def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§240.14a-12
UNILIFE CORPORATION
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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October 14,
2011
Dear Stockholder:
You are cordially invited to attend this years annual
meeting of stockholders to be held on Thursday, December 1,
2011, at 4:00 P.M., U.S. Eastern Standard Time
(8:00 A.M. Australian Eastern Daylight Time on Friday,
December 2, 2011), at the Intercontinental New York
Barclay, 111 East
48th
Street, New York, New York 10017. The meeting will be
broadcast via the Investor Relations section of our website
www.unilife.com as a live listen only webcast.
All stockholders and CDI holders are cordially invited to
attend the meeting in person. Whether or not you expect to
attend the meeting, we urge you to submit your proxy card or
CHESS Depository Interest (CDI) voting instruction form as
soon as possible so that your shares (or shares underlying your
CDIs) can be voted at the meeting in accordance with your
instructions. For specific instructions on voting, please refer
to the instructions on the proxy card or CDI voting instruction
form.
We are furnishing our proxy materials over the Internet.
Therefore, you will not receive paper copies of our proxy
materials. We will instead send you a notice with instructions
for accessing the proxy materials and voting via the Internet.
The notice also provides instructions on how you may obtain
copies of the proxy materials if you so choose.
Whether or not you plan to attend the meeting, your vote is
very important and we encourage you to vote promptly. As a
Delaware corporation and under our bylaws, a minimum of
one-third of our outstanding shares of common stock (including
shares underlying our outstanding CDIs) must be present in
person or represented by proxy at the meeting in order for the
meeting to be considered valid. You may vote your shares (or
direct the CDI depositary to vote if you hold your shares in the
form of CDIs) online or by mailing a completed proxy card or CDI
voting instruction form if you elect to receive the proxy
materials by mail. Instructions regarding each method of voting
are provided on the proxy card and the 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 the meeting.
Sincerely yours,
Slavko James Joseph Bosnjak
Chairman of the Board
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON DECEMBER 1, 2011
AT 4:00 P.M.
(U.S. EASTERN STANDARD
TIME)
TO THE STOCKHOLDERS:
Notice is hereby given that the annual meeting of stockholders
of Unilife Corporation, a Delaware corporation, will be held on
Thursday, December 1, 2011, at 4:00 P.M.,
U.S. Eastern Standard Time, (8:00 A.M. Australian
Eastern Daylight Time on Friday, December 2, 2011) at
the Intercontinental New York Barclay, 111 East
48th
Street, New York, New York 10017, for the following purposes:
1. To elect seven directors, identified in the accompanying
proxy statement, to hold office until our annual meeting of
stockholders to be held in 2012 and until his or her successor
is duly elected and qualified, or until his or her earlier
resignation or removal (Proposal No. 1);
2. To ratify the appointment of KPMG LLP as our independent
registered public accounting firm for the fiscal year ending
June 30, 2012 (Proposal No. 2);
3. To consider and act on an advisory vote regarding the
approval of compensation paid to certain executive officers
(Proposal No. 3);
4. To consider and act on an advisory vote regarding the
frequency of stockholder approval of the compensation paid to
certain executive officers
(Proposal No. 4);
5. For the purposes of ASX Listing Rule 10.14 and for
all other purposes, to approve the grant of up to 45,000
securities to Slavko James Joseph Bosnjak (which
Mr. Bosnjak may elect to take in the form of shares of
common stock or phantom stock units) on the terms set out in the
accompanying proxy statement;
6. For the purposes of ASX Listing Rule 10.14 and for
all other purposes, to approve the grant of up to 45,000
securities to Jeff Carter (which Mr. Carter may elect to
take in the form of shares of common stock or phantom stock
units) on the terms set out in the accompanying proxy statement;
7. For the purposes of ASX Listing Rule 10.14 and for
all other purposes, to approve the grant of up to 45,000
securities to William Galle (which Mr. Galle may elect to
take in the form of shares of common stock or phantom stock
units) on the terms set out in the accompanying proxy statement;
8. For the purposes of ASX Listing Rule 10.14 and for
all other purposes, to approve the grant of up to 45,000
securities to John Lund (which Mr. Lund may elect to take
in the form of shares of common stock or phantom stock units) on
the terms set out in the accompanying proxy statement;
9. For the purposes of ASX Listing Rule 10.14 and for
all other purposes, to approve the grant of up to 45,000
securities to Mary Katherine Wold (which Ms. Wold may elect
to take in the form of shares of common stock or phantom stock
units) on the terms set out in the accompanying proxy statement.
10. For the purposes of ASX Listing Rule 10.14 and for
all other purposes, to approve the grant of up to 45,000
securities to Marc Firestone (which Mr. Firestone may elect
to take in the form of shares of common stock or phantom stock
units) on the terms set out in the accompanying proxy statement;
11. For the purposes of ASX Listing Rule 10.14 and for
all other purposes, to approve the grant of up to 1,916,000
securities (in the form of 1,166,000 shares of restricted
stock and 750,000 stock options) to Alan D. Shortall on the
terms set out in the accompanying proxy statement;
12. For the purposes of ASX Listing Rule 7.2
(Exception 9) and for all other purposes, to approve the
2009 Stock Incentive Plan, as proposed to be amended;
13. 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 stockholders vote
FOR the re-election of each of the directors named
in Proposal No. 1 and FOR
Proposals No. 2-3
and 5-11, excluding Slavko James Joseph Bosnjak (with respect to
Proposal No. 5 only), Jeff Carter (with respect to
Proposal No. 6 only), William Galle (with respect to
Proposal No. 7 only), John Lund (with respect to
Proposal No. 8 only), Mary Katherine Wold (with
respect to Proposal No. 9 only), Marc Firestone (with
respect to Proposal No. 10 only), and Alan D. Shortall
(with respect to Proposal No. 11 only), who abstain
from making a recommendation with respect to the proposal in
parentheses after their name due to their personal interest in
that proposal. The board of directors recommends that
stockholders vote for THREE YEARS with respect to
Proposal No. 4. Our board of directors does not make a
recommendation with respect to Proposal No. 12 due to
their interest in the outcome of that proposal.
Stockholders of record as of the close of business on
October 7, 2011 (U.S. Eastern Daylight Time), the
record date for the meeting, are entitled to receive notice of,
and to vote at, the meeting and any adjournment or postponement
of the meeting. Record holders of 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
enclosed 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 CDI holders at the meeting in
accordance with the instructions received via the CDI voting
instruction form or online.
The proxy statement that accompanies and forms part of this
notice of meeting provides information in relation to each of
the matters to be considered. This notice of 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 adviser prior to voting.
By order of the Board of Directors,
J. Christopher Naftzger
Vice President, General Counsel, Corporate Secretary &
Chief Compliance Officer
October 14, 2011
IMPORTANT: To assure that your shares are
represented at the meeting, please vote (or, for CDI holders,
direct CDN to vote) your shares via the Internet or by marking,
signing, dating and returning the enclosed proxy card or CDI
voting instruction form to the address specified, or, for the
holders of our common stock only, via telephone. 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.
TABLE OF
CONTENTS
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A-1
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AT
4:00 P.M. U.S. EASTERN STANDARD TIME ON DECEMBER 1,
2011 (8:00 A.M. Australian Eastern Daylight Time
December 2, 2011): A complete set of proxy materials
relating to our meeting is available on the Internet. These
materials, consisting of the Notice of Meeting, Proxy Statement,
proxy card, CDI voting instruction form and Annual Report on
Form 10-K
for the fiscal year ended June 30, 2011, may be viewed and
printed at www.unilife.com. If you are a CDI holder, you
may be also view and print these materials online at
www.investorvote.com.au.
UNILIFE
CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 1, 2011
(U.S. EASTERN STANDARD
TIME)
The accompanying proxy is solicited by the board of directors of
Unilife Corporation, a Delaware corporation (the
Company), for use at our annual meeting of
stockholders to be held at 4:00 P.M. U.S. Eastern
Standard Time on Thursday, December 1, 2011
(8:00 A.M. Australian Eastern Daylight Time on
December 2, 2011), or any adjournment or postponement
thereof, for the purposes set forth in the accompanying Notice
of Meeting of Stockholders.
A Notice of Internet Availability of Proxy Materials is being
mailed to our stockholders on or about October 19, 2011.
INTERNET
AVAILABILITY OF PROXY MATERIALS
A complete set of proxy materials relating to our meeting is
available on the Internet. These materials, consisting of the
Notice of Meeting, Proxy Statement, proxy card, CDI voting
instruction form and Annual Report on
Form 10-K
for the fiscal year ended June 30, 2011, may be viewed and
printed at www.envisionreports.com/unis. If you are a CDI
holder, you may also view and print these materials online at
www.investorvote.com.au.
SOLICITATION
AND VOTING
Voting
Rights and Procedures
Only those stockholders or CDI holders of record as of the close
of business on October 7, 2011 (U.S. Eastern Daylight
Time), the record date, will be entitled to vote at the meeting
and any adjournment or postponement thereof. Those persons
holding CDIs are entitled to receive notice of and attend the
meeting and may instruct CDN to vote at the meeting by following
the instructions on the CDI voting instruction form or by voting
online at www.investorvote.com.au.
As of the record date, we had 64,270,656 shares of common
stock outstanding (equivalent to 385,623,936 CDIs assuming all
shares of common stock were converted into CDIs on the record
date), all of which are entitled to vote with respect to all
matters to be acted upon at the meeting, except to the extent of
the voting exclusions for Proposals No. 5
12 described below. Each stockholder as of the close of business
on the record date is entitled to one vote for each share of
common stock held by such stockholder. Each CDI holder as of the
close of business on the record date is entitled to direct CDN
to vote one share for every six CDIs held by such holder.
One-third of the outstanding shares of our common stock entitled
to vote, whether present in person or represented by proxy,
shall constitute a quorum for the transaction of business at the
meeting. Votes for and against, abstentions and broker
non-votes (shares held by a broker or nominee that does
not have discretionary voting authority and has not received
instructions as to how to vote on a particular proposal) will
each be counted as present and entitled to vote for the purposes
of determining whether a quorum is present.
The following describes how you may vote on each proposal and
the votes required for approval of each proposal:
Proposal No. 1 Our seven director nominees
will be elected by a plurality of votes. You may vote for each
director nominee or withhold your vote from one or more of the
nominees. Withholding a vote as to any director nominee is the
equivalent of abstaining. In an uncontested election such as
this, abstentions and broker non-votes have no effect, since
approval by a specific percentage of the shares present or
outstanding is not required.
Proposals No. 2 and 3 and Proposals No. 5
through 12 The affirmative vote of the holders of a
majority in voting power of the shares of common stock present
in person or represented by proxy at the meeting and
entitled to vote on the matter must be obtained in order to
approve each of these proposals. You may vote for or against the
proposal or you may abstain from voting. Abstentions will not be
counted as affirmative votes and will have the same effect as
AGAINST votes, and broker non-votes will not be counted as
entitled to vote and will have no effect on the outcome of such
proposals.
Proposal No. 4 With respect to the
non-binding advisory vote on the frequency of the advisory vote
on executive compensation, stockholders will be considered to
have expressed a frequency preference for the alternative that
receives the most votes. You may vote for a frequency of every
one year, two years, or three years. Abstentions and broker
non-votes will not affect the outcome of the vote on this
proposal.
Solicitation
of Proxies
We will pay the entire cost of preparing, assembling, printing,
mailing, and distributing these proxy materials. If you choose
to vote over the Internet, you are responsible for Internet
access charges you may incur. In addition to the mailing of
these proxy materials, the solicitation of proxies or votes may
be made in person, by telephone or by electronic communication
by our directors, officers and employees, who will not receive
any additional compensation for such solicitation activities. In
addition to soliciting stockholders through our employees, we
will request banks, brokers and other intermediaries holding
shares of our common stock beneficially owned by others to
solicit the beneficial owners and will reimburse them for their
reasonable expenses in so doing.
Voting
Instructions
All shares of our common stock represented by properly executed
proxies received before the times indicated on the proxy will,
unless the proxies are revoked, be voted in accordance with the
instructions indicated on those proxies. If no instructions are
indicated on the proxy, the shares will be voted as the proxy
holder nominated on the proxy card determines, or, if no person
is nominated, the shares will be voted FOR each
proposal, except for Proposal No. 4 in which case the
shares will be voted for THREE YEARS. The persons
named as proxies will vote on any other matters properly
presented at the meeting in accordance with their best judgment.
A stockholder giving a proxy has the power to revoke his or her
proxy at any time before it is exercised by delivering to the
Corporate Secretary of Unilife Corporation, 250 Cross Farm Lane,
York, Pennsylvania 17406, a written notice revoking the proxy or
a duly executed proxy with a later date, or by attending the
meeting and voting in person. Attendance at the meeting will
not, in and of itself, constitute revocation of a proxy.
Shares held directly in your name as the stockholder of record
may be voted in person at the meeting. If you choose to vote in
person, please bring proof of identification. Even if you plan
to attend the meeting, we recommend that you vote your shares in
advance as described below so that your vote will be counted if
you later decide not to attend. Shares held in street name
through a brokerage account or by a bank or other nominee may be
voted in person by you if you obtain a valid proxy from the
record holder giving you the right to vote the shares. CDI
holders may attend the meeting, but cannot vote in person at the
meeting.
Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may vote without attending the
meeting. Whether you hold shares directly as the stockholder of
record or beneficially in street name, you may direct how your
shares are voted as follows:
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If you are a stockholder of record, you may vote by proxy. You
can vote by proxy over the Internet or telephone by following
the instructions provided on the proxy card or can vote by proxy
by mail pursuant to instructions provided on the proxy card.
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If your shares are held in a stock brokerage account or by a
bank or other nominee, you have the right to direct your broker
or other nominee on how to vote the shares in your account. If
you hold shares beneficially in street name, you may vote by
proxy over the Internet or telephone by following the
instructions provided on the Proxy Card or may vote by mail by
following the voting instruction card provided to you by your
broker, bank, trustee or nominee.
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Under Delaware law, votes cast by Internet have the same effect
as votes cast by submitting a written proxy card.
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Special
Instructions for CDI Holders
Specific instructions to be followed by any CDI holder
interested in directing CDN to vote the shares underlying their
CDIs are set forth on the CDI voting instruction form. The
Internet voting procedures for CDI holders are designed to
authenticate the CDI holders identity and to allow the CDI
holder to direct CDN to vote his or her shares and confirm that
his or her voting instructions have been properly recorded.
CDI holders may direct CDN to vote their underlying shares at
the meeting by following the instructions in the CDI voting
instruction form and voting online at
www.investorvote.com.au or by returning the CDI voting
instruction form to Computershare, being the agent we designated
for the collection and processing of voting instructions from
our CDI holders, no later than 4:00 A.M. on
November 28, 2011 U.S. Eastern Standard Time
(8:00 P.M. on November 28, 2011 Australian Eastern
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. If you
direct CDN to vote by completing the CDI voting instruction
form, you may revoke those directions by delivering to
Computershare, no later than 4:00 A.M. on November 28,
2011 U.S. Eastern Standard Time (8:00 P.M. on
November 28, 2011 Australian Eastern Daylight Time), a
written notice of revocation bearing a later date than the CDI
voting instruction form previously sent.
CDI holders may attend the meeting, but cannot vote in person
at the meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The terms of office of each of our current directors will expire
at the meeting. Our board has determined to nominate for
re-election each of our current directors for a one-year term.
Directors are elected by a plurality (i.e., nominees with
the highest number of votes for their re-election will be
elected as directors) of votes present or represented by proxy
and entitled to vote at the meeting. Shares represented by
validly executed proxies will be voted, if authority to do so is
not withheld, for the election of each of the nominees. If any
of the nominees is unexpectedly unavailable for election, these
shares will be voted for the election of a substitute nominee
proposed by our nominating and corporate governance committee or
our board may determine to reduce the size of our board. Each
person nominated for election has agreed to serve if elected.
Set forth below is biographical information for the nominees as
well as the key attributes, experience and skills that the board
believes such nominee brings to the board. Please note that the
tenure of the nominees on the Unilife board described below
includes service on the board of Unilife Medical Solutions
Limited (UMSL), our Australian predecessor.
Slavko James Joseph Bosnjak
(age 62). Mr. Bosnjak has served as our
director since February 2003 and as chairman of our board since
April 2006. Mr. Bosnjak has been a co-owner and director of
the Le Meridien Lav Hotel in Split, Croatia since 2002 and is
chairman and co-founder of Ultimate Outdoor Ltd., an Australian
outdoor advertising company. Mr. Bosnjak is chairman of
Chiron Commercial Vehicles Pty Ltd. a Malaysian company which
manufactures bus bodies for export to Australia. He has also
held positions on Commonwealth and New South Wales government
advisory bodies, including the Greater Western Sydney Economic
Development Board, and the GROW Employment Council.
Mr. Bosnjak also served as the Chairman of the Tourism
Council of Australia and Bus 2000 Ltd., which coordinated bus
services for the Sydney 2000 Olympic Games. Mr. Bosnjak was
awarded an Order of Australia Medal in 1994 for his services to
transport and the community, and also holds an honorary
doctorate from the University of Western Sydney for his services
related to employment growth and economic development. Our board
believes that Mr. Bosnjaks broad government and
investment experience in numerous industries across Australia,
Asia and Europe, as well as his long history with us and deep
knowledge of our business, make him well-suited to serve as a
director.
Alan D. Shortall
(age 58). Mr. Shortall has served as
our chief executive officer since September 2002.
Mr. Shortall founded Unilife in July 2002 and has guided
the growth of Unilife since then. In 2008, the trade magazine
Medical Device and Diagnostic Industry named him as one
of 100 Notable People in the medical device industry worldwide.
Our board believes that Mr. Shortalls strategic
vision and intimate understanding of our safety syringe
technology and products, as well as his substantial marketing
and commercial experience, make him well-suited to serve as a
director.
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John Lund (age 45). Mr. Lund has
served as our director since November 2009. Mr. Lund has
also served as managing partner of M&A Holdings, LLC, a
private consulting company since July 2003, and Upstart CFO, LLC
since December 2010. Mr. Lund was vice president of finance
and controller of
E-rewards,
Inc., an internet market research company from February 2009 to
March 2011, vice president and controller of Nexstar
Broadcasting Group, Inc., a NASDAQ listed television
broadcasting company, from March 2008 to November 2008, vice
president of finance and corporate controller of LQ Management,
LLC (LaQuinta) from November 2006 to March 2008,and corporate
controller of ExcellerateHRO, a Hewlett Packard company, from
January 2005 to October 2006. Prior to that, Mr. Lund held
chief financial officer and controller positions for various
public and private companies, and was a manager at KPMG.
Mr. Lund received the Certificate of Director Education
from the National Association of Corporate Directors (NACD)
and completed various corporate governance courses at Harvard
during 2010. Mr. Lund, a certified public accountant,
graduated from University of North Texas in 1991 and is
currently completing an MBA at Kellogg School of Management.
Mr. Lund is actively involved in the NACD, Financial
Executive Institute, American Institute of Certified Public
Accountants and the Texas Society of Certified Public
Accountants. Our board believes that Mr. Lunds
expertise in finance and accounting and his experience with
corporate transactions and publicly listed companies make him
well-suited to serve as a director.
William Galle (age 72). Mr. Galle
has served as our director since June 2008. Mr. Galle was
also an independent director of American Marketing Complex in
New York City from October 2007 to December 2009. Since 2009,
Mr. Galle has been affiliated as an investment banker with
Bradley Woods, a 40 year-old New York City-based
independent research and investment banking firm specializing in
federal regulatory and legislative developments impacting
substantial investor portfolios. Since 1993, Mr. Galle has
been president of Diversified Portfolio Strategies LLC in
Washington D.C., which provides alternative investment advisory
services for institutions and substantial investors. Prior
thereto, he was vice president of pension services at Smith
Barney, Harris Upham and director of corporate services at
NASDAQ in Washington, D.C. Mr. Galle is a graduate of
Columbia University, Rutgers University, and the New York
Institute of Finance. Our board believes that
Mr. Galles investment advisory experience makes him a
qualified member of the board.
Jeff Carter (age 53). Mr. Carter has
served as our director since April 2006. From February 2005
until January 2009, Mr. Carter served as chief financial
officer of UMSL. He also served as company secretary of UMSL
from March 2007 to July 2010. Mr. Carter is a chartered
accountant and holds a masters degree in applied finance
from Macquarie University. Mr. Carter was a chief financial
officer of various publicly listed healthcare companies prior to
joining UMSL in February 2005. Prior to entering the healthcare
industry Mr. Carter held Senior Management positions with
Coca Cola, Santos, Canadian Imperial Bank of Commerce and Touche
Ross. Mr. Carter has in excess of 30 years experience
in professional accounting, investment banking, corporate
finance and commercial/strategic planning roles. Our board
believes that Mr. Carters experience in financial and
management roles, with a strong background in the healthcare
industry, make him a valuable member of the board.
Mary Katherine Wold
(age 58). Ms. Wold has served as our
director since May 2010. Ms. Wold serves as chief executive
officer of the Church Pension Fund, which oversees defined
benefit and defined contribution pension plans for clergy and
lay employees of the Episcopal Church. Prior to her position at
the Church Pension Fund, Ms. Wold served as senior vice
president of finance from 2007 to 2009, senior vice president of
tax and treasury from 2005 to 2007 and vice president of tax
from 2002 to 2005, of Wyeth, a NYSE-listed pharmaceutical
company, which was acquired by Pfizer in October 2009. Prior
thereto, Ms. Wold spent 17 years with the
international law firm of Shearman & Sterling based in
New York, specializing in international tax planning for
multinational corporations and in the tax aspects of mergers and
acquisitions, capital markets and private equity transactions.
Ms. Wold received her law degree from the University of
Michigan and her Bachelor of Arts degree from Hamline
University. Our board believes that Ms. Wolds
knowledge in financial, tax, and treasury matters along with her
broad experience in global operations at one of the worlds
largest pharmaceutical companies make her a valuable member of
the board.
Marc S. Firestone
(age 51). Mr. Firestone has served as
our director since July 2010. Mr. Firestone serves as
executive vice president of corporate & legal affairs
and general counsel for Kraft Foods Inc., a Fortune
100 company. Prior to his position at Kraft Foods,
Mr. Firestone held senior executive positions at Philip
Morris Companies and its subsidiaries, including as senior vice
president and general counsel, Philip Morris International, and
senior vice president of regulatory affairs, Philip Morris
Companies. Before joining Philip Morris, he was an
4
attorney with the law firm of Arnold & Porter. He
holds a juris doctorate from Tulane University School of Law,
and a bachelors degree from Washington & Lee
University. He received the International Law Office/Association
of Corporate Counsel General Counsel of the Year
award in 2011. Our board believes that Mr. Firestones
legal and government relations knowledge and international
experience make him a valuable member of the board.
OUR BOARD
RECOMMENDS A VOTE FOR EACH OF THE NOMINEES NAMED
ABOVE.
CORPORATE
GOVERNANCE
Our business is managed under the direction and oversight of our
board. We keep board members informed of our business through
discussions with management, materials we provide to them,
visits to our offices, and their participation in board and
board committee meetings. We believe open, effective, and
accountable corporate governance practices are key to our
relationship with our stockholders. Our board has adopted
corporate governance guidelines (board charter) that, along with
the charters of our board committees and our code of business
conduct and ethics, provide the framework for our governance. A
complete copy of our corporate governance guidelines, the
charters of our board committees, and our code of ethics may be
found on the investor relations section of our website at
www.unilife.com under the heading of Corporate
Governance. Information contained on our website is not
part of this proxy statement. The board regularly reviews
corporate governance developments and modifies these policies as
warranted. Any changes in these governance documents will be
reflected on the same location of our website.
Director
Independence
Our board has determined that each of Slavko James Joseph
Bosnjak, John Lund, William Galle, Mary Katherine Wold and
Marc S. Firestone is independent within the meaning
of
Rule 10A-3
under the Securities Exchange Act of 1934, NASDAQ listing
standards and the ASX Corporate Governance Council Corporate
Governance Principles and Recommendations.
Board
Leadership Structure
As reflected in our corporate governance guidelines and in order
to comply with the ASX Corporate Governance Council Corporate
Governance Principles and Guidelines, the roles of chairman and
chief executive officer are occupied by separate individuals.
Alan D. Shortall currently serves as our chief executive officer
and Slavko James Joseph Bosnjak serves as our chairman of the
board. We believe this leadership structure is presently the
most appropriate structure for us. As chief executive officer,
Mr. Shortall is responsible for setting our strategic
direction and the
day-to-day
leadership and performance, while Mr. Bosnjak, as chairman,
provides guidance to the chief executive officer, and acts as a
liaison between the chief executive officer and the rest of the
board.
Boards
Role in Risk Oversight
Our board is ultimately responsible for ensuring that
appropriate risk management policies and procedures are in place
to protect our assets and business. The board requires senior
management to ensure that an approach to managing risk is
implemented as part of our day to day operations and to design
internal control systems with a view to identifying and managing
material risks. The committees of our board are responsible for
evaluating the risks related to their respective
responsibilities and overseeing the management of such risks.
Our board periodically reviews the material risks faced by us,
our risk management processes and systems and the adequacy of
our policies and procedures designed to respond to and mitigate
these risks.
Meetings
and Committees of the Board
Directors are expected to attend meetings of the board and any
board committees on which they serve. The board has four
standing committees to facilitate and assist the board in the
execution of its responsibilities: the audit committee, the
compensation committee, the nominating and corporate governance
committee, and the strategic partnerships committee.
5
During the fiscal year ended June 30, 2011, the board held
four meetings and the audit, compensation, nominating and
corporate governance, and strategic partnerships committees held
four, two, one and five meetings, respectively. Each director
attended 75% or more of the aggregate of all meetings of the
board and board committees on which such director served at the
time of the meetings.
