises two directors.  The directors in Class II, if elected, will serve three‑year terms and in each case until their respective successors are duly elected and qualified. On March 22, 2018, the Board unanimously nominated Robert B. Thomas and C. Raymond Larkin for election at the 2018 Annual Meeting.  R. Scott Huennekens, our other Class II director, has informed us that he does not intend to stand for re-election due to other time commitments. 

 

Robert B. Thomas is a current Class II director whose term expires at the Annual Meeting.  Our Board appointed C. Raymond Larkin on July 13, 2017 to serve as a Class II director until the next annual general meeting after his appointment (being this Annual Meeting), when he must be duly elected by a vote of our stockholders.  If elected, the two directors nominated as Class II directors will serve until the Company’s annual meeting of stockholders in 2021, and in each case until their successors are elected and qualified, or until their earlier resignation or removal.  Both nominees have indicated their willingness to serve if elected, but if any should be unable to serve or for good cause will not serve, the shares represented by proxies may be voted for a substitute as REVA may designate, unless a contrary instruction is indicated in the proxy.

 

If another Board member is not appointed as a Class II director by the date of the Annual General Meeting to replace R. Scott Huennekens, we may have a vacancy on the Board.

 

Vote Required for Approval

Directors are elected by a plurality of the votes cast at the Annual Meeting, which means that the two director nominees receiving the highest number of “FOR” votes will be elected as Class II directors. Abstentions and broker non‑votes are not counted as votes cast with respect to that director, and will have no direct effect on the outcome of the election of directors.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.

 

 

PROPOSAL 2 — ELECTION OF class i DIRECTOR

At the Annual Meeting, our stockholders will be asked to elect one director nominated for election as a Class I director. Our Board of Directors currently consists of eight members and is divided into three classes; Class I and II comprise three

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directors each and Class III comprises two directors. The Class I director, if elected, will serve a two‑year term and until his respective successor is duly elected and qualified. On March 22, 2018, our Board unanimously nominated Dr. Stephen N. Oesterle for election at the 2018 Annual Meeting as a Class I director.  Our Board appointed Dr. Stephen N. Oesterle on February 5, 2018 to serve as a Class I director until the next annual general meeting after his appointment (being this Annual Meeting), when he must be duly elected by a vote of our stockholders.

If elected, the Class I director will serve until the Company’s annual meeting of stockholders in 2020, and until his successor is elected and qualified, or until his earlier resignation or removal. The nominee has indicated his willingness to serve if elected, but if he should be unable to serve or for good cause will not serve, the shares represented by proxies may be voted for a substitute as REVA may designate, unless a contrary instruction is indicated in the proxy.

Vote Required for Approval

Directors are elected by a plurality of the votes cast at the Annual Meeting, which means that the director nominee receiving the highest number of “FOR” votes will be elected as a Class I director. Abstentions and broker non‑votes are not counted as votes cast with respect to that director, and will have no direct effect on the outcome of the election of directors.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR” THE ELECTION OF THE DIRECTOR NOMINEE NAMED ABOVE.

 

 

 

PROPOSAL 3 — RATIFICATION OF INDEPENDENT AUDITOR

 

The audit committee has selected Grant Thornton LLP as the Company’s independent registered public accounting firm (the “independent auditor”) to audit our financial statements for the fiscal year ending December 31, 2018. We are asking our stockholders to ratify the appointment of Grant Thornton LLP as our independent auditor because we value our stockholders’ views on the Company’s independent auditor even though the ratification is not required by our bylaws or otherwise. If our stockholders fail to ratify the appointment, the audit committee will reconsider whether or not to retain Grant Thornton LLP as our independent auditor or whether to consider the appointment of a different firm. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment of a different independent auditor at any time for the fiscal year ending December 31, 2018.

A representative of Grant Thornton LLP is expected to be present at the Annual Meeting, will have an opportunity to make a statement if he or she desires to do so, and will be available to respond to appropriate questions.

Vote Required for Approval

Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018 requires the affirmative vote of a majority of the shares of common stock of the Company present in person or represented by proxy at the Annual Meeting and entitled to vote. Abstentions are considered shares present and entitled to vote and thus will have the effect of a vote “AGAINST” this proposal. Broker non-votes will have no direct effect on the outcome of this proposal.

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS vote
“FOR” THE RATIFICATION OF OUR INDEPENDENT auditor.

 

 

 

PROPOSAL 4 — APPROVAL OF ISSUANCE OF UP TO 10% OF THE ISSUED CAPITAL OF THE COMPANY

Introduction

 

We are a U.S. public reporting company listed on ASX and, therefore, are required to comply with the U.S. federal securities laws and the ASX Listing Rules. We are seeking stockholder approval for the potential issuance of securities in the future solely for purpose of ASX Listing Rules, as further described below.

 

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ASX Listing Rule 7.1 allows a company to issue a maximum of 15 percent of its issued capital in any 12-month period without obtaining stockholder approval. In accordance with ASX Listing Rule 7.1A, eligible companies can issue a further 10 percent of their issued capital over a 12-month period (the “Placement Securities”) without obtaining stockholder approval for the individual issues, provided that stockholder approval is obtained at the company’s annual meeting (and the company is an “eligible entity” at the time of the annual meeting). The Company is an “eligible entity” as of the date of this Proxy Statement.

 

Under ASX Listing Rule 7.1A, the Placement Securities must be in the same class as an existing quoted class of equity securities of the Company. As of the date of this Proxy Statement, the Company has only one quoted class of equity securities on issue, namely CDIs (and the shares of common stock underlying those CDIs).

 

The purpose of this Proposal 4 is to provide us with flexibility to meet future business and financial needs. We believe that it is advantageous for us to have the ability to act promptly with respect to potential opportunities and that approval of the issuance of the Placement Securities is desirable in order to have the securities available, as needed, for possible future financing transactions, strategic transactions, or other general corporate purposes that are determined by our board to be in the Company’s best interests.

 

Approval of this Proposal 4 would enable us to issue shares of common stock or CDIs without the expense and delay of holding a stockholders’ meeting, except as may be required by applicable law or regulations. The cost, prior notice requirements, and delay involved in obtaining stockholder approval at the time a corporate action may become necessary could eliminate the opportunity to effect the action or could reduce the expected benefits.

 

If approved, subject to the limitations described below with respect to the additional 10 percent placement capacity, we will generally be permitted to issue up to 25 percent of our issued and outstanding capital without any further stockholder approval, unless such stockholder approval is required by applicable law, the rules of ASX, or the rules or another stock exchange on which our securities may be listed. Currently, we have no definitive plans, understandings, agreements, or arrangements to issue securities for any purpose, other than equity awards under our 2010 Equity Incentive Plan. We believe that the adoption of this Proposal 4 will enable us to promptly and appropriately respond to business opportunities or to raise additional equity capital. Our board of directors will determine the terms of any issuance of securities in the future.

 

The Company is seeking stockholder approval to have the ability to issue Placement Securities under ASX Listing Rule 7.1A. The exact number of Placement Securities that may be issued by the Company under ASX Listing Rule 7.1A will be determined in accordance with the formula prescribed in ASX Listing Rule 7.1A.2, as follows:

 

(A x D) - E

 

A = Number of fully paid ordinary securities on issue 12 months before the date of issue or agreement:

 

    plus the number of fully paid ordinary securities issued during the 12 months under an exception in ASX Listing Rule 7.2;

 

    plus the number of partly paid ordinary securities that became fully paid during the 12 months;

 

    plus the number of fully paid ordinary securities issued during the 12 months with stockholder approval under ASX Listing Rules 7.1 and 7.4; and,

 

    less the number of fully paid ordinary securities cancelled during the 12 months.

 

D = 10%

 

E = Number of equity securities issued or agreed to be issued under Listing Rule 7.1A.2 in the 12 months before the date of issue or agreement to issue that are not issued with stockholder approval under ASX Listing Rules 7.1 or 7.4.

 

If passed, Proposal 4 will allow our board of directors to issue up to an additional 10 percent of the Company’s issued capital during the 12-month period following the date of the annual meeting without requiring further stockholder approval. This is in addition to the 15 percent annual placement capacity provided in ASX Listing Rule 7.1.

 

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As of the date of this Proxy Statement, the Company has no specific plans to issue Placement Securities under ASX Listing Rule 7.1A.

 

As required by ASX Listing Rule 7.3A, the following information is provided in relation to this Proposal 4:

 

(a) ASX Listing Rule 7.3A.1 — The minimum price at which Placement Securities may be issued pursuant to the ASX Listing Rule 7.1A approval will be no less than 75% of the volume weighted average price of the Company’s CDIs calculated over the 15 trading days on which trades in that class were recorded immediately before:

 

    the date on which the issue price of the Placement Securities is agreed; or

 

    if Placement Securities are not issued within 5 trading days of the date on which the issue price is agreed, the date on which Placement Securities are issued.

 

In accordance with ASX listing rules, if the Placement Securities are issued for non-cash consideration, the Company will provide a valuation to the market that demonstrates the non-cash consideration issue price of the Placement Securities complies with ASX Listing Rule 7.3A.

 

(b) ASX Listing Rule 7.3A.2 — If the Company issues Placement Securities under ASX Listing Rule 7.1A, the existing stockholders of the Company face the risk of economic and voting dilution as a result of the issue of Placement Securities, to the extent that such Placement Securities are issued, including the risk that:

 

    the market price for Placement Securities may be significantly lower on the issue date than on the date of the approval under ASX Listing Rule 7.1A; and

 

    Placement Securities may be issued at a price that is at a discount to the market price for those securities on the issue date.

 

The following table describes the potential dilution to existing stockholders on the basis of three different issue prices and values for variable ‘A’ in the formula in ASX Listing Rule 7.1A.2. The prices and values set out in the table are examples only and include scenarios prescribed by the ASX Listing Rules. Accordingly, they provide no indication of the actual market price of the Company’s CDIs or the price at which issues of Placement Securities under ASX Listing Rule 7.1A will be made (assuming Proposal 4 is approved by stockholders).

 

 

Variable 'A' in Listing Rule 7.1.A.2

 

 

 

CDI issue price of A$0.20

(50% of the current market price of the Company's CDIs)

 

CDI issue price of A$0.40

(100% of the current market price of the Company's CDIs)

 

CDI issue price of A$0.80

(200% of the current market price of the Company's CDIs)

412,458,200 CDIs

 

10% Voting Dilution

 

41,245,820 CDIs

 

41,245,820 CDIs

 

41,245,820 CDIs

(current variable 'A')

 

Funds raised

 

A$8,249,164

 

A$16,498,328

 

A$32,996,656

 

 

 

 

 

 

 

 

 

618,687,300 CDIs

 

10% Voting Dilution

 

61,868,730 CDIs

 

61,868,730 CDIs

 

61,868,730 CDIs

(50% increase in variable 'A')

 

Funds raised

 

A$12,373,746

 

A$24,747,492

 

A$49,494,984

 

 

 

 

 

 

 

 

 

824,916,400 CDIs

 

10% Voting Dilution

 

82,491,640 CDIs

 

82,491,640 CDIs

 

82,491,640 CDIs

(100% increase in variable 'A')

 

Funds raised

 

A$16,498,328

 

A$32,996,656

 

A$65,993,312

 

 

 

 

 

 

 

 

 

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The above table has been prepared based on the following assumptions:

 

 

The Company issues (as CDIs) the maximum number of Placement Securities available under the 10% placement capacity prescribed by ASX Listing Rule 7.1A.

 

No options are exercised before the date of issue of Placement Securities under ASX Listing Rule 7.1A.

 

The 10% voting dilution reflects the aggregate percentage dilution against the issued share capital at the time of issue. This is why the voting dilution is shown in each example as 10%.

 

The table shows only the effect of issues of Placement Securities under ASX Listing Rule 7.1A, not under the Company’s 15% placement capacity under ASX Listing Rule 7.1.

 

The issue price of A$0.40 is the last closing price of the Company’s CDIs on ASX as of March 22, 2018.

 

Assuming all shares of common stock are held as CDIs.

(c) ASX Listing Rule 7.3A.3 — The date the Placement Securities must be issued by (assuming this Proposal 4 is approved by stockholders) is the date that is 12 months after the date of the Company’s 2018 annual general meeting (i.e., 17 May 2019 (Australian Time)) unless the Company approves a transaction under ASX Listing Rule 11.1.2 (a significant change to the nature or scale of the Company’s activities) or ASX Listing Rule 11.2 (disposal of the Company’s main undertaking), in which case the ASX Listing Rule 7.1A approval under this Proposal 4 will fall away on the date of stockholder approval for the relevant transaction.

(d) ASX Listing Rule 7.3A.4The Placement Securities will be issued for the purpose of funding the Company’s operations, including research and development, preclinical and clinical studies and commercialization. 

(e) ASX Listing Rule 7.3A.5 — the Company’s allocation policy for issues of Placement Securities pursuant to approval under this Proposal 4 will depend on prevailing market conditions and the Company’s circumstances at the time of any proposed issue. The form and timing of any issue of Placement Securities under ASX Listing Rule 7.1A and the identity of the allottees of Placement Securities will be determined on a case by case basis having regard to any one or more of the following: 

    the methods of raising funds available to the Company including, but not limited to, rights issues or other issues in which existing stockholders of the Company can participate;

    the effect of the issue of placement securities on the control of the Company;

    the financial situation of the Company; and

    advice from any one or more of the Company’s professional advisers.

Allottees for the purposes of the issue of Placement Securities under ASX Listing Rule 7.1A have not been determined as at the date of this Proxy Statement but may include existing substantial stockholders and/or new stockholders who are not related parties or associates of as related party of the Company.  In addition, if the Company is successful in acquiring new assets or investments, it is possible that allottees for the purpose of the issue of Placement Securities under ASX Listing Rule 7.1A will be or include vendors or include vendors of the new assets or investments.

As of the date of this Proxy Statement, the Company has not formed an intention as to the parties which it may approach to participate in an issue of Placement Securities under ASX Listing Rule 7.1A including which such an issue would be made to existing stockholders or to new investors.