In accordance with our corporate governance guidelines, we make
every effort to schedule our meeting of stockholders at a time
and date to maximize attendance by directors taking into account
the directors schedules. Under our corporate governance
guidelines, all directors should make every effort to attend our
meeting of stockholders absent an unavoidable and irreconcilable
conflict. In 2010, the meeting was held in New York City and six
of seven of the directors then in office attended the meeting.
Mr. Carter was unable to attend the meeting, in person, as
it was necessary for him to facilitate the completion of the
Companys capital raising activities that were underway in
Australia.
Audit
Committee
The primary purpose of the audit committee is to oversee our
accounting and financial reporting processes and the audits of
our financial statements. The committee also reviews the
qualifications, independence and performance, and approves the
terms of engagement of our independent auditors, and reviews and
approves any related party transactions. The audit committee is
governed by a written charter approved by our board, a copy of
which is available from the investor relations section of our
website at www.unilife.com under the heading of
Corporate Governance.
The audit committee currently consists of John Lund (Chairman),
Slavko James Joseph Bosnjak and Mary Katherine Wold. Our
board of directors has determined that Mr. Lund qualifies
as an audit committee financial expert as defined
under SEC rules.
Compensation
Committee
The primary purpose of the compensation committee is to
supervise and review our affairs as they relate to the
compensation and benefits of our named executive officers. In
carrying out these responsibilities, the compensation committee
reviews all components of executive compensation for consistency
with our compensation philosophy and with the interests of our
stockholders. The compensation committee is governed by a
written charter approved by our board of directors, a copy of
which is available from the investor relations section of our
website at www.unilife.com under the heading of
Corporate Governance.
Our compensation committees responsibilities include the
following:
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develop and implement an executive compensation policy to
support overall business strategies and objectives, attract and
retain key executives, link compensation with business
objectives and company performance, and provide competitive
compensation;
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approve compensation for the chief executive officer, including
relevant performance goals and objectives, review and approve
compensation for other named executive officers, and oversee
their evaluations;
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make recommendations to our board of directors with respect to
the adoption of stock-based compensation plans and incentive
compensation plans;
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review the outside directors compensation program for
competitiveness and plan design, and recommend changes to our
board, as appropriate;
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oversee the management succession process for our chief
executive officer and selected senior executives;
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oversee general compensation plans and initiatives; and
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consult with senior management on major policies affecting
employee relations and benefits.
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The compensation committee currently consists of Slavko James
Joseph Bosnjak (Chairman), John Lund and William Galle.
6
Nominating
and Corporate Governance Committee
The nominating and corporate governance committee oversees our
director nomination and corporate governance matters. The
nominating and corporate governance committee is governed by a
written charter approved by our board of directors, a copy of
which is available from the investor relations section of our
website at www.unilife.com under the heading of
Corporate Governance.
The nominating and corporate governance committees primary
responsibilities are to:
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identify individuals qualified to become board members;
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select, or recommend to the board of directors, director
nominees for each election of directors;
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develop and recommend to the board criteria for selecting
qualified director candidates;
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consider committee member qualifications, appointment and
removal;
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recommend corporate governance principles, codes of ethics and
compliance mechanisms applicable us, and
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provide oversight in the evaluation of the board and each
committee.
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The nominating and corporate governance committee currently
consists of Marc S. Firestone (Chairman), Slavko James Joseph
Bosnjak, John Lund and William Galle.
Strategic
Partnerships Committee
The primary purpose of the strategic partnerships committee is
to provide support to our senior management in establishing and
maintaining strategic partnership relationships between us,
pharmaceutical companies, potential customers and other third
parties that the committee considers can be of strategic
importance in our growth. To that end, the strategic
partnerships committee will review and evaluate strategic
partnership status, strategies and opportunities with our senior
management, assist our senior management in developing strategic
partnerships and relationships and, from time to time, initiate
proposals and make recommendations on strategic partnerships.
The strategic partnerships committee is governed by a written
charter approved by our board of directors, a copy of which is
available from the investor relations section of our website at
www.unilife.com under the heading of Corporate
Governance.
The strategic partnerships committee consists of Mary Katherine
Wold (Chair), Alan D. Shortall, John Lund and Marc S. Firestone.
Nominations
Process and Director Qualifications
In evaluating candidates for directors proposed by directors,
stockholders
and/or
management, the nominating and corporate governance committee
considers the following factors, among others:
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the committees views of the current needs of the board for
certain skills, experience or other characteristics;
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the candidates background, skills, and experience;
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other characteristics and expected contributions of the
candidate; and
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the qualification standards established from time to time by the
nominating and corporate governance committee.
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The nominating and corporate governance committee considers the
appropriate skills and characteristics required of board members
in the context of the current makeup of the board. In accordance
with our corporate governance guidelines, this assessment
includes issues of diversity, age, skills such as understanding
of manufacturing, technology, finance and marketing, and
international background, all in the context of an assessment of
the perceived needs of the board at that point in time. Pursuant
to our corporate governance guidelines, directors should possess
the highest personal and professional ethics, integrity and
values, and be committed to representing the long-term interests
of stockholders. They must also have an inquisitive and
objective perspective and mature judgment.
7
In identifying director nominees, the nominating and corporate
governance committee first evaluates the current members of the
board willing to continue in service. Current members of the
board with skills and experience that are relevant to our
business and who are willing to continue in service are
considered for re-nomination, balancing the value of continuity
of service by existing members of the board with that of
obtaining a new perspective. If any member of the board does not
wish to continue in service or if the nominating and corporate
governance committee or the board decides not to re-nominate a
member for re-election, the nominating and corporate governance
committee identifies the desired skills and experience of a new
nominee in light of the criteria above. Other than the
foregoing, there are no specific, minimum qualifications that
the nominating and corporate governance committee believes that
a committee-recommended nominee to the board of directors must
possess, although the nominating and corporate governance
committee may also consider such other factors as it may deem
are in the best interests of us and our stockholders. If the
nominating and corporate governance committee believes, at any
time, that the board requires additional candidates for
nomination, the committee may engage, as appropriate, a third
party search firm to assist in identifying qualified candidates.
The nominating and corporate governance committee also considers
suggestions of nominees from our stockholders. Stockholders may
recommend individuals for consideration by following the
procedures set forth in our bylaws.
Compensation
Committee Interlocks and Insider Participation
None of the members of the compensation committee has ever been
an executive officer or employee of us or any of our
subsidiaries, or has any relationship with us or our executives,
other than their directorship and equity interests in us as
disclosed in the section entitled Security Ownership of
Certain Beneficial Owners and Management. During fiscal
2011, none of our executive officers served on the compensation
committee or board of any other entity that had any executive
officer who also served on our board.
Code of
Business Conduct and Ethics
Our board has adopted a code of business conduct and ethics
which meets the definition of code of ethics under
the SEC rules. The code applies to all of our employees and
directors. A copy of the code of business conduct and ethics is
available from the investor relations section of our website at
www.unilife.com under the heading of Corporate
Governance. We intend to disclose any amendment to, or
waiver from, a provision of the code that applies to any of our
principal executive, financial or accounting officers in the
investor relations section of our website.
Communications
with Directors
Stockholders may communicate with our directors by transmitting
correspondence by mail, facsimile or email, addressed as follows.
Chairman of the Board
or Board of Directors
or [individual director]
c/o J.
Christopher Naftzger
250 Cross Farm Lane
York, Pennsylvania 17406 USA
Fax: + 717
384-3402
Email Address: chris.naftzger@unilife.com
All incoming communications are screened by our corporate
secretary and transmitted to the intended recipient absent
safety or security issues.
8
DIRECTOR
COMPENSATION
The following table provides information regarding the total
compensation that we paid or awarded to our non-executive
directors during the year ended June 30, 2011. Directors
who are also employees do not receive compensation for their
services as directors.
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Nonqualified
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Fees Earned
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Deferred
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or Paid
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Stock
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Option
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Compensation
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All Other
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in Cash
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Awards
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Awards
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Earnings
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Compensation
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Total
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Name
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($)
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($)
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($)(1)
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($)(2)
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($)
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($)
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Slavko James Joseph Bosnjak
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118,836
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(3)
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10,695
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129,531
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William Galle
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48,504
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472
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48,976
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Jeff Carter
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53,476
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(4)
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4,812
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346,392
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(5)
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404,680
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John Lund
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80,004
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2,908
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82,912
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Mary Katherine Wold
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63,496
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199,895
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2,325
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265,716
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Marc Firestone(6)
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49,212
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215,542
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264,754
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(1) |
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The amount referenced is the grant date fair value of the stock
options determined in accordance with ASC Topic 718 using the
Black-Scholes option-pricing model. The valuation assumptions
used for determining the amounts discussed in this footnote are
provided in Note 4 to our consolidated financial statements
included in our Annual Report on
Form 10-K
for the fiscal year ended June 30, 2011. |
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(2) |
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Represents statutory contributions of 9% of fees to a
superannuation fund (i.e., pension) for Australian directors
only. |
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(3) |
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Mr. Bosnjaks fees represent A$120,000 paid in
Australian dollars. Amounts were converted using the average
exchange rate during the applicable period. |
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(4) |
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Mr. Carters fees represent A$54,000 paid in
Australian dollars. Amounts were converted using the average
exchange rate during the applicable period. This amount
represents fees earned solely for serving as a director. |
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(5) |
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Mr. Carters other compensation includes amounts paid
to a consulting entity of which Mr. Carter is the
principal. The consulting entity provides accounting, company
secretarial, ASX liaison and other consulting services provided
to us. Mr. Carter has direct responsibility for the
management of the Australian representative office and
compliance with Australian listing rules. These fees were paid
in Australian dollars and were converted using the average
exchange rate during the applicable period. Of these consulting
fees, A$137,425 was paid to one of our former employees to
assist Mr. Carter in performing these functions. |
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(6) |
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Mr. Firestone was appointed to the board on July 27,
2010. |
9
The fees for all independent members of the board are as follows:
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Board:
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Annual retainer per director
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$
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25,000
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Chairman of the board fee
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25,000
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Fee per meeting for a full board meeting (limit 4 per year)
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1,500
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Incremental fee for out of town meeting
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1,000
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Audit Committee:
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Annual retainer for chairperson
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20,000
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Annual retainer for other members
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10,000
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Fee per meeting (limit four per year)
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500
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Compensation Committee:
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Annual retainer for chairperson
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15,000
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Annual retainer for other members
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7,500
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Fee per meeting (limit four per year)
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250
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Nominating and Corporate Governance Committee:
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Annual retainer for chairperson
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10,000
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Annual retainer for other members
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5,000
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Fee per meeting (limit four per year)
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250
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Strategic Partnerships Committee:
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Annual retainer for chairperson
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17,500
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Annual retainer for other members
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7,500
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Fee per meeting (limit four per year)
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500
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Also, a director attending any board or committee meeting in
person that requires the director to travel for more than two
hours will be paid an additional $1,000 for attending such
meeting.
We paid Mr. Carter an annual cash fee for all of his
services as a director. We did not compensate him separately for
attendance at meetings or for service on board committees.
To date, we have not granted annual stock-based awards to our
directors. The board has approved an annual equity grant of
15,000 shares of common stock or phantom stock units for
our non-executive directors, subject to stockholder approval
being obtained for the grant as required under the ASX Listing
Rules. For information regarding these proposed grants to our
non-executive directors, please see
Proposals No. 5 10
Approval of the Grant of Securities to Non-Executive Directors
of the Company under the 2009 Stock Incentive Plan on
page 37.
Stock
Ownership and Retention Guidelines for Non-Executive
Directors
In September 2011, our board adopted new stock ownership and
retention guidelines for non-executive directors. Previously,
our corporate governance guidelines acknowledged our
boards belief that directors should be stockholders in
order to align their interests with the long-term interests of
our stockholders, but the guidelines did not establish a level
of share ownership for individual directors. With the adoption
of the new stock ownership and retention guidelines, specific
ownership and retention standards are set, as follows.
Stock
Ownership Guideline
Each non-executive director is strongly encouraged to acquire
and hold shares of our common stock having an aggregate value
equal to four times his or her annual cash compensation for
service on the board and board committees, excluding for this
purpose meeting fees and expense reimbursements. For purposes of
this stock ownership guideline, directly and indirectly owned
shares, unvested shares of restricted stock, and vested and
unvested stock units are counted as shares owned, but
unexercised stock options are not. Directors are expected to
10
achieve their ownership goal within three years after the
boards initial adoption of this stock ownership guideline
or the directors appointment to the board, whichever is
later.
This stock ownership guideline applies to the minimum number of
shares that have an aggregate fair market value equal to the
directors ownership goal on the date that his or her
ownership interest first meets the applicable ownership goal.
Upon meeting the ownership goal, that number of shares becomes
fixed and ownership of that number of shares must be maintained
until the end of the directors service on the board. A
directors ownership goal will not change as a result of
changes in his or her annual cash compensation or fluctuations
in the price of our common stock.
To facilitate achievement of the ownership goal, until the
ownership goal is achieved the director is expected to retain
all of the net gain shares resulting from the
exercise of stock options, the grant of vested shares, or the
vesting of restricted stock or stock units granted under our
equity incentive plans. Net gain shares means the
net number of shares remaining after reduction by the number of
shares of common stock that the director would need to sell to
cover the exercise price and taxes owed with respect to the
grant, exercise or vesting event (assuming for this purpose a
flat 40 percent tax rate and sale of shares at the closing
price on the date of the taxable event).
Stock
Retention Guideline
To further align the interests of the non-executive directors
with those of our stockholders, in addition to satisfying the
ownership goal described above, a further retention requirement
applies to shares acquired from us by each non-executive
director. Sixty percent of all net gain shares that are
issued to the director after his or her achievement of the
ownership goal, which net gain shares result from the exercise
of stock options, the grant of vested shares, or the vesting of
restricted stock or stock units granted under our equity
incentive plans, and are not otherwise subject to the ownership
goal are expected to be held until the end of the
directors service on the board. This retention guideline
applies to net gain shares that arise in connection with stock
options, restricted stock awards and stock units outstanding as
of the date the guideline is adopted by the board and
stock-based awards granted after that date.
Waiver
and Modification of Guidelines
These stock ownership and retention guidelines may be waived at
the discretion of a majority of the members of the compensation
committee in the event compliance would place severe hardship on
a director or prevent a director from complying with a court
order, as in the case of divorce settlement; provided, however,
that a member of the compensation committee may not cast a vote
on his or her own waiver request. It is expected that these
instances of waiver requests will be rare.
The board may, upon recommendation of the compensation
committee, amend or modify these stock ownership and retention
guidelines at any time, in whole or in part.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee is directly responsible for the appointment,
retention, compensation and oversight of the work of our
independent registered public accounting firm. In making its
determination regarding whether to appoint or retain a
particular independent registered public accounting firm, the
audit committee takes into account the views of management.
The audit committee has appointed KPMG LLP (KPMG) as
our independent registered public accounting firm for the fiscal
year ending June 30, 2012. KPMG has acted in such capacity
since its appointment in March 2010 to replace BDO Audit (WA)
Pty Ltd (BDO). The audit committee has considered
whether KPMGs provision of services other than audit
services is compatible with maintaining independence as our
independent registered public accounting firm and determined
that such services are compatible.
Although ratification by stockholders is not a prerequisite to
the ability of the audit committee to select KPMG as our
independent registered public accounting firm, we believe such
ratification to be desirable. Accordingly,
11
stockholders are being requested to ratify, confirm and approve
the selection of KPMG as our independent registered public
accounting firm for the fiscal year ending June 30, 2012.
If the stockholders do not ratify the selection of KPMG, the
selection of the independent registered public accounting firm
will be reconsidered by the audit committee; however, the audit
committee may select KPMG notwithstanding the failure of the
stockholders to ratify its selection. If the appointment of KPMG
is ratified, the audit committee will continue to conduct an
ongoing review of KPMGs scope of engagement, pricing and
work quality, among other factors, and will retain the right to
replace KPMG at any time.
Representatives of KPMG are expected to be present at the
meeting, with the opportunity to make a statement if the
representatives desire to do so. It is also expected that they
will be available to respond to appropriate questions.
Fees
Paid
The following table sets forth the fees for services provided by
KPMG during the years ended June 30, 2011 and 2010.
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2011
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2010
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Audit Fees(1)
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$
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380,333
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$
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195,673
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Audit-Related Fees(2)
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31,000
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7,000
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Tax Fees(3)
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22,000
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All Other Fees
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Total Fees
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$
|
433,333
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$
|
202,673
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(1) |
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Audit fees include amounts for professional services in
connection with the annual audit of our consolidated financial
statements and the review of our consolidated financial
statements included in our Quarterly Reports on
Form 10-Q.
In addition, for the fiscal year ended June 30, 2011 audit
fees included professional services related to the audit of our
internal control over financial reporting as required by the
Sarbanes-Oxley Act of 2002. |
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(2) |
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Audit-related fees include amounts for professional services in
connection with the review of our SEC registration statements. |
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(3) |
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Tax fees include amounts for professional services in connection
with tax compliance, tax advice and tax planning paid. |
The following table sets forth the fees for services provided by
BDO during the year ended June 30, 2010.
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2010
|
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Audit Fees(1)
|
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$
|
85,815
|
|
Audit-Related Fees(2)
|
|
|
181,780
|
|
Tax Fees(3)
|
|
|
16,728
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
284,323
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees include amounts for professional services in
connection with the annual audit of our consolidated financial
statements and the review of our consolidated financial
statements included in our Quarterly Reports on
Form 10-Q. |
|
(2) |
|
Audit-related fees include amounts for professional services in
connection with the review of our SEC registration statements. |
|
(3) |
|
Tax fees include amounts for professional services in connection
with tax compliance, tax advice and tax planning paid. |
12
Audit
Committees Pre-Approval Policy
It is the audit committees policy to approve in advance
the engagement of the independent registered public accounting
firm for all audit services and non-audit services. The audit
committee may delegate authority to pre-approve audit or
non-audit services to one or more of its members. Any
pre-approval authorized by a member of the audit committee to
whom authority has been delegated must specify clearly in
writing the services and fees approved by such member. Any
member to whom such authority is delegated shall report any
pre-approval decisions made under such delegated authority to
the audit committee at its next scheduled meeting. All of the
2010 and 2011 fees paid to the independent registered public
accounting firm described above were pre-approved by the audit
committee in accordance with the pre-approval policy.
OUR BOARD
UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
PROPOSAL NO. 2
REPORT OF
THE AUDIT COMMITTEE
The audit committee of our board is composed of John Lund
(Chairman), Slavko James Joseph Bosnjak and Mary Katherine Wold.
The audit committee members are not professional accountants or
auditors (although Mr. Lund is a certified public
accountant, he currently does not work as an accountant or
auditor). Management has the primary responsibility for
preparing the financial statements and designing and assessing
the effectiveness of internal control over financial reporting.
Management is responsible for maintaining appropriate accounting
and financial reporting principles and policies and the internal
controls and procedures that provide for compliance with
accounting standards and applicable laws and regulations. In
this context, the audit committee has reviewed and discussed
with management the audited financial statements included in our
Annual Report on
Form 10-K
for the year ended June 30, 2011 filed with the SEC.
The audit committee also has discussed with KPMG the matters
required to be discussed by the statement on Auditing Standards
No. 61 (AICPA, Professional Standards, Vol. 1, AU
section 380), as amended, as adopted by the Public Company
Accounting Oversight Board in Rule 3200T.
The audit committee has received the written disclosures and the
letters from KPMG required by applicable requirements of the
Public Company Accounting Oversight Board regarding KPMGs
communications with the audit committee concerning independence
and has discussed with KPMG their independence.
Based on the audit committees review and discussions with
management and KPMG, the audit committee recommended that our
board include the audited consolidated financial statements in
our Annual Report on
Form 10-K
for the fiscal year ended June 30, 2011 filed with the SEC.
THE AUDIT COMMITTEE
John Lund (Chairman)
Slavko James Joseph Bosnjak
Mary Katherine Wold
EXECUTIVE
COMPENSATION
RISK
MANAGEMENT AND INCENTIVE COMPENSATION
Our compensation committee has reviewed our compensation systems
and has determined that it is not reasonably likely that our
compensation plans would have a material adverse effect on us
for the following reasons:
|
|
|
|
|
Any operational performance objectives of our annual cash
incentive and stock-based grant programs are objectives that are
reviewed and approved by our compensation committee and board.
|
|
|
|
The strategic milestones for our annual cash incentive program
for our named executive officers are based on the same set of
Company goals as for other employees.
|
13
|
|
|
|
|
Our annual cash incentive program is designed to reward
bonus-eligible employees for committing to and delivering goals
that are aligned with our strategic plan, with objectives linked
to our strategic plan or performance.
|
|
|
|
The performance goals are reviewed by senior management and our
board of directors to ensure that they are focused on business
activity that advances the stockholders interests and do
not encourage excessive or potentially damaging risk-taking.
|
|
|
|
The amount of annual cash incentive compensation is not set at
such an aggressive level that it would induce bonus-eligible
employees to take inappropriate risks that could threaten our
financial and operating stability.
|
|
|
|
Because the performance measures for our annual cash incentive
program are based on strategic objectives of our business plan,
we do not believe that any of the goals approved under our
annual cash incentive compensation program would encourage
manipulation of reported earnings to enhance the compensation of
any employee.
|
|
|
|
Our compensation programs are balanced to avoid too much focus
on stock-based or annual cash incentive compensation, do not
contain highly leveraged payout curves or uncapped payouts, do
not set unreasonable thresholds and do not encourage short-term
business decisions to meet payout thresholds.
|
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and Analysis describes our
compensation philosophy and practices for those individuals who
were our most highly compensated executives based on their
fiscal 2011 compensation. We refer to these individuals as
named executive officers. Our fiscal year begins on
July 1st and ends on June 30th of each year.
Thus, all references to fiscal 2011 mean the period
that spans July 1, 2010 to June 30, 2011.
Our named executive officers are:
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|
|
|
|
Alan D. Shortall, who is our chief executive officer;
|
|
|
|
R. Richard Wieland II, who is our executive vice president and
chief financial officer;
|
|
|
|
Ramin Mojdehbakhsh, Ph.D. (Dr. Mojdeh), who became our
executive vice president and chief operating officer in February
2011;
|
|
|
|
J. Christopher Naftzger, who is our vice president, general
counsel, corporate secretary and chief compliance
officer; and
|
|
|
|
Mark V. Iampietro, who is our vice president, quality systems
and regulatory affairs.
|
Executive
Summary
Fiscal 2011 was our first full year as a public company in the
United States. As we began the year, we set a number of
important goals for our company for 2011, including the
following:
|
|
|
|
|
Completing the industrialization process for the
Unifill®
ready-to-fill
syringe;
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|
|
|
Completing our new manufacturing facility and global
headquarters in York, Pennsylvania and relocating all of our
operations to the new facility;
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|
Strengthening our financial position; and
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|
|
|
Further developing our senior management team.
|
14
By the end of the fiscal year, we achieved these goals and also
made significant progress on a number of other fronts. Our major
achievements for fiscal 2011 include the following:
|
|
|
|
|
In March 2011, we commenced initial production of the
Unifill®
ready-to-fill
syringe and in late June, we completed the validation phase for
the syringe, which represented the final step in the
industrialization process.
|
|
|
|
We completed our new manufacturing facility on schedule and
moved all staff to the new building in December 2010.
|
|
|
|
We raised approximately A$36 million of additional capital
through an Australian private placement and share purchase plan,
while also securing an $18 million mortgage for our
headquarters from a local bank.
|
|
|
|
We hired Dr. Mojdeh, formerly of Becton Dickinson
Pharmaceutical Systems, as our new chief operating officer.
Dr. Mojdeh has led a realignment of our business to enhance
operational focus, improve efficiencies and drive continuous
growth.
|
|
|
|
We hired several new commercial and technical personnel with
significant medical device industry experience, which has given
us increased contacts with pharmaceutical companies and has
resulted in our developing a diversified and highly innovative
portfolio of advanced drug delivery systems, in addition to the
Unifill®
ready-to-fill
syringe, in response to the unmet needs of pharmaceutical
companies, healthcare workers and patients.
|
When designing the annual and long-term compensation program for
our named executive officers, our compensation committee
balanced the creation of appropriate incentives for the
achievement of our strategic goals with the desire to conserve
cash. We believe that our compensation program for our named
executive officers was instrumental in helping us achieve our
objectives for fiscal 2011. Highlights of the committees
compensation decisions include the following:
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|
|
|
|
Base salaries for our named executive officers stayed basically
flat, except for one market-based adjustment. As part of our
business realignment, in April 2011, we also cancelled cost of
living increases for our named executive officers which had been
instituted in January.
|
|
|
|
All of our named executive officers (other than Dr. Mojdeh
who joined us in February 2011) earned 100% of their target
cash incentive awards for calendar year 2010 at the levels
provided in their employment agreements. These awards were paid
in two installments, half in mid-December 2010 and half in March
2011, based on satisfaction of their personal key performance
indicators, or KPIs, established by the compensation committee
early in calendar 2010. Although our fiscal year ends on
June 30, our performance year for our cash incentive plan
is based on a calendar year. Thus, the payments we made in
December 2010 and March 2011 related to the 2010 calendar year
performance period which included the first six months of fiscal
2011. As Mr. Shortalls performance objectives for the
2011 calendar year were completed relatively early in the year,
we paid Mr. Shortall 100% of his target cash incentive
award for the 2011 calendar year in April 2011.
|
|
|
|
We did not pay any bonuses in addition to the cash incentive
awards described above.
|
|
|
|
As we discuss below under Elements of
Compensation Long-Term Incentive Compensation,
Mr. Shortall, did not receive a stock-based award in fiscal
2011. Mr. Shortall received in fiscal 2010 grants of
performance-based restricted stock that vest upon achievement of
specified strategic milestones and stock options that vest based
on the attainment of specified market prices for our common
stock over a sustained period of time. These awards were
intended to award performance to be achieved over a multi-year
period.
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|
|
|
Dr. Mojdeh received an initial grant of performance-based
restricted stock and stock options at the time he joined us in
February 2011.
|
|
|
|
We awarded stock options in January 2011 to our other named
executive officers as the initial grants of what we expect to be
an annual stock-based award grant cycle.
|
15
Compensation
Philosophy and Objectives
The compensation committee of our board of directors is
responsible for reviewing and approving the compensation payable
to our named executive officers. The compensation committee
follows an executive compensation philosophy that includes the
following considerations:
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|
|
|
|
a
pay-for-performance
orientation that delivers pay based on company and individual
performance;
|
|
|
|
long-term incentives, in the form of stock-based awards, to more
closely align the interests of named executive officers with the
long-term interests of stockholders;
|
|
|
|
individual wealth accumulation through long-term incentives,
rather than through pensions.
|
The primary objectives of our executive compensation program are
to deliver a competitive package to attract, motivate and retain
key executives and to align their compensation with our overall
business goals, core values and stockholder interests. We aim to
provide total compensation that is appropriate for an
organization of our size and stage of development and that will
support continued recruitment of top talent and retention of the
executive team we have built. We link a substantial portion of
compensation to our achievement of strategic objectives and the
individuals contribution to the attainment of those
objectives. In addition, we encourage ownership of our common
stock among our executive team through our long-term incentive
plan to align executive compensation with the long-term
interests of our stockholders.
We expect that our primary compensation objectives will
reinforce consistent attainment of our key strategic goals and
motivate and retain the executive talent we have hired.
Setting
Executive Compensation
Our compensation committee has engaged Strategic Apex Group LLC,
or Strategic Apex, an independent third party consulting firm,
to assist it by providing competitive compensation data and
general advice on our compensation programs and policies for
named executive officers. Strategic Apex assists the
compensation committee in developing performance metrics and
long-term incentives for the named executive officers to ensure
that key strategic goals are met and that the interests of key
decision makers and stockholders are aligned. In addition,
Strategic Apex assists the compensation committee in evaluating
proposed compensation packages with respect to new executive
hires, and makes recommendations to the compensation committee
regarding the magnitude of annual cash incentive compensation
and annual stock-based grants to our named executive officers.
During fiscal 2010, Strategic Apex performed a market analysis
on the compensation paid by a group of forty-four medical device
companies relative to the compensation paid to our chief
executive officer and chief financial officer for calendar year
2010 which was reduced to twenty-one companies in calendar year
2011. [See Compensation Discussion and
Analysis Benchmarking in our proxy statement
for the annual meeting of stockholders held December 1,
2010, for more information on the comparison group. A copy of
that proxy statement may be found at
http://www.sec.gov/Archives/edgar/data/1476170/000095012310093908/y87180def14a.htm.]
Strategic Apex confirmed that the total cash compensation (base
salary plus annual cash incentive award) of our chief executive
officer and chief financial officer was in the
50th percentile range of the total cash compensation of
similarly situated executives within the comparator group for
calendar year 2010. Our compensation committee believes that
this level of total cash compensation is appropriate for our
named executive officers at this stage of our development.
In determining whether adjustments should be made to the
compensation packages for our named executive officers for
calendar year 2011, the compensation committee considered
comparator information provided by Strategic Apex and
compensation data from the Radford Global Life Sciences Survey
(150 499 employees) or Radford Survey. Our
compensation committee determined that an appropriate goal for
total compensation (cash and equity) of our named executive
officers should be between the 50th and
75th percentiles of the Radford Survey. On average, our
named executive officers receive a base salary that is
approximately 80% of the 50th percentile. One of our named
executive officers, Mr. Iampietro, received an increase to
his base salary for calendar year 2011 as a market adjustment.
In addition, a 3% cost of living increase to the base salaries
of our named executive officers, except for
16
Mr. Shortall, was implemented in January 2011, but this
cost of living increase was cancelled in April 2011 as part of
our business realignment program.
Our compensation committee, upon recommendation of Strategic
Apex, adopted a formula approach to determining the size of
stock-based awards to be granted annually to our named executive
officers and other senior management, other than our chief
executive officer, beginning in calendar year 2011. Specifically
the compensation committee intends that, the size of the grant
would be determined by the estimated fair value of the award,
determined in accordance with the Financial Accounting Standards
Board (FASB), Accounting Standards Codification Topic 718, as a
percentage of base salary, which percentage is based on an
individuals title (senior and executive vice
presidents 50%, vice presidents 35%,
directors 30%).
We implement our annual cash incentive program using calendar
year performance periods. As more fully described below under
Annual Cash Incentive Compensation and Bonuses, the
KPIs established for the 2010 and 2011 calendar year performance
periods represent key strategic objectives relating to the
industrialization of the Unifill
ready-to-fill
syringe, the commercial production and sale of our Unitract 1 mL
syringe, the further development of our management team and
additional products, and building stockholder value.
During the process of hiring our new chief operating officer
Dr. Mojdeh, our chief executive officer negotiated on an
arms length basis with Dr. Mojdeh with respect to the
terms of his compensation package. Our chief executive officer
considered Dr. Mojdehs prior relevant experience and
compensation levels, as well as his prospective roles and
responsibilities with us. Our chief executive officer consulted
with Strategic Apex who made recommendations, based on peer
group companies as well as the Radford Survey, on what would
constitute an appropriate compensation package. Our chief
executive officer presented the proposed compensation package to
the compensation committee of our board of directors which
agreed to the terms.
Benchmarking
The compensation committee uses independent verifiable data and
information as well as the business judgment of the committee
members in making decisions concerning executive compensation.
An important element of this process is the evaluation of
compensation practices among similarly-situated public
companies. For this purpose the compensation committee uses the
Radford Survey and reviews the
25th,
50th and
75th
percentile compensation data to benchmark compensation. In
addition, Strategic Apex assists the compensation committee in
developing an appropriate peer group against which various
elements of our executive compensation package are benchmarked.
This group is referred to as the comparison group. The
comparison group consists of twenty-one medical equipment and
devices companies, with median revenues and market
capitalization of approximately $50 million to
$500 million, respectively. The comparison group for 2011
changed from the previous one used by us in 2010 due to
acquisitions and changes to some of the companies in the prior
comparison group.
17
Peer
Group Summary
|
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|
|
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|
($Millions)
|
|
|
Company
|
|
Ticker
|
|
Revenues
|
|
Net Income
|
|
Market Cap
|
|
Employees
|
|
ABAXIS Inc
|
|
|
ABAX
|
|
|
$
|
124.6
|
|
|
$
|
13.0
|
|
|
$
|
643.2
|
|
|
|
354
|
|
ABIOMED Inc
|
|
|
ABMD
|
|
|
$
|
85.7
|
|
|
$
|
(19.0
|
)
|
|
$
|
601.8
|
|
|
|
365
|
|
Accuray Inc
|
|
|
ARAY
|
|
|
$
|
221.6
|
|
|
$
|
2.8
|
|
|
$
|
452.3
|
|
|
|
451
|
|
Alphatec Holdings Inc
|
|
|
ATEC
|
|
|
$
|
171.6
|
|
|
$
|
(14.4
|
)
|
|
$
|
306.2
|
|
|
|
460
|
|
Analogic Corp
|
|
|
ALOG
|
|
|
$
|
423.6
|
|
|
$
|
15.6
|
|
|
$
|
628.9
|
|
|
|
1400
|
|
AndioDynamics Inc
|
|
|
ANGO
|
|
|
$
|
216.0
|
|
|
$
|
12.3
|
|
|
$
|
341.4
|
|
|
|
681
|
|
Cantel Medical Corp.
|
|
|
CMN
|
|
|
$
|
274.0
|
|
|
$
|
19.9
|
|
|
$
|
412.8
|
|
|
|
883
|
|
Conceptus Inc
|
|
|
SPTS
|
|
|
$
|
140.7
|
|
|
$
|
82.0
|
|
|
$
|
375.8
|
|
|
|
304
|
|
Cyberonics Inc
|
|
|
SYBX
|
|
|
$
|
167.8
|
|
|
$
|
78.4
|
|
|
$
|
728.9
|
|
|
|
465
|
|
Delcath Systems Inc
|
|
|
DCTH
|
|
|
$
|
0.0
|
|
|
$
|
(46.7
|
)
|
|
$
|
214.0
|
|
|
|
47
|
|
DexCom Inc
|
|
|
DXCM
|
|
|
$
|
48.6
|
|
|
$
|
(55.2
|
)
|
|
$
|
814.0
|
|
|
|
405
|
|
Exactech Inc
|
|
|
EXAC
|
|
|
$
|
190.5
|
|
|
$
|
10.5
|
|
|
$
|
234.9
|
|
|
|
553
|
|
HeartWare International Inc
|
|
|
HTWR
|
|
|
$
|
55.2
|
|
|
$
|
(29.4
|
)
|
|
$
|
978.8
|
|
|
|
206
|
|
Insulet Corp
|
|
|
PODD
|
|
|
$
|
97.0
|
|
|
$
|
(61.2
|
)
|
|
$
|
862.1
|
|
|
|
310
|
|
Kensey Nash Corp
|
|
|
KNSY
|
|
|
$
|
80.6
|
|
|
$
|
19.5
|
|
|
$
|
203.1
|
|
|
|
269
|
|
Natus Medical Inc
|
|
|
BABY
|
|
|
$
|
218.7
|
|
|
$
|
11.9
|
|
|
$
|
485.8
|
|
|
|
750
|
|
Orthovita Inc
|
|
|
VITA
|
|
|
$
|
94.7
|
|
|
$
|
(5.7
|
)
|
|
$
|
295.0
|
|
|
|
256
|
|
Somanetics Corp
|
|
|
SMTS
|
|
|
$
|
50.0
|
|
|
$
|
6.8
|
|
|
$
|
298.6
|
|
|
|
134
|
|
Symmetry Medical Inc
|
|
|
SMA
|
|
|
$
|
360.8
|
|
|
$
|
14.0
|
|
|
$
|
322.9
|
|
|
|
2797
|
|
Wright Medical Group Inc
|
|
|
WMGI
|
|
|
$
|
519.0
|
|
|
$
|
17.8
|
|
|
$
|
561.1
|
|
|
|
1390
|
|
Young Innovations Inc
|
|
|
YDNT
|
|
|
$
|
102.8
|
|
|
$
|
149.9
|
|
|
$
|
220.0
|
|
|
|
400
|
|
25th
Percentile
|
|
|
|
|
|
$
|
85.7
|
|
|
$
|
(14.4
|
)
|
|
$
|
298.6
|
|
|
|
304
|
|
Median
|
|
|
|
|
|
$
|
140.7
|
|
|
$
|
11.9
|
|
|
$
|
412.8
|
|
|
|
405
|
|
75th
Percentile
|
|
|
|
|
|
$
|
218.7
|
|
|
$
|
15.6
|
|
|
$
|
628.9
|
|
|
|
681
|
|
Unilife Corporation
|
|
|
UNIS
|
|
|
$
|
6.7
|
|
|
$
|
(40.7
|
)
|
|
$
|
271.7
|
|
|
|
128
|
|
Companies were selected for inclusion in the comparison group
based on several factors, including: annual revenues, market
capitalization, number of employees, stage of development, and
similar business model and products. The committee intends to
review and, if appropriate, modify the comparison group on an
annual basis to best reflect our business as it evolves.
18
Elements
of Compensation
The key elements of our executive compensation program are
summarized in the table below.
|
|
|
|
|
COMPONENT
|
|
DESCRIPTION
|
|
PURPOSE
|
|
Base salary
|
|
Fixed cash compensation that is based on scope of
responsibilities, experience, and competitive pay practices.
|
|
Provide a fixed, baseline level of compensation.
|
Annual cash incentives
|
|
Cash payment tied to performance during the calendar year.
|
|
Reward Unilifes achieving or exceeding annual performance
and strategic objectives and individual contributions to
Unilifes performance.
|
Long-term incentive compensation:
Stock options
Restricted stock awards
|
|
Right to purchase shares after vesting at an exercise price equal to the closing price on the grant date.
Grant of shares that are forfeited if employment terminates before vesting occurs.
|
|
Increase executive ownership, promote executive retention, align
compensation with the achievement of long-term performance
objectives and reward the creation of stockholder value.
|
Other benefits and perquisites
|
|
Noncash compensation generally nominal in value relative to
total compensation, which may consist of components such as
temporary housing and relocation assistance, family travel
expense reimbursement, car allowance and insurance premiums.
|
|
Provide a competitive pay package.
Attract and retain highly qualified leaders.
|
The compensation committee believes this combination of cash and
stock-based compensation furthers the objectives of our
executive compensation program. Based on prevailing market
practices, our compensation committee provides a mix of salary,
annual cash incentive and stock-based awards to offer a
competitive compensation package. This structure also promotes
our
pay-for-performance
philosophy by linking pay levels to both our short-term
performance (through annual incentive awards) and long-term
performance (through stock options and restricted stock awards).
A significant portion of compensation is also provided through
stock-based compensation awards, which align the interests of
the executives with our stockholders, promote executive
retention and reward the creation of stockholder value. By
providing a significant portion of compensation through
stock-based compensation awards, our named executive
officers compensation fluctuates with the movement of our
stock price, thus they share in both upward and downward
movement of our stock value.
There is no pre-established policy for allocation of
compensation between cash and non-cash components or between
short-term and long-term components. Instead, the compensation
committee determines the mix of compensation for each named
executive officer based on its review of competitive data and
the compensation committees subjective analysis of that
individuals performance and contribution to our
performance.
Base
Salary
It is the compensation committees objective to set a
competitive rate of annual base salary for each named executive
officer. The compensation committee believes competitive base
salaries are necessary to attract and retain top quality
executives, since it is common practice for public companies to
provide their executive officers with a guaranteed annual
component of compensation that is not subject to performance
risk. Base salary levels are designed to recognize an
individuals ongoing contribution, to be commensurate with
an individuals experience and organization level and to be
competitive with market benchmarks.
One of our named executive officers, Mr. Iampietro,
received an increase to his base salary for calendar year 2011
as a market adjustment. In addition, a 3% cost of living
increase to the base salaries of our named executive officers,
except
19
for Mr. Shortall, was implemented in January 2011, but this
cost of living increase was cancelled in April 2011 as part of
our business realignment program. Consequently, the base
salaries of our named executive officers, other than
Mr. Iampietro, are consistent with the base salaries paid
for calendar year 2010.
Our compensation committee will determine whether and when to
adjust the base salaries of the named executive officers in the
future. In doing so, our compensation committee will consider
each named executive officers performance and level of
responsibility and market data for similar positions.
Annual
Cash Incentive Compensation and Bonuses
We implement our annual cash incentive program using calendar
year performance periods. There is not a formal written plan for
this program, but instead target cash incentive opportunities
are specified in the employment agreement of each named
executive officer. Our chief executive officer, in consultation
with our compensation committee, establishes and communicates to
the named executive officers in the first quarter of the
performance year KPIs, against which each named executives
performance will be measured for that year. Our chief executive
officer provides the compensation committee with a review of the
performance of the other named executive officers and makes
recommendations to the compensation committee as to the level of
cash incentive to be paid based on that performance. In
accordance with our compensation committees charter, our
compensation committee evaluates the performance of each named
executive officer in light of his KPIs and determines the amount
of any annual incentive compensation earned by the named
executive officer based on such evaluation.
Prior to the 2011 calendar year, the annual cash incentives were
paid semi-annually based on evaluation of achievements as of the
end of each June and December. Consequently, a portion of the
annual incentives earned for the last six months of the 2009
calendar year performance period were earned and paid during
fiscal 2010 and these amounts are reflected in the Summary
Compensation Table at page 28 as amounts earned in fiscal
2010. For the 2010 calendar year performance period, performance
for the six-month period ending June 30, 2010 was evaluated
in July but payment of the amounts earned was deferred until
mid-December 2010. Performance for the six-month period ending
December 31, 2010 was evaluated after the close of the
calendar year and the amounts earned were paid in March 2011.
Thus, the amounts reflected in the Summary Compensation Table
for fiscal 2011 reflect the payment of cash incentives in
respect of calendar year 2010 because such amounts were earned
in fiscal 2011. The delay in paying the amounts earned during
the first six-month performance period of the 2010 calendar year
was the first step in our transition to a program of evaluating
performance on an annual basis, rather than a semi-annual basis,
and paying a single annual cash incentive payment.
Our compensation committee may also determine to provide
discretionary bonuses in addition to the target cash incentive
opportunity to reward the executive for contributions and
achievements other than the executives pre-established
KPIs. No such discretionary bonuses were awarded to our named
executive officers during fiscal 2011.
Our chief executive officers annual cash incentive award
is discretionary in amount up to $200,000, as provided in his
employment agreement. The amount of this discretionary award to
be paid is determined by our compensation committee based on
satisfaction of KPIs. Our compensation committee sets the KPIs
of our chief executive officer, reviews his performance and
determines the amount of any annual incentive compensation
earned by him.
Each of Messrs. Wieland, Iampietro and Naftzger was
entitled to receive a cash incentive award for calendar year
2010 (in the case of Messrs. Wieland and Naftzger,
pro-rated for the portion of calendar year 2010 during which
they were employed with us), at the target level specified in
his employment agreement, if his performance satisfied
pre-established KPIs identified by our chief executive officer
and approved by our compensation committee. Dr. Mojdeh
joined us in February 2011 and thus his entitlement to a cash
incentive award commences with the 2011 calendar year. More
information regarding the target cash incentive opportunity for
each of these named executive officers is provided in the
footnotes to the Grants of Plan-Based Awards Table on
page 29.
20
The KPIs were tailored to each named executive officers
individual area of responsibility and key strategic goals. In
respect of calendar year 2010, the following is a summary
description of the KPIs set for and achieved by each named
executive officer:
Alan D.
Shortall, Chief Executive Officer
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strengthened the board of directors
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hired a new chief financial officer and a general counsel,
corporate secretary and chief compliance officer
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started production of the Unitract 1mL syringe in our
Lewisberry, PA facility
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continued progress on the industrialization of the Unifill
ready-to-fill
syringe and the construction and financing of our new
manufacturing and headquarters facility
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raised additional capital (A$36 million) through an
Australian private placement and share purchase plan
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R.
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Richard
Wieland II, Executive Vice President and Chief Financial
Officer
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assessed and reorganized the Finance and Administration
Department
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implemented a program for Sarbanes Oxley (SOX)
compliance
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conducted a successful year-end audit with KPMG with no material
weaknesses noted
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obtained USDA-guaranteed financing for our new manufacturing and
headquarters facility
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raised additional capital (A$36 million) through an
Australian private placement and share purchase plan
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J. Christopher Naftzger, Vice President, General
Counsel, Corporate Secretary and Chief Compliance Officer
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assessed and implemented improvements to our corporate
governance procedures
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filed our first proxy statement and planning of both annual and
special stockholders meeting
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obtained USDA-guaranteed financing for our new manufacturing and
headquarters facility
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raised additional capital (A$36 million) through an
Australian private placement and share purchase plan
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Mark V.
Iampietro, Vice President, Quality Systems and Regulatory
Affairs
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managed of our quality systems and regulatory affairs, including
issuance of new 510(k) and CE mark approvals
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oversaw construction of our new manufacturing facility to ensure
that all quality and regulatory requirements are met
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Our compensation committee, upon recommendation of our chief
executive officer, determines whether each of the named
executive officers other than our chief executive officer
satisfied their KPIs. Our compensation committee, with input
from other members of the board of directors, evaluates the
performance of our chief executive officer against his KPIs. The
compensation committee determined that each of the named
executive officers satisfied all of their KPIs for the 2010
calendar year performance period. Consequently, during fiscal
2011, all of the named executive officers received payout, at
target level, of their cash incentive award for the twelve-month
period ending December 31, 2010.
The compensation committee in October 2010 approved KPIs for
calendar 2011 for Messrs. Shortall, Wieland, Naftzger and
Iampietro. Subsequently, in June 2011, our compensation
committee approved revised KPIs for calendar 2011 for
Messrs. Shortall, Wieland, Naftzger and Iampietro and for
Dr. Mojdeh. These KPIs reflect the
21
business realignment which we commenced in March 2011. The
following is a summary description of these revised KPIs:
Alan D.
Shortall, Chief Executive Officer
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complete the industrialization of the Unifill 3.1 syringe so as
to meet customer demands
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optimize U.S. production to support Unitract 1mL syringe sales
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explore new product development, such as an auto-injector, and
develop other advanced drug delivery products
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secure supply or collaboration agreements with pharmaceutical
and healthcare companies for commercialization of pipeline
products;
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expand our organizational capability, build a high-performance
culture and develop operational resources to meet customer
requirements
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continuously build stockholder value through financial
accountability and commercial expansion
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R.
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Richard
Wieland II, Executive Vice President and Chief Financial
Officer
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support the completion of the industrialization of the Unifill
3.1 syringe so as to meet customer demands
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support the optimization of U.S. production of the Unitract 1mL
syringe to support sales
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support new product development activities
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work with our chief executive officer, chief operating officer
and other members of our executive team in securing supply or
collaboration agreements with pharmaceutical and healthcare
customers
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expand our organizational capability, build a high-performance
culture and develop operational resources by implementing a new
SAP Enterprise Resource Planning (ERP) system and
guiding the SOX compliance program to successful conclusion by
June 30, 2011.
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continuously build stockholder value through financial
accountability and commercial expansion by supporting financing
activities, controlling costs, developing and implementing a
global tax plan, and developing and implementing a cash
management, financial planning and forecast process to support
budget planning and controls
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Ramin
Mojdehbakhsh, Ph.D., Executive Vice President and Chief
Operating Officer
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complete the industrialization of the Unifill 3.1 syringe so as
to meet customer demands
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optimize U.S. production to support Unitract 1mL syringe sales
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explore new product development, such as an auto-injector, and
develop other advanced drug delivery products
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secure supply or collaboration agreements with pharmaceutical
and healthcare companies for commercialization of pipeline
products;
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expand our organizational capability, build a high-performance
culture and develop operational resources to meet customer
requirements
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continuously build stockholder value through financial
accountability and commercial expansion
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J. Christopher Naftzger, Vice President, General
Counsel, Corporate Secretary and Chief Compliance Officer
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support the completion of the industrialization of the Unifill
3.1 syringe so as to meet customer demands
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support the optimization of U.S. production of the Unitract 1mL
syringe to support sales
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support new product development activities and improve our
intellectual property protection program
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support our chief executive officer, chief operating officer and
other members of our executive team in securing supply or
collaboration agreements with pharmaceutical and healthcare
customers, and in the negotiation and execution of other supply,
partnership, sales and distribution agreements
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expand our organizational capability, build a high-performance
culture and develop operational resources by implementing a new
SAP ERP system and guiding the SOX compliance program to
successful conclusion by June 30, 2011.
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continuously build stockholder value through financial
accountability and commercial expansion by supporting our chief
executive officer, chief operating officer and chief financial
officer in financing activities, controlling costs, supporting
the development and implementation of a global tax plan;
assisting our chief executive officer and chief financial
officer with the preparation and review of registration
statements and other corporate filings, planning and preparing
for all board and board committee meetings and the annual
stockholders meeting and implementing appropriate risk
management programs
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Mark V.
Iampietro, Vice President, Quality Systems and Regulatory
Affairs
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provide quality and regulatory affairs support to the
commercialization of the Unifill 3.1 syringe to ensure that we
are able to commence supply to pharmaceutical partners for
product testing
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provide quality and regulatory affairs support to ensure that we
are able to meet all quality and regulatory requirements for the
Unitract 1mL syringe program
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provide quality and regulatory affairs support to optimize new
product development to meet customer needs; ensure that we meet
all quality and regulatory requirements to manufacture, market
and sell our new products; complete regulatory compliance
activities to support these product lines
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provide quality and regulatory affairs support to ensure that we
are able to meet all quality and regulatory requirements in
supply or collaboration agreements in support of market demand
and customer needs
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expand our organizational capability, build a high-performance
culture and develop operational resources by supporting the
implementation of a new SAP ERP system and by ensuring that all
staff members are well-trained in all quality requirements for
medical device manufacturing
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continuously build stockholder value by controlling costs and
supporting the implementation of risk management and compliance
programs
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Long-Term
Incentive Compensation
As described above, stock-based incentives are a key component
of our executive compensation program. Employee ownership is a
core value of our operating culture. Management and the
compensation committee believe that stock ownership encourages
our executives to create value for us over the long term. They
also believe that stock ownership promotes retention and
affiliation with us by aligning executive interests with those
of our stockholders and allowing our executives to share in our
long-term success after satisfying multi-year vesting
requirements.
Our long-term incentive compensation has been in the form of
grants of stock options and restricted stock awards, with all
such grants made during fiscal 2011 having been made under our
stockholder-approved 2009 Stock Incentive Plan. All of our stock
options are granted at an exercise price equal to the closing
price of our common stock on the date of grant. We view stock
options as an important element of performance-based
compensation because a stock option provides no realizable value
to a recipient until the vesting requirements have been met and
will increase in value only as the trading price of our shares
increases following the grant of the stock options. Similarly,
we view restricted stock awards as an important element of
performance-based compensation because, as a stockholder, the
named executive officer shares in both the upside and the
downside risk of movements in the market price of our common
stock. We believe that this sharing in the downside risk, which
is not a feature of stock options, coupled with multi-year
vesting periods helps to keep the named executive officers
focused on the interests of our stockholders over the long term.
23
For retention purposes, we have granted stock options and
restricted stock awards to our named executive officers that
vest over time based on continuous employment with us through
the relevant vesting dates. In addition, for incentive purposes,
we have granted stock options and restricted stock awards to
certain of our named executive officers that vest upon
achievement of specified performance criteria, including the
accomplishment of strategic business milestones, our attaining
specified market capitalization targets, or the trading price of
our common stock reaching specified levels for sustained periods.