(f) ASX Listing Rule 7.3A.6— the Company previously obtained stockholder approval under ASX Listing Rule 7.1A at its 2016 Annual Meeting on 26 May 2016.  The Company has not issued any securities pursuant to that ASX Listing Rule 7.1A approval which expired on 26 May 2017. 

 

 

 

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Voting Exclusion Statement

 

The Company will disregard any votes cast in respect of Proposal 4 by a person who may participate in the proposed issue of any Placement Securities and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of shares, if Proposal 4 is passed, and any associates of those persons. However, the Company need not disregard a vote if:

 

  it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy card; or

 

  it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with direction on the proxy card to vote as the proxy decides.

 

As at the date of this Proxy Statement, the Company has no specific plans to issue Placement Securities under ASX Listing Rule 7.1A and therefore it is not known who, if any, may participate in a potential issue of Placement Securities, if any, under ASX Listing Rule 7.1A. Accordingly, as at the date of this Proxy Statement, the Company is not aware of any person who would be excluded from voting on this Proposal 4.

 

Vote required and Board of Directors Recommendation

 

Under ASX Listing Rule 7.1A, Proposal 4 is required to be passed as a special resolution for the purposes of the ASX Listing Rules, which means that it must be approved by at least 75 percent of the votes cast by stockholders entitled to vote on Proposal 4.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ISSUANCE OF SECURITIES OF UP TO 10% OF THE ISSUED CAPITAL OF THE COMPANY.

 

PROPOSAL 5 — ADVISORY VOTE ON THE FREQUENCY OF A STOCKHOLDER VOTE ON EXECUTIVE COMPENSATION

 

This proposal gives our stockholders the opportunity, through the following resolution, to advise our Board how often we should conduct an advisory “Say on Pay” vote on the compensation of our named executive officers:

“RESOLVED, that an advisory vote of the stockholders of REVA Medical, Inc. to approve the compensation of named executive officers as disclosed pursuant to the United States Securities and Exchange Commission (“SEC”) compensation disclosure rules, shall be held at an annual meeting of stockholders, beginning with the 2018 Annual Meeting of Stockholders, (i) every 3 years, (ii) every 2 years, or (iii) every year.”

 

The enclosed proxy card gives you four choices for voting on this item. You can choose whether the Say on Pay vote should be conducted every 3 years, every 2 years, or 1 year. You may also abstain.

 

Recommendation

 

 

While we will continue to monitor developments in this area, our Board currently plans to seek an advisory vote on compensation of our named executive officers every year. Our Board believes that holding such a vote every year is advisable for a number of reasons, including the following:

 

an annual advisory vote would enable our stockholders to provide the Company with input regarding the compensation of our named executive officers on a timely basis;

 

an annual advisory vote may provide a higher level of accountability and direct communication between the Company and its stockholders by enabling the vote to correspond to the information presented in the accompanying proxy statement for the applicable stockholders’ meeting;

 

an annual vote is consistent with the requirement for ASX listed Australian companies to conduct an advisory vote at each annual general meeting with respect to the approval of the Company’s remuneration report; and,

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a failure to provide stockholder input every year might make it more difficult to understand whether a stockholder vote pertains to the compensation year being discussed in the current proxy, or pay practices from the previous year or two. This, in turn, might make it more difficult for the Board and the compensation committee to understand the implications of the vote and to respond to them.

 

 

We ask that you indicate your support for the advisory vote on compensation of our named executive officers to be held annually.

 

Because your vote is advisory, it will not be binding upon the Board. However, our Board values the opinions that our stockholders express in their votes and will take into account the outcome of the vote when considering how frequently we should conduct an advisory Say on Pay vote on the compensation of our named executive officers.

The choice of frequency that receives the highest number of votes will be considered the advisory vote of the stockholders. Abstentions and broker non-votes will not count in determining which frequency choice received the largest number of votes, and will have no direct effect on the outcome of this proposal.

 

THE BOARD RECOMMENDS A VOTE FOR A FREQUENCY OF EVERY “1 YEAR” FOR FUTURE NON-BINDING STOCKHOLDER VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

 

 

 

PROPOSAL 6 — ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Board of Directors is providing stockholders with the opportunity to cast an advisory vote on the compensation of our named executive officers in accordance with the rules of the SEC. This proposal, commonly known as a “Say on Pay” proposal, gives you, as a stockholder, the opportunity to endorse or not endorse our executive compensation programs and policies and the compensation paid to our named executive officers.

The Say on Pay vote is advisory, and therefore not binding on the compensation committee or the Board. Although the vote is non‑binding, the compensation committee and the Board will review the voting results, seek to determine the cause or causes of any significant negative voting, and take them into consideration when making future decisions regarding executive compensation programs.

We design our executive compensation programs to implement our core objectives of providing competitive pay, pay for performance, and alignment of management’s interests with the interests of long‑term stockholders. We utilize an independent compensation consultant to assist us in designing our compensation programs.  Stockholders are encouraged to read the “Compensation Discussion and Analysis” section of this Proxy Statement for a more detailed discussion of how our compensation programs reflect our core objectives.

We believe stockholders should consider the following key aspects of executive compensation with respect to our named executive officers when voting on this proposal:

 

base salaries increased by three to five percent in fiscal year 2017, in line with industry standards, as compared to the 2016 base salaries;

 

in addition to base salaries, the executives have a potential for cash bonuses and equity awards that would comprise a significant percentage of total compensation. Bonuses were awarded for 2017 based upon achievements of milestones under a pre-defined program, as more fully described in the Compensation and Discussion Analysis presented in this Proxy Statement;

 

the Company grants long-term equity awards that link the interests of our executives with those of our stockholders; and,

 

our compensation programs were reviewed by the compensation committee and determined not to create inappropriate or excessive risk that is likely to have a material adverse effect on the Company.

Recommendation

The Board believes the Company’s executive compensation program uses appropriate structures and sound pay practices that are effective in achieving our core objectives. Accordingly, the Board recommends that you vote in favor of the following resolution:

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“RESOLVED, that the stockholders of REVA Medical, Inc. approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed pursuant to the SEC’s compensation disclosure rules, including the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement.”

Approval of the Say on Pay proposal requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions are considered shares present and entitled to vote and thus will have the effect of a vote “AGAINST” this proposal. Broker non‑votes will have no direct effect on the outcome of this proposal.

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS vote

“FOR” APPROVAL, ON AN ADVISORY BASIS, OF EXECUTIVE COMPENSATION.

 

 

 

PROPOSAL 7 — APPROVAL OF THE ISSUANCE AND TRANSFER OF SECURITIES UNDER THE AMENDED AND RESTATED 2010 EQUITY INCENTIVE PLAN

 

Introduction

 

ASX Listing Rule 7.1 provides that the prior approval of our stockholders is required for an issue of equity securities if the securities will, when aggregated with the securities issued by the Company during the previous 12 months, exceed 15% of the number of securities on issue at the commencement of that 12 months.

 

ASX Listing Rule 7.2 (Exception 9) sets out an exception to ASX Listing Rule 7.1. This rule provides that issues under an employee incentive scheme are exempt for a period of three years if stockholders approve the issue of securities under the scheme for the purposes of this exception.

 

Accordingly, Proposal 7 seeks approval from our stockholders to approve the issuance and transfer of securities under the Amended and Restated 2010 Equity Incentive Plan (or “2010 Plan” or “Restated Plan”).

 

Approval of this Proposal 7 will mean that for the period of three years following the date of this Annual Meeting, any issues or transfers of securities made under the Amended and Restated 2010 Equity Incentive Plan will be excluded from the calculation of the Company’s 15% issue capacity under ASX Listing Rule 7.1 and, to the extent applicable, from the Company’s additional 10% placement capacity under ASX Listing Rule 7.1A (assuming Proposal 4 is approved by stockholders).

 

The Board of Directors last sought and obtained approval of its stockholders to approve the issuance and transfer of securities under the Amended and Restated 2010 Equity Incentive Plan in May 2014. The Company is now requesting that its stockholders approve the issuance and transfer of securities under the Amended and Restated 2010 Equity Incentive Plan at this Annual Meeting for the purposes of ASX Listing Rule 7.2 (Exception 9) so that we may continue to offer a compensation program that will attract, retain, motivate, and reward the experienced, highly qualified, and performance-based directors, employees, and consultants who will contribute to our success and align their and the Company’s interests with those of our stockholders through our ability to grant a variety of equity-based awards.

  

The number of securities issued under the 2010 Plan since its last approval for ASX purposes in May 2014 is 3,394,550 options (exercisable over 3,394,550 shares of common stock) and 1,151,300 shares of restricted stock units (for 1,151,300 shares of common stock).

 

A summary of the principal provisions of the 2010 Plan is set out below. This summary is qualified in its entirety by the complete text of the Amended and Restated 2010 Equity Incentive Plan set forth in Appendix A to this Proxy Statement.

 

Shares Authorized.  As approved by our stockholders in November 2010, the 2010 Plan (and the Restated Plan) also provides that the number of authorized shares automatically increases on January 1 of each subsequent year through 2020, by an “Annual Increase” equal to the smallest of (a) 3% of the number of shares of common stock issued and outstanding on the

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immediately preceding December 31, and (b) a lesser amount determined by the Board of Directors.  On January 1, 2018, the share reserve was increased by 1,237,374 shares.

  

As of March 22, 2018, options were outstanding under the 2010 Plan for a total of 6,547,948 shares of our common stock and a total of 691,500 shares were subject to unvested awards of “full value awards” (e.g., awards other than stock options and stock appreciation rights) were outstanding under the 2010 Plan.  As of that date, a total of 3,142,438 shares remained available for the future grant of awards under the 2010 Plan.

 

Our average annual burn rate (gross number of shares granted during the year divided by weighted common shares outstanding) for the three years ending December 31, 2017 was 4.5%.  On an annual basis, the burn rate for the prior three (3) years was approximately 3.1%, 1.5%, and 9.0% for the annual periods ending December 31, 2017, December 31, 2016, and December 31, 2015, respectively.

 

If any award granted under the 2010 Plan expires or otherwise terminates for any reason without having been exercised or settled in full, or if shares subject to forfeiture or repurchase are forfeited or repurchased by the Company for not more than the participant’s purchase price, any such shares reacquired or subject to a terminated award will again become available for issuance under the Restated Plan.  Shares will not be treated as having been issued under the Restated Plan and will therefore not reduce the number of shares available for issuance to the extent an award is settled in cash.  Shares that are withheld or reacquired by the Company in satisfaction of a tax withholding obligation or that are tendered in payment of the exercise price of an option will not be made available for new awards under the 2010 Plan.  Upon the exercise of a stock appreciation right or net-exercise of an option, the number of shares available under the 2010 Plan will be reduced by the gross number of shares for which the award is exercised.

 

Adjustments for Capital Structure Changes.  Appropriate and proportionate adjustments will be made to the number of shares authorized under the Restated Plan, to the numerical limits on certain types of awards described below, and to outstanding awards in the event of any change in our common stock through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares or similar change in our capital structure, or if we make a distribution to our stockholders in a form other than common stock.

 

Section 162(m) Award Limits.  As described above, the 2010 Plan established a limit on the maximum aggregate number of shares or dollar value for which such awards may be granted to an employee in any fiscal year which are intended to qualify as performance-based awards under Section 162(m) of the Code, as follows:

 

                  No more than five hundred thousand (500,000) shares under stock-based awards within any fiscal year.

 

                  No more than $2,000,000 for each full fiscal year contained in the performance period under cash-based awards.

 

These amounts are doubled with respect to the first fiscal year in which an employee is hired.

 

Administration.  The 2010 Plan generally is administered by the Compensation Committee, although the Board of Directors retains the right to appoint another of its committees to administer the Restated Plan or to administer the Restated Plan directly. In the case of awards intended to qualify for the performance-based compensation exemption under Section 162(m) of the Code, administration of the Restated Plan must be by a compensation committee comprised solely of two or more “outside directors” within the meaning of Section 162(m) of the Code. (For purposes of this summary, the term “Compensation Committee” will refer to either such duly appointed committee or the Board of Directors.)  Subject to the provisions of the Restated Plan, the Compensation Committee determines in its discretion the persons to whom and the times at which awards are granted, the types and sizes of awards, and all of their terms and conditions. The Compensation Committee may, subject to certain limitations on the exercise of its discretion required by Section 162(m) of the Code or otherwise provided by the Restated Plan, amend, cancel or renew any award, waive any restrictions or conditions applicable to any award, and accelerate, continue, extend or defer the vesting of any award. The 2010 Plan provides, subject to certain limitations, for indemnification by the Company of any director, officer or employee against all reasonable expenses, including attorneys’ fees, incurred in connection with any legal action arising from such person’s action or failure to act in administering the 2010 Plan. All awards granted under the Restated Plan will be evidenced by a written or digitally signed agreement between the Company and the participant specifying the terms and conditions of the award, consistent with the requirements of the Restated Plan. The Compensation Committee will interpret the 2010 Plan and awards granted thereunder,

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and all determinations of the Compensation Committee generally will be final and binding on all persons having an interest in the Restated Plan or any award.

 

Prohibition of Option and SAR Repricing.  The 2010 Plan expressly provides that, without the approval of a majority of the votes cast in person or by proxy at a meeting of our stockholders, the Compensation Committee may not provide for any of the following with respect to underwater options or stock appreciation rights: (1) either the cancellation of such outstanding options or stock appreciation rights in exchange for the grant of new options or stock appreciation rights at a lower exercise price or the amendment of outstanding options or stock appreciation rights to reduce the exercise price, (2) the issuance of new full value awards in exchange for the cancellation of such outstanding options or stock appreciation rights, or (3) the cancellation of such outstanding options or stock appreciation rights in exchange for payments in cash.

 

Eligibility.  Awards may be granted to employees, directors and consultants of the Company or any present or future parent or subsidiary corporation or other affiliated entity of the Company.  Incentive stock options may be granted only to employees who, as of the time of grant, are employees of the Company or any parent or subsidiary corporation of the Company.  As of March 22, 2018, we had approximately 56 employees, including four executive officers, and seven non-employee directors who are eligible under the 2010 Plan.