In fiscal 2010, we granted a combination of stock options and
restricted stock awards to our chief executive officer that were
intended to serve as a multi-year incentive compensation
package. In light of those fiscal 2010 awards, we did not grant
any new stock-based incentive awards to our chief executive
officer in fiscal 2011. Vesting of the 834,000 stock options
that our chief executive officer received in fiscal 2010 is
contingent upon the attainment of specified market prices for
our common stock over a sustained period of time, and vesting of
the 1,166,000 restricted shares that he received in fiscal 2010
is contingent upon the attainment of specified strategic
business milestones. See the footnotes to the Outstanding
Equity Awards Table on page 31 for more details
regarding the vesting of these stock options and restricted
stock awards held by our chief executive officer.
In fiscal 2011, we granted a combination of stock options and
restricted stock awards to two of our named executive officers,
Mr. Naftzger and Dr. Mojdeh, in connection with their
commencement of employment with us. The size and composition of
the initial hire stock-based incentive awards for
Mr. Naftzger and Dr. Mojdeh were determined by our
compensation committee based on recommendations made by
Strategic Apex, comparative data for executives of similar
positions as reflected in the Radford Survey, and consideration
of prior grants made to our senior executives.
Mr. Naftzger was hired in early July 2010 and his initial
hire stock-based incentive awards were granted by our
compensation committee on July 6, 2010. Consequently, they
are reflected in the Grants of Plan-Based Awards
Table on page 29 as awards granted during fiscal
2011. Mr. Naftzgers initial hire restricted share
award consists of 40,000 restricted shares that become vested,
contingent upon his continued employment with us, over a
three-year period in increments of 25%, 25% and 50% of the
restricted shares. To ensure that the vesting occurs during an
open trading window so that vested shares may be liquidated to
cover tax liabilities that arise upon vesting, the vesting
occurs each year on the third trading day after we release
earnings for the fiscal quarter which includes the anniversary
of the date of grant. Mr. Naftzgers initial hire
stock option award consists of 60,000 stock options which become
vested based on achievement of performance criteria.
Specifically,
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30,000 of the stock options will vest upon the execution by us
and a pharmaceutical company (or Pharma A) of one or more
commercial supply agreements for the Unifill
ready-to-fill
syringe which provide for aggregate revenues to us of at least
$10 million; and
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30,000 of the stock options will vest upon the execution by us
and a pharmaceutical company other than Pharma A or any
affiliate of Pharma A of one or more commercial supply
agreements for the Unifill
ready-to-fill
syringe which provide for aggregate revenues to us of at least
$25 million.
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Consistent with the terms of Mr. Naftzgers employment
agreement with us, the stock options and restricted shares will
also vest upon a change in control, upon
Mr. Naftzgers death or termination of employment due
to total disability, or upon Mr. Naftzgers
resignation within 180 days after Alan D. Shortall ceases
to be our chief executive officer for any reason.
Dr. Mojdeh was hired in February 2011 and his initial hire
stock-based incentive awards were granted by our compensation
committee effective on February 7, 2011.
Dr. Mojdehs initial hire restricted share award
consists of 120,000 restricted shares that become vested in part
based on his continued employment with us and in part based on
achievement of specified performance criteria. Specifically, the
restricted shares will vest as follows provided that
Dr. Mojdeh remains employed with us through the relevant
vesting date:
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20,000 restricted shares will vest on the third trading day
after we release earnings for the fiscal quarter which includes
the first anniversary of the date of grant;
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20,000 restricted shares will vest on the third trading day
after we release earnings for the fiscal quarter which includes
the second anniversary of the date of grant;
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40,000 restricted shares will vest on the third trading day
after we release earnings for the fiscal quarter which includes
the third anniversary of the date of grant;
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20,000 restricted shares will vest upon signing of a first new
supply agreement for the Unifill
ready-to-fill
syringe with a pharmaceutical company other than Sanofi or its
affiliates, and
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20,000 restricted shares will vest upon signing of a second new
supply agreement for the Unifill
ready-to-fill
syringe with a pharmaceutical company other than Sanofi or its
affiliates.
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To ensure that the vesting occurs during an open trading window
so that vested shares may be liquidated to cover tax liabilities
that arise upon vesting, the vesting of the time-based
restricted shares occurs each year on the third trading day
after we release earnings for the fiscal quarter which includes
the anniversary of the date of grant.
Dr. Mojdehs initial hire stock option award consists
of 300,000 stock options which will vest in eight equal tranches
upon Dr. Mojdeh meeting substantial operational and product
milestones to enhance stockholder value. See the footnotes to
the Outstanding Equity Awards Table on page 31
for more details regarding the performance milestones.
Beginning in January 2011 and provided that there are sufficient
shares available for grant under the 2009 Stock Incentive Plan,
our compensation committee adopted a policy of providing annual
grants of stock-based incentive awards to our senior level
employees, including our named executive officers other than our
chief executive officer. Our compensation committee followed the
recommendation of Strategic Apex to implement a formula approach
in determining the size of stock-based awards to be granted each
year.
Specifically, grants will be made on the first business day of
each calendar year to employees holding the title of director or
a more senior position, excluding the chief executive officer.
The size of the grant would be determined by the estimated fair
value of the award, determined in accordance with FASB
Accounting Standards Codification Topic 718, as a percentage of
base salary, which percentage is based on an individuals
title (senior and executive vice presidents 50%,
vice presidents 35%, directors 30%). The
awards granted on January 3, 2011 under this annual grant
program were made in the form of stock options having an
exercise price equal to the closing market price of our common
stock on that day. One-third of the options will vest upon each
of the first, second and third anniversaries of the date of
grant, provided that the recipient remains employed with us
through the relevant vesting date. The options will also vest
upon a change in control of us, or upon the executives
death or termination of employment due to total disability.
Messrs. Wieland, Naftzger and Iampietro each received a
grant of stock options under this annual grant program. See the
Grants of Plan-Based Awards Table on page 29
for more information regarding their stock option awards.
If Proposal No. 12 to approve the 2009 Stock Incentive
Plan as proposed to be amended is not approved by our
stockholders, we do not anticipate having sufficient shares
available for grant under the 2009 Stock Incentive Plan to
continue this annual grant program beyond fiscal 2012.
Savings
Plans
We do not provide for wealth accumulation for retirement through
defined benefit pension plans or supplemental executive
retirement plans, nor do we anticipate doing so in the future.
Our U.S. subsidiary, Unilife Medical Solutions, Inc.,
maintains a broad-based 401(k) plan that permits our employees,
including our named executive officers, to accumulate savings
for retirement on a tax-deferred basis. Although our
U.S. subsidiary did not make matching or other employer
contributions under the 401(k) plan in fiscal 2011, we
anticipate adding a matching contribution feature to the 401(k)
plan in future years.
Other
Benefits and Perquisites
The named executive officers are eligible to participate in
employee benefit programs generally offered to our other
employees. In addition, we provide certain other perquisites to
the named executive officers that are not generally available to
other employees. Our compensation committee reviews these
benefits and perquisites. We also provide temporary housing and
other relocation assistance when certain employees, including
named executive officers, are hired or relocated for business
reasons. We anticipate continuing to offer newly hired or
relocated
25
employees relocation benefits which are competitive and
appropriate for their level of responsibility. For more detailed
information regarding benefits and perquisites provided to the
named executive officers, see the footnotes to the Summary
Compensation Table on page 28.
Severance
Severance provisions are set forth in the employment agreements
with our named executive officers. Further information regarding
the severance benefits of our named executive officers is
described under Potential Payments upon
Termination or Change in Control.
We will continue the severance obligations under existing
employment agreements. We believe that severance benefits allow
us to attract and retain talented executives, and to entice
other potential employees to accept positions with us and to
relocate to our central Pennsylvania headquarters. In
establishing these arrangements, we consider that we do not
provide defined benefit pension or supplemental executive
retirement plan benefits.
Guidelines
for Share Ownership and Holding Periods for Stock-based Awards
for Named Executive Officers
Our chief executive officer is also currently our largest
stockholder. Although we do not have formal stock ownership
requirements for our named executive officers, our chief
executive officers ownership position assists in ensuring
that management decisions are aligned with stockholder
interests. Moreover, under the terms of the stock option and
restricted stock awards that our chief executive officer
received in fiscal 2010, he may not dispose of the net gain
shares received under those awards before the first anniversary
on which the awards become vested with respect to such shares.
This holding period requirement expires if his employment
terminates or we undergo a change in control. Net gain shares
are the shares remaining after satisfaction of tax withholding
obligations
and/or
payment of the option exercise price via share withholding. As
of the date of this proxy statement, none of the 834,000 stock
options or 1,166,000 shares of restricted stock granted on
February 3, 2010 to our chief executive officer have vested.
In May 2011, the board discussed adopting stock ownership
guidelines to require our executive officers and directors to
accumulate and hold a minimum number of shares of our common
stock to ensure that their interests are aligned with
stockholder interests. While the board decided in September 2011
to establish stock ownership and retention guidelines for
non-executive directors, the board decided not to adopt similar
guidelines for our executive officers at this time. Our
compensation committee will continue to review this matter on a
yearly basis in consultation with our compensation consultant
and taking into consideration best practices in the United
States.
Potential
Impact on Compensation from Executive Misconduct
Because of the subjective nature of certain aspects of executive
incentive compensation, at present we have no formal policies
and/or
provisions with respect to the adjustment or recovery of awards
or payments if the relative performance measures upon which they
are based are restated or otherwise adjusted in a manner that
would have reduced the size of an award or payment. These types
of provisions are often referred to as recoupment or claw-back
policies. In June 2011, our compensation committee evaluated the
advisability of adopting a claw-back policy to protect our
investors from financial misconduct. The compensation committee
determined that we should adopt such a policy once the SEC
issues regulations under the recently enacted Dodd-Frank Wall
Street Reform and Consumer Protection Act, or Dodd-Frank, about
the proper form and scope of the claw-back policy required under
that Act. The compensation committee wishes to ensure that we
implement a fully compliant policy at one time, rather than
implement an interim policy that may require amendment after the
SEC regulations are released. In the meantime, our chief
executive officer and chief financial officer are and shall
remain subject to Section 304 of SOX, which provides that
if a financial restatement is required due to the material
noncompliance of the issuer, as a result of misconduct, with any
financial reporting requirement under the securities laws, then
the issuers chief executive officer and chief financial
officer must repay the issuer any amounts received as
incentive-based or stock-based compensation and profits received
from the sale of securities if such amounts are received during
the 12 months following the filing of the inaccurate
financial statements.
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Tax
Matters
Section 162(m) of the United States Internal Revenue Code
of 1986, as amended, places a limit of $1,000,000 on the amount
of compensation that publicly held corporations may deduct for
United States federal tax purposes in any one year with respect
to certain named executive officers.
To the extent that Section 162(m) applies to our
compensation program for our named executive officers, our
compensation committee follows a general practice of considering
the adverse effect of Section 162(m) on the deductibility
of compensation when designing annual and long-term compensation
programs and approving payouts under these programs. While the
tax treatment of compensation is important, the primary factor
influencing program design is the support of business
objectives. Consequently, our compensation committee reserves
the right to design and administer compensation programs in a
manner that does not satisfy the requirements of
Section 162(m) and to approve the payment of nondeductible
compensation, if the compensation committee believes doing so is
in our best interest.
Accounting
Matters
We record compensation expenses from our stock-based incentive
compensation awards in accordance with FASB Accounting Standards
Codification Topic 718, Compensation Stock
Compensation. We estimate the grant-date fair value of stock
options using the Black-Scholes option-pricing model, with the
exception of market-based grants, which are valued based on the
Monte Carlo pricing model. The fair value of restricted stock is
measured on the date of grant using the closing price of our
common stock on that date.
* * * * *
Compensation
Committee Report
The information contained in this report shall not be deemed
to be soliciting material or filed with
the SEC or subject to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended, the Exchange Act,
except to the extent that Unilife Corporation specifically
incorporates it by reference into a document filed under the
Securities Act of 1933, as amended or the Exchange Act.
The compensation committee has reviewed and discussed the
Compensation Discussion and Analysis appearing above with
management. Based on such review and discussions, the
compensation committee recommended to the board that the
Compensation Discussion and Analysis be included in our annual
report on
Form 10-K
and this proxy statement.
THE COMPENSATION COMMITTEE
Slavko James Joseph Bosnjak (Chairman)
John Lund
William Galle
27
Compensation
of Named Executive Officers
Summary
Compensation Table
The following table sets forth information concerning the
compensation earned during fiscal 2011, 2010 and 2009 by our
named executive officers.
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Plan
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
($)
|
|
Alan D. Shortall(4)
|
|
|
2011
|
|
|
|
423,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
(5)
|
|
|
75,296
|
(6)
|
|
|
898,446
|
|
Chief Executive Officer
|
|
|
2010
|
|
|
|
428,019
|
|
|
|
|
|
|
|
7,742,240
|
|
|
|
2,652,120
|
|
|
|
200,000
|
|
|
|
64,805
|
|
|
|
11,087,184
|
|
|
|
|
2009
|
|
|
|
321,991
|
|
|
|
144,540
|
|
|
|
1,541,025
|
(7)
|
|
|
1,408,400
|
(8)
|
|
|
166,908
|
|
|
|
142,035
|
|
|
|
3,724,899
|
|
R. Richard Wieland II(9)
|
|
|
2011
|
|
|
|
247,096
|
|
|
|
|
|
|
|
|
|
|
|
68,918
|
|
|
|
55,860
|
|
|
|
128,232
|
(10)
|
|
|
500,106
|
|
Executive Vice President and Chief Financial Officer
|
|
|
2010
|
|
|
|
4,712
|
|
|
|
|
|
|
|
422,400
|
|
|
|
570,000
|
|
|
|
8,167
|
|
|
|
3,858
|
|
|
|
1,009,137
|
|
Ramin Mojdehbakhsh, Ph.D.(11)
|
|
|
2011
|
|
|
|
137,077
|
|
|
|
|
|
|
|
582,000
|
|
|
|
819,178
|
|
|
|
|
|
|
|
15,097
|
(12)
|
|
|
1,553,352
|
|
Executive Vice President and Chief Operating Officer
|
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|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
J. Christopher Naftzger(13)
|
|
|
2011
|
|
|
|
199,154
|
|
|
|
|
|
|
|
238,000
|
|
|
|
204,445
|
|
|
|
29,400
|
|
|
|
91,553
|
(14)
|
|
|
762,552
|
|
Vice President, General Counsel, Corporate Secretary, and Chief
Compliance Officer
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|
|
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|
|
|
|
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|
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|
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|
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|
|
|
|
|
|
Mark V. Iampietro(15)
|
|
|
2011
|
|
|
|
193,096
|
|
|
|
|
|
|
|
|
|
|
|
36,428
|
|
|
|
47,375
|
|
|
|
1,180
|
|
|
|
278,079
|
|
Vice President of Quality and Regulatory Affairs
|
|
|
2010
|
|
|
|
185,000
|
|
|
|
|
|
|
|
303,500
|
|
|
|
|
|
|
|
46,250
|
|
|
|
30,459
|
|
|
|
565,209
|
|
|
|
|
(1) |
|
Reflects the aggregate grant date fair value of stock awards
granted during the relevant fiscal year calculated in accordance
with FASB ASC Topic 718. See Note 4 to our audited
consolidated financial statements included in our Annual Report
on
Form 10-K
for the year ended June 30, 2011. |
|
(2) |
|
Reflects the aggregate grant date fair value of stock options
granted during the relevant fiscal year calculated in accordance
with FASB ASC Topic 718. For a discussion of valuation
assumptions, see Note 4 to our audited consolidated
financial statements included in our Annual Report on
Form 10-K
for the year ended June 30, 2011. |
|
(3) |
|
We provide more detailed information about non-equity incentive
plan compensation in the footnotes to the Grants of Plan-Based
Awards Table below. The amounts in this column reflect the
annual cash incentive awards earned during the relevant fiscal
year. The amount reflected for Mr. Shortall for fiscal 2011
includes the amounts earned for calendar years 2010 and 2011
performance, each payment of which was made during fiscal 2011. |
|
(4) |
|
Prior to his relocation from Australia to the United States in
February 2009 and until April 2009, Mr. Shortall had been
receiving his cash compensation in Australian dollars, which,
for purposes of the 2009 amounts in this Summary Compensation
Table, were converted into U.S. dollars using the average
exchange rate during the applicable period. |
|
(5) |
|
The amount reflected for Mr. Shortall for fiscal 2011
includes the amounts earned for calendar years 2010 and 2011
performance, each payment of which was made during fiscal 2011. |
|
(6) |
|
Includes payments of $27,760 related to the purchase and
maintenance of an automobile. Also includes $45,508 related to
travel expenses of family members accompanying Mr. Shortall
on business trips and $2,028 of other expenses. |
|
(7) |
|
This restricted stock grant was issued with a fair value
determined in Australian dollars. Amounts were converted using
the exchange rate on the date of grant. |
|
(8) |
|
These option awards were issued with exercise prices in
Australian dollars. Amounts were converted using the exchange
rate at June 30, 2009 of A$1.00 = US$0.8048. |
|
(9) |
|
Mr. Wieland has been serving as our chief financial officer
since June 8, 2010. The amounts disclosed for fiscal 2010,
other than the amounts under the stock awards and option awards
columns, reflect amounts earned from June 8, 2010 to
June 30, 2010. |
28
|
|
|
(10) |
|
Includes $125,482 for reimbursement of relocation expenses and
$2,750 of other expenses. |
|
(11) |
|
Only fiscal 2011 data is provided because Dr. Mojdeh was
not one of our named executive officers for fiscal 2009 or 2010. |
|
(12) |
|
Represents reimbursement for relocation expenses. |
|
(13) |
|
Only fiscal 2011 data is provided because Mr. Naftzger was
not one of our named executive officers for fiscal 2009 or 2010. |
|
(14) |
|
Represents reimbursement for relocation expenses. |
|
(15) |
|
Mr. Iampietro has served as our Vice President of Quality
and Regulatory Affairs since October 2008. Only fiscal 2010 and
2011 data is provided because Mr. Iampietro was not one of
our named executive officers for fiscal 2009. |
Grants of
Plan-Based Awards in Fiscal 2011*
The following table provides information regarding all
plan-based awards made to our named executive officers during
fiscal 2011:
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|
|
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|
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|
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|
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|
|
|
|
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|
|
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|
|
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|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
Estimated
|
|
|
|
Other Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Future Payouts
|
|
Future Payouts
|
|
All Other
|
|
Awards:
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
Under
|
|
Under
|
|
Stock Awards:
|
|
Number of
|
|
Exercise or
|
|
Fair Value of
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Equity
|
|
Number of
|
|
Securities
|
|
Base Price of
|
|
Stock and
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
Incentive Plan
|
|
Shares of
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Award
|
|
|
|
Approval
|
|
Awards Target
|
|
Awards: Target
|
|
Stock or Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Type(1)
|
|
Grant Date
|
|
Date
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($)
|
|
($)
|
|
Alan D. Shortall
|
|
|
AIC
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Richard Wieland II
|
|
|
OP
|
|
|
|
1/3/11
|
|
|
|
10/28/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,436
|
|
|
|
5.46
|
|
|
|
68,918
|
|
|
|
|
AIC
|
|
|
|
|
|
|
|
|
|
|
|
98,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ramin Mojdehbakhsh, Ph.D.
|
|
|
RS
|
|
|
|
2/7/11
|
|
|
|
2/2/11
|
|
|
|
|
|
|
|
40,000
|
|
|
|
80,000
|
|
|
|
|
|
|
|
|
|
|
|
582,000
|
|
|
|
|
OP
|
|
|
|
2/7/11
|
|
|
|
2/2/11
|
|
|
|
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
4.85
|
|
|
|
819,178
|
|
|
|
|
AIC
|
|
|
|
|
|
|
|
|
|
|
|
68,750
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Christopher Naftzger
|
|
|
RS
|
|
|
|
7/6/10
|
|
|
|
6/28/10
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
238,000
|
|
|
|
|
OP
|
|
|
|
7/6/10
|
|
|
|
6/28/10
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
5.95
|
|
|
|
165,062
|
|
|
|
|
OP
|
|
|
|
1/3/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,821
|
|
|
|
5.46
|
|
|
|
39,383
|
|
|
|
|
AIC
|
|
|
|
|
|
|
|
10/28/10
|
|
|
|
60,000
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark V. Iampietro
|
|
|
OP
|
|
|
|
1/3/11
|
|
|
|
10/28/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,859
|
|
|
|
5.46
|
|
|
|
36,428
|
|
|
|
|
AIC
|
|
|
|
|
|
|
|
|
|
|
|
46,250
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Includes only those columns relating to grants awarded to the
named executive officers in fiscal 2011. All other columns have
been omitted. |
|
(1) |
|
Award Type: |
|
|
OP = stock option |
|
|
RS = restricted stock award |
|
|
AIC = annual incentive cash award |
|
(2) |
|
Pursuant to Mr. Shortalls employment agreement, he is
eligible to receive, subject to satisfaction of specified KPIs,
an incentive compensation payment of up to $200,000 per calendar
year for his services. The incentive compensation payment for
services performed in calendar year 2011 was paid during fiscal
2011. |
|
(3) |
|
Mr. Wieland has served as our chief financial officer since
June 8, 2010. Pursuant to Mr. Wielands
employment agreement, he is eligible to receive, subject to
satisfaction of specified KPIs, an incentive compensation
payment of up to 40% of his base salary per calendar year for
his services. The incentive compensation payment for services
performed in calendar year 2011 is payable during the first
quarter of calendar year 2012. |
|
(4) |
|
Dr. Mojdeh has served as our chief operating officer since
February 7, 2011. Pursuant to Dr. Mojdehs
employment agreement, he is eligible to receive, subject to
satisfaction of specified KPIs, an incentive compensation of up
to 50% of his base salary per calendar year for his services,
prorated for the period of time during which he was employed
during fiscal 2011. The incentive compensation payment for
services performed in calendar year 2011 is payable during the
first quarter of calendar year 2012. |
|
(5) |
|
Mr. Naftzger has served as our general counsel, corporate
secretary and chief compliance officer since July 6, 2011.
Pursuant to Mr. Naftzgers employment agreement, he is
eligible to receive, subject to satisfaction of |
29
|
|
|
|
|
specified KPIs, an incentive compensation of up to 30% of his
base salary per calendar year for his services. The incentive
compensation payment for services performed in calendar year
2011 is payable during the first quarter of calendar year 2012. |
|
(6) |
|
Pursuant to Mr. Iampietros employment agreement, he
is eligible to receive, subject to satisfaction of specified
KPIs, an incentive compensation payment of up to 25% of his base
salary per calendar year for his services. The incentive
compensation payment for services performed in calendar year
2011 is payable during the first quarter of calendar year 2012. |
Each of our named executive officers is employed with us under
the terms of an employment agreement for a term of years. The
employment agreements establish the named executive
officers initial base salary, which is subject to review
and adjustment annually, and his annual cash incentive award
opportunity. All cash incentive award payments are discretionary
and subject to achievement of key performance indicators. The
employment agreements with Messrs. Wieland and Iampietro
and Dr. Mojdeh provide for reimbursement of relocation and
temporary living expenses. The employment agreements for each of
our named executive officers also contain restrictive covenants
under which the executive must refrain from disclosing our
confidential information, and must refrain from becoming
involved in any business which is our competitor of or
attempting to entice away any of our employees, customers or
suppliers for a specified period of time after his employment
with us terminates. The employment agreements provide for
certain payments and benefits upon the named executive
officers termination of employment with us under certain
circumstances. Further information regarding those payments and
benefits and the circumstances under which they are payable is
described under Potential Payments upon
Termination or Change in Control.
The non-equity incentive plan award opportunity for each of our
named executive officers is specified as a term of his
employment agreement. Specifically, the current employment
agreement for Mr. Shortall provides for a discretionary
award of up to $200,000 subject to achievement of KPIs
established by our compensation committee. The non-equity
incentive plan award opportunity for each of our other named
executive officers is a discretionary amount expressed as a
percentage of base salary per calendar year, subject to
achievement of KPIs established by our compensation committee.
Those percentages are as follows:
|
|
|
|
|
|
|
Percentage of
|
|
Name
|
|
Base Salary
|
|
|
R. Richard Wieland II
|
|
|
40
|
%
|
Ramin Mojdehbakhsh, Ph.D.
|
|
|
50
|
%
|
J. Christopher Naftzger
|
|
|
30
|
%
|
Mark V. Iampietro
|
|
|
25
|
%
|
We implement our non-equity incentive plan, which we refer to
generally as our annual cash incentive plan, on a calendar year
basis. Consequently, amounts reflected in the Grants of
Plan-Based Awards Table above reflect the award opportunity for
services performed by our named executive officers throughout
the 2011 calendar year. The amount earned, if any, with respect
to those services is payable during the first quarter of
calendar year 2012.
30
Outstanding
Equity Awards Table
The following table provides information regarding all
outstanding equity awards for our named executive officers as of
June 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Market or
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
Payout
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
Unearned
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Market Value
|
|
Plan Awards:
|
|
Shares,
|
|
|
Number of
|
|
Number of
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
of Shares or
|
|
Number of
|
|
Units or
|
|
|
Securities
|
|
Securities
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Unearned Shares,
|
|
Other
|
|
|
Underlying
|
|
Underlying
|
|
Unexercised
|
|
Option
|
|
|
|
Stock
|
|
Stock That
|
|
Units or Other
|
|
Rights That
|
|
|
Unexercised
|
|
Unexercised
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
That Have
|
|
Have Not
|
|
Rights That Have
|
|
Have Not
|
|
|
Options
|
|
Options
|
|
Options
|
|
Price
|
|
Expiration
|
|
Not Vested
|
|
Vested
|
|
Not Vested
|
|
Vested
|
Name
|
|
(#) Exercisable
|
|
(#) Unexercisable
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)(1)
|
|
(#)
|
|
($)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan D. Shortall
|
|
|
|
|
|
|
|
|
|
|
834,000
|
(2)
|
|
|
6.64
|
|
|
|
2/3/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,250,000
|
|
|
|
|
|
|
|
|
|
|
|
2.10
|
(3)
|
|
|
9/30/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,166,000
|
(4)
|
|
|
6,039,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Richard Wieland II
|
|
|
|
|
|
|
|
|
|
|
240,000
|
(5)
|
|
|
5.28
|
|
|
|
6/8/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,436
|
(6)
|
|
|
|
|
|
|
5.46
|
|
|
|
1/3/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(7)
|
|
|
414,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ramin Mojdehbakhsh, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
300,000
|
(8)
|
|
|
4.85
|
|
|
|
2/7/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(9)
|
|
|
414,400
|
|
|
|
40,000
|
(10)
|
|
|
207,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Christopher Naftzger
|
|
|
|
|
|
|
|
|
|
|
60,000
|
(11)
|
|
|
5.95
|
|
|
|
7/6/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,821
|
(12)
|
|
|
|
|
|
|
5.46
|
|
|
|
1/3/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(13)
|
|
|
207,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark V. Iampietro
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
2.10
|
(3)
|
|
|
6/30/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,859
|
(14)
|
|
|
|
|
|
|
5.46
|
|
|
|
1/3/21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
(15)
|
|
|
194,250
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Includes only those columns which are applicable. |
|
(1) |
|
The market value of all stock awards is based upon the closing
price of our common stock of $5.18 at June 30, 2011. |
|
(2) |
|
The options will vest as follows: 250,000 options will vest upon
our share price reaching $9.45 or more for a minimum of 20 out
of any 30 consecutive trading days, 250,000 options will vest
upon our share price reaching $12.15 or more for a minimum of 20
out of any 30 consecutive trading days and 334,000 options will
vest upon our share price reaching $17.82 or more for a minimum
of 20 out of any 30 consecutive trading days. The options will
also vest upon a change in control or upon
Mr. Shortalls death or termination of employment due
to total disability. |
|
(3) |
|
Option awards were issued with an exercise price in Australian
dollars. Amounts were converted using the exchange rate at
June 30, 2011 of A$1.00 = US$1.0597. |
|
(4) |
|
Mr. Shortalls shares of restricted stock are subject
to vesting based on the achievement of the following performance
milestones: 233,200 restricted shares will vest upon the signing
of supply agreements with Sanofi for 100 million or more
Unifill
ready-to-fill
syringes. 233,200 restricted shares will vest upon the signing
of the first new agreement for the Unifill
ready-to-fill
syringe with a pharmaceutical company other than Sanofi or its
affiliates. 233,200 restricted shares will vest upon the signing
of an agreement with any pharmaceutical company, including
Sanofi, for a new product (other than the Unifill
ready-to-fill
syringe). 233,200 restricted shares will vest upon the
installation of the first Unifill
ready-to-fill
syringe production line into a clean room in our new facility,
including the successful operational qualification of the line.
233,200 restricted shares will vest upon the first shipment of
production quality sterile Unifill
ready-to-fill
syringes to Sanofi from a commercial production line. The shares
of restricted stock will also vest upon a change in control or
upon Mr. Shortalls death or termination of employment
due to total disability. |
|
(5) |
|
The options will vest as follows provided that Mr. Wieland
remains employed with us through the relevant vesting date:
60,000 options will vest upon our market capitalization reaching
$500 million or more for 20 consecutive trading days;
60,000 options will vest upon our market capitalization reaching
$750 million or more for 20 consecutive trading days;
60,000 options will vest upon our market capitalization reaching
$1,250 million or more for 20 consecutive trading days; and
60,000 options will vest upon our market capitalization
reaching |
31
|
|
|
|
|
$1,500 million or more for 20 consecutive trading days. The
options will also vest upon a change in control, upon
Mr. Wielands resignation within 180 days after
Alan D. Shortall ceases to be our chief executive officer for
any reason, or upon Mr. Wielands death or termination
of employment due to total disability. |
|
(6) |
|
These options were granted on January 3, 2011. One-third of
the options will vest upon each of the first, second and third
anniversaries of the date of grant, provided that
Mr. Wieland remains employed with us through the relevant
vesting date. The options will also vest upon a change in
control, upon Mr. Wielands death or termination of
employment due to total disability, or upon
Mr. Wielands resignation 180 days after Alan D.
Shortall ceases to be our chief executive officer for any reason. |
|
(7) |
|
These shares of restricted stock were granted on June 8,
2010. The shares of restricted stock will vest as follows
provided that Mr. Wieland remains employed with us through
the relevant vesting date: 20,000 shares will vest on the
third trading day after we release earnings for the fiscal
quarter which includes the first anniversary of the date of
grant, 20,000 shares will vest on the third trading day
after we release earnings for the fiscal quarter which includes
the second anniversary of the date of grant, and
40,000 shares will vest on the third trading day after we
release earnings for the fiscal quarter which includes the third
anniversary of the date of grant. The shares of restricted stock
will also vest upon a change in control, upon
Mr. Wielands resignation within 180 days after
Alan D. Shortall ceases to be our chief executive officer for
any reason, or upon Mr. Wielands death or termination
of employment due to total disability. |
|
(8) |
|
These options were granted on February 7, 2011. The options
will vest as follows provided that Dr. Mojdeh remains
employed with us through the relevant vesting date:
(i) 37,500 will vest upon the complete implementation of
the SAP ERP system for all manufacturing, supply and logistics
related components (which occurred during the fourth quarter of
fiscal 2011); (ii) 75,000 will vest upon meeting certain
milestones relating to the installation, validation and
production of first Unifill high volume automated assembly line;
(iii) 37,500 will vest upon meeting certain milestones
relating to the installation, validation and production of the
second Unifill high volume automated assembly line;
(iv) 37,500 will vest upon meeting specified revenue and
gross margin targets; and (v) 112,500 will vest upon
meeting development and implementation milestones for specified
and unspecified new products. The options will also vest upon a
change in control, upon Dr. Mojdehs death or
termination of employment due to total disability. |
|
(9) |
|
These shares of restricted stock were granted on
February 7, 2011. The restricted shares will vest as
follows provided that Dr. Mojdeh remains employed with us
through the relevant vesting date: 20,000 restricted shares will
vest on the third trading day after we release earnings for the
fiscal quarter which includes the first anniversary of the date
of grant; 20,000 restricted shares will vest on the third
trading day after we release earnings for the fiscal quarter
which includes the second anniversary of the date of grant;
40,000 restricted shares will vest on the third trading day
after we release earnings for the fiscal quarter which includes
the third anniversary of the date of grant. The restricted
shares will also vest upon a change in control, or upon
Dr. Mojdehs death or termination of employment due to
total disability |
|
(10) |
|
These shares of restricted stock were granted on
February 7, 2011. The restricted shares will vest as
follows provided that Dr. Mojdeh remains employed with us
through the relevant vesting date: 20,000 restricted shares will
vest upon signing of a first new supply agreement for the
Unifill
ready-to-fill
syringe with a pharmaceutical company other than Sanofi or its
affiliates, and 20,000 restricted shares will vest upon signing
of a second new supply agreement for the Unifill
ready-to-fill
syringe with a pharmaceutical company other than Sanofi or its
affiliates. The restricted shares will also vest upon a change
in control, or upon Dr. Mojdehs death or termination
of employment due to total disability. |
|
(11) |
|
These options were granted on July 6, 2010. The options
will vest as follows provided that Mr. Naftzger remains
employed with us through the relevant vesting date: 30,000 will
vest upon the execution by us and a pharmaceutical company
(Pharma A) of one or more commercial supply
agreements for the Unifill
ready-to-fill
syringe which provide for aggregate revenues to us of at least
$10 million; and 30,000 will vest upon the execution by us
and a pharmaceutical company other than Pharma A or any
affiliate of Pharma A of one or more commercial supply
agreements for the Unifill
ready-to-fill
syringe which provide for aggregate revenues to us of at least
$25 million. The options will also vest upon a change in
control, upon Mr. Naftzgers death or termination of
employment due to total disability, or upon
Mr. Naftzgers resignation within 180 days after
Alan D. Shortall ceases to be our chief executive officer for
any reason. |
32
|
|
|
(12) |
|
These options were granted on January 3, 2011. One-third of
the options will vest upon each of the first, second and third
anniversaries of the date of grant, provided that
Mr. Naftzger remains employed with us through the relevant
vesting date. The options will also vest upon a change in
control, upon Mr. Naftzgers death or termination of
employment due to total disability, or upon
Mr. Naftzgers resignation within 180 days after
Alan D. Shortall ceases to be our chief executive officer for
any reason. |
|
(13) |
|
These shares of restricted stock were granted on July 6,
2010. The shares of restricted stock will vest as follows
provided that Mr. Naftzger remains employed with us through
the relevant vesting date: 10,000 shares will vest on the
third trading day after we release earnings for the fiscal
quarter which includes the first anniversary of the date of
grant, 10,000 shares will vest on the third trading day
after we release earnings for the fiscal quarter which includes
the second anniversary of the date of grant, and
20,000 shares will vest on the third trading day after we
release earnings for the fiscal quarter which includes the third
anniversary of the date of grant. The restricted shares will
also vest upon a change in control, upon
Mr. Naftzgers death or termination of employment due
to total disability, or upon Mr. Naftzgers
resignation within 180 days after Alan D. Shortall ceases
to be our chief executive officer for any reason. |
|
(14) |
|
These options were granted on January 3, 2011. One-third of
the options will vest upon each of the first, second and third
anniversaries of the date of grant, provided that
Mr. Iampietro remains employed with us through the relevant
vesting date. |
|
(15) |
|
These shares of restricted stock were granted on March 26,
2010. The shares of restricted stock will vest as follows
provided that Mr. Iampietro remains employed with us
through the relevant vesting date: 12,500 shares will vest
on the third trading day after we release earnings for the
fiscal quarter which includes the second anniversary of the date
of grant, and 25,000 shares will vest on the third trading
day after we release earnings for the fiscal quarter which
includes the third anniversary of the date of grant. The shares
of restricted stock will also vest upon a change in control, or
upon Mr. Iampietros death or termination of
employment due to total disability. |
Option
Exercises and Stock Vested in Fiscal 2011
The following table contains information relating to the
exercise of stock options and vesting of restricted stock during
fiscal 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Value
|
|
Number of
|
|
Value
|
|
|
Shares Acquired
|
|
Realized on
|
|
Shares Acquired
|
|
Realized on
|
|
|
on Exercise
|
|
Exercise
|
|
on Vesting
|
|
Vesting
|
Name
|
|
(#)
|
|
(1)($)
|
|
(#)
|
|
(2)($)
|
|
Alan D. Shortall
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Richard Wieland II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ramin Mojdehbakhsh, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Christopher Naftzger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark V. Iampietro
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
64,750
|
|
|
|
|
(1) |
|
Represents the difference between the exercise price of the
stock options and the fair market value of our common stock at
exercise. Amount was converted using the exchange rate on the
date of exercise. |
|
(2) |
|
The value realized upon vesting of stock awards was calculated
by multiplying the closing price of our common stock on the
vesting date by the number of shares that became vested on that
date. |
Potential
Payments upon Termination or Change in Control
We have entered into employment agreements with our named
executive officers which provide for certain payments and
benefits upon the named executive officers termination of
employment with us under certain circumstances. In addition,
stock-based awards granted to our named executive officers
contain provisions for the acceleration of vesting under certain
circumstances.
The table below reflects the compensation and benefits, if any,
due to each of the named executive officers upon a voluntary
termination; a termination for cause; an involuntary termination
other than for cause or resignation for good
33
reason, both before and after a change of control; the
occurrence of a change of control; or a termination due to
death, disability or retirement. Except with respect to our
chief executive office, none of our named executive officers are
entitled to a tax
gross-up
payment in the event that the benefits that they receive upon
termination of employment or the occurrence of a change in
control result in the imposition of golden parachute excise
taxes. The amounts shown in the table below assume that each
termination of employment or the change of control, as
applicable, was effective as of June 30, 2011, and the fair
market value of a share of our common stock as of June 30,
2011 was $5.18, which was the closing price of our shares on
that date. The amounts shown in the table are estimates of the
amounts which would be payable upon termination of employment or
change of control as applicable. The actual amounts to be paid
can only be determined at the time of the actual termination of
employment or change of control, as applicable.
The value of the accelerated vesting of options was calculated
by multiplying the number of unvested shares subject to each
option by the excess, if any, between $5.18, the closing price
of a share of our common stock on June 30, 2011, over the
per share exercise price of the option. The value of the
accelerated vesting of restricted stock was calculated by
multiplying the aggregate number of unvested shares of
restricted stock by $5.18, the closing price of a share of our
common stock on June 30, 2011. More details concerning
these values are set forth in the footnotes below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
Termination
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
|
|
Resignation
|
|
|
Without Cause
|
|
|
|
|
|
Cause
|
|
|
|
|
|
|
|
|
or
|
|
|
Prior to
|
|
|
|
|
|
After
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Change in
|
|
|
Change in
|
|
|
Change in
|
|
|
Death or
|
|
Name
|
|
Benefit
|
|
for Cause
|
|
|
Control(1)
|
|
|
Control(2)
|
|
|
Control(3)
|
|
|
Disability(2)
|
|
|
Alan D. Shortall
|
|
Cash severance
|
|
$
|
|
|
|
$
|
315,000
|
(4)
|
|
$
|
|
|
|
$
|
315,000
|
(4)
|
|
$
|
|
|
|
|
Options
|
|
|
|
|
|
|
|
(5)
|
|
|
|
(5)
|
|
|
|
(5)
|
|
|
|
(5)
|
|
|
Restricted Stock
|
|
|
|
|
|
|
6,039,880
|
(6)
|
|
|
6,039,880
|
(6)
|
|
|
6,039,880
|
(6)
|
|
|
6,039,880
|
(6)
|
|
|
Health Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise tax gross up
|
|
|
|
|
|
|
|
|
|
|
2,999,000
|
|
|
|
2,999,000
|
|
|
|
|
|
|
|
Relocation
|
|
|
100,000
|
(7)
|
|
|
100,000
|
(7)
|
|
|
|
|
|
|
100,000
|
(7)
|
|
|
100,000
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value
|
|
$
|
100,000
|
|
|
$
|
6,454,880
|
|
|
$
|
9,038,880
|
|
|
$
|
9,453,880
|
|
|
$
|
6,139,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Richard Wieland II(8)
|
|
Cash severance
|
|
$
|
|
|
|
$
|
245,000
|
(9)
|
|
$
|
|
|
|
$
|
375,667
|
(10)
|
|
$
|
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
(11)
|
|
|
|
(11)
|
|
|
|
(11)
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
414,400
|
(12)
|
|
|
414,400
|
(12)
|
|
|
414,400
|
(12)
|
|
|
Health Benefits
|
|
|
|
|
|
|
5,751
|
(13)
|
|
|
|
|
|
|
8,626
|
(14)
|
|
|
|
|
|
|
Relocation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value
|
|
$
|
|
|
|
$
|
250,751
|
|
|
$
|
414,400
|
|
|
$
|
798,693
|
|
|
$
|
414,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ramin Mojdehbakhsh, Ph.D.
|
|
Cash severance
|
|
$
|
|
|
|
$
|
330,000
|
(15)
|
|
$
|
|
|
|
$
|
495,000
|
(16)
|
|
$
|
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
86,625
|
(17)
|
|
|
86,625
|
(17)
|
|
|
86,625
|
(17)
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
621,600
|
(18)
|
|
|
621,600
|
(18)
|
|
|
621,600
|
(18)
|
|
|
Health Benefits
|
|
|
|
|
|
|
5,751
|
(19)
|
|
|
|
|
|
|
8,626
|
(20)
|
|
|
|
|
|
|
Relocation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value
|
|
$
|
|
|
|
$
|
335,751
|
|
|
$
|
708,225
|
|
|
$
|
1,211,851
|
|
|
$
|
708,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Christopher Naftzger(21)
|
|
Cash severance
|
|
$
|
|
|
|
$
|
200,000
|
(22)
|
|
$
|
|
|
|
$
|
300,000
|
(23)
|
|
$
|
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
(24)
|
|
|
|
(24)
|
|
|
|
(24)
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
207,200
|
(25)
|
|
|
207,200
|
(25)
|
|
|
207,200
|
(25)
|
|
|
Health Benefits
|
|
|
|
|
|
|
5,751
|
(26)
|
|
|
|
|
|
|
8,626
|
(27)
|
|
|
|
|
|
|
Relocation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value
|
|
$
|
|
|
|
$
|
205,751
|
|
|
$
|
207,200
|
|
|
$
|
515,826
|
|
|
$
|
207,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark V. Iampietro
|
|
Cash severance
|
|
$
|
|
|
|
$
|
92,500
|
(28)
|
|
$
|
|
|
|
$
|
323,750
|
(29)
|
|
$
|
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
(30)
|
|
|
|
(30)
|
|
|
|
(30)
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
194,250
|
(31)
|
|
|
194,250
|
(31)
|
|
|
194,250
|
(31)
|
|
|
Health Benefits
|
|
|
|
|
|
|
2,876
|
(32)
|
|
|
|
|
|
|
8,626
|
(33)
|
|
|
|
|
|
|
Relocation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value
|
|
$
|
|
|
|
$
|
95,376
|
|
|
$
|
194,250
|
|
|
$
|
526,626
|
|
|
$
|
194,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|
(1) |
|
Except with respect to Mr. Shortall, Termination Without
Cause includes termination due to our decision not to renew a
named executive officers employment agreement if the named
executive officer was willing and able to continue performing
services under the terms of the employment agreement. |
|
(2) |
|
Upon a change of control or in the case of termination of
employment due to death or total disability, all outstanding
options and shares of restricted stock vest. |
|
(3) |
|
Termination Without Cause After Change in Control reflects the
aggregate of any payments and benefits to which the executive
becomes entitled upon a single-trigger Change in Control event
and any incremental payments and benefits to which the executive
becomes entitled upon termination of employment coincident with
or following such Change in Control event. |
|
(4) |
|
The cash severance payment to Mr. Shortall is calculated
based on an amount equal to nine months of his total salary
compensation for the fiscal year in which employment is
terminated. |
|
(5) |
|
All of Mr. Shortalls outstanding unvested options
were underwater as of June 30, 2011. In the event that
Mr. Shortalls employment is terminated by us without
cause prior to a change in control, his performance-based stock
options are neither accelerated nor forfeited; rather, he
retains the opportunity to vest in the options if the
performance milestones are satisfied before the expiration date. |
|
(6) |
|
This amount represents the value of the accelerated vesting of
1,166,000 shares of restricted stock based on a value per
share of $5.18, the closing price of our shares on June 30,
2011. In the event that Mr. Shortalls employment is
terminated by us without cause prior to a change in control, his
performance-based restricted stock is neither accelerated nor
forfeited; rather, he retains the opportunity to vest in the
restricted stock if the performance milestones are satisfied
before the expiration date. |
|
(7) |
|
Upon the end of Mr. Shortalls employment with us in
the United States we have the obligation to pay for the
relocation of Mr. Shortall and his family from the United
States to Australia, including moving his personal and household
effects. The amount above represents the estimated expenses
associated with such relocation as of June 30, 2011. |
|
(8) |
|
If Mr. Wieland resigns his employment with us within
180 days after Alan D. Shortall ceases to be our chief
executive officer for any reason, Mr. Wieland is entitled
to receive the payments set forth under Termination
Without Cause After a Change in Control. |
|
(9) |
|
This amount represents an amount equal to 12 months of
Mr. Wielands total salary compensation for the fiscal
year in which employment is terminated. |
|
(10) |
|
This amount represents an amount equal to eighteen months of
Mr. Wielands total salary compensation for the fiscal
year in which employment is terminated ($367,500) plus the
amount of the bonus paid to Mr. Wieland in our fiscal year
ended June 30, 2010 ($8,167). |
|
(11) |
|
All of Mr. Wielands outstanding unvested options were
underwater as of June 30, 2011. Had the options been in the
money, the amount reflected would represent the excess, if any
between $5.18, the closing price of our shares on June 30,
2011, and the option exercise price. |
|
(12) |
|
This amount represents the value of the accelerated vesting of
80,000 shares of restricted stock based on a value per
share of $5.18, the closing price of our shares on June 30,
2011. |
|
(13) |
|
This amount represents the cost of 12 months of
Mr. Wielands COBRA health care continuation coverage. |
|
(14) |
|
This amount represents the cost of 18 months of
Mr. Wielands COBRA health care continuation coverage. |
|
(15) |
|
This amount represents an amount equal to 12 months of
Dr. Mojdehs total salary compensation for the fiscal
year in which employment is terminated. |
|
(16) |
|
This amount represents an amount equal to 18 months of
Dr. Mojdehs total salary compensation for the fiscal
year in which employment is terminated ($495,000) plus the
amount of the bonus paid to Dr. Mojdeh in our fiscal year
ended June 30, 2010 ($0). |
|
(17) |
|
This amount represents the accelerated vesting of 262,500
options based on the excess, if any between $5.18, the closing
price of our shares on June 30, 2011, and the option
exercise price of $4.85. |
|
(18) |
|
This amount represents the value of the accelerated vesting of
120,000 shares of restricted stock based on a value per
share of $5.18, the closing price of our shares on June 30,
2011. |
35
|
|
|
(19) |
|
This amount represents the cost of 12 months of
Dr. Mojdehs COBRA health care continuation coverage. |
|
(20) |
|
This amount represents the cost of 18 months of
Dr. Mojdehs COBRA health care continuation coverage. |
|
(21) |
|
If Mr. Naftzger resigns his employment with us within
180 days after Alan D. Shortall ceases to be our chief
executive officer for any reason, Mr. Naftzger is entitled
to receive the payments set forth under Termination
Without Cause After a Change in Control. |
|
(22) |
|
This amount represents an amount equal to 12 months of
Mr. Naftzgers total salary compensation for the
fiscal year in which employment is terminated. |
|
(23) |
|
This amount represents an amount equal to 18 months of
Mr. Naftzgers total salary compensation for the
fiscal year in which employment is terminated ($300,000) plus
the amount of the bonus paid to Mr. Naftzger in our fiscal
year ended June 30, 2010 ($0). |
|
(24) |
|
All of Mr. Naftzgers outstanding unvested options
were underwater as of June 30, 2011. Had the options been
in the money, the amount reflected would represent the excess,
if any between $5.18, the closing price of our shares on
June 30, 2011, and the option exercise price. |
|
(25) |
|
This amount represents the value of the accelerated vesting of
40,000 shares of restricted stock based on a value per
share of $5.18, the closing price of our shares on June 30,
2011. |
|
(26) |
|
This amount represents the cost of 12 months of
Mr. Naftzgers COBRA health care continuation coverage. |
|
(27) |
|
This amount represents the cost of 18 months of
Mr. Naftzgers COBRA health care continuation coverage. |
|
(28) |
|
This amount represents an amount equal to six months of
Mr. Iampietros total salary compensation for the
fiscal year in which employment is terminated. |
|
(29) |
|
This amount represents an amount equal to 18 months of
Mr. Iampietros total salary compensation for the
fiscal year in which employment is terminated ($277,500) plus
the amount of the bonus paid to Mr. Iampietro in our fiscal
year ended June 30, 2010 ($46,250). |
|
(30) |
|
All of Mr. Iampietros outstanding unvested options
were underwater as of June 30, 2011. Had the options been
in the money, the amount reflected would represent the excess,
if any, between $5.18, the closing price of our shares on
June 30, 2011, and the option exercise price. |
|
(31) |
|
This amount represents the value of the accelerated vesting of
37,500 shares of restricted stock based on a value per
share of $5.18, the closing price of our shares on June 30,
2011. |
|
(32) |
|
This amount represents the cost of six months of
Mr. Iampietros COBRA health care continuation
coverage. |
|
(33) |
|
This amount represents the cost of 18 months of
Mr. Iampietros COBRA health care continuation
coverage. |
PROPOSAL NO. 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are providing you with the opportunity to vote to approve, on
an advisory, non-binding basis, the compensation of our
executive officers named in the Summary Compensation Table under
Executive Compensation. Under Dodd-Frank, we are
required to seek a non-binding advisory vote from our
stockholders to approve the compensation awarded to our named
executive officers. This proposal, commonly known as a
say-on-pay
proposal, gives you as a stockholder the opportunity to express
your views on our named executive officers compensation.
This vote is not intended to address any specific element of our
compensation programs, but rather to address our overall
approach to the compensation of our named executive officers
described in this proxy statement. The vote solicited by this
proposal is advisory and its outcome will not be binding on the
board or require the board or the compensation committee to take
any action. However, the compensation committee values the
opinions expressed by our stockholders in their vote on this
proposal and expects to take into account the outcome of this
vote when evaluating future executive compensation arrangements
for our named executive officers.
We have in place comprehensive executive compensation programs.
Our compensation committee continually monitors executive
compensation programs and adopt changes to reflect the
marketplace in which we compete for talent, as well as general
economic, regulatory and legislative developments affecting
executive compensation. As described in detail under the heading
EXECUTIVE COMPENSATION Compensation Discussion
and Analysis, our executive compensation programs are
designed to help us attract, retain and motivate superior
executive talent, while providing competitive and differentiated
levels of pay based on corporate and individual performance
36
that reinforce the alignment of the interests of the members of
our executive management team with those of our stockholders.
The board is asking stockholders to cast a non-binding advisory
vote on the following resolution:
Resolved that the compensation paid to the
Companys named executive officers, as disclosed pursuant
to the disclosure rules of the Securities and Exchange
Commission, including the Compensation Discussion and
Analysis, compensation tables and narrative discussions,
is approved on a non-binding advisory basis.