 

Stock Options.  The Compensation Committee may grant nonstatutory stock options, incentive stock options within the meaning of Section 422 of the Code, or any combination of these.  The exercise price of each option may not be less than the fair market value of a share of our common stock on the date of grant.  However, any incentive stock option granted to a person who at the time of grant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company (a “10% Stockholder”) must have an exercise price equal to at least 110% of the fair market value of a share of common stock on the date of grant.  As of March 22, 2018, the last closing price of our common stock as reported on the ASX was $3.10 per share as adjusted to account for conversion of CDIs (A$0.40) into shares of common stock and converted into U.S. dollars based on the prevailing exchange rate of 0.7744 on March 22, 2018.

 

The 2010 Plan provides that the option exercise price may be paid in cash, by check, or cash equivalent; by means of a broker-assisted cashless exercise; by means of a net-exercise procedure; to the extent legally permitted, by tender to the Company of shares of common stock owned by the participant having a fair market value not less than the exercise price; by such other lawful consideration as approved by the Compensation Committee; or by any combination of these.  Nevertheless, the Compensation Committee may restrict the forms of payment permitted in connection with any option grant.  No option may be exercised unless the participant has made adequate provision for federal, state, local and foreign taxes, if any, relating to the exercise of the option, including, if permitted or required by the Company, through the participant’s surrender of a portion of the option shares to the Company.

 

Options will become vested and exercisable at such times or upon such events and subject to such terms, conditions, performance criteria or restrictions as specified by the Compensation Committee.  The maximum term of any option granted under the 2010 Plan is ten (10) years, provided that an incentive stock option granted to a 10% Stockholder must have a term not exceeding five (5) years.  Unless otherwise permitted by the Compensation Committee, an option generally will remain exercisable for three months following the participant’s termination of service, provided that if service terminates as a result of the participant’s death or disability, the option generally will remain exercisable for 12 months, but in any event the option must be exercised no later than its expiration date, and provided further that an option will terminate immediately upon a participant’s termination for cause (as defined by the 2010 Plan).

 

Options are nontransferable by the participant other than by will or by the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the participant.  However, a nonstatutory stock option may be assigned or transferred to certain family members or trusts for their benefit to the extent permitted by the Compensation Committee.

 

Stock Appreciation Rights.  The Compensation Committee may grant stock appreciation rights either in tandem with a related option (a “Tandem SAR”) or independently of any option (a “Freestanding SAR”).  A Tandem SAR requires the option holder to elect between the exercise of the underlying option for shares of common stock or the surrender of the option and the exercise of the related stock appreciation right.  A Tandem SAR is exercisable only at the time and only to the extent that the related stock option is exercisable, while a Freestanding SAR is exercisable at such times or upon such events and subject to such terms, conditions, performance criteria or restrictions as specified by the Compensation Committee.  The exercise price of each stock appreciation right may not be less than the fair market value of a share of our common stock on the date of grant.

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Upon the exercise of any stock appreciation right, the participant is entitled to receive an amount equal to the excess of the fair market value of the underlying shares of common stock as to which the right is exercised over the aggregate exercise price for such shares.  Payment of this amount upon the exercise of a Tandem SAR may be made only in shares of common stock whose fair market value on the exercise date equals the payment amount.  At the Compensation Committee’s discretion, payment of this amount upon the exercise of a Freestanding SAR may be made in cash or shares of common stock.  The maximum term of any stock appreciation right granted under the 2010 Plan is ten (10) years.

 

Stock appreciation rights are generally nontransferable by the participant other than by will or by the laws of descent and distribution, and are generally exercisable during the participant’s lifetime only by the participant.  If permitted by the Compensation Committee, a Tandem SAR related to a nonstatutory stock option and a Freestanding SAR may be assigned or transferred to certain family members or trusts for their benefit to the extent permitted by the Compensation Committee.  Other terms of stock appreciation rights are generally similar to the terms of comparable stock options.

 

Restricted Stock Awards.  The Compensation Committee may grant restricted stock awards under the 2010 Plan either in the form of a restricted stock purchase right, giving a participant an immediate right to purchase common stock, or in the form of a restricted stock bonus, in which stock is issued in consideration for services to the Company rendered by the participant.  The Compensation Committee determines the purchase price payable under restricted stock purchase awards, which may be less than the then current fair market value of our common stock.  Restricted stock awards may be subject to vesting conditions based on such service or performance criteria as the Compensation Committee specifies, including the attainment of one or more performance goals similar to those described below in connection with performance awards.  Shares acquired pursuant to a restricted stock award may not be transferred by the participant until vested.  Unless otherwise provided by the Compensation Committee, a participant will forfeit any shares of restricted stock as to which the vesting restrictions have not lapsed prior to the participant’s termination of service.  Unless otherwise determined by the Compensation Committee, participants holding restricted stock will have the right to vote the shares and to receive any dividends paid, except that dividends or other distributions paid in shares will be subject to the same restrictions as the original award and dividends paid in cash may be subject to such restrictions.

 

Restricted Stock Units.  The Compensation Committee may grant restricted stock units under the 2010 Plan, which represent rights to receive shares of our common stock at a future date determined in accordance with the participant’s award agreement.  No monetary payment is required for receipt of restricted stock units or the shares issued in settlement of the award, the consideration for which is furnished in the form of the participant’s services to the Company.  The Compensation Committee may grant restricted stock unit awards subject to the attainment of one or more performance goals similar to those described below in connection with performance awards, or may make the awards subject to vesting conditions similar to those applicable to restricted stock awards.  Unless otherwise provided by the Compensation Committee, a participant will forfeit any restricted stock units which have not vested prior to the participant’s termination of service.  Participants have no voting rights or rights to receive cash dividends with respect to restricted stock unit awards until shares of common stock are issued in settlement of such awards.  However, the Compensation Committee may grant restricted stock units that entitle their holders to dividend equivalent rights, which are rights to receive additional restricted stock units for a number of shares whose value is equal to any cash dividends the Company pays.

 

Performance Awards.  The Compensation Committee may grant performance awards subject to such conditions and the attainment of such performance goals over such periods as the Compensation Committee determines in writing and sets forth in a written agreement between the Company and the participant.  These awards may be designated as performance shares or performance units, which consist of unfunded bookkeeping entries generally having initial values equal to the fair market value determined on the grant date of a share of common stock in the case of performance shares and a monetary value established by the Compensation Committee at the time of grant in the case of performance units.  Performance awards will specify a predetermined amount of performance shares or performance units that may be earned by the participant to the extent that one or more performance goals are attained within a predetermined performance period.  To the extent earned, performance awards may be settled in cash, shares of common stock (including shares of restricted stock that are subject to additional vesting) or any combination thereof.

  

Prior to the beginning of the applicable performance period or such later date as permitted under Section 162(m) of the Code, the Compensation Committee will establish one or more performance goals applicable to the award.  Performance goals will be based on the attainment of specified target levels with respect to one or more measures of business or financial performance of the Company and each subsidiary corporation consolidated with the Company for financial reporting purposes, or such division or business unit of the Company as may be selected by the Compensation Committee.  The

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Compensation Committee, in its discretion, may base performance goals on one or more of the following such measures: revenue; sales; expenses; operating income; gross margin; operating margin; earnings before any one or more of: stock-based compensation expense, interest, taxes, depreciation and amortization; pre-tax profit; net operating income; net income; economic value added; free cash flow; operating cash flow; balance of cash, cash equivalents and marketable securities; stock price; earnings per share; return on stockholder equity; return on capital; return on assets; return on investment; total stockholder return, employee satisfaction; employee retention; market share; customer satisfaction; product development; research and development expense; completion of an identified special project; and completion of a joint venture or other corporate transaction.

 

The target levels with respect to these performance measures may be expressed on an absolute basis or relative to an index, budget or other standard specified by the Compensation Committee. The degree of attainment of performance measures will be calculated in accordance with generally accepted accounting principles, if applicable, but prior to the accrual or payment of any performance award for the same performance period, and, according to criteria established by the Compensation Committee, excluding the effect (whether positive or negative) of changes in accounting standards or any extraordinary, unusual or nonrecurring item occurring after the establishment of the performance goals applicable to a performance award.

 

Following completion of the applicable performance period, the Compensation Committee will certify in writing the extent to which the applicable performance goals have been attained and the resulting value to be paid to the participant.  The Compensation Committee retains the discretion to eliminate or reduce, but not increase, the amount that would otherwise be payable on the basis of the performance goals attained to a participant who is a Covered Employee within the meaning of Section 162(m) of the Code (with respect to awards intended to qualify as performance-based awards under Section 162(m) of the Code).  However, no such reduction may increase the amount paid to any other participant.  The Compensation Committee may make positive or negative adjustments to performance award payments to participants other than Covered Employees to reflect the participant’s individual job performance or other factors determined by the Compensation Committee.  In its discretion, the Compensation Committee may provide for a participant awarded performance shares of to receive dividend equivalent rights with respect to cash dividends paid on the Company’s common stock.  The Compensation Committee may provide for performance award payments in lump sums or installments.  If any payment is to be made on a deferred basis, the Compensation Committee may provide for the payment of dividend equivalent rights or interest during the deferral period.

 

Cash-Based Awards and Other Stock-Based Awards.  The Compensation Committee may grant cash-based awards or other stock-based awards in such amounts and subject to such terms and conditions as the Compensation Committee determines.  Cash-based awards will specify a monetary payment or range of payments, while other stock-based awards will specify a number of shares or units based on shares or other equity-related awards.  Such awards may be subject to vesting conditions based on continued performance of service or subject to the attainment of one or more performance goals similar to those described above in connection with performance awards.  Settlement of awards may be in cash or shares of common stock, as determined by the Compensation Committee.  A participant will have no voting rights with respect to any such award unless and until shares are issued pursuant to the award.  The Compensation Committee may grant dividend equivalent rights with respect to other stock-based awards.  The effect on such awards of the participant’s termination of service will be determined by the Compensation Committee and set forth in the participant’s award agreement.

  

Deferred Compensation Awards.  The 2010 Plan authorizes the Compensation Committee to establish a deferred compensation award program. If and when implemented, participants designated by the Compensation Committee, who may be limited to directors or members of a select group of management or highly compensated employees, may make an advance election to receive an award of stock options, stock appreciation rights, restricted stock or restricted stock units in lieu of director fees or bonuses otherwise payable in cash. The Compensation Committee will determine basis on which the number of shares subject to an equity award granted in lieu of cash compensation will be determined.  Such awards will be subject to the applicable provisions of the 2010 Plan.

 

Change in Control.  Unless otherwise defined in a participant’s award or other agreement with the Company, the Restated Plan provides that a “Change in Control” occurs upon (a) a person or entity (with certain exceptions described in the Restated Plan) becoming the direct or indirect beneficial owner of more than 50% of the Company’s voting stock; (b) stockholder approval of a liquidation or dissolution of the Company; or (c) the occurrence of any of the following events upon which the stockholders of the Company immediately before the event do not retain immediately after the event direct or indirect beneficial ownership of more than 50% of the voting securities of the Company, its successor or the entity to which the assets of the company were transferred: (i) a sale or exchange by the stockholders in a single transaction or series of

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related transactions of more than 50% of the Company’s voting stock; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the Company).

 

If a Change in Control occurs, the surviving, continuing, successor or purchasing entity or its parent may, without the consent of any participant, either assume or continue outstanding awards or substitute substantially equivalent awards for its stock. If so determined by the Compensation Committee, stock-based awards will be deemed assumed if, for each share subject to the award prior to the Change in Control, its holder is given the right to receive the same amount of consideration that a stockholder would receive as a result of the Change in Control.  In general, any awards which are not assumed, substituted for or otherwise continued in connection with a Change in Control or exercised or settled prior to the Change in Control will terminate effective as of the time of the Change in Control.  Subject to the restrictions of Section 409A of the Code, the Compensation Committee may provide for the acceleration of vesting or settlement of any or all outstanding awards upon such terms and to such extent as it determines. The 2010 Plan also authorizes the Compensation Committee, in its discretion and without the consent of any participant, to cancel each or any award denominated in shares of stock upon a Change in Control in exchange for a payment to the participant with respect each vested share (and each unvested share if so determined by the Compensation Committee) subject to the cancelled award of an amount equal to the excess of the consideration to be paid per share of common stock in the Change in Control transaction over the exercise price per share, if any, under the award. The vesting of all awards held by non-employee directors will be accelerated in full upon a Change in Control.

 

Awards Subject to Section 409A of the Code.  Certain awards granted under the 2010 Plan may be deemed to constitute “deferred compensation” within the meaning of Section 409A of the Code, providing rules regarding the taxation of nonqualified deferred compensation plans, and the regulations and other administrative guidance issued pursuant to Section 409A of the Code.  Any such awards will be required to comply with the requirements of Section 409A of the Code.  Notwithstanding any provision of the Restated Plan to the contrary, the Compensation Committee is authorized, in its sole discretion and without the consent of any participant, to amend the 2010 Plan or any award agreement as it deems necessary or advisable to comply with Section 409A of the Code.

 

Amendment, Suspension or Termination.  The 2010 Plan will continue in effect until its termination by the Compensation Committee, provided that no awards may be granted under the 2010 Plan following the tenth anniversary of the date the Amended 2010 Plan became effective.  The Compensation Committee may amend, suspend or terminate the 2010 Plan at any time, provided that no amendment may be made without stockholder approval that would increase the maximum aggregate number of shares of stock authorized for issuance under the 2010 Plan, change the class of persons eligible to receive incentive stock options or require stockholder approval under any applicable law.  No amendment, suspension or termination of the 2010 Plan may affect any outstanding award unless expressly provided by the Compensation Committee, and, in any event, may not have a materially adverse effect an outstanding award without the consent of the participant unless necessary to comply with any applicable law, regulation or rule, including, but not limited to, Section 409A of the Code, or unless expressly provided in the terms and conditions governing the award.

 

Voting Exclusion Statement

 

The Company will disregard any votes cast in respect of Proposal 7 by a Director of the Company or any associate of such Directors.

 

However, the Company need not disregard any vote cast by any such persons if:

 

                              it is cast as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

 

                              it is cast by a Director who is chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

 

Vote Required for Approval

 

Approval of the issuance and transfer of securities under the Amended and Restated 2010 Equity Incentive Plan requires the affirmative vote of a majority of the shares of common stock of the Company present in person or represented by proxy at the Annual Meeting and entitled to vote. Abstentions are considered shares present and entitled to vote and thus will have the effect of a vote “AGAINST” this proposal. Broker non-votes will have no direct effect on the outcome of this proposal.

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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ISSUE AND TRANSFER OF SECURITIES UNDER THE PLAN.

 

 

PROPOSALS 8 through 14 — STOCK OPTION AND RSU GRANTS TO DIRECTORS

Introduction

On January 22, 2018, our Board of Directors, upon the recommendation of the compensation committee, approved the grant of 226,000 options to purchase 226,000 shares of our common stock (the “Options”) and the award of 114,000 restricted stock units for 114,000 shares of common stock (the “RSUs”)  under the REVA Medical, Inc. 2010 Equity Incentive Plan, as amended (the “Plan) to Regina E. Groves, our chief executive officer and director, subject to obtaining stockholder approval for the grant at the 2018 Annual Meeting as required by the ASX Listing Rules.  

On March 22, 2018, our Board of Directors, upon the recommendation of the compensation committee, approved the grant of an aggregate 248,012 options to purchase 248,012 shares of our common stock (the “Options”) under the Plan in the amounts of 25,000 Options to each of four existing non-executive directors of the Company, and 61,095 Options and 86,917 Options to Mr. C. Raymond Larkin and  Dr. Stephen N. Oesterle, respectively; both new non-executive directors, subject to obtaining stockholder approval for each grant at the 2018 Annual Meeting as required by the ASX Listing Rules.  The compensation committee utilized the recommendations of our independent compensation consultant to determine the number of annual option grants awarded to directors.  Mr. Larkin and Dr. Oesterle received a pro-rata portion of the annual option grants based on their service period.  Mr. Larkin and Dr. Oesterle also received initial equity grants of 40,000 and 80,000 options, respectively.  The board of directors determined that Dr. Oesterle should receive a higher initial grant as the board expects Dr. Oesterle will assist management with commercialization of our bioresorbable coronary scaffolds, Fantom and Fantom Encore due to his extensive knowledge of the interventional cardiology market.

The aggregate market value of the shares issuable on exercise of the Options proposed for grant to Ms. Groves is approximately US$ $700,000, the aggregate market value of the shares and on the vesting of the RSUs proposed for grant to Ms. Groves is approximately US$353,000, and the aggregate market value of the shares issuable on exercise of the Options to our non-executive directors is US$768,000, in each case based on the ASX closing price of A$0.40 for our CDIs and the exchange rate of 0.7744 on 22 March 2018 (Australian Time). As of March 22, 2018, the Company had a total of 3,142,438 options reserved for issuance for employees and non‑executive directors. Proposals 8 through 14 recommend the issuance of Options and RSUs to non‑executive directors that constitute approximately 18.7 percent of the total number of stock options reserved for issuance.

Approvals

Our CHESS Depositary Interests (“CDIs”), each representing one-tenth of a share of our common stock, are listed on the Australian Securities Exchange (“ASX”). ASX Listing Rule 10.14 provides that a company must not permit a director to acquire securities under an employee incentive scheme without the prior approval of stockholders. Accordingly, stockholder approval is now being sought for purposes of ASX Listing Rule 10.14 and for all other purposes for the grant of the securities to the directors of the Company as described below.

Principal Terms of the Options

If Proposals 8 through 14 (inclusive) are approved by stockholders, the Options will be issued to Ms. Groves and the non‑executive directors as soon as practicable after the Annual Meeting and, in any case, no later than three years after the Annual Meeting. The Options to be issued to Ms. Groves and each of the non‑executive directors will be issued on the following terms and conditions:

 

a)

Grant Price:  There is no consideration payable for the grant of the Options.  

 

b)

Exercise Price:  The exercise price of the Options will be equal to the closing price of the Company’s CDIs on the ASX on the date of grant, as converted to US dollars. Any vested Options will be exercisable; unvested Options will not be exercisable. Upon exercise, each option will entitle the non-executive director to receive one share of REVA’s common stock.

 

c)

Vesting Conditions:  For Ms, Groves, the Options are scheduled to vest 25% at the first anniversary date and 2.083% monthly thereafter. For Mr. Larkin, 40,000 Options are scheduled to vest in equal annual installments over three years beginning on the first anniversary of the grant date and 21,095 Options are scheduled to vest on the one-year

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anniversary of the grant date.  For Dr. Oesterle, 80,000 Options are scheduled to vest in equal annual installments over three years beginning on the first anniversary of the grant date and 6,917 Options are scheduled to vest on the one-year anniversary of the grant date.  For the remaining non-executive directors, the Options are scheduled to vest on the one-year anniversary of the grant date. There are no performance conditions or other requirements attaching to the Options, other than the requirement that Ms. Groves continue to be employed by the Company as an officer or director at each relevant vesting date and the non‑executive director to whom they are granted being a director of the Company at each relevant vesting date.

 

d)

Lapsing of Options:  The Options will lapse in circumstances where:  

 

i.

the Options have been exercised or otherwise settled;

 

ii.

Ms. Groves ceases to be an employee or director of the Company or the non‑executive director ceases to be a director of the Company;

 

iii.

there has been a change in control event (as defined in the Plan); or,

 

iv.

the Options have not been exercised by the tenth anniversary of the date of grant.

Principal Terms of the Restricted Stock Units

If Proposal 10 is approved by stockholders, the RSUs will be issued to Ms. Groves as soon as practicable after the Annual Meeting and, in any case, no later than three years after the Annual Meeting. The RSUs to be issued to Ms. Groves will be issued on the following terms and conditions:  

 

a)

Issue Price:  There is no consideration payable for the award, or upon vesting, of the RSUs.  

 

b)

Vesting Conditions:  For Ms. Groves, the RSUs are scheduled to vest one-third on each anniversary date of the award.  There are no performance conditions or other requirements attaching to the RSUs, other than the requirement that Ms. Groves continue to be employed by the Company as an officer or director at each relevant vesting date.

 

c)

Issuance of Common Stock:  Upon vesting, the RSUs will be settled by issuance of the same number of shares of the Company’s common stock.

 

d)

Restrictions on Transfer of RSUs:  Prior to vesting, the RSUs may not be transferred, sold, exchanged, assigned, encumbered, or subjected to garnishment, except by transfer through a will or the laws of descent and distribution.  

 

e)

Lapsing of RSUs:  The RSUs will lapse in circumstances where:  

 

i.

the RSUs have been settled with issuance of the Company’s common stock;

 

ii.

Ms. Groves ceases to be an employee or director of the Company; or,

 

iii.

there has been a change in control event (as defined in the Plan).

As required by ASX Listing Rule 10.15A, the following information is provided for Proposals 8 through 14. The maximum aggregate number of Options and RSUs that may be granted under Proposals 8 through 14 is 474,012 Options and 114,000 RSUs, comprising:

 

25,000 Options to Dr. Ross A. Breckenridge;

 

25,000 Options to Brian H. Dovey;

 

226,000 Options and 114,000 RSUs to Regina E. Groves;

 

61,095 Options to C. Raymond Larkin;

 

86,917 Options to Dr. Stephen N. Oesterle;

 

25,000 Options to Robert B. Stockman; and,

 

25,000 Options to Robert B. Thomas.

Upon exercise, each Option will entitle Ms. Groves and the relevant non‑executive director to receive one share of REVA’s common stock. Upon vesting, each RSU will entitle Ms. Groves to receive one share of REVA’s common stock. No loans have been or will be made by the Company to Ms. Groves or any non‑executive director in connection with the acquisition or exercise of Options or the underlying shares of common stock or the vesting of RSUs.

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The securities received by our directors during the past three years under ASX Listing Rule 10.14 are presented in the “Non-Executive Director Compensation” section below. Our directors did not receive options or any other equity awards under the Plan subsequent to those approved at our 2017 Annual General Meeting of Stockholders. The securities received by Ms. Groves during the past three years under ASX Listing Rule 10.14 are presented in the Outstanding Equity Awards table under “Executive Compensation” section below.  Ms. Groves equity awards were not subject to stockholder approval prior to her appointment to the Board of Directors in June 2017.

All of our directors are entitled to participate in the Plan. Details of any securities issued under the Plan will be published in the Company’s Annual Report relating to the period in which securities have been issued, together with a statement that approval for this issue of securities was obtained under ASX Listing Rule 10.14.

Any additional persons who become entitled to participate in the Plan after approval of Proposals 8 through 14 and who are not named in this Proxy Statement will not participate until any applicable approval is obtained under ASX Listing Rule 10.14.  

Voting Exclusion Statement

The Company will disregard any votes cast on Proposals 8 through 14 by the directors of REVA or any associate of the directors of REVA. However, the Company need not disregard a vote if:  

 

it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy card; or

 

it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy card to vote as the proxy decides.

Vote Required for Approval

Approval of Proposals 8 through 14 requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposals. Abstentions are considered shares present and entitled to vote and thus will have the effect of a vote “AGAINST” a proposal. Broker non-votes will have no direct effect on the outcome of these proposals.

 

EXCLUDING Dr. Ross A. Breckenridge (Proposal No. 8), Brian H. Dovey (Proposal No. 9),

REGINA E. GROVES (Proposal No. 10), C. RAYMOND LARKIN (Proposal No. 11), DR. STEPHEN N. OESTERLE (Proposal No. 12), Robert B. Stockman (Proposal No. 13), and Robert B. Thomas (Proposal No. 14) WHO DO NOT MAKE A RECOMMENDATION WITH RESPECT TO THE PROPOSAL IN PARENTHESIS AFTER THEIR NAME DUE TO THEIR PERSONAL INTEREST IN THAT PROPOSAL,

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE

“FOR” THE APPROVAL OF the stock option AND RSU grants to the CHIEF EXECUTIVE OFFICER AND non-executive directors as contained in PROPOSALS 8 through 14 (INCLUSIVE).

 


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BOARD OF DIRECTORS INFORMATION

 

Overview

Our Company is incorporated in the State of Delaware and, as a result, the rights of our stockholders are governed by the Delaware General Corporation Law. Our stock is traded in the form of CHESS Depositary Interests (or “CDIs”) on the Australian Securities Exchange (the “ASX”).

Nominees for Election as Directors

Our Board currently consists of eight members and is divided into three classes. Class I and Class II comprise three directors each and Class III comprises two directors. The directors in each class (unless otherwise stated) are elected to serve three‑year terms and in each case until their respective successors are duly elected and qualified. The Board unanimously nominated C. Raymond Larkin, Robert Thomas and Dr. Stephen N. Oesterle, for election at the 2018 Annual Meeting.  R. Scott Huennekens currently serves as a Class II director, but he is not standing for re-election and his term will expire at the 2018 Annual Meeting.

Directors are elected by a plurality of the votes cast at the Annual Meeting, which means that the director nominees receiving the highest number of “FOR” votes will be elected. Each nominee has indicated their willingness to serve if elected, but if any nominee should be unable to serve or for good cause will not serve, the shares represented by proxies may be voted for a substitute as REVA may designate, unless a contrary instruction is indicated in the proxy.

The following table sets forth information as of March 22, 2018 regarding the director nominees for election at the Annual Meeting, as well as the other members of our Board, whose terms of office will continue after the Annual Meeting but who are not currently up for election. The information includes each member’s business experience and service on other boards of directors, in addition to the qualifications, attributes, and skills that led our Board to the conclusion that each member should serve as a director.

While our Diversity Policy doesn’t contain specific guidelines in considering whether to recommend any director nominee, including any candidate recommended by stockholders, we believe that the backgrounds and qualifications of the directors, considered as a group, should provide a significant mix of experience, knowledge, and abilities that will allow our Board to fulfill its responsibilities. As set forth in our corporate governance guidelines, these criteria generally include, among other things, an individual’s business experience and skills (including skills in core areas such as operations, management, technology, accounting and finance, strategic planning, and international markets), as well as independence, judgment, knowledge of our business and industry, professional reputation, leadership, integrity, and the ability to represent the best interests of the Company’s stockholders. In addition, the nominating and corporate governance committee also considers a Board member’s ability to commit sufficient time and attention to the activities of the Board, as well as the absence of any potential conflicts with the Company’s interests. The nominating and corporate governance committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. Our Board is responsible for selecting candidates for election as directors based on the recommendation of the nominating and corporate governance committee.

We believe that our current Board includes individuals with strong backgrounds in executive leadership and management, accounting and finance, and Company and industry knowledge. In addition, each of our directors has a strong professional reputation and has shown a dedication to his or her profession and community. We also believe that our directors’ diversity of backgrounds and experiences results in different perspectives, ideas, and viewpoints, which makes our Board more effective in carrying out its duties. We believe that our directors hold themselves to the highest standards of integrity and that they are committed to representing the long‑term interests of our stockholders.


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Class II Directors for Election (New Term Expires in 2021)

 

C. RAYMOND LARKIN JR.

Chairman of the Board

(age 70)

 

 

Mr. Larkin has served as a director since July 2017 and is seeking election for the first time from the stockholders at the 2018 Annual Meeting. Since 2000, he has served as a principal of Group Outcome L.L.C., a merchant banking firm concentrating on medical technologies. From 2003 to 2005, Mr. Larkin was Chairman and CEO at Eunoe Inc., an investigative device for slowing and stopping progression of Alzheimer’s disease. From 2001 to 2007, he served as a part-time Venture Partner at Cutlass Capital, a venture capital firm. Prior to that, he was President and Chief Executive Officer of Nellcor Puritan Bennett, Inc., a respiratory products company. Mr. Larkin also held positions of increasing responsibility at Bentley Laboratories/American Hospital Supply from 1976 to 1983. Mr. Larkin currently serves as board chairman of Align Technology, and also served as board chairman of HeartWare, Inc. prior to its acquisition by Medtronic, plc. He received his B.S. degree in Industrial Management from LaSalle University and is a former captain in the United States Marine Corps.