OUR BOARD
RECOMMENDS A VOTE FOR THE APPROVAL OF
PROPOSAL NO. 3
PROPOSAL NO. 4
ADVISORY VOTE ON THE FREQUENCY OF EXECUTIVE
COMPENSATION VOTING
Under Dodd-Frank, we are required to seek a non-binding advisory
vote from our stockholders regarding how frequently we should
include in our proxy materials a proposal regarding the approval
of the compensation awarded to our named executive officers. We
are providing stockholders with the option of selecting a
frequency of one, two or three years. The board and the
compensation committee believe an advisory vote on executive
compensation every THREE YEARS is the best approach for
us and our stockholders based on a number of considerations,
including the following:
|
|
|
|
|
an advisory
say-on-pay
vote at every third meeting would provide stockholders an
opportunity to make an informed and thoughtful vote based on
close analysis of our compensation program.
|
|
|
|
a three-year vote cycle gives the board and the compensation
committee sufficient time to thoughtfully respond to
stockholders sentiments and to implement any necessary
changes to our executive compensation policies and procedures.
This may be challenging to do on an annual or biennial basis,
and both we and our stockholders would benefit from having more
time for a thoughtful and constructive dialogue on why
particular pay practices are appropriate for us.
|
|
|
|
a short review cycle will not allow for a meaningful evaluation
of our performance against our compensation practices, as any
adjustment in pay practices would take time to implement and be
reflected in our financial performance and in the price of our
common stock.
|
|
|
|
our board will continue to engage with our stockholders on
executive compensation during the period between stockholder
votes. As discussed elsewhere in this proxy statement, we
provide stockholders an opportunity to communicate directly with
the board of directors, including on issues of executive
compensation.
|
The option of one year, two years or three years that receives
the highest number of votes cast by stockholders will be the
frequency for the advisory vote on executive compensation that
has been selected by stockholders. Although the advisory vote is
non-binding, the board will review the results of the vote and
consider our stockholders concerns and take them into
account when determining how often to include a
say-on-pay
proposal in our proxy materials. We currently intend to provide
a say-on-pay
proposal at least once every three years.
OUR BOARD
RECOMMENDS A VOTE FOR A THREE-YEAR FREQUENCY OF
THE
NON-BINDING VOTE TO APPROVE EXECUTIVE COMPENSATION.
PROPOSALS NO. 5
10 APPROVAL OF THE GRANT OF SECURITIES TO
NON-EXECUTIVE DIRECTORS OF THE COMPANY UNDER THE 2009 STOCK
INCENTIVE PLAN
Introduction
Our CHESS Depositary Interests, or CDIs, each representing
one-sixth of a share of our common stock, are listed on the
Australian Securities Exchange, or ASX.
37
Our board believes that it is desirable to add a stock-based
component to the compensation of our non-executive directors to
ensure that the directors have a commonality of interest with
our stockholders toward our long-term success.
On September 30, 2011, our board approved the grant of
15,000 securities (either in the form of shares of common stock
or phantom stock units) in each of 2011, 2012 and 2013 to each
of our non-executive directors (Slavko James Joseph Bosnjak,
Jeff Carter, William Galle, John Lund, Mary Katherine Wold and
Marc Firestone) under the 2009 Stock Incentive Plan, or the
Stock Plan, provided that each of the above named directors
continues to be a director at the time of issue and subject to
obtaining stockholder approval at the meeting as required under
the ASX Listing Rules. As noted above, each non-executive
director will have the option of electing to take their
securities in the form of common stock or phantom stock units
further details of which are provided below.
Consequently, under
Proposals 5-10,
stockholders are being asked to approve a three-year program of
systematically granting 15,000 stock-based awards to each of the
above named non-executive directors, the first grant of which
would be made, assuming
Proposals No. 5-10
are approved by stockholders, as soon as practicable after the
meeting to each director who is re-elected at that meeting.
Subsequent grants of the same magnitude would be made to these
non-executive directors on each June 30th of calendar
years 2012 and 2013 if they continue to serve as our
non-executive directors on those dates. Additional stockholder
approval will be required under ASX Listing Rule 10.14 if
we wish to extend the systematic grant of awards to our
non-executive directors beyond June 30, 2013 or to any new
non-executive directors and our CDIs remain listed on the ASX at
that time.
The 45,000 securities to be granted to each of the above named
directors over three years have a market value of $189,000 based
on the closing price of our common stock on the NASDAQ Stock
Market on September 30, 2011, being the date on which our
board approved the grant. The total of 270,000 securities to be
granted to all directors together has a market value of
$1,134,000.
All stock-based awards under these
Proposals No. 5-10
would be granted under our Stock Plan or any successor
stockholder-approved plan. Non-executive directors will be
permitted to choose whether to receive their stock-based awards
in the form of either (i) fully-vested shares of our common
stock or (ii) fully-vested phantom stock units that will be
settled in shares of our common stock when the directors
service on the board ceases for any reason including in the
event of a change in control. Phantom stock units are a form of
stock-based award that is commonly used in the United States as
an incentive to executives
and/or
directors and which provides for a deferral of compensation for
tax purposes. They are not available in Australia. Essentially,
phantom stock units are bookkeeping entries under which
recipients are credited with a number of units that represent
their right to be issued stock at a specified future time or
event. The value associated with a phantom stock unit is the
equivalent of the value of a share of common stock, but
recipients may not sell or otherwise transfer the unit before
settlement in shares to realize that value. Further details of
the terms of the phantom stock units and common stock that may
be issued to the above named non-executive directors (should
Proposals No. 5-10
be approved by stockholders) are set out below. To comply with
United States federal income tax law, directors who are
U.S. tax payers are required to make an advance written
election regarding the form in which they wish to receive each
stock-based award. However, to ensure that we are able to
administer stock-based awards granted under our Stock Plan
uniformly, we will require all directors to make the written
election regarding the form in which they wish to receive each
stock-based award on the same date. All of the stock-based
awards will be subject to the Stock Ownership and Retention
Guidelines discussed above under Director
Compensation at page 9.
As at September 30, 2011, we had a total of
6,676,143 shares of common stock reserved for issue
pursuant to the Stock Plan.
Proposals No. 5-10
relate to the issue of 270,000 securities to the above named
directors (which each director may elect to take in either the
form of shares of common stock or phantom stock units) with
90,000 securities to be issued as soon as practical following
conclusion of the meeting (assuming stockholders approve
Proposals No. 5-10)
which constitutes approximately 1.35% of the total number of
currently reserved shares of common stock.
38
The principal terms of the shares of common stock and phantom
stock units which the directors may elect to receive are as
follows:
(a) Grant Price: There is no
consideration payable on the receipt of shares of common stock
or phantom stock units. The phantom stock units, are
automatically converted into shares of common stock when the
director leaves our board.
(b) Vesting Conditions: The shares of
common stock and phantom stock units will be fully vested and
nonforfeitable upon receipt by the director.
(c) Transferability: The shares of common
stock will be subject to the Stock Ownership and Retention
Guidelines described above under Director
Compensation at page 9, but may be sold by the
director to the extent permitted under those guidelines. A
director will not be able to sell or otherwise transfer the
phantom stock units until such time as the phantom stock units
are converted to shares of common stock which will occur when
the director leaves our board for any reason including the event
of a change in control. Only after the director leaves our board
may he or she sell or otherwise transfer for value the shares of
common stock which are associated with the phantom stock units.
Approvals
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 the
purposes of ASX Listing Rule 10.14 and for all other
purposes for the grant of securities to each of the
non-executive directors described below.
As required by the ASX Listing Rule 10.15A, the following
additional information is provided in relation to
Proposals No. 5-10:
|
|
|
|
|
the maximum aggregate number of securities which may be granted
by us under the Stock Plan under
Proposals No. 5 10 is 270,000, comprising:
|
|
|
|
|
|
15,000 securities (in either the form of shares of common stock
or phantom stock units) to Slavko James Joseph Bosnjak in each
of 2011, 2012 and 2013, totaling 45,000 securities;
|
|
|
|
15,000 securities (in either the form of shares of common stock
or phantom stock units) to Jeff Carter in each of 2011, 2012 and
2013, totaling 45,000 securities;
|
|
|
|
15,000 securities (in either the form of shares of common stock
or phantom stock units) to William Galle in each of 2011, 2012
and 2013, totaling 45,000 securities;
|
|
|
|
15,000 securities (in either the form of shares of common stock
or phantom stock units) to John Lund in each of 2011, 2012 and
2013, totaling 45,000 securities;
|
|
|
|
15,000 securities (in either the form of shares of common stock
or phantom stock units) to Mary Katherine Wold in each of 2011,
2012 and 2013, totaling 45,000 securities; and
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15,000 securities (in either the form of shares of common stock
or phantom stock units) to Marc Firestone in each of 2011, 2012
and 2013, totaling 45,000 securities.
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There is no consideration payable for the grant of the phantom
stock units or shares of common stock (as the case may be).
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The following options have been issued to our directors since
the last approval under the ASX Listing Rule 10.14:
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options to purchase 100,000 shares of common stock were
granted to Marc Firestone with an exercise price of $6.19
following stockholder approval at the 2010 stockholders
meeting held on December 1, 2010; and
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options to purchase 100,000 shares of common stock were
granted to Mary Katherine Wold with an exercise price of $6.83
following stockholder approval at the 2010 stockholders
meeting held on December 1, 2010.
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Mr. Shortall, our chief executive officer, and each of our
non-executive directors named in Proposals
No. 5-10
are eligible to participate in the Stock Plan.
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If
Proposals No. 5-10
are approved by stockholders, we will issue 15,000 securities
(in either the form of common stock or phantom stock units) to
each of the above named non-executive directors who are
re-elected to serve as a non-executive director of the Company
at the meeting as soon as practicable after the date of the
meeting. 15,000 securities (in the form of common stock or
phantom stock units) will then be issued to each of the above
named non-executive directors on or around July 1 of calendar
years 2012 and 2013, provided that they continue to be directors
at the time of issue. In any case, no securities approved for
issue under
Proposals No. 5-10
will be issued to directors later than three years after the
2011 meeting.
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No loan will be made by us to any non-executive director in
connection with the grant of securities.
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Details of any securities issued under the Stock Plan will be
published in our Annual Report on
Form 10-K
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 (falling within ASX Listing
Rule 10.14) who become entitled to participate in the Stock
Plan after
Proposals No. 5-10
have been approved and who are not named in this proxy statement
will not participate until approval is obtained under ASX
Listing Rule 10.14.
Voting
exclusion statement
We will disregard any votes cast on Proposals No. 5
-10 by a director and any associate of a director. However, we
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 form, or it is cast by the person
chairing the meeting as a proxy for a person who is entitled to
vote, in accordance with a direction on the proxy form to vote
as the proxy decides.
THE BOARD (EXCLUDING SLAVKO JAMES JOSEPH BOSNJAK (WITH
RESPECT TO PROPOSAL NO. 5 ONLY), JEFF CARTER (WITH
RESPECT TO PROPOSAL NO. 6 ONLY), WILLIAM GALLE
(WITH RESPECT TO PROPOSAL NO. 7 ONLY), JOHN LUND (WITH
RESPECT TO PROPOSAL NO. 8 ONLY), MARY KATHERINE WOLD
(WITH RESPECT TO PROPOSAL NO. 9 ONLY), AND MARC
FIRESTONE (WITH RESPECT TO PROPOSAL NO. 10 ONLY)), WHO
DO NOT MAKE A RECOMMENDATION WITH RESPECT TO THE
PROPOSAL IN PARENTHESES AFTER THEIR NAME DUE TO THEIR
PERSONAL INTEREST IN THAT PROPOSAL) UNANIMOUSLY RECOMMENDS A
VOTE FOR THE APPROVAL OF
PROPOSALS NO. 5-10.
PROPOSAL NO. 11
APPROVAL OF THE GRANT OF SECURITIES TO ALAN D.
SHORTALL
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, in connection with the negotiation and execution by
the Company of a new three-year employment agreement with
Mr. Shortall, who is our founder, executive director and
chief executive officer, we are seeking stockholder approval for
the purposes of ASX Listing Rule 10.14 and for all other
purposes for the grant of restricted stock and stock options on
the terms set out below.
On September 30, 2011, the compensation committee approved
in relation to Mr. Shortalls employment agreement the
grant of 1,166,000 shares of restricted stock and options
to purchase 750,000 shares of common stock (Options) to
Mr. Shortall under the Stock Plan, subject to obtaining
stockholder approval for the grant at the meeting. The proposed
grant of restricted stock and options is provided for in the
terms of a new three-year employment agreement between us and
Mr. Shortall, which became effective on October 1,
2011. The vesting of the options will be tied to
Mr. Shortalls continued employment with us, and the
vesting of the restricted stock will be
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tied to the achievement of significant milestones related to the
development and commercialization of our diversified portfolio
of advanced drug delivery systems that are expected to increase
stockholder value.
Our compensation committee considered the proposed grant of
restricted stock and Options as part of Mr. Shortalls
total compensation provided for in his new employment agreement.
In evaluating Mr. Shortalls total compensation
package, the compensation committee consulted the Radford
Survey, which provides cash and equity compensation data
reported for
U.S.-based
chief executive officers for life sciences companies, including
those companies which are similar to us in terms of employee
headcount. Strategic Apex advised the compensation committee on
the negotiation of Mr. Shortalls new employment
agreement, including the proposed grant of restricted stock and
options.
Our compensation committee believes that the amounts and terms
of the proposed grants of restricted stock and Options are
appropriate and will further align Mr. Shortalls
interests with those of our stockholders.
Specifically, the compensation committee considered that:
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Mr. Shortalls annual salary and bonus, which have not
changed since 2008 (other than to convert his salary from
Australian dollars to U.S. dollars), are not increased
under the new employment agreement. In addition,
Mr. Shortalls annual salary and bonus will not
increase and will remain at current levels during the term of
his new employment agreement;
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Mr. Shortalls salary and bonus under the new
employment agreement are significantly below the
50th percentile based on the Radford Survey;
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Although the percentage of Mr. Shortalls total
compensation that is represented by the restricted stock and
Options is higher than for similar companies included in the
Radford Survey, which the compensation committee believes is
appropriate for a company at our stage of development and aligns
Mr. Shortalls interests with those of our
shareholders, the value of Mr. Shortalls overall
compensation package (salary, bonus and equity compensation) is
consistent with other CEOs in the Radford Survey;
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Vesting of the restricted stock is tied to the achievement of
significant business milestones, which the committee believes
are closely tied to the creation of stockholder value;
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The Options will have value only to the extent that our stock
price increases; and
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The aggregate amount of the proposed grant is less than the
previous equity award to Mr. Shortall, which was approved
by stockholders in 2009.
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As of September 30, 2011, which is the date of the
committees approval of the proposed grant of restricted
stock and Options to Mr. Shortall, the Black-Scholes value
of the Options was $1.88 million, and the market value of
the shares issuable pursuant to the restricted stock was
$4.9 million based upon the closing price of our common
stock on the NASDAQ Stock Market on that date. As previously
discussed, the value of the restricted stock and Options is
spread over the three-year period of Mr. Shortalls
new employment agreement and are tied to the achievement of
significant business milestones.
Terms of
Options
The principal terms of the Options to be granted to
Mr. Shortall are as follows:
(a) Grant Date: Subject to stockholder
approval being obtained for Proposals No. 11and 12,
the Options will be granted to Mr. Shortall as soon as
practicable after the meeting. Because there are not sufficient
shares remaining under the Stock Plan at this time to fulfill
the proposed grant of restricted stock and Options, the grant
date is anticipated to be January 3, 2012, after the annual
adjustment to the Stock Plan share reserve is effectuated, as
further described under Proposal No. 12 on
page 44 provided that Proposal No. 12 is approved
by stockholders.
(b) Grant Price: There is no
consideration payable for the grant of Options.
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(c) Exercise Price for the Options: The
exercise price of the Options will be the closing price of our
common stock on the NASDAQ Stock Market on the grant date. We
will ensure that we will disclose to the market the exact
exercise price of the Options granted to Mr. Shortall
immediately following their grant.
(d) Expiration Date: The Options will
expire at 5:00 P.M. U.S. Eastern Time on the tenth
anniversary of the grant date, unless fully exercised or
terminated earlier.
(e) Vesting Conditions: The Options are
scheduled to vest in three equal installments as follows:
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250,000 of the Options will vest and become exercisable on the
first anniversary of the grant date,
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250,000 of the Options will vest and become exercisable on the
second anniversary of the grant date, and
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250,000 of the Options will vest and become exercisable on the
third anniversary of the grant date.
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There are no other performance conditions or other requirements
attaching to the Options other than the requirement that
Mr. Shortall continues to be employed by us.
Notwithstanding the foregoing, the Options will immediately
become vested and exercisable upon (i) the occurrence of a
change in control event (as defined in the Stock Plan),
(ii) the death of Mr. Shortall, or
(iii) Mr. Shortall ceasing to be employed by us by
reason of disability.
(f) Lapsing of Options: The Options
granted to Mr. Shortall will lapse if Mr. Shortall
ceases to be employed by us, except for reason of death or
disability, prior to the vesting of the Options.
Terms of
Restricted Stock
Shares of restricted stock are a form of US security which are
not available in Australia but which are commonly used in the
United States as a form of incentive for executives
and/or
directors. Although shares of restricted stock will be issued to
Mr. Shortall, Mr. Shortall will not be able to
transfer the restricted stock until certain performance
milestones are achieved (as described below) and the restricted
stock will be forfeited if the performance milestones are not
achieved within the prescribed period or if certain other events
occur.
The principal terms of the 1,166,000 shares of restricted
stock to be granted to Mr. Shortall are as follows:
(a) Grant Date: Subject to stockholder
approval being obtained for Proposals No. 11 and 12,
the restricted stock will be granted to Mr. Shortall as
soon as practicable after the meeting. Because there are not
sufficient shares remaining under the Stock Plan at this time to
fulfill the proposed grant of restricted stock and Options, the
grant date is anticipated to be January 3, 2012, after the
annual adjustment to the Stock Plan share reserve is
effectuated, as further described under
Proposal No. 12 on page 44, provided that
Proposal No. 12 is approved by stockholders.
(b) Grant Price: There is no
consideration payable for the grant of the restricted stock.
(c) Exercise Price: There is no
consideration payable on the vesting of the restricted stock.
(d) Vesting Conditions: The shares of
restricted stock are scheduled to vest as follows:
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Product shipment to a pharmaceutical company for drug stability
studies or drug clinical trials 5% per drug.
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The signing of a development agreement with a pharmaceutical
company for the development or customization of a Unilife
product with scheduled payments of up to $3,000,000
5% per agreement.
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The signing of a development agreement with a pharmaceutical
company for the development or customization of a Unilife
product with scheduled payments between $3,000,000 and
$5,000,000 10% per agreement.
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The signing of a development agreement with a pharmaceutical
company for the development or customization of a Unilife
product with scheduled payments in excess of
$5,000,000 20% per agreement.
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The signing of a commercial supply agreement for a Unilife
product with sales of up to $25,000,000 15% per
agreement.
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The signing of a commercial supply agreement for a Unilife
product with sales in excess of $25,000,000 25%
per agreement.
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Annual revenue in excess of $100,000,000 50%.
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Annual revenue in excess of $200,000,000 100%.
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Given the companys transformation into a developer of
advanced drug delivery devices to meet the specific needs of
pharmaceutical companies, the compensation committee believes
that it is important to set performance milestones that do not
limit Mr. Shortalls compensation to any one product,
pharmaceutical customer or performance metric. The foregoing
milestones were crafted by the compensation committee to allow
Mr. Shortall and us flexibility to pursue various
commercial paths that should result in increased stockholder
value. Although Mr. Shortall could meet several of the
foregoing milestones that in total would exceed 100%, under the
terms of the proposed grant, Mr. Shortall is capped at 100%
or a total of 1,166,000 shares of restricted stock. For
example, we enter into (i) an agreement with a
pharmaceutical company for product for one stability test (5%),
(ii) two development agreements for a Unilife product in
excess of $5,000,000 (20% each) and (iii) and three
commercial supply agreements for a Unilife product of up to
$25,000,000 (15% each), 90% of Mr. Shortalls
restricted stock would have vested under the proposed grant. If
the company then enters into a commercial supply agreement for a
Unilife product with sales in excess of $25,000,000, which
according to the foregoing schedule should result in 25% of his
restricted stock vesting, Mr. Shortall would only receive
10% as he is capped at 100%. Thereafter, Mr. Shortall would
not receive any additional shares of restricted stock no matter
what other milestones are meet during the term of his employment
agreement.
The compensation committee will have sole discretion to
determine whether and when a particular vesting condition has
been satisfied.
Notwithstanding the foregoing, the shares of restricted stock
will immediately vest upon (i) the occurrence of a change
in control (as defined in the Stock Plan), (ii) the death
of Mr. Shortall, or (iii) Mr. Shortall ceasing to
be employed by us by reason of disability.
(e) Lapsing of Restricted Stock: The
shares of restricted stock will be forfeited if
Mr. Shortall voluntarily resigns or if we terminate his
employment with us for cause. The shares of restricted stock
will be forfeited, to the extent not yet vested, on the fifth
anniversary of the grant date.
As required by ASX Listing Rule 10.15A, the following
additional information is provided in relation to
Proposal No. 11:
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the maximum aggregate number of shares of restricted stock that
may be granted to Mr. Shortall is 1,166,000, which will
vest as set out above;
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the maximum aggregate number of Options that may be granted to
Mr. Shortall is 750,000, which will vest as set out above;
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the following options have been issued to our directors since
the last approval under the ASX Listing Rule 10.14:
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options to purchase 100,000 shares of common stock were
granted to Marc Firestone with an exercise price of $6.19
following stockholder approval at the 2010 stockholders
meeting held on December 1, 2010; and
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options to purchase 100,000 shares of common stock were
granted to Mary Katherine Wold with an exercise price of $6.83
following stockholder approval at the 2010 stockholders
meeting held on December 1, 2010.
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Mr. Shortall and each of our non-executive directors named
in Proposals
No. 5-10
are eligible to participate in the Stock Plan; and
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no loan will be made by us to Mr. Shortall in connection
with the grant of restricted stock or options.
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Details of any securities issued under the Stock Plan will be
published in our Annual Report on
Form 10-K
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 (falling within ASX Listing
Rule 10.14) who become entitled to participate in the Stock
Plan after Proposal No. 11 has been approved and who
are not named in this proxy statement will not participate until
approval is obtained under ASX Listing Rule 10.14.
Voting
exclusion statement
We will disregard any votes cast on Proposal No. 11 by
a director and any associate of a director. However, we 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 a direction on the proxy card to vote as the
proxy decides.
OUR
BOARD, EXCLUDING ALAN D. SHORTALL DUE TO HIS PERSONAL INTEREST
IN THE PROPOSAL, UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF PROPOSAL NO. 11.
PROPOSAL NO. 12
APPROVAL OF THE 2009 STOCK
INCENTIVE PLAN, AS PROPOSED TO BE AMENDED
Overview
As described above under EXECUTIVE
COMPENSATION Compensation Discussion and
Analysis, stock-based incentives are a key component of
our executive compensation program and employee ownership is a
core value of our operating culture. Management and the
compensation committee believe that stock ownership encourages
our executives and employees to create value for us over the
long term. They also believe that stock ownership promotes
retention and affiliation with us by aligning executive and
employee interests with those of our stockholders and allowing
our executives and employees to share in our long-term success
after satisfying multi-year vesting requirements. Moreover,
compensating our employees through equity awards allows us to
grow our company while conserving cash. Our long-term incentive
compensation has been in the form of grants of stock options and
restricted stock awards, with all such grants following our
redomiciliation to the United States in January 2010 having been
made under our stockholder-approved 2009 Stock Incentive Plan,
or the Stock Plan.
Approvals
Under this Proposal No. 12, we are asking stockholders
to approve an amendment of the Stock Plan to increase the number
of shares of our common stock
and/or our
CHESS Depositary Interests, or CDIs, that may be issued under
the Stock Plan and to reapprove the Stock Plan for purposes of
refreshing our stockholder approval requirement for the purpose
of ASX Listing Rule 7.2 (Exception 9), the NASDAQ Listing
Standard 5635(c) and Section 162(m) of the
U.S. Internal Revenue Code, or Section 162(m).
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 us 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 No. 12 seeks approval
from stockholders pursuant to ASX Listing Rule 7.2
(Exception 9) for the Stock Plan.
Such re-approval of the Stock Plan is also intended to ensure
that we may continue to grant performance-based awards to our
named executive officers that are tax efficient for us under
U.S. tax law. Other than the increase in the number of
shares of common stock or CDIs that may be issued under the
Stock Plan, as described in more detail below, no other changes
have been made to the Stock Plan since the date it was last
approved by our stockholders nor are any other changes being
proposed under this Proposal No. 12. Specifically,
approval of this Proposal No. 12
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will not change the types of awards that may be granted or
expand the benefits that eligible participants receive under the
Stock Plan.
Our Stock Plan expires upon the earlier of the tenth anniversary
of its adoption in 2009 and the date upon which the shares
available for issuance under the Stock Plan are exhausted. As of
the record date, of the shares of our common stock approved for
issuance under the Stock Plan, 6,298,948 shares have either
been issued or are subject to issuance under outstanding awards,
so that only 377,195 shares of our common stock remain
available for future awards (not including any shares that might
in the future be returned to the Stock Plan as a result of
awards expiring, being forfeited or otherwise terminating as to
any shares, or shares being withheld or surrendered to us in
payment of an awards exercise price or related tax
withholding obligations). We have issued 4,207,517 options,
2,328,000 shares of restricted stock and 23,184 shares
of common stock under the Stock Plan as of our record date. Of
the total options issued, 259,753 options have been
cancelled due to employee terminations and remain available for
reissuance. If this Proposal No. 12 is not approved by
our stockholders, we currently anticipate that we will exhaust
all of the shares available for issuance under our Stock Plan by
the end of fiscal 2012. Moreover, we would not be able to
fulfill the grants of stock options and restricted stock
proposed to be made to our chief executive officer under the
incentive package included in his new employment agreement,
which are described in and we are asking stockholders to
approve, under Proposal No. 11. Similarly, we would
not be able to fulfill the grants of common stock or stock units
to our non-executive directors, which are described in and we
are asking stockholders to approve, under
Proposals No. 5-10.
If this Proposal No. 12 is not approved, we will not
be able to make the above-described grants, notwithstanding
approval of Proposals No. 5 11 by
stockholders.
Share
Increase Amendment
The initial number of shares of our common stock which may be
issued with respect to awards granted under the Stock Plan was
set at an aggregate of 6,000,000 shares, the share reserve.
This amount was equivalent to approximately 11.4% of our total
outstanding shares of common stock on February 19, 2010
when our shares began trading on the NASDAQ Stock Market.
Commencing January 1, 2011, and on each
January 1st thereafter through January 1, 2019,
the share reserve automatically adjusts under the terms of the
Stock Plan so that the share reserve will equal twelve and
one-half percent (12.5%) of the weighted average number of
shares of our common stock outstanding at that time; provided,
however, that any such adjustment may only increase, and not
decrease, the share reserve. The outstanding shares for this
purpose is the number determined by us to calculate basic
earnings (loss) per share for the preceding four fiscal
quarters. The 12.5% share reserve determined as of each
January 1st is reduced, however, by the sum of
(A) any shares of our common stock issued or delivered
pursuant to awards under the Stock Plan, and (B) any shares
of our common stock subject to any then-outstanding award under
the Stock Plan. In other words, the share reserve increases if
our total outstanding shares of common stock increases, such as
due to a capital raising event, and the share reserve decreases
as we grant awards under the Stock Plan and issue shares of
common stock pursuant to those awards. The share reserve
adjustment is not an evergreen provision that necessarily makes
additional shares available for issuance under the Stock Plan
annually.
The Stock Plan also includes share accounting rules under which
we are able to regrant certain shares that are returned to the
Stock Plan under certain circumstances, for example, awards that
are forfeited, expire, or settled in cash. See the Summary
of the 2009 Stock Incentive Plan below for more
information about these share accounting rules.
Because the annual adjustment to the share reserve each
January 1st results in an increase in the number of
shares of our common stock available for grant under the Stock
Plan only if our total outstanding shares of common stock has
increased over the preceding four fiscal quarters, our share
reserve growth has not kept pace with our need to be able to
issue stock-based awards during this growth phase of our
company. Specifically, we rely on stock-based awards to provide
attractive incentives to recruit key talent as we grow our
management team and employee base. Likewise, we rely on the use
of stock-based awards to offset lower cash compensation,
relative to our peer group companies, as we continue to
judiciously invest our working capital in growing our pipeline
of products. Consequently, under this Proposal No. 12,
we are asking stockholders to approve an amendment to the share
reserve provisions of the Stock Plan to provide that, commencing
January 1, 2012, the annual adjustment be increased to
17.5% of the weighted average number of shares of our common
stock outstanding as determined by us to calculate basic
earnings (loss) per share for the preceding four fiscal
quarters. We estimate that this amendment
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will result in approximately 4,165,000 additional shares of our
common stock becoming available for grant under the Stock Plan
as of January 1, 2012, if the weighted average shares of
our common stock for the calendar year ending December 31,
2011 does not change significantly from the weighted average
shares outstanding as of the end of the fiscal quarter ended
September 30, 2011.
An increase of this magnitude would enable us to provide
competitive incentive awards to anticipated key recruits as we
continue to expand our team of talent over the next two to three
years. In addition, it will allow us to continue our policy of
providing annual grants of stock-based incentive awards to our
key employees; add a stock-based component to the compensation
of our non-executive directors under the program of grants
described under Proposals No. 5 10,
provided that such proposals are approved by stockholders; and
fulfill the grants of stock options and restricted stock
proposed to be made to our chief executive officer under the
incentive package included in his new employment agreement,
described under Proposal No. 11, provided that
proposal is approved by stockholders.
Voting
Exclusion Statement
We will disregard any votes cast on Proposal No. 12 by
any director and any associate of a director. However, we 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 form, or it is cast by the person chairing the
meeting as a proxy for a person who is entitled to vote, in
accordance with a direction on the proxy form to vote as the
proxy decides provided that the vote is not cast on behalf of a
director or any associate of that director.
Our board believes that the Stock Plan, as proposed to be
amended, is in the best interests of stockholders because it
preserves our ability to grant stock-based awards, which are
critically important in attracting and retaining key people and
creating incentives for those people to improve stockholder
value and contribute to our growth and financial success.
In accordance with ASX Listing Rule 7.2 (Exclusion 9), the
following is a summary of the principal features of our Stock
Plan, as proposed to be amended, but it is qualified in its
entirety by reference to the full text of the Stock Plan, which
appears as Annex A to this proxy statement.
Summary
of the 2009 Stock Incentive Plan
Background
and Purpose
We adopted the Stock Plan to promote our long-term growth and
profitability by:
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providing key people with incentives to improve stockholder
value and contribute to our growth and financial
success; and
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enabling us to attract, retain and reward the best-available
personnel.
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The Stock Plan is a typical plan for
U.S.-listed
companies and is designed to comply with U.S. law.
Eligibility
and Participation
Participation in the Stock Plan is open to all of our employees,
officers, executive directors, non-executive directors and other
individuals who provide services to us or any of our affiliates,
as the administrator of the Stock Plan may select from time to
time. Our compensation committee serves as the administrator.
The administrator may also grant awards to individuals in
connection with their hiring, recruitment or other related
circumstance prior to the date that the relevant individual
first performs those services for us or any of our affiliates,
however, no awards may vest or become exercisable and no shares
may be issued prior to the individual commencing performance of
those services. As of the date of this proxy statement, six
non-executive directors and approximately 141 employees and
other individuals providing services to us or any of our
affiliates are eligible to participate in the Stock Plan.
Types
of Awards
The Stock Plan provides for the grant of stock options, stock
appreciation rights, and other stock-based awards (including
performance awards), as each is described more fully below,
which may be granted separately or in
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tandem with other awards. The administrator will be responsible
for determining the prices, expiration dates, and other material
conditions governing the exercise of the awards granted under
the Stock Plan. We may make or guarantee loans to assist award
holders in the exercise of awards or to satisfy any withholding
tax obligations arising from awards granted under the Stock
Plan, to the extent permitted by law. U.S. laws preclude us
from making or guaranteeing any such loans to our executive
officers. Types of awards which may be granted under the Stock
Plan include:
Stock Options. The administrator may grant
tax-qualified incentive stock options, within the meaning of
Section 422 of the U.S. Internal Revenue Code or
nonqualified stock options. However, only our employees and
employees of our subsidiaries may receive tax-qualified
incentive stock options. All stock options must have an exercise
price equal to or above the fair market value of our shares on
the date of grant and a term of no longer than ten years. As of
September 30, 2011, the fair market value of a share of our
common stock was $4.20. An option holder may pay the exercise
price in cash, by tendering shares, by a combination of cash and
shares or by any other means that the administrator approves.
Stock Appreciation Rights. The administrator
may grant stock appreciation rights which entitle the holder to
receive a payment in cash, shares or a combination of the
foregoing, having an aggregate value that is equal to the excess
(if any) on the date of exercise of the fair market value of the
underlying shares on that date over the base price of the shares
specified in the grant agreement. The base price per share
specified in the grant agreement cannot be less than the lower
of the fair market value of shares on the grant date or the
exercise price of any tandem stock option award to which the
stock appreciation right is related. No stock appreciation right
shall have a term longer than ten years duration.
Stock-Based Awards. The administrator may
grant stock-based awards in such amounts, on such terms and
conditions and for such consideration (including no
consideration or such minimum consideration as may be required
by law), as the administrator shall determine. A stock award may
be restricted or unrestricted and may be denominated and paid in
cash, shares or other securities, stock-equivalent units,
securities or debentures convertible into shares, or any
combination of these.
Performance Awards. The administrator may
grant stock-based awards in a manner that constitutes them as
qualified performance-based compensation within the
meaning of Section 162(m). Section 162(m) limits a
public company from deducting more than $1 million in
compensation paid in any one year to its chief executive officer
or any of its next three highest compensated officers (other
than the chief executive officer and chief financial officer),
unless the amount paid is qualified performance-based
compensation. For awards granted under the Stock Plan to qualify
as performance-based compensation, the material terms of the
performance goals upon which awards are conditioned must be
disclosed to and approved by our stockholders at least once
every five years. Material terms for purposes of
Section 162(m) include (1) the individuals eligible to
receive compensation; (2) a description of the business
criteria on which the performance goal is based; and
(3) the maximum amount of compensation that could be paid
to any individual if the performance goal is attained. Each of
these aspects of the Stock Plan is discussed below, and approval
of this Proposal No. 12 constitutes approval of these
aspects for purposes of the stockholder approval requirements of
Section 162(m). Your vote on this
Proposal No. 12, therefore, is necessary so that we
may comply with Section 162(m) when granting
performance-based stock awards and thereby ensure that we may
qualify to deduct, for U.S. federal income tax purposes,
any compensation that is paid under such awards.
The administrator may determine that the grant of, or lapse of
restrictions with respect to, performance-based stock awards may
be based upon one or more performance measures or objective
performance targets to be attained relative to those performance
measures. Performance targets may include minimum, maximum,
intermediate and target levels of performance, with the size of
the performance-based stock award or the lapse of restrictions
based on the level of performance attained. The administrator is
authorized to make adjustments to the method of calculating the
attainment of performance measures or targets in recognition of:
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extraordinary or non-recurring items;
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changes in tax laws;
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changes in generally accepted accounting principles or
accounting policies;
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47
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changes related to restructured or discontinued operations;
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the restatement of prior period financial results; or
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any other unusual, non-recurring gain or loss that is separately
identified and quantified in our financial statements,
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provided that the administrators decision is made as to
whether such adjustments will be made with respect to any
covered employee, within the meaning of Section 162(m) and
is determined when the performance targets are established for
the applicable performance period. The administrator may also,
at its sole discretion, modify the performance results upon
which awards are based under the Stock Plan to offset any
unintended results arising from events not anticipated when
performance measures and targets were established provided that
such adjustment is permitted by Section 162(m).
For this purpose, performance measures means the
criteria established by the administrator in either absolute
terms or relative to the performance of one or more comparable
companies or an index covering multiple companies and which
relate to any of the following, as it may apply to an
individual, one or more business unit(s), divisions or
subsidiaries or our whole company:
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revenue;
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earnings before interest, taxes,
depreciation and amortization (EBITDA);
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operating income;
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pre- or after-tax income;
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cash flow;
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cash flow per share;
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net earnings
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earnings per share;
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price-to-earnings
ratio;
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return on equity;
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return on invested capital;
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return on assets;
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growth in assets;
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share price performance;
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economic value added;
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total stockholder return;
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improvement in or attainment of expense
levels;
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improvement in or attainment of working
capital levels;
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relative performance to a group of
companies comparable to us, and
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strategic business criteria consisting
of one or more objectives based on our meeting specified goals
relating to revenue, market penetration, business expansion,
costs, clinical trials, product feasibility studies, regulatory
submissions, regulatory approvals, or acquisitions or
divestitures.
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Shares Available
Under the Stock Plan
The initial number of shares of our common stock that may be
issued with respect to awards granted under the Stock Plan was
set at an aggregate of 6,000,000 shares, subject to annual
increases as described above. If Proposal No. 12 is
approved, the share reserve provision under the Stock Plan will
be amended to provide that the annual adjustment is increased by
5%, beginning as of January 1, 2012, to 17.5% of the
weighted average number of shares of our common stock
outstanding as determined by us to calculate basic earnings
(loss) per share for the preceding four fiscal quarters. We
estimate that this amendment will result in approximately
4,165,000 additional shares of our common stock becoming
available for grant under the Stock Plan as of January 1,
2012, assuming that the weighted average shares of our common
stock for the calendar year ending December 31, 2011 does
not change significantly from the weighted average shares
outstanding as of the end of the fiscal quarter ended
September 30, 2011. In addition, shares may be issued under
awards assumed in connection with a merger or acquisition as
permitted by applicable rules of the principal securities
exchange or market on which shares are listed. Any such issue
will not reduce the number of shares available for issue under
the Stock Plan.
If any:
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award issued under the Stock Plan has for any reason expired or
otherwise terminated, in whole or in part, without having been
exercised in full;
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48
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shares issued to an award holder under the Stock Plan are
forfeited, or bought back by us because of the failure to meet a
contingency or condition required for the vesting of such
shares; or
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awards issued under the Stock Plan are settled in cash,
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then the shares not issued pursuant to such award, or forfeited
or bought back by us, will revert and become available for
re-issue under the Stock Plan.
If any shares subject to an award are not delivered to the award
holder under the Stock Plan because those shares are withheld
for the payment of taxes or because the award has been exercised
through a reduction of shares the subject of the award (i.e.,
net exercised) or where an appreciation distribution in respect
of a stock appreciation right is paid in shares, the number of
shares subject to the award that are not delivered to the award
holder will remain available for subsequent issue under the
Stock Plan. If the exercise price of any award or the tax
withholding liability related to any award is satisfied by
tendering of shares held by the award holder (either by actual
delivery or attestation), then the number of shares so tendered
will be available for issue under the Stock Plan. Prior to this
proposed amendment, outstanding shares tendered to satisfy the
tax withholding liability related to restricted stock awards
were not available for reissuance under the Stock Plan.
Notwithstanding the above, of the total shares that are
authorized for issue under the Stock Plan, not more than
6,000,000 shares are currently available for issue pursuant
to tax-qualified incentive stock options intended to qualify
under Section 422 of the U.S. Internal Revenue Code.
In addition, the maximum number of shares subject to awards of
any combination which may be granted during any one calendar
year to any one individual under the Stock Plan is limited to
2,000,000 shares.
Each of the limits described above will be adjusted to reflect
any stock dividends, stock splits,
split-ups,
recapitalizations, mergers, consolidations, business
combinations, exchanges of stock or anything similar. The shares
to be issued under the Stock Plan will be shares of authorized
but unissued or reacquired shares or treasury shares, including
shares repurchased by us on the open market.
Adjustments
to Awards
In the event of a stock dividend, stock split or reverse stock
split affecting shares:
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the maximum number of shares for which awards may be granted
under the Stock Plan and the maximum number of shares with
respect to which awards may be granted during any one fiscal
year to any individual; and
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the number of shares covered by and the exercise price and other
terms of outstanding awards,
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will be adjusted to reflect such event.
Except as stated above, in the event of any change affecting us,
our shares, or our capitalization, by reason of a spin-off,
split-up,
dividend, recapitalization, merger, consolidation, or share
exchange (other than any such change that is part of a
transaction resulting in a Change in Control (as
defined in the Stock Plan)), the administrator, in its
discretion and without the consent of the holders of the awards,
may make:
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appropriate adjustments to the maximum number and type of shares
reserved for issue or with respect to which awards may be
granted under the Stock Plan (in the aggregate, with respect to
any individual during any one calendar year and with respect to
which awards that are intended to be tax-qualified as incentive
stock options under the U.S. Internal Revenue
Code); and
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any adjustments in outstanding awards, including, but not
limited to, modifying the number, kind and price of securities
subject to awards.
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In the event of any transaction resulting in a Change in
Control, outstanding stock options and other awards which are
payable or convertible into shares will terminate on the
effective time of the Change in Control, unless provision is
made for the continuation, assumption, or substitution of the
awards by the surviving or successor entity or its parent. In
the event of such a termination, the outstanding stock options
and other awards that will terminate upon the effective time of
the Change in Control will become fully vested immediately
before the effective time of the Change in Control, and the
holders of stock options and other awards under the Stock Plan
will be permitted, immediately before the Change in Control, to
exercise or convert all portions of the awards that are then
exercisable
49
or convertible. Further, in the event that a Change in Control
occurs after a performance-based stock award has been granted
but before completion of the applicable performance period, such
award will become payable (or the lapse restrictions will lapse,
as applicable) as of the date of the Change in Control.
Without the consent of award holders, the administrator may make
adjustments to the terms and conditions of, and the criteria
included in, awards in recognition of unusual or non-recurring
events affecting us, our financial statements or the financial
statements of any affiliate, changes in applicable laws,
regulations, or accounting principles, whenever the
administrator determines that such adjustments are appropriate
in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Stock
Plan.
Amendment
and Termination
Our board of directors may terminate, amend or modify the Stock
Plan or any portion of it at any time without stockholder
approval, subject to such restrictions on amendments and
modifications as may apply under applicable laws or listing
rules.
Compliance
with Listing Rules
While shares are listed for trading on any stock exchange or
market, our board of directors and the administrator agree that
they will not make any amendments, issue any awards or take any
action under the Stock Plan unless such action complies with the
relevant listing rules.
U.S.
Federal Income Tax Consequences
The following is a general summary of the U.S. federal
income tax treatment of stock options, which are authorized for
grant under the Stock Plan, based upon the provisions of the
U.S. Internal Revenue Code as of the date of this proxy
statement.
Non-U.S. residents
should consult with their tax adviser regarding the specific tax
consequences as a result of the grant of awards under the Stock
Plan in their country of origin. This summary is not intended to
be exhaustive and the exact tax consequences to any award holder
will depend upon his or her particular circumstances and other
facts. Stock Plan participants should consult their tax advisor
with respect to any state, local and
non-U.S. tax
considerations or relevant U.S. federal tax implications of
options granted under the Stock Plan.
Incentive Stock Options. An option holder will
recognize no taxable income for regular income tax purposes as a
result of the grant or exercise of an incentive stock option
which qualifies under Section 422 of the U.S. Internal
Revenue Code. Option holders who neither dispose of their shares
within two years of the date that the option was granted or
within one year following the exercise of the option, will
normally recognize a capital gain or loss on the sale of the
shares equal to the difference, if any, between the sale price
and the purchase price of the shares. If an option holder
satisfies these holding periods, on the sale of the shares, we
will not be entitled to any deduction for U.S. federal
income tax purposes. Where an option holder disposes of shares
within two years after the date of grant of those options or
within one year after the date of exercise (a disqualifying
disposition), the difference between the fair market value of
the shares on the exercise date and the option exercise price
(which is not to exceed the gain realized on the sale, if the
disposition is a transaction with respect to which a loss, if
sustained, would be recognized) will be taxed as ordinary income
at the time of disposition. Any gain in excess of that amount
will be a capital gain. If a loss is recognized, there will be
no ordinary income, and such loss will be a capital loss. Any
ordinary income recognized by the option holder on the
disqualifying disposition of the shares will generally result in
a deduction by us for U.S. federal income tax purposes.
Nonqualified Stock Options. Options not
designated or qualifying as incentive stock options will be
nonqualified stock options having no special tax status. An
option holder generally recognizes no taxable income as a result
of the grant of the option. On the exercise of a nonqualified
stock option, the option holder normally recognizes ordinary
income in the amount of the difference between the option
exercise price and the fair market value of the shares on the
exercise date. Where the option holder is an employee, such
ordinary income will generally be subject to withholding of
income and employment taxes. On the sale of shares acquired by
the exercise of a nonqualified stock option, any gain or loss,
(based on the difference between the sale price and the fair
market value on the exercise date) will be taxed as a capital
gain or loss. No tax deduction is available to us with respect
to
50
the grant of a nonqualified stock option or the sale of the
stock acquired pursuant to such grant. We should generally be
entitled to a deduction equal to the amount of ordinary income
recognized by the option holder as a result of the exercise of a
nonqualified stock option.
Deductibility of Compensation. The
U.S. Internal Revenue Code allows publicly held
corporations to deduct compensation which is in excess of
$1,000,000 paid to the corporations chief executive
officer and or any of its three most highly compensated
executive officers (other than the chief executive officer and
the chief financial officer) if the compensation is payable
solely based on the attainment of one or more performance goals
and where certain statutory requirements are satisfied. It is
intended that compensation arising from awards granted under the
Stock Plan that are based on performance goals, and stock
options and stock appreciation rights, are to be deductible by
us as qualified performance-based compensation not subject to
the $1,000,000 limitation on deductibility under the
U.S. Internal Revenue Code. Despite this, we reserve the
right to grant awards under the Stock Plan that do not result in
qualified performance-based compensation and, as such, may not
entitle us to a tax deduction.
New Plan
Benefits Table
The following New Plan Benefits Table contains the number of
awards that will be made under the Stock Plan to the individuals
and groups listed below during the period commencing on the date
of the meeting (assuming stockholder approval is obtained where
applicable) and ending on the Stock Plans scheduled
termination date. The footnotes to the New Plan Benefits Table
indicate the number of awards that these individuals and groups
have received since the Stock Plans inception.
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Number of
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Name and Position
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Award Shares
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Alan D. Shortall
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1,916,000
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(1)
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Chief Executive Officer
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R. Richard Wieland II
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*
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(2)
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Executive Vice President and Chief Financial Officer
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Ramin Mojdehbakhsh, Ph.D.
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*
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(3)
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Executive Vice President and Chief Operating Officer
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J. Christopher Naftzger
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*
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(4)
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Vice President, General Counsel, Corporate Secretary and Chief
Compliance Officer
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Mark V. Iampietro
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*
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(5)
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Vice President of Quality and Regulatory Affairs
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All current executive officers as a group (5 people)
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*
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(6)
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All current directors who are not executive officers as a group
(6 people)
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270,000
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(7)
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All employees and consultants, including all current officers
who are not executive officers, as a group (159 people)
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*
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(8)
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* |
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Future awards are subject to discretion and, therefore, are not
currently determinable. |
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(1) |
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Has received awards with respect to 2,000,000 shares since
the Stock Plans inception through the date of this proxy
statement. The amount reflected in this column assumes that
Proposal 11 is approved. |
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(2) |
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Has received awards with respect to 342,436 shares since
the Stock Plans inception through the date of this proxy
statement. |
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(3) |
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Has received awards with respect to 420,000 shares since
the Stock Plans inception through the date of this proxy
statement. |
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(4) |
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Has received awards with respect to 112,821 shares since
the Stock Plans inception through the date of this proxy
statement. |
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(5) |
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Has received awards with respect to 61,859 shares since the
Stock Plans inception through the date of this proxy
statement. |
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(6) |
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Have received awards with respect to 2,937,116 shares since
the Stock Plans inception through the date of this proxy
statement. |
51
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(7) |
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Have received awards with respect to 200,000 shares since
the Stock Plans inception through the date of this proxy
statement. The amount reflected in this column assumes that all
current non-executive directors as a group continue as directors
until the Stock Plans scheduled termination date and that
Proposals 5 through 10 are approved. |
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(8) |
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Have received awards with respect to 3,161,832 shares since
the Stock Plans inception through the date of this proxy
statement. |
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides information as of June 30,
2011 with respect to our equity compensation plans. See
Note 4 to our consolidated financial statements in our
Annual Report on
Form 10-K
for the fiscal year ended June 30, 2011 for further
information.
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Number of Securities
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Remaining Available for
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Number of Securities
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Future Issuance Under
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to be Issued upon
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Weighted Average
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Equity Compensation
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Exercise of
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Exercise Price of
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Plans (Excluding
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Outstanding Options,
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Outstanding Options,
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Securities Reflected in
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Plan Category
|
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Warrants and Rights
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Warrants and Rights
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Column (a))
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(a)
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(b)
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(c)
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Equity compensation plans: approved by security holders Employee
Share Option Plan
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2,208,334
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$
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2.85
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(1)
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2009 Stock Incentive Plan
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3,790,874
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(2)
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6.05
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622,285
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(3)
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2009 private placement options
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491,662
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(4)
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5.40
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Equity compensation plans not approved by security holders:
Individual agreements with various consultants, advisors and
other third parties
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1,220,248
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3.65
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Total
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7,711,118
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$
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4.71
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622,285
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(1) |
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No further options will be granted under this plan. |
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(2) |
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Represents the number of shares issuable upon exercise of
outstanding options under the 2009 Stock Incentive Plan. In
addition, there are 1,957,000 non-vested shares issued pursuant
to restricted stock awards under the 2009 Stock Incentive Plan. |
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(3) |
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Represents the number of shares available for future issuance
pursuant to stock option, restricted stock and other awards
under the 2009 Stock Incentive Plan. The number of shares
available for issuance under the 2009 Stock Incentive Plan
adjusts annually commencing on January 1, 2011 as provided
therein. See Proposal No. 12 on page 44 for a
description of a proposed amendment to the 2009 Stock Incentive
Plan to modify the size of this annual adjustment. |
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(4) |
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Represents options granted as compensation to brokers who
assisted in the 2009 private placement. |
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
During fiscal 2011, we were a party to one transaction in which
the amount involved exceeded $120,000 and in which any director,
executive officer, holder of more than 5% of our capital stock,
or their immediate family members, had a material interest.
We have an agreement with a consulting entity, of which Jeff
Carter, a member of our board is the principal. Under the terms
of the agreement, Mr. Carter will perform finance,
accounting and secretarial consulting services in Australia. We
pay Mr. Carter on a month to month basis for these
services. Under the agreement, we pay the
52
consulting entity a commercial arms length fee for the
consulting services of A$13,200 per month. During fiscal 2011,
we paid the consulting entity A$349,785. Of these consulting
fees, A$137,425 was paid to one of our former employees to
assist Mr. Carter in performing these functions.
We review all relationships and transactions in which we and our
directors and executive officers or their immediate family
members are participants to determine whether such persons have
a direct or indirect material interest. Our chief executive
officer and chief financial officer are primarily responsible
for the development and implementation of processes and controls
to obtain information from the directors and executive officers
with respect to related party transactions. Our audit committee
reviews and approves or ratifies any related party transaction
pursuant to the authority given under the charter of the audit
committee.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding ownership
of our common stock by (i) each person, or group of
affiliated persons who is known by us to beneficially own 5% or
more of our common stock, (ii) each of our directors,
(iii) each of our named executive officers and
(iv) all current directors and executive officers as a
group. All of this information gives effect to the
redomiciliation and the share consolidation effected in
connection therewith.