Qualifications:  We believe Mr. Larkin is qualified to sit on our Board due to his experience serving on multiple other boards of directors, his experience in executive positions with life science companies and his experience at venture capital firms.

ROBERT B. THOMAS

Director (age 72)

 

 

Mr. Thomas has served as a director since July 2010. He was a director and non-executive Chairman of the Board of HeartWare Limited/HeartWare International, Inc., a NASDAQ-listed medical device company (formerly also ASX-listed), between November 2004 and August 2016 when they were acquired by Medtronic, Inc. He is currently a director of a number of Australian public companies, including Starpharma Limited (Chairman) and Biotron Limited. Mr. Thomas was a director of Virgin Australia Limited from 2007 through February 28, 2018. Between October 2004 and September 2008, Mr. Thomas was a consultant to Citigroup Corporate and Investment Bank. Between March 2003 and September 2004, he was Chairman of Global Corporate and Investment Bank, Citigroup Global Markets, Australia and New Zealand. Prior to that time, Mr. Thomas was Chief Executive Officer of Citigroup’s Corporate and Investment Bank (formerly known as Salomon Smith Barney), Australia and New Zealand from October 1999 until February 2003. Mr. Thomas is Chairman of Aus Bio Limited, a director of O’Connell Street Associates, and Chairman of Grahger Capital Resources. Mr. Thomas holds a Bachelor of Economics from Monash University, Australia. He is a member of the Stockbrokers Association of Australia and is a Master Stockbroker. Mr. Thomas is also a Fellow of the Financial Services Institute of Australia and the Australian Institute of Company Directors. He is on the board of the NSW State Library Foundation.

Qualifications:  We believe Mr. Thomas is qualified to sit on our Board due to his vast investment banking experience, his involvement with medical device companies, and his experience in governance and risk management across a wide range of industries. Mr. Thomas also brings capital market and economics expertise to the Board from his years of service as a securities analyst and as a director of ASX-listed companies.

 

Class I Director for Election (New Term Expires in 2020)

 

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STEPHEN N. OESTERLE

Director (age 67)

 

 

Dr. Oesterle has served as a director since February 2018 and is seeking election for the first time from the stockholders at the 2018 Annual Meeting. Since 2015, he has been a venture partner at New Enterprise Associates and has also served as a Senior Advisor to EQT Partners of Sweden and Temasek Holdings in Singapore. He has also been a member of the Board of Directors at Baxter International since 2017. From 2002 to 2015, Dr. Oesterle was Senior Vice President for Medicine and Technology at Medtronic, Inc. and a member of its Executive Operating Committee. He oversaw long term internal technology investments while participating in strategic corporate investments in emerging private companies. Additionally, he served as a member of Medtronic’s Business Development and Strategy Committee that approved all corporate acquisitions. Dr. Oesterle graduated summa cum laude from Harvard and received his M.D. from Yale Medical School; he completed his residency at Massachusetts General Hospital. Following medical school, he completed a fellowship in Interventional Cardiology at Stanford University Hospital. Dr. Oesterle then served on the faculties at Harvard and Stanford medical schools where he directed Invasive Cardiology Services at each hospital.

Qualifications:  We believe Dr. Oesterle is qualified to sit on our Board due to his extensive medical background, particularly as it relates to cardiology, his experience at health care venture capital firms and his general business proficiency.

 

 


Class I Directors Continuing in Office (Term Expires in 2020)

 

BRIAN H. DOVEY

Director (age 76)

 

 

Mr. Dovey has served as a director since June 2001 and was Chairman of the Board from March 2016 through September 2017. Since 1988, Mr. Dovey has been a partner of Domain Associates, LLC, a private venture capital management firm focused on life sciences, where he has led innovative investments not only in life science companies, but also has established and directed new initiatives such as the collaboration between Domain and Rusnano. Since joining Domain, he has served on the board of directors of over 35 private and public companies and has been chairman of six, including REVA. Mr. Dovey currently sits on the board of two public companies:  REVA and Orexigen Therapeutics, Inc. Prior to joining Domain, Mr. Dovey spent six years at Rorer Group, Inc. (now part of Sanofi), a pharmaceutical and medical device company listed on the NYSE. As president of Rorer from 1986 to 1988, he was the primary architect of the company’s strategic shift to pharmaceuticals. Previous to that, he was President of Survival Technology, Inc., a start-up medical products company. Mr. Dovey serves on the board of directors and was the former chairman of the Center for Venture Education (Kauffman Fellows Program) and serves on the La Jolla Playhouse board of trustees. He was the former chair and currently serves on the board of trustees of the Wistar Institute, a leader in preclinical biomedical research in the non-profit sector. Mr. Dovey has served as both president and chairman of the National Venture Capital Association. He is a former board member of the industry association representing the medical device industry, as well as the association representing consumer pharmaceuticals. He is a trustee emeritus of Germantown Academy and is a former trustee of the University of Pennsylvania School of Nursing and the Sanford-Burnham Institute for Medical Research. Mr. Dovey received his B.A. in mathematics from Colgate University and his MBA from the Harvard Business School.

Qualifications:  We believe Mr. Dovey is qualified to sit on our Board due to his strong financial expertise, his experience in corporate governance and risk management, his service as a director on over 35 private and public companies, his broad executive experience with medical device companies, and his extensive experience at a health care venture capital firm.

REGINA E. GROVES

Chief Executive Officer

(age 59)

 

 

Ms. Groves has served as a director since June 2017 and as the Company’s Chief Executive Officer since September 2015. Her background encompasses over 30 years in medical devices, executive leadership, and financial management. Prior to joining REVA, since 2008 Ms. Groves served as Vice President and General Manager of the AF Solutions, Cardiac Rhythm and Heart Failure division of Medtronic, Inc., a leading global medical technology company. In this position she developed and executed strategies to re-enter the catheter-based Atrial fibrillation (“Afib”) ablation market and achieved the goal to be the market leader in intermittent Afib ablation. The position also allowed her to acquire and integrate companies, complete numerous clinical trials, and launch novel products worldwide. Prior to 2008, Ms. Groves held other senior positions at Medtronic, McKinsey & Company, Inc. and several health care companies. Since March 2017, she serves on the board of AtriCure, Inc., a NASDAQ-listed company innovating surgical treatments for Afib. She is a member of the Commercial Advisory Board for the Global Cardiovascular Innovation Center at the Cleveland Clinic. From 2010 through 2016, she served on the board of the Foxcroft School and was Chair from 2013 through 2016. She also served as an Observer to the Board of Directors for Synaptic, Inc., a Chinese ablation company from 2011 through 2015. Ms. Groves received her M.B.A. from Harvard Business School and her B.S. in Pharmacy from the University of Florida.

Qualifications:  We believe Ms. Groves is qualified to sit on our Board due to her extensive industry knowledge and her operational and management experience. Additionally, Ms. Groves brings valuable experience and insights to our Board from her experience of transitioning pre-revenue stage operations to highly successful worldwide commercial operations, her key commercial and business contacts in our industry, and her intimate knowledge of REVA’s strategies and operations.

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Class III Directors Continuing in Office (Term Expires in 2019)

 

ROSS A. BRECKENRIDGE

Director (age 48)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Breckenridge has served as a director since January 2015. Dr. Breckenridge is currently the Chief Medical Officer of Silver Creek Pharmaceuticals, Inc., a biotechnology company developing new regenerative medicines to treat serious diseases in which growth factor signaling plays a critical roles in promoting cell and tissue repair, and was formerly the Chief Executive Officer from September 2016 to December 2017. Prior to that, he was a senior clinical lecturer and Programme Director for the Masters Programme in Clinical and Experimental Medicine at University College London since 2006. He was a Fellow of the Royal College of Physicians (London) and a Consultant Physician at University College London Hospital from 2006 until September 2016. Dr. Breckenridge has provided consultation services to investors in the biotech and healthcare sector since 1998. He is a current board member of the Cornelia de Lange Society of Great Britain and has sat on numerous other medical and corporate boards. He obtained his medical degree from Oxford University, followed by his PhD in Developmental Biology at the University of Cambridge. He then completed his training in Clinical Pharmacology at University College London.

Qualifications:  We believe Dr. Breckenridge is qualified to sit on our Board due to his extensive medical background, particularly as it relates to research of cardiac disease, his experience serving on multiple other boards of directors, and his general business acumen.

ROBERT B. STOCKMAN

Director (age 64)

 

 

Mr. Stockman, our co-founder, has served as a director since 1999. He was Chairman of the Board from 1999 until March 2016 and he was our Chief Executive Officer from August 2010 to September 2015. He served as a director of HeartWare Limited/ HeartWare International, Inc., a NASDAQ-listed medical device company (formerly also ASX-listed), between December 2006 and August 2016 when they were acquired by Medtronic, Inc. He previously served on the board of ZELTIQ Aesthetics, Inc., a medical technology company listed on NASDAQ, from July 2010 until April 2012. Since 1999, Mr. Stockman has been the President and Chief Executive Officer of Group Outcome LLC, a U.S.-based merchant banking firm that deploys its capital and that of its financial partners in private equity and venture capital investments in medical technology companies. Mr. Stockman also co-founded Centrimed, Inc., an internet-based software company, that was acquired by the Global Healthcare Exchange, LLC, and led the buyouts of Ioptex, an intraocular lens manufacturer, and two Johnson & Johnson divestitures, “A” Company Orthodontics, Inc. and Critikon Company, LLC, each of which was subsequently acquired. Prior to establishing Group Outcome LLC, Mr. Stockman spent 18 years with Johnston Associates, Inc. and Narragansett Capital Corporation, where he focused on venture capital investments and merger advisory work in health care. Mr. Stockman holds a Bachelor’s Degree from Harvard College and an MBA from The Tuck School at Dartmouth College, where he serves on Tuck’s Board of Overseers.

 

Qualifications:  We believe Mr. Stockman is qualified to sit on our Board due to his extensive experience as an entrepreneur driving the growth of five medical products companies, his experience as an executive of several medical device companies, and his experience as an executive in the investment banking industry, particularly in private equity and venture capital investments in medical technology. Mr. Stockman’s qualifications also include his strong financial background, including his work early in his career at Price Waterhouse, a provider of tax, audit, and advisory services, and his ability to provide financial expertise to the Board, including an understanding of financial statements, corporate finance, accounting, and capital markets.

 


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Class II Director Not Standing for Re-Election

R. SCOTT HUENNEKENS

Director (age 53)

 

 

Mr. Huennekens has served as a director since March 2015. Since August 2015 he is President and Chief Executive Officer of Verb Surgical, Inc., a collaboration between Alphabet, Inc. (formerly Google) and Johnson & Johnson, focused on developing a comprehensive robotic surgical solutions platform. Previously, from April 2002 to February 2015, Mr. Huennekens was President and Chief Executive Officer of Volcano Corporation, a manufacturer of intravascular imaging equipment for coronary and peripheral applications. Prior to 2002, he served as President and Chief Executive Officer of Digirad Corporation, a diagnostic imaging solutions provider, and also held senior positions at Baxter International, Inc. in the Edwards Cardiovascular Division and the Novacor division. Mr. Huennekens currently serves on the Medical Device Manufacturers Association (“MDMA”) board and he served on the board of EndoChoice until November 2016. He received his B.S. in Business Administration from the University of Southern California and an MBA from Harvard Business School.

Qualifications:  We believe Mr. Huennekens is qualified to sit on our Board due to his vast experience in executive positions with medical equipment manufacturers, his broad business background, his experience serving on multiple other boards of directors, and his strong financial background, including his work early in his career at Deloitte, a provider of tax, audit, and advisory services.

 

Committees of the Board of Directors/Corporate Governance

 

Directors are expected to attend meetings of the Board and any Board committees on which they serve. The Board has three standing committees to facilitate and assist the Board in the execution of its responsibilities:  audit, compensation, and nominating and corporate governance. Each of these committees has the responsibilities described in the committee charters, which are available on our website at www.revamedical.com. Our Board may also establish other committees from time to time to assist in the discharge of its responsibilities.

 

As of March 22, 2018, membership of the committees of our Board is as follows:

Director

 

Audit

Committee

 

Compensation
Committee

 

Nominating
and Corporate
Governance Committee

Mr. Larkin (Chairman) (1)

 

 

 

Chair

Dr. Breckenridge (1)

 

X

 

X

 

Mr. Dovey (2)

 

 

Chair

 

X

Ms. Groves (4)

 

 

 

Mr. Huennekens (1)

 

Chair

 

 

X

Dr. Oesterle (1)

 

 

 

Mr. Stockman (3)

 

 

 

Mr. Thomas (1)

 

X

 

X

 

____________

 

(1)

Independent Director under the rules of the ASX, SEC, and NASDAQ.

 

(2)

Independent Director under the rules of the SEC and NASDAQ, but not considered independent under the ASX.

 

(3)

Mr. Stockman resigned as our chief executive officer on September 18, 2015. Under ASX, SEC, and NASDAQ rules, a director employed by the Company is not independent until three years after such employment terminates.

 

 

(4)

Ms. Groves is currently our chief executive officer.  Under ASX, SEC and NASDAQ rules, a director employed by the Company is not independent.

 

During the year ended December 31, 2017, all directors attended at least 75 percent of the aggregate of (i) the total number of Board meetings held during the period for which he or she was a director and (ii) the total number of committee meetings on which he or she served during the period that he or she served. Following is a summary of meeting attendance during the year ended December 31, 2017:


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Director

 

 

 

Board of

Directors

 

Audit

Committee

 

Compensation
Committee

 

Nominating
and Corporate
Governance Committee

Number of Meetings Held

 

9

 

5

 

2

 

3

Meeting Attendance:

 

 

 

 

 

 

 

 

   Mr. Dovey

 

9

 

3 (3)

 

2

 

0 (5)

   Dr. Breckenridge

 

9

 

2 (3)

 

0 (4)

 

3 (5)

   Ms. Groves

 

9

 

 

 

   Mr. Huennekens

 

7

 

5

 

 

0 (5)

   Mr. Larkin (1)

 

3

 

 

 

0 (5)

   Mr. Oesterle (2)

 

0

 

 

 

   Mr. Stockman

 

9

 

 

 

   Mr. Thomas

 

7

 

5

 

2

 

____________

 

(1)

Mr. Larkin joined the Board in July 2017 and attended all subsequent meetings.