Beneficial ownership is determined according to the rules of the
SEC and generally includes any shares over which a person
exercises sole or shared voting or investment power. The
beneficial ownership percentages set forth below are based on
64,270,656 shares of common stock outstanding as of
October 7, 2011. All shares of common stock owned by such
person, including shares of common stock underlying stock
options that are currently exercisable or exercisable within
60 days after October 7, 2011 (all of which we refer
to as being currently exercisable) are deemed to be outstanding
and beneficially owned by that person for the purpose of
computing the ownership percentage of that person, but are not
considered outstanding for the purpose of computing the
percentage ownership of any other person. Except as otherwise
indicated, to our knowledge, each person listed in the table
below has sole voting and investment power with respect to the
shares shown to be beneficially owned by such person, except to
the extent that applicable law gives spouses shared authority.
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|
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Number of Shares
|
|
|
Percentage of Shares
|
|
Name and Address of Beneficial Owner
|
|
Beneficially Owned
|
|
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Beneficially Owned
|
|
|
Directors and Named Executive Officers(1)
|
|
|
|
|
|
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|
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Slavko James Joseph Bosnjak
|
|
|
654,118
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(2)
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|
|
1.0
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%
|
Alan D. Shortall
|
|
|
5,333,842
|
(3)
|
|
|
8.1
|
%
|
John Lund
|
|
|
62,667
|
(4)
|
|
|
*
|
|
William Galle
|
|
|
133,334
|
(5)
|
|
|
*
|
|
Jeff Carter
|
|
|
158,378
|
(6)
|
|
|
*
|
|
Mary Katherine Wold
|
|
|
41,667
|
(7)
|
|
|
*
|
|
Marc S. Firestone
|
|
|
41,667
|
(7)
|
|
|
*
|
|
R. Richard Wieland II
|
|
|
73,740
|
(8)
|
|
|
*
|
|
Dr. Ramin Mojdehbakhsh
|
|
|
267,100
|
(9)
|
|
|
*
|
|
J. Christopher Naftzger
|
|
|
43,000
|
(10)
|
|
|
*
|
|
Mark V. Iampietro
|
|
|
146,840
|
(11)
|
|
|
*
|
|
All directors and executive officers as a group (11 persons)
|
|
|
6,956,353
|
(12)
|
|
|
10.7
|
%
|
|
|
|
* |
|
Indicates less than 1% |
|
(1) |
|
The address of each director and executive officer listed above
is
c/o Unilife
Corporation, 250 Cross Farm Lane, York, Pennsylvania 17604. |
|
(2) |
|
Includes options to purchase 166,667 shares of common stock
which are currently exercisable. |
53
|
|
|
(3) |
|
Includes 1,166,000 shares of restricted stock which are
subject to performance based vesting conditions. Includes
options to purchase 1,250,000 shares of common stock which
are currently exercisable. Does not include options to purchase
834,000 shares of common stock which are not currently
exercisable. |
|
(4) |
|
Includes options to purchase 41,667 shares of common stock
which are currently exercisable. Does not include options to
purchase 58,333 shares of common stock which are not
currently exercisable. |
|
(5) |
|
Represents options to purchase 133,334 shares of common
stock which are currently exercisable. Does not include options
to purchase 58,333 shares of common stock which are not
currently exercisable. |
|
(6) |
|
Includes options to purchase 41,667 shares of common stock
which are currently exercisable. Does not include options to
purchase 58,333 shares of common stock which are not
currently exercisable. |
|
(7) |
|
Represents options to purchase 41,667 shares of common
stock which are currently exercisable. Does not include options
to purchase 58,333 shares of common stock which are not
currently exercisable. |
|
(8) |
|
Includes 60,000 shares of restricted stock which are
subject to time based vesting conditions. Does not include
options to purchase 262,436 shares of common stock which
are not currently exercisable. |
|
(9) |
|
Includes 80,000 shares of restricted stock which are
subject to time based vesting conditions and 40,000 shares
of restricted stock which are subject to performance based
vesting conditions. Includes options to purchase
37,500 shares of common stock which are currently
exercisable. Does not include options to purchase
262,500 shares of common stock which are not currently
exercisable. |
|
(10) |
|
Includes 40,000 shares of restricted stock which are
subject to time based vesting conditions. Does not include
options to purchase 72,821 shares of common stock which are
not currently exercisable. |
|
(11) |
|
Includes 37,500 shares of restricted stock which are
subject to time based vesting conditions. Includes options to
purchase 100,000 shares of common stock which are currently
exercisable. Does not include options to purchase
11,859 shares of common stock which are not currently
exercisable. |
|
(12) |
|
Includes 1,423,500 shares of restricted stock which are
subject to performance-based and time-based vesting conditions,
options to purchase 1,854,169 shares of common stock which
are currently exercisable and options to purchase
1,735,281 shares of common stock which are not currently
exercisable. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors,
officers and persons who own more than 10% of our common stock
to file with the SEC reports of ownership and changes in
ownership of our common stock. Our directors, officers and
greater than 10% beneficial owners of our common stock are
required by SEC regulation to furnish us with copies of all
Section 16(a) reports they file. Based solely upon
information furnished to us and contained in reports filed with
the SEC, as well as any written representations that no other
reports were required, we believe that all Section 16(a)
reports of our directors, officers and greater than 10%
beneficial owners were filed timely for the fiscal year ended
June 30, 2011.
OTHER
BUSINESS
2012
Stockholder Proposals
Stockholders interested in submitting a proposal to be
considered for inclusion in our proxy statement for the 2012
annual meeting of stockholders may do so by following the
procedures prescribed by Securities Exchange Act
Rule 14a-8.
To be eligible for inclusion, proposals must be submitted in
writing and received by us at the address appearing as our
principal executive offices on or before June 21, 2012.
A stockholder of ours may wish to have a proposal presented at
the 2012 annual meeting of stockholders, but not to have the
proposal included in our proxy statement relating to that
meeting.
54
Pursuant to our bylaws, in most circumstances, no business may
be brought before the meeting unless it is specified in the
notice of meeting or is otherwise brought before the meeting at
the direction of the board or by a stockholder of record who
otherwise has the right to submit the proposal and who has
delivered written notice to us (containing certain information
specified in the bylaws about the stockholder and the proposed
action) no later than 120 days prior to the first
anniversary of the mailing date of the proxy statement for the
preceding years meeting, i.e., before June 21, 2012.
Nominating
or Recommending for Nomination Candidates for Director
Our bylaws permit stockholders to nominate directors for
election at an annual meeting of stockholders. To nominate a
director, the stockholder must provide the information required
by our bylaws. In addition, the stockholder must give timely
notice to us in accordance with our bylaws, which, in general,
require that the notice be received by us within the time period
described above under 2012 Stockholder Proposals for
stockholder proposals that are not intended to be included in
our proxy statement.
Transaction
of Other Business
Our board knows of no other business that will be conducted at
the meeting other than as described in this proxy statement. If
any other matter or matters are properly brought before the
meeting or any adjournment or postponement of the meeting, it is
the intention of the persons named in the accompanying form of
proxy to vote the proxy on such matters in accordance with their
best judgment.
By order of the Board of Directors,
J. Christopher Naftzger
Vice President, General Counsel, Corporate Secretary &
Chief Compliance Officer
October 14, 2011
55
Annex A
UNILIFE
CORPORATION 2009 STOCK INCENTIVE PLAN
(as amended December 1, 2011)
|
|
1.
|
Establishment,
Purpose and Types of Awards
|
Unilife Corporation, a Delaware corporation (the
Company), has established and maintains the
UNILIFE CORPORATION 2009 STOCK INCENTIVE PLAN which is hereby
amended as set forth herein effective as of December 1,
2011 (the Plan), subject to stockholder
approval. The purpose of the Plan is to promote the long-term
growth and profitability of the Company by (i) providing
key people with incentives to improve stockholder value and to
contribute to the growth and financial success of the Company
through their future services, and (ii) enabling the
Company to attract, retain and reward the best-available
personnel.
The Plan permits the granting of stock options (including
incentive stock options qualifying under Code section 422
and nonstatutory stock options), stock appreciation rights,
restricted or unrestricted stock awards, phantom stock,
performance awards, other stock-based awards, or any combination
of the foregoing.
Under this Plan, except where the context otherwise indicates,
the following definitions apply:
(a) Administrator means the Board or the
committee(s) or officer(s) appointed by the Board that have
authority to administer the Plan as provided in Section 3
hereof.
(b) Affiliate means any entity, whether
now or hereafter existing, which controls, is controlled by, or
is under common control with, the Company (including, but not
limited to, joint ventures, limited liability companies, and
partnerships). For this purpose, control
shall mean ownership of 50% or more of the total combined voting
power or value of all classes of stock or interests of the
entity, or the power to direct the management and policies of
the entity, by contract or otherwise.
(c) ASX means ASX Limited ACN 008 624
691 or the securities market which it operates, as the context
requires.
(d) Award means any stock option, stock
appreciation right, stock award, phantom stock award,
performance award, or other stock-based award.
(e) Board means the Board of Directors
of the Company.
(f) Change in Control means: a
(i) Change in Ownership of the Company, (ii) Change in
Effective Control of the Company, or (iii) Change in the
Ownership of Assets of the Company, all as described herein and
construed in accordance with Code section 409A.
(i) A Change in Ownership of the Company shall occur
on the date that any one Person acquires, or Persons Acting as a
Group acquire, ownership of the capital stock of the Company
that, together with the stock held by such Person or Group,
constitutes more than 50% of the total fair market value or
total voting power of the capital stock of the Company. However,
if any one Person is, or Persons Acting as a Group are,
considered to own more than 50% of the total fair market value
or total voting power of the capital stock of the Company, the
acquisition of additional stock by the same Person or Persons
Acting as a Group is not considered to cause a Change in
Ownership of the Company or to cause a Change in Effective
Control of the Company (as described below). An increase in the
percentage of capital stock owned by any one Person, or Persons
Acting as a Group, as a result of a transaction in which the
Company acquires its stock in exchange for property will be
treated as an acquisition of stock.
(ii) A Change in Effective Control of the Company
shall occur on the date a majority of members of the Board
is replaced during any
12-month
period by directors whose appointment or election is not
endorsed by a majority of the members of the Board before the
date of the appointment or election.
A-1
(iii) A Change in the Ownership of Assets of the Company
shall occur on the date that any one Person acquires, or
Persons Acting as a Group acquire (or has or have acquired
during the
12-month
period ending on the date of the most recent acquisition by such
Person or Persons), assets from the Company the total gross fair
market value of which is more than 50% of the total gross fair
market value of all of the assets of the Company immediately
before such acquisition or acquisitions. For this purpose, gross
fair market value means the value of the assets of the Company,
or the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets.
The following rules of construction apply in interpreting the
definition of Change in Control:
(A) A Person means any individual, entity or group
within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended, other than employee
benefit plans sponsored or maintained by the Company and by
entities controlled by the Company or an underwriter of the
capital stock of the Company in a registered public offering.
(B) Persons will be considered to be Persons Acting
as a Group (or Group) if they are owners of a
corporation that enters into a merger, consolidation, purchase
or acquisition of stock, or similar business transaction with
the Company. If a Person owns stock in both corporations that
enter into a merger, consolidation, purchase or acquisition of
stock, or similar transaction, such shareholder is considered to
be acting as a Group with other shareholders only with respect
to the ownership in that corporation before the transaction
giving rise to the change and not with respect to the ownership
interest in the other corporation. Persons will not be
considered to be acting as a Group solely because they purchase
assets of the same corporation at the same time or purchase or
own stock of the same corporation at the same time, or as a
result of the same public offering.
(C) For purposes of this Section 2(f), fair market
value shall be determined by the Administrator.
(D) A Change in Control shall not include a transfer to a
related person as described in Code section 409A or a
public offering of capital stock of the Company.
(E) For purposes of this Section 2(f), Code
section 318(a) applies to determine stock ownership. Common
Stock underlying a vested option is considered owned by the
individual who holds the vested option (and the stock underlying
an unvested option is not considered owned by the individual who
holds the unvested option). For purposes of the preceding
sentence, however, if a vested option is exercisable for stock
that is not substantially vested (as defined by Treasury
Regulation §1.83-3(b) and (j)), the stock underlying the
option is not treated as owned by the individual who holds the
option.
(F) For purposes of this Section 2(f), the
Redomiciliation shall not be considered a Change in Control.
(g) CDIs means CHESS Depository
Interests.
(h) Code means the United States
Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder.
(i) Committee means the Compensation
Committee of the Board or any other committee the Board appoints
to administer the Plan.
(j) Common Stock means shares of common
stock of the Company, par value of one cent ($0.01) per share,
in the form of Common Stock or CDIs. Any reference herein to a
share of Common Stock shall be construed, as applicable within
the context, as either one share of common stock of the Company,
par value of one cent ($0.01) per share, or six CDIs.
(k) Fair Market Value means, with
respect to the Common Stock, as of any date:
(i) if the principal market for the Common Stock (as
determined by the Board if the Common Stock is listed or
admitted to trading on more than one exchange or market) is a
national securities exchange or an established securities market
(including, without limitation, ASX and NASDAQ Stock Market),
the closing price per share of Common Stock on that date on the
principal exchange or market on which the
A-2
Common Stock is then listed or admitted to trading or, if no
sale is reported for that date, the last preceding day on which
a sale was reported;
(ii) if the principal market for the Common Stock is not a
national securities exchange or an established securities
market, the average of the highest bid and lowest asked prices
for the Common Stock on that date as reported on a national
quotation system or, if no prices are reported for that date, on
the last preceding day on which prices were reported; or
(iii) if the Common Stock is neither listed nor admitted to
trading on a national securities exchange or an established
securities market, nor quoted by a national quotation system,
the value determined by the Board in good faith.
With respect to property other than Common Stock, Fair Market
Value means the value of the property determined by such methods
or procedures to be established from time to time by the Board
in accordance with Code section 409A.
(l) Grant Agreement means a written
document, including an electronic writing acceptable to the
Administrator, memorializing the terms and conditions of an
Award granted pursuant to the Plan and which shall incorporate
the terms of the Plan.
(m) Listing Rules means the applicable
listing rules of the securities exchange or market on which
shares of Common Stock are listed for trading, which may
include, without limitation, NASDAQ Stock Market and the ASX.
(n) Performance Measures shall mean
criteria established by the Administrator relating to any of the
following, as it may apply to an individual, one or more
business units, divisions or subsidiaries, or on a Company-wide
basis, and in either absolute terms or relative to the
performance of one or more comparable companies or an index
covering multiple companies: revenue; earnings before interest,
taxes, depreciation and amortization (EBITDA); operating income;
pre- or after-tax income; cash flow; cash flow per share; net
earnings; earnings per share;
price-to-earnings
ratio; return on equity; return on invested capital; return on
assets; growth in assets; share price performance; economic
value added; total shareholder return; improvement in or
attainment of expense levels; improvement in or attainment of
working capital levels; relative performance to a group of
companies comparable to the Company, and strategic business
criteria consisting of one or more objectives based on the
Company meeting specified goals relating to revenue, market
penetration, business expansion, costs, clinical trials, product
feasibility studies, regulatory submissions, regulatory
approvals, or acquisitions or divestitures.
(o) Redomiciliation means the
transactions effected pursuant to the schemes of arrangement
between the Company and Unilife Medical Solutions Limited as a
result of which the Company will become the parent company of
Unilife Medical Solutions Limited.
(a) Administration of the Plan. The Plan
shall be administered by the Board or by such committee or
committees as may be appointed by the Board from time to time.
To the extent allowed by applicable state law, the Board by
resolution may authorize an officer or officers to grant Awards
(other than Stock Awards) to other officers and employees of the
Company and its Affiliates, and, to the extent of such
authorization, such officer or officers shall be the
Administrator.
(b) Powers of the Administrator. The
Administrator shall have all the powers vested in it by the
terms of the Plan, such powers to include authority, in its sole
and absolute discretion, to grant Awards under the Plan,
prescribe Grant Agreements evidencing such Awards and establish
programs for granting Awards.
The Administrator shall have full power and authority to take
all other actions necessary to carry out the purpose and intent
of the Plan, including, but not limited to, the authority to:
(i) determine the eligible persons to whom, and the time or
times at which Awards shall be granted; (ii) determine the
types of Awards to be granted; (iii) determine the number
of shares of Common Stock to be covered by or used for reference
purposes for each Award; (iv) impose such terms,
limitations, restrictions and conditions upon any such Award as
the Administrator
A-3
shall deem appropriate; (v) modify, amend, extend or renew
outstanding Awards, or accept the surrender of outstanding
Awards and substitute new Awards (provided however, that,
except as provided in Section 6 or 7(d) of the Plan, any
modification that would materially adversely affect any
outstanding Award shall not be made without the consent of the
holder and no such modification, amendment or substitution that
results in repricing the Award, within the meaning of NASDAQ
Marketplace Rule 5635(c) and IM-5635-1, or any successor
provision, shall be made without prior stockholder approval);
(vi) accelerate or otherwise change the time in which an
Award may be exercised or becomes payable and to waive or
accelerate the lapse, in whole or in part, of any restriction or
condition with respect to such Award, including, but not limited
to, any restriction or condition with respect to the vesting or
exercisability of an Award following termination of any
grantees employment or other relationship with the
Company; provided, however, that no such waiver or
acceleration of lapse restrictions shall be made with respect to
a performance-based stock award granted to an executive officer
of the Company if such waiver or acceleration is inconsistent
with Code section 162(m) and the Committee had determined
that qualification of such award under Code section 162(m)
is desirable; (vii) establish objectives and conditions, if
any, for earning Awards and determining whether Awards will be
paid with respect to a performance period; and (viii) for
any purpose, including but not limited to, qualifying for
preferred tax treatment under foreign tax laws or otherwise
complying with the regulatory requirements of local or foreign
jurisdictions, to establish, amend, modify, administer or
terminate
sub-plans,
and prescribe, amend and rescind rules and regulations relating
to such
sub-plans.
The Administrator shall have full power and authority, in its
sole and absolute discretion, to administer, construe and
interpret the Plan, Grant Agreements and all other documents
relevant to the Plan and Awards issued thereunder, to establish,
amend, rescind and interpret such rules, regulations,
agreements, guidelines and instruments for the administration of
the Plan and for the conduct of its business as the
Administrator deems necessary or advisable, and to correct any
defect, supply any omission or reconcile any inconsistency in
the Plan or in any Award in the manner and to the extent the
Administrator shall deem it desirable to carry it into effect.
(c) Non-Uniform Determinations. The
Administrators determinations under the Plan (including,
without limitation, determinations of the persons to receive
Awards, the form, amount and timing of such Awards, the terms
and provisions of such Awards and the Grant Agreements
evidencing such Awards) need not be uniform and may be made by
the Administrator selectively among persons who receive, or are
eligible to receive, Awards under the Plan, whether or not such
persons are similarly situated.
(d) Limited Liability. To the maximum
extent permitted by law, no member of the Administrator shall be
liable for any action taken or decision made in good faith
relating to the Plan or any Award thereunder.
(e) Indemnification. To the maximum
extent permitted by law and by the Companys charter and
by-laws, the members of the Administrator shall be indemnified
by the Company in respect of all their activities under the Plan.
(f) Effect of Administrators
Decision. All actions taken and decisions and
determinations made by the Administrator on all matters relating
to the Plan pursuant to the powers vested in it hereunder shall
be in the Administrators sole and absolute discretion and
shall be conclusive and binding on all parties concerned,
including the Company, its stockholders, any participants in the
Plan and any other employee, consultant, or director of the
Company, and their respective successors in interest.
|
|
4.
|
Shares Available
for the Plan; Maximum Awards
|
(a) Share Reserve. Subject to adjustments
as provided in Section 7(d) of the Plan, upon the effective
date of the Plan, the total number of shares of Common Stock
reserved and available for grant and issuance pursuant to this
Plan will be equal to 36,000,000 shares, which shall be
adjusted to 6,000,000 shares upon the effectiveness of the
Redomiciliation (the Share Reserve).
Commencing January 1, 2011, and on each
January 1st thereafter through January 1, 2019,
the Share Reserve will automatically adjust so that it will
equal (i) on January 1, 2011, twelve and one-half
percent (12.5%) and on January 1 of calendar years 2012 through
2019, seventeen and one-half percent (17.5%) of the weighted
average number of shares of Common Stock outstanding, as that
number is determined by the Company to calculate basic earnings
(loss) per share for the preceding four fiscal quarters; reduced
by (ii) the sum of (A) any shares of Common Stock
issued or delivered pursuant to Awards under the Plan, and
(B) any shares of Common Stock subject to any outstanding
Award under the Plan; provided, however, that any such
adjustment may only increase, and not decrease, the Share
Reserve. Notwithstanding the foregoing, the Board may act, prior
to
A-4
the first day of any calendar year, to provide that there shall
be no increase in the Share Reserve for such calendar year or
that the increase in the Share Reserve for such calendar year
shall be a lesser number of shares of Common Stock than would
otherwise occur pursuant to the preceding sentence. Common Stock
may be issued in connection with a merger or acquisition as
permitted by NASDAQ Rule 5635(c)(3) or, if applicable, NYSE
Listed Company Manual Section 303A.08, or AMEX Company
Guide Section 711 or other applicable rule of the principal
exchange or market on which the Common Stock is listed for trade
and such issuance shall not reduce the number of shares of
Common Stock available for issuance under the Plan.
(b) ISO Limit. Notwithstanding the
foregoing, not more than 36,000,000 shares of Common Stock,
which shall be adjusted to 6,000,000 shares upon the
effectiveness of the Redomiciliation, subject to adjustments as
provided in Section 7(d) of the Plan, of the total shares
authorized for issuance under the Plan shall be available for
issuance pursuant to incentive stock options intended to qualify
under Code section 422.
(c) Reversion of Shares to the Share
Reserve. If any (i) Award shall for any
reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, (ii) shares of
Common Stock issued to an Award recipient pursuant to an Award
are forfeited back to or repurchased by the Company because of
the failure to meet a contingency or condition required for the
vesting of such shares, or (iii) an Award is settled in
cash, then the shares of Common Stock not issued under such
Award, or forfeited to or repurchased by the Company, shall
revert to and again become available for issuance under the
Plan. If any shares subject to an Award are not delivered to an
Award recipient because such shares are withheld for the payment
of taxes or the Award is exercised through a reduction of shares
subject to the Award (i.e., net exercised) or
an appreciation distribution in respect of a stock appreciation
right is paid in shares of Common Stock, the number of shares
subject to the Award that are not delivered to the Award
recipient shall remain available for subsequent issuance under
the Plan. If the exercise price of any Award or the minimum
statutory tax withholding obligation that arises in connection
with an Award is satisfied by tendering shares of Common Stock
held by the Award recipient (either by actual delivery or
attestation), then the number of shares so tendered shall
remain, or as applicable revert to and be, available for
issuance under the Plan.
(d) Code section 162(m)
Limit. Subject to adjustments as provided in
Section 7(d) of the Plan, the maximum number of shares of
Common Stock subject to Awards of any combination that may be
granted during any one fiscal year of the Company to any one
individual under this Plan shall be limited to one-third of the
total number of shares issuable under the Plan, pursuant to
Section 4(a), as of the Plans effective date.
(e) Source of Shares. The stock issuable
under the Plan shall be shares of authorized but unissued or
reacquired Common Stock or treasury shares, including shares
repurchased by the Company on the open market. The Company shall
at all times during the term of the Plan and while any Awards
are outstanding retain as authorized and unissued Common Stock,
or as treasury Common Stock, at least the number of shares of
Common Stock required to fulfill the Companys obligations
under such Awards, or otherwise assure itself of its ability to
perform its obligations thereunder.
Participation in the Plan shall be open to all employees,
officers, and directors of, and other individuals providing bona
fide services to, or for, the Company or of any Affiliate of the
Company, as may be selected by the Administrator from time to
time. The Administrator may also grant Awards to individuals in
connection with hiring, retention or otherwise, prior to the
date the individual first performs services for the Company or
an Affiliate, provided that such Awards shall not become vested
or exercisable, and no shares shall be issued to such
individual, prior to the date the individual first commences
performance of such services.
The Administrator, in its sole discretion, establishes the terms
of all Awards granted under the Plan. Awards may be granted
individually or in tandem with other types of Awards,
concurrently with or with respect to outstanding Awards. All
Awards are subject to the terms and conditions provided in the
Grant Agreement.
(a) Stock Options. The Administrator may
from time to time grant to eligible participants Awards of
incentive stock options as that term is defined in Code
section 422 or nonstatutory stock options; provided,
A-5
however, that Awards of incentive stock options shall be
limited to employees of the Company or of any current or
hereafter existing parent corporation or
subsidiary corporation, as defined in Code
sections 424(e) and (f), respectively, of the Company and
any other individuals who are eligible to receive incentive
stock options under the provisions of Code section 422.
Options must have an exercise price at least equal to Fair
Market Value as of the date of grant and may not have a term in
excess of ten years duration. No stock option shall be an
incentive stock option unless so designated by the Administrator
at the time of grant or in the Grant Agreement evidencing such
stock option.
(b) Stock Appreciation Rights. The
Administrator may from time to time grant to eligible
participants Awards of Stock Appreciation Rights
(SAR). An SAR entitles the grantee to
receive, subject to the provisions of the Plan and the Grant
Agreement, a payment having an aggregate value equal to the
product of (i) the excess of (A) the Fair Market Value
on the exercise date of one share of Common Stock over
(B) the base price per share specified in the Grant
Agreement, times (ii) the number of shares specified by the
SAR, or portion thereof, which is exercised. The base price per
share specified in the Grant Agreement shall not be less than
the lower of the Fair Market Value on the grant date or the
exercise price of any tandem stock option Award to which the SAR
is related. No SAR shall have a term longer than ten years
duration. Payment by the Company of the amount receivable upon
any exercise of an SAR may be made by the delivery of Common
Stock or cash, or any combination of Common Stock and cash, as
determined in the sole discretion of the Administrator. If upon
settlement of the exercise of an SAR a grantee is to receive a
portion of such payment in shares of Common Stock, the number of
shares shall be determined