 

(2)

Mr. Oesterle joined the Board in February 2018 and therefore did not attend any meetings in 2017.

 

(3)

On September 18, 2017, Dr. Breckenridge replaced Mr. Dovey on the Audit Committee.

 

(4)

On September 18, 2017, Dr. Breckenridge was assigned to the Compensation Committee.  There were no meetings of this committee between September 18 and December 31, 2017.

 

(5)

Prior to September 18, 2017, the Nominating and Corporate Governance members were Anne Keating (resigned as of June 1, 2017), Gordon Nye (resigned as of July 13, 2017) and Dr. Ross Breckenridge.  On September 18, 2017, Mr. Dovey, Mr. Huennekens and Mr. Larkin were assigned to the Nominating and Corporate Governance Committee.  There were no meetings of this committee between September 18 and December 31, 2017.

Audit Committee

Our audit committee oversees our corporate accounting and financial reporting, including auditing of our financial statements. Among other things, our audit committee:

 

determines the engagement of, and approves fees paid to, our independent registered public accounting firm;

 

oversees and receives reports from the internal auditors;

 

reviews our financial statements and critical accounting estimates;

 

monitors the qualifications, independence activities, and performance of our independent registered public accounting firm and our internal auditors;

 

approves the retention of our independent registered public accounting firm to perform any proposed and permissible non-audit services; and,

 

discusses the annual audit results with management, the internal auditors, and the independent registered public accounting firm.

Our audit committee reviews the effectiveness of internal controls and the adequacy of our reporting and disclosure controls and procedures. In addition, our audit committee is responsible for the performance of our internal audit function, as well as preparing any reports required under SEC rules. The audit committee will also provide advice to the Board and report on the status of business risks pursuant to our risk management policy.

We have adopted an audit committee charter, a copy of which is available in the “Investors ─ Corporate Governance” section of our website at www.revamedical.com.

Compensation Committee

Our compensation committee establishes, amends, reviews, and approves the compensation and benefit plans with respect to senior management and employees, including determining individual elements of total compensation for the chief executive officer and other executive officers, and reviews our performance and the performance of our executive officers with respect to these elements of compensation. In carrying out its responsibilities, the compensation committee will review all components of compensation for consistency with our compensation philosophy and with the interests of stockholders. Our compensation committee reviews compensation practices and trends, identifies performance goals of our Company and

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our executive officers, and sets compensation in light of these objectives. Our compensation committee also makes recommendations to the Board regarding annual retainer, meeting fees, equity awards, and other compensation for members of the Board and its committees and administers the issuance of stock options and other awards under our equity incentive plans.

Our compensation committee reviews and evaluates potential risks related to our compensation policies and practices for employees and has determined that we have no compensation risks that are reasonably likely to have a material adverse effect on the Company. We structure our compensation to address Company‑wide risk. We believe the combination of base salary, bonus potential, and equity-based incentive awards with four‑year vesting periods, or vesting based on achievement of performances, is balanced and serves to motivate our employees to accomplish our business plan without creating risks that are reasonably likely to have a material adverse effect on our Company.

We have adopted a compensation committee charter, a copy of which is available in the “Investors ─ Corporate Governance” section of our website at www.revamedical.com.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee recommends the director nominees for each annual general meeting and ensures that the Board and the committees of the Board have the benefit of qualified and experienced independent directors. The committee’s primary responsibilities are to:

 

review the size and composition of our Board;

 

select, or recommend to our Board, nominees for each election of directors;

 

develop and recommend to our Board criteria for selecting qualified director candidates;

 

consider committee member qualifications, appointment, and removal;

 

recommend corporate governance principles, codes of conduct, and applicable compliance mechanisms; and,

 

provide oversight in the evaluation of our Board and each committee.

We have adopted a nominating and corporate governance committee charter, a copy of which is available in the “Investors ─ Corporate Governance” section of our website at www.revamedical.com.

 

 

GOVERNANCE OF OUR COMPANY

Corporate Governance Guidelines

Our corporate governance guidelines are designed to ensure effective corporate governance of the Company. Our corporate governance guidelines cover topics including, but not limited to, director qualification criteria, director compensation, director orientation and continuing education, communications from stockholders to the Board, succession planning, and the annual evaluations of the Board and its committees. Our corporate governance guidelines are reviewed regularly by the nominating and corporate governance committee and revised when appropriate.

The full content of our corporate governance guidelines can be found in the “Investors ─ Corporate Governance” section of our website accessible at www.revamedical.com. A printed copy may also be obtained by any stockholder upon request.

Code of Business Conduct and Ethics

Our Board adopted a code of business conduct and ethics to ensure that our business is conducted in a consistently legal and ethical manner. The code of business conduct and ethics establishes policies pertaining to, among other things, employee conduct in the workplace, securities trading, confidentiality, conflicts of interest, reporting violations, and compliance procedures. All of our employees, including our executive officers, as well as members of our Board, are required to comply with our code of business conduct and ethics.

The full content of our code of business conduct and ethics can be found in the “Investors ─ Corporate Governance” section of our website accessible at www.revamedical.com. A printed copy may also be obtained by any stockholder upon request. Any waiver of the code of business conduct and ethics for our executive officers or directors must be approved by our Board after receiving a recommendation from our audit committee. We disclose any amendments or waivers to our code of business conduct and ethics on our website within four business days following the date of an amendment or waiver.

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Stockholder Recommendations for Director Nominees

In nominating candidates for election as director, the nominating and corporate governance committee will consider a reasonable number of candidates for director recommended by a single stockholder who has held over 0.1 percent of REVA’s shares of common stock for over one year and who satisfies the notice, information, and consent provisions set forth in our amended and restated bylaws and corporate governance guidelines.

Stockholders who wish to recommend a candidate may do so by writing to the nominating and corporate governance committee in care of the Corporate Secretary, REVA Medical, Inc., 5751 Copley Drive, San Diego, California 92111, U.S.A. The nominating and corporate governance committee will use the same evaluation process for director nominees recommended by stockholders as it uses for other director nominees.

Communicating with the Board

Our nominating and corporate governance committee establishes procedures by which stockholders and other interested parties may communicate with the Board, any committee of the Board, any individual director, or the independent or non-executive directors as a group. Such parties can send communications by mail to the Board in care of the Corporate Secretary, REVA Medical, Inc., 5751 Copley Drive, San Diego, California 92111, U.S.A. In addition, parties can contact the Board by emailing the Corporate Secretary at boardmember@revamedical.com. The name or title of any specific recipient or group should be noted in the communication. Communications from stockholders are distributed by the Corporate Secretary to the Board or to the committee or director(s) to whom the communication is addressed, however the Corporate Secretary will not distribute items that are unrelated to the duties and responsibilities of the Board, such as spam, junk mail and mass mailings, business solicitations and advertisements, and communications that advocate the Company’s engaging in illegal activities or that, under community standards, contain offensive, scurrilous, or abusive content.

Identification and Evaluation of Nominees for Directors

Our nominating and corporate governance committee uses a variety of methods for identifying and evaluating nominees for director. The committee regularly assesses the appropriate size and composition of the Board, the needs of the Board and the respective committees of the Board, and the qualifications of candidates in light of these needs. Candidates may come to the attention of the committee through stockholders, management, current members of the Board, or search firms. The evaluation of these candidates may be based solely upon information provided to the nominating and corporate governance committee or may also include discussions with persons familiar with the candidate, an interview of the candidate or other actions the nominating and corporate governance committee deems appropriate, including the use of third parties to review candidates.

Director Attendance at Annual Meetings of Stockholders

We have a policy encouraging all of the directors to attend each annual meeting of stockholders. Ms. Keating attended the 2017 AGM in person and Mr. Dovey attended it by teleconference. We currently anticipate a majority of our directors to be present at, or available for, the 2018 Annual Meeting.

Director Independence

In accordance with our corporate governance guidelines, the majority of our Board members are independent directors. Our Board considers that a director is independent when the director is not an officer or employee of the Company or its subsidiaries, does not have any relationship which would, or could reasonably appear to, materially interfere with independent judgment, and otherwise meets the independence requirements under the rules of the ASX, SEC, and NASDAQ. Our Board has reviewed the materiality of any relationship that each of our directors has with us, either directly or indirectly.

Based on this review, our Board has determined that:

 

Dr. Ross A. Breckenridge, R. Scott Huennekens, Dr. Stephen N. Oesterle, C. Raymond Larkin, and Robert B. Thomas are considered to be independent directors under the rules of the ASX, SEC and NASDAQ;

 

Brian H. Dovey is considered to be an independent director under the rules of the SEC and NASDAQ, but is not considered to be independent under ASX standards as he is a principal of a firm that has held between 8.6 and 11.1 percent of the Company’s outstanding common stock;

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Robert B. Stockman is not considered to be independent. Mr. Stockman resigned as our chief executive officer on September 18, 2015. Under ASX, SEC, and NASDAQ rules, a director is not independent until three years after such employment terminates; and,

 

Regina E. Groves is not considered to be independent. Ms. Groves currently serves as our chief executive officer. Under ASX, SEC, and NASDAQ rules, a director is not independent if currently serving as an employee of the Company.

There are no family relationships among our directors and officers, nor are there any arrangements or understandings between any of our directors or officers or any other person pursuant to which any director or officer was, or is, to be selected as a director or officer.

Board Leadership Structure

Mr. Larkin is considered independent under the rules of the ASX, SEC and NASDAQ. The Board considers his appointment as Chairman of the Board to be in the best interest of our Company and our Stockholders. Mr. Larkin possesses detailed and in-depth knowledge of the issues, opportunities, and challenges facing the Company, and we believe he is the person best positioned to develop agendas that ensure the Board’s time and attention is focused on the most critical matters. Further, our Board believes that his decisive leadership ensures clear accountability and enhances our ability to communicate our message and strategy clearly and consistently to stockholders, employees, customers, and suppliers.

The Board’s Role in Risk Oversight

Our Board’s role in risk oversight includes receiving reports from members of management on a regular basis regarding material risks faced by the Company and applicable mitigation strategies and activities, at least on a quarterly basis. The reports cover the critical areas of development, regulatory and quality affairs, intellectual property, clinical development, operations, sales and marketing, and legal and financial affairs. Our Board and its committees consider these reports, discuss matters with management, and identify and evaluate any potential strategic or operational risks and appropriate activities to address those risks.

We have adopted a risk management policy that sets out how we identify, assess, and manage risk in business operations, a copy of which is available in the “Investors ─ Corporate Governance” section of our website at www.revamedical.com.

Compensation Committee Interlocks and Insider Participation

No member of our compensation committee has at any time been our employee. Except as set forth herein, none of our executive officers serves, or has served during the last fiscal year, as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of our Board or our compensation committee.

 

AUDIT-RELATED MATTERS

Report of the Audit Committee

As of March 22, 2018, the audit committee of our board had three members, all of whom have been determined by our board to be independent under SEC and NASDAQ rules. Mr. Huennekens is considered to be an “audit committee financial expert” under applicable SEC rules.

In performing its functions, the audit committee acts only in an oversight capacity and necessarily relies on the work and assurances of management, the internal audit function as currently performed by an independent third party (the “internal auditor”), and Grant Thornton LLP, the Company’s independent registered public accounting firm (the “independent auditor”), which, in its reports, express opinions on the conformity of the Company’s annual financial statements with U.S. generally accepted accounting principles.

Management is responsible for the financial reporting process, the system of internal controls, including internal control over financial reporting, risk management, and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The independent auditor is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with U.S. generally accepted accounting principles, as well as expressing an opinion on the effectiveness of internal control over

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financial reporting, to the extent such opinion is required by the SEC. The audit committee recognizes the importance of maintaining the independence of the Companys independent auditor, both in fact and appearance. Each year, the audit committee evaluates the qualifications, performance and independence of the Companys independent auditor and determines whether to re-engage the current independent auditor. In doing so, the audit committee considers the quality and efficiency of the services provided by the auditors, the auditors’ capabilities and the auditors technical expertise and knowledge of the Companys operations and industry.

The audit committee held five meetings during the year ended December 31, 2017. At each meeting, the audit committee met with the independent auditor and the internal auditor, with and without management present, to discuss the following:

 

overall scope and plans for the Company’s audits;

 

the results of audits and quarterly reviews of the Company’s financial statements, including a discussion of the quality, not just the acceptability, of the accounting principles;

 

the reasonableness of significant judgments; the clarity of disclosures in the financial statements;

 

review of the Company’s compliance with internal controls; and,

 

the overall quality of the Company’s financial reporting.

The audit committee also discussed with the independent auditor the matters required to be discussed by the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), including PCAOB Auditing Standard No. 16, Communications With Audit Committees, SEC rules, and other applicable regulations.

The audit committee and/or the Board also received from the Company’s independent auditor the written disclosures and the letter required by applicable requirements of the PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, regarding their communications with the audit committee concerning independence and has discussed with the independent auditor its independence from the Company. The audit committee also has considered whether the provision of non-audit services to the Company is compatible with the independence of the independent auditor.

The audit committee has reviewed and discussed the annual consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 with management and the independent auditor. The audit committee has also discussed the results of management’s assessment of the effectiveness of the Company’s internal control over financial reporting with management.

Based on the review of the consolidated financial statements and discussions with management and Grant Thornton LLP, the audit committee recommended to the Board, and the Board has approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The Annual Report on Form 10-K was filed with the SEC and the ASX.

Submitted by the Audit Committee of the Board of Directors:

R. Scott Huennekens (Chair)

Dr. Ross A. Breckenridge

Robert B. Thomas

 

Audit and Non-Audit Fees

The following table presents the fees for professional services rendered to the Company by Grant Thornton LLP for audit of the Company’s financial statements and tax consulting for the years ended December 31, 2017 and 2016:

 

Type of Service

 

2017

 

 

2016

 

Audit Fees (1)

 

$

523,000

 

 

$

349,000

 

Audit-related Fees (2)

 

 

 

 

 

 

Tax Fees (3)

 

 

33,000

 

 

 

63,000

 

  Total Fees

 

$

556,000

 

 

$

412,000

 

 

 

(1)

Includes the integrated audit of our consolidated financial statements included in the Annual Reports on Form 10-K, reviews of Quarterly Reports on Form 10-Q, the audit of internal control over financial reporting, and the issuance of consents related to our Form S-8 filings.  

 

 

(2)

We did not incur any assurance or related services during the past two years, other than those reported as “Audit Fees.”

 

 

(3)

Includes services related to tax advice and tax planning.

 

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Policy Regarding Pre-Approval of Services Provided by the Independent Auditor

The audit committee has established an audit and non‑audit services compliance policy (the “Policy”) requiring pre‑approval of all audit and permissible non‑audit services performed by the independent auditor to monitor the auditor’s independence from the Company. The Policy provides for the annual pre‑approval of specific types of services and gives detailed guidance to management as to the specific services that are eligible for such annual pre‑approval and for all other permitted services. For all types of pre‑approval, the audit committee considers whether the provision of a non‑audit service is consistent with the SEC’s rules on auditor independence.

Additionally, the audit committee considers whether the independent auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Company’s business, people, culture, accounting systems, risk profile, and other factors, and whether the service might enhance the Company’s ability to manage or control risk or improve audit quality.

All services require pre‑approval as set forth in the Policy and within the established guidelines prior to being provided by the independent auditor. In its review, the audit committee will also consider the relationship between fees for audit and non‑audit services in deciding whether to pre‑approve such services.

As provided under the Sarbanes‑Oxley Act of 2002 and the SEC’s rules, the audit committee has delegated pre‑approval authority to the chair of the audit committee to address certain requests for pre‑approval of services, and the chair must report his or her pre‑approval decisions to the audit committee at its next regular meeting. The Policy is designed to help ensure that there is no delegation by the audit committee of authority or responsibility for pre‑approval decisions to management. The audit committee monitors compliance by requiring management to report to the audit committee on a regular basis regarding the pre‑approved services rendered by the independent auditor. Management has also implemented internal procedures to promote compliance with the Policy.

The audit committee appointed Grant Thornton LLP for 2017 and selected them to serve as our independent auditor for the year ending December 31, 2018, subject to ratification by our stockholders.

Representatives of Grant Thornton will be present at the Annual Meeting, will have an opportunity to make a statement, if desired, and will be available to respond to appropriate questions.

 

EXECUTIVE COMPENSATION

The following discussion and analysis of compensation arrangements is designed to provide stockholders with an understanding of our compensation philosophy and objectives, as well as an overview of the analyses that we performed in setting executive compensation. It discusses the compensation committee’s determination of how and why, in addition to what, compensation actions were taken for the year ended December 31, 2017 for each person serving as our chief executive officer and our chief financial officer, as well as for our two other most highly compensated executive officers during 2017 (the “named executive officers”), all of whom were employed as of December 31, 2017, who were as follows:

 

Regina E. Groves, our Chief Executive Officer (age 59);

 

Brandi L. Roberts, our Chief Financial Officer and Secretary (age 44);

 

Jeffrey A. Anderson, our Senior Vice President, Clinical and Regulatory Affairs (age 51); and

 

Richard M. Kimes, our Senior Vice President, Operations (age 56).

This discussion contains forward-looking statements that are based on our current plans, considerations, expectations, and determinations regarding our business objectives and anticipated achievement under existing and future compensation programs. Actual compensation programs that we may adopt in the future may differ materially from currently planned programs as summarized in this discussion.

Compensation Discussion and Analysis

Overview of Executive Compensation Program

Our compensation committee oversees our executive compensation program and determines executive compensation. Our compensation program is intended to align the interests of our executive officers with those of our stockholders by rewarding performance for the achievement of goals as established by the compensation committee. Our compensation approach for

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2017 is tied to successfully commercializing our first product, adequately capitalizing the Company, expanding our clinical trials, and sourcing feasible follow-on products for development and commercialization. Our compensation approach for 2018 is tied to achieving commercialization targets, development of follow-on products, expanding clinical evidence, cash management and talent management.

In an effort to ensure our 2017 executive compensation practices were comparable to those of similar public medical device companies, the compensation committee engaged Marsh & McLennan (“Marsh”), an independent compensation consultant, to provide compensation advisory services that included the following:  

 

an assessment of our executive compensation philosophy and plan structures and objectives;

 

a review and update of our peer group of companies for compensation comparison purposes;

 

a review of market practices related to short-term cash incentive plans and long-term equity and other incentive trends in the medical device industry;

 

the collection of competitive compensation levels for each of our executive positions;

 

an assessment of our executives’ base salaries, cash bonuses, and equity compensation levels;

 

a review of our equity compensation strategy, including the development of award guidelines; and,

 

a review of broader equity trends, including burn rate, share overhang, and share allocation.

The compensation committee oversees, reviews, and approves all compensation programs, initiatives, and decisions relating to our executives. Our compensation program is designed to attract and retain talented employees, to motivate them to achieve our key financial, operational, and strategic goals, and to reward them for superior performance. As we commercialize our first product, add to our senior management team, and continue product development, we expect that the specific direction, emphasis, and components of our executive compensation program will continue to evolve. During 2017, the objectives of the compensation program included:

 

a program structure to attract and retain highly qualified executive officers;

 

guiding principles, including a comparative peer group and targeted market positioning for compensation elements;

 

alignment of executive compensation, individually and as a team, to the long‑term interests of stockholders by rewarding performance for achievements; and,

 

program flexibility to permit the accommodation of appropriate individual circumstances.

Compensation Process

Our compensation committee is responsible for establishing our compensation philosophy and setting the compensation levels for our executives, including base salaries, cash bonuses, and equity‑based incentive awards. To assist the compensation committee in their executive compensation evaluations, our chief executive officer prepares a report at the beginning of each fiscal year recommending base salaries, bonus targets, and equity‑based incentive awards for each executive officer (other than herself). In addition to this report, our compensation committee considers market compensation data presented by Marsh. The compensation committee in its sole discretion may accept or adjust the compensation recommendations it is provided. No executive officer is allowed to be present at the time his or her compensation is being discussed or determined by the compensation committee.

Benchmarking

In the fourth quarter of 2017, as part of Marsh’s advisory services to the compensation committee, Marsh recommended a “peer” group, comprising 19 medical device or medical technology companies for purposes of benchmarking our compensation program in 2018. Each member of the peer group was selected based on an evaluation of the nature and location of its operations, number of employees, revenues and revenue growth, operating income or loss, outstanding securities, and market capitalization. Since we are an early-stage revenue company and are still incurring operating losses, the selection of peer companies focused on those with annual revenues less than $200 million and a market capitalization less than $650 million. The following companies comprised our peer group for 2018:


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AtriCure

Inovio

STAAR Surgical Company

Cardiovascular Systems

Intersect ENT

SurModics

Cerus

Invuity

Tandem Diabetes Care

CryoLife

IRIDEX

Utah Medical Products

Cutera

LeMaitre Vascular

Veracyte

Endologix

Ocular Therapeutix

 

GenMark Diagnostics

Sientra

 

 

A majority of the companies in our 2018 peer group were also part of our 2017 peer group.  Vascular Solutions was removed from the peer group as they were acquired in 2017.  Entellus Medical was also removed as it did not fall within our peer group parameters.  We replaced Vascular Solutions and Entellus Medical with Inovio and Invuity.

The compensation committee reviewed market data made available by Marsh to benchmark our executive compensation relative to the peer group. The compensation committee used this data to evaluate whether our executive compensation levels, including base salary and incentive awards, were within industry norms.

Determination of Executive Compensation

In setting compensation for our executive officers, our compensation committee’s philosophy is to consider market levels of compensation, an executive’s contributions and responsibilities, and the goals and overall progress of the Company. Compensation for this purpose comprises total cash compensation, which includes base salary and annual cash bonus consideration, and long-term equity incentives. With assistance from our compensation consultant, the compensation committee measures our executives’ compensation against the peer group, generally targeting compensation between the 25th and 75th percentile of market.

In addition to market benchmarking, the compensation committee reviews the compensation recommendations of our chief executive officer (other than with respect to determining her own compensation), considers the Company’s overall performance and each executive’s individual contributions during the prior fiscal year, as well as each individual’s annual performance reviews based on achievement of annual goals. With respect to new hires, our compensation committee considers an executive’s background and historical compensation in lieu of prior year performance.

Components of Executive Compensation

Our current executive compensation program consists of the following components:

 

base salary;

 

performance-based cash bonus awards;

 

equity‑based incentives; and,

 

other benefits.

We combine these elements in order to formulate compensation packages that provide competitive pay; reward achievement of financial, operational, and strategic objectives; and, align the interests of our named executive officers with those of our stockholders.

Base Salary:  We provide our executive officers with a base salary to compensate them for the services they provide to the Company. In setting base salaries, our compensation committee considers the executive’s position, our success in achieving prior year corporate goals, the individual’s responsibilities, contributions, and performance during the prior year, relevant market data, and benchmark levels. The evaluations and recommendations proposed by our chief executive officer are also considered. Our compensation committee evaluates and sets base salaries following annual performance evaluations, as well as upon a promotion or other change in responsibility. We expect our compensation committee to continue these policies going forward.

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For 2017, the compensation committee determined to increase the base salaries of the named executive officers between three and five percent from the 2016 levels, based on general economic trends, rather than performance or market data. For 2018, the compensation committee determined to increase base salaries based on performance and market data, as the Company had transitioned to commercialization.  Following are the base salaries for our named executive officers for 2018, 2017 and 2016:

Name and Title

 

2018             Base Salary

 

2017

Base Salary

 

2016
Base Salary

Regina E. Groves, Chief Executive Officer

 

$482,000

 

$414,900

 

$395,000

Brandi L. Roberts, Chief Financial Officer and Secretary

 

339,900

 

330,000

 

N/A (3)

Jeffrey A. Anderson, SVP, Clinical and Regulatory Affairs

 

300,300

 

291,500

 

283,000

Richard M. Kimes, SVP, Operations

 

265,300

 

257,500

 

250,000

Robert K. Schultz, Ph.D., Former President and Chief Operating Officer

 

N/A (1)

 

359,500

 

349,000

Katrina L. Thompson, Former Chief Financial Officer and Secretary

 

N/A (2)

 

298,300

 

284,000

 

(1)

Dr. Schultz’s employment ceased on July 13, 2017.

 

(2)

Ms. Thompson’s employment ceased on September 8, 2017.

 

(3)

Ms. Roberts’ employment commenced on August 28, 2017.

Performance-Based Cash Bonuses:  To help align each executive officer’s efforts with the Company’s operational, financial, and strategic goals, we have utilized a combination of discretionary bonuses and defined programs for cash bonuses. In considering and awarding cash bonuses, our compensation committee considers the executive officer’s position and individual responsibilities, contributions and accomplishments, and performance. The committee also evaluates the Company’s success in achieving corporate goals, relevant market data, and benchmark levels. The recommendations proposed by our chief executive officer are also considered.

The Company’s approach is to ensure individual incentive payments will not be considered an entitlement.

For the year ended December 31, 2017, the compensation committee established a bonus program for the named executive officers; similar to the program established in 2016. The 2017 bonus program was primarily based on the Company’s goals for commercialization of Fantom, product development, clinical trial progress, fundraising and transition from a research-based company to a commercial company. Metrics related to these goals were defined at the beginning of 2017 and assigned individual weighting. Each goal was assigned a target performance metric, as well as a minimum and maximum value. Achievement at target would result in earning 100 percent of that goal’s bonus value; achievement of the minimum criteria would result in earning 85 percent and achievement of the maximum criteria would result in earning 110 percent of the goals’ bonus values.  Achievement of goals was measured each quarter, with final measurement at December 31, 2017. Bonuses achieved under the 2017 program were paid out in February 2018.

Following is a summary of the Company’s 2017 bonus program goals, metrics, and the 2017 result by metric:

Company Goal

 

Weight

 

2017
Achievement

Commercialization of Fantom

 

30%

 

26.0%

Progress on product development and clinical trials

 

30%

 

25.5%

Fundraising status and business position

 

30%

 

25.5%

Organizational transition

 

10%

 

10.0%

 

 

 

 

 

Total Program Metrics

 

100%

 

87.0%

The 2017 Company goal achievement result applied universally to all executives; however, each executive was assigned an individual bonus target level, stated as a percent of base salary, to which the goal achievement applied.

At its meeting on January 21, 2018, the compensation committee determined to continue a bonus program for the named executive officers, similar in structure to the 2017 program with defined company goals, weighting, and target, minimum, and maximum potential for each goal. The compensation committee also considered and set the 2018 individual bonus target levels at that meeting.

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Following is a summary of the 2017 bonus program and the 2018 individual bonus targets:

 

 

2017 Bonus Program

 

 

2018 Bonus Program

 

Name and Title

 

Bonus Target

(% of Salary)

 

 

Amount at Target

 

 

Amount Earned

 

 

Bonus Target

(% of Salary)

 

 

Amount at Target

 

Regina E. Groves

 

 

50

%

 

$

207,450

 

 

$

180,482

 

 

 

75

%

 

$

361,500

 

Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brandi L. Roberts (1)

 

 

40

%

 

 

50,268

 

 

 

44,186

 

 

 

50

%

 

 

169,950

 

Chief Financial Officer and Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jeffrey A. Anderson

 

 

35

%

 

 

102,025

 

 

 

89,680

 

 

 

35

%

 

 

105,105

 

SVP, Clinical and Regulatory Affairs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Richard M. Kimes

 

 

35

%

 

 

90,125

 

 

 

79,220

 

 

 

35

%

 

 

92,855

 

SVP, Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert K. Schultz, Ph.D. (2)

 

 

35

%

 

 

125,825

 

 

N/A

 

 

N/A

 

 

N/A

 

Former President and Chief Operating Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Katrina L. Thompson (3)

 

 

35

%

 

 

104,405

 

 

N/A

 

 

N/A

 

 

N/A

 

Former Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Ms. Roberts’ employment commenced on August 28, 2017 and her bonus was pro-rated accordingly.

 

(2)

Dr. Schultz’s employment ceased on July 13, 2017.  No bonus was earned for 2017.

 

(3)

Ms. Thompson’s employment ceased on September 8, 2017.  No bonus was earned for 2017.

Equity‑Based Incentives:  In addition to base salary, we provide long‑term equity‑based incentives to our executives. These equity-based awards generally consist of options to purchase shares of our common stock, and in some cases, shares of restricted stock or restricted stock units (“RSUs”). We believe that equity-based incentives help further our compensation objectives by encouraging our executives to remain with us through at least the vesting period for these awards and providing them with an incentive to continue to focus on our long‑term financial performance and to build stockholder value.

Historically, our executive officers have received grants of equity awards at the time of hire or promotion, on an annual basis, and occasionally on an ad‑hoc basis. The grants of equity awards are made in accordance with our 2010 Equity Incentive Plan, as amended (the “2010 Plan”).

During the year ended December 31, 2017, our Board granted equity-based incentives to our named executive officers as follows:

 

Regina E. Groves, Chief Executive Officer – options to purchase 234,000 shares of common stock (subject to vesting over a 4-year period) and 117,000 RSUs (subject to vesting over a 3-year period).

 

Brandi L. Roberts, Chief Financial Officer and Secretary – options to purchase 190,000 shares of common stock (subject to vesting over a 4-year period).

 

Jeffrey A. Anderson, SVP, Clinical and Regulatory Affairs - options to purchase 41,000 shares of common stock (subject to vesting over a 4-year period) and 20,500 RSUs (subject to vesting over a 3-year period).

 

Richard M. Kimes, SVP, Operations – options to purchase 41,000 shares of common stock (subject to vesting over a 4-year period) and 20,500 RSUs (subject to vesting over a 3-year period).

 

Robert K. Schultz, Ph.D., Former President and Chief Operating Officer – while still an employee, options to purchase 41,000 shares of common stock (subject to vesting over a 4-year period) and 20,500 RSUs (subject to vesting over a 3-year period).  At Dr. Schultz’s separation date, these equity awards were forfeited as they had not vested.  Dr. Schultz was also granted 75,000 RSUs as part of a consulting agreement, vesting in full on June 30, 2018, subject to certain performance requirements.

 

Katrina L. Thompson, Former Chief Financial Officer and Secretary while still an employee, options to purchase 52,600 shares of common stock (subject to vesting over a 4-year period) and 26,300 RSUs (subject to vesting over a 3-year period).  At Ms. Thompson’s separation date, these equity awards were forfeited as they had not vested.  Ms. Thompson was also granted 75,000 RSUs as part of a consulting agreement, vesting in full on June 30, 2018, subject to certain performance requirements.

We plan to continue to grant equity incentive awards, including stock options, restricted stock, and/or restricted stock units, to our executive officers upon hire, following promotions, and on an annual or occasional basis. The guidelines for initial grants are based on the executive’s position and the guidelines for annual grants are designed to partially replace the

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number of equity awards initially granted to the executive at hiring that vest after one year. For new hires, we also will consider the executive’s background and historical compensation when determining the equity incentive to grant or award. The actual number of options or shares of stock for an executive may be higher or lower than these guidelines, based on individual performance or extraordinary achievements.

Stock and Option Grant Practices:  All equity awards to our employees, consultants, and directors have been granted at no less than the fair market value on the date of the award or grant. The amount of realizable value related to such grants and awards is determined by our stock price following the dates of vesting and, therefore, will be determined by our financial performance in the time after award but prior to vesting. Whether the stock price moves up or down shortly after an award date is largely irrelevant for purposes of the equity awards.

The exercise price of any option grant and the value of any restricted stock or RSU award are determined by reference to the fair market value of the underlying shares, which the 2010 Plan defines as the closing price of our common stock. The closing price of our common stock is calculated in U.S. dollars based on the closing price of our CDIs traded on the ASX on the date of grant or award. However, because options have been, and will continue to be, granted at fair market value, such options only have cash value to the holder to the extent that the price of our common stock increases during the term of the option. Restricted stock awards and RSUs generally have cash value equal to the current stock price.

All vesting of equity-based incentive awards is subject to continued service to the Company. Certain stock options were granted that allow immediate exercise; any common stock issued upon exercise of those stock options is subject to a lapsing right of repurchase until fully vested. All options have a 10‑year term; RSUs typically vest over 3 to 5-year periods, or upon achievement of specific performance criteria. Additional information regarding accelerated vesting prior to, upon, or following a change in control is discussed below under “Potential Payments upon Termination or Change in Control.”

Severance and Change of Control Benefits

We have entered into employment agreements that require specific payments and benefits to certain executive officers in the event their employment is terminated following a change of control or in the event their employment is terminated without cause or by the executive for good reason. See “Employment Agreements” below.

Other Benefits

In order to attract and retain qualified individuals and pay market levels of compensation, we have historically provided, and will continue to provide, our executives with the following benefits:

 

Health Insurance – We provide each of our executives and their spouses and children the same health, dental, and vision insurance coverage that we make available to our other eligible employees.

 

Life and Disability Insurance – We provide each of our executives with the same life and disability insurance as we make available to our other eligible employees.

 

Pension Benefits – We do not provide pension arrangements or post‑retirement health coverage for our executives or employees. Our executives and other eligible employees may participate in our 401(k) defined contribution plan. We currently provide matching contributions equal to 25 percent of an employee’s deferral amount, to a maximum four percent of the employee’s salary, to the statutory limits.

 

Nonqualified Deferred Compensation – We do not provide any nonqualified defined contribution or other deferred compensation plans to any of our employees.

 

Perquisites – We limit the perquisites that we make available to our executive officers. Our executives are entitled to relocation expenses on their initial hire and other benefits with de minimis value that are not otherwise available to all of our employees.

 

Employment Agreements

Regina E. Groves:  In August 2015, we entered into an employment agreement with Ms. Groves to serve as our chief executive officer. Ms. Groves’ offer letter provided for, among other things:  (i) an annual base salary, subject to annual review; (ii) eligibility to participate in the Company’s bonus plan, with half of her 2016 bonus guaranteed, provided employment continued through December 31, 2016; (iii) award of options to purchase shares of our common stock at an exercise price equal to the fair market value on the grant date; (iv) reimbursement for monthly expenses of up to $3,000 for commuting and up to $3,000 for housing in San Diego until such time as Ms. Groves relocates from her residence in Minnesota to San Diego, California; (v) moving allowance of $50,000, provided relocation occurs prior to receipt of CE Mark on Fantom (during 2018, the Board of Directors extended this timeframe to December 31, 2018); (vi) reimbursement of pre-employment legal fees of up to $7,500; and (vii) four weeks of paid vacation annually. In the event Ms. Groves’

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employment is terminated Without Cause or if she resigns for Good Reason (both as defined in the employment agreement), we will pay Ms. Groves severance equal to (i) 12 months of base salary and (ii) continuation in our medical and dental insurance plans for 12 months. The offer letter also provides immediate vesting of all stock options upon a Change in Control (as defined in the employment agreement).

Brandi L. Roberts:  In August 2017, we entered into an employment offer letter with Ms. Roberts to serve as our Chief Financial Officer. Ms. Roberts’ offer letter provides for, among other things: (i) an annual base salary subject to annual review; (ii) eligibility to participate in the Company’s bonus plan; (iii) award of options to purchase shares of our common stock at an exercise price equal to the fair market value on the grant date and (iv) reimbursement of pre-employment legal fees of up to $2,000.  In the event Ms. Roberts’ employment terminates, any options exercised prior to vesting that have not become vested will be subject to a repurchase right by us at the lesser of cost or fair market value. In addition, in the event Ms. Roberts’ employment is terminated Without Cause or if she resigns for Good Reason (both as defined in the employment offer letter), we will pay Ms. Roberts severance equal to (i) six months of base salary and (ii) continuation in our medical and dental insurance plans for six months. The amounts of severance payments are increased to nine months after the one-year anniversary of Ms. Roberts’ employment.  The offer letter also provides immediate vesting of all stock options upon a Change in Control (as defined in the employment agreement).

Jeffrey A. Anderson:  In February 2011, we entered into an employment offer letter with Mr. Anderson, to serve as our Vice President of Clinical and Regulatory Affairs (Mr. Anderson was promoted to Senior Vice President in December 2013). Mr. Anderson’s offer letter provides for, among other things: (i) an annual base salary subject to annual review; (ii) eligibility to participate in the Company’s bonus plan; and, (iii) award of options to purchase shares of our common stock at an exercise price equal to the fair market value on the grant date. In the event Mr. Anderson’s employment terminates, any options exercised prior to vesting that have not become vested will be subject to a repurchase right by us at the lesser of cost or fair market value. In addition, in the event Mr. Anderson’s employment is terminated Without Cause or if he resigns for Good Reason (both as defined in the employment offer letter), we will pay Mr. Anderson severance equal to (i) three months of base salary and (ii) continuation in our medical and dental insurance plans for three months.

Robert K. Schultz, Ph.D.:  In October 2010, we entered into an employment offer letter with Dr. Schultz to serve as our Chief Operating Officer. Upon Dr. Schultz’s resignation in July 2017, we paid Dr. Schultz severance equal to (i) six months of base salary and (ii) continuation in our medical and dental insurance plans for six months. Dr. Schultz elected to take the salary portion of the severance payment over 13 bi-weekly pay periods.  $152,096 of the salary amount was paid in 2017, with the remainder paid in January 2018.  All of the medical and dental insurance payments were made in 2017.

Katrina L. Thompson:  In October 2010, we entered into an employment offer letter with Ms. Thompson to serve as our Chief Financial Officer.  Upon Ms. Thompson’s resignation in September 2017, we paid Ms. Thompson severance equal to (i) six months of base salary, (ii) an additional negotiated payment ($25,000), and (iii) continuation in our medical and dental insurance plans for six months. Ms. Thompson elected to take the salary portion of the severance payment, as well as the $25,000 additional payment, over 13 bi-weekly pay periods.  $80,377 of the salary amount was paid in 2017, with the remainder to be paid by March 2018.  $1,753 of the medical and dental insurance payments were made in 2017 with the remainder to be paid by March 2018.

CEO Pay Ratio

We are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Ms. Groves, our CEO. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records.

 

For 2017, our last completed fiscal year:

 

 

the median of the annual total compensation of all employees of our company (other than our CEO), was $80,000 and

 

the annual total compensation of our CEO, as reported in the Summary Compensation Table presented elsewhere in this Proxy Statement, was $2,628,988.

 

Based on this information, for 2017 the ratio of the annual total compensation of Ms. Groves, our CEO, to the median of the annual total compensation of all employees was 33 to 1.

 

To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of the "median employee," the methodology and the material assumptions, adjustments, and estimates that we used were as follows:

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We determined that, as of December 31, 2017, our employee population consisted of 51 employees, with 48 based in the United States and 3 based in Europe.

 

We selected December 31, 2017, which is within the last three months of 2017, as the date upon which we would identify the "median employee".

 

For all employees, we examined total compensation, which included: base salary, incentive compensation plan payments for non-sales employees, sales incentive compensation plan payments for sales employees, equity awards consisting of stock options and restricted stock units, and other compensation such as 401(k) matching contributions and Company-paid life insurance premiums.

 

We annualized the compensation of all permanent employees who were not employed by us for all of 2017.

 

Since nearly all of our employees are located in the United States, we did not make any cost-of-living adjustments in identifying the "median employee."

 

For employees outside the United States, we converted their compensation to U.S. dollars using the average exchange rate for 2017.

 

Compensation Committee Report

The compensation committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management and, based on such review and discussion, the compensation committee recommended to the Board that it be included in this Proxy Statement.

By the Compensation Committee of the Board of Directors on March 21, 2018:

Brian H. Dovey (Chair)

Ross A. Breckenridge

Robert B. Thomas

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2017 Summary Compensation Table

The following table presents the compensation provided during 2017 to our principal executive officer, our principal financial officer, our two other executive officers as of December 31, 2017 and our former president and chief operating officer and former chief financial officer. We refer to these executive officers as our “named executive officers.”

Name & Principal Position

 

Year

 

Salary

 

 

Bonus

 

 

Stock or RSU Awards (1)

 

 

Option Awards (1)

 

 

Non-Equity Incentive Plan Comp

 

 

All Other Comp

 

 

Total Compensation

 

Regina E. Groves (2)

 

2017

 

$

414,900

 

 

$

 

 

$

871,943

 

 

$

1,078,740

 

 

$

180,482

 

 

$

82,923

 

(9)

$

2,628,988

 

Chief Executive Officer

 

2016

 

 

395,000

 

 

 

 

 

 

 

 

 

1,494,900

 

 

 

162,740

 

 

 

76,298

 

(9)

 

2,128,938

 

 

 

2015

 

 

94,952

 

 

 

39,500

 

 

 

 

 

 

4,158,300

 

 

 

 

 

 

28,734

 

(9)

 

4,321,486

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brandi L. Roberts (3)

 

2017

 

 

113,918

 

 

 

 

 

 

 

 

 

668,825

 

 

 

44,186

 

 

 

14,778

 

(10)

 

841,707

 

Chief Financial Officer, SVP and Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jeffrey A. Anderson

 

2017

 

 

291,500

 

 

 

 

 

 

158,055

 

 

 

195,980

 

 

 

89,680

 

 

 

5,982

 

(11)

 

741,197

 

SVP, Clinical and Regulatory Affairs

 

2016

 

 

283,000

 

 

 

 

 

 

 

 

 

 

 

 

87,447

 

 

 

5,932

 

(11)

 

376,379

 

 

 

2015

 

 

282,077

 

 

 

85,000

 

 

 

469,640

 

 

 

72,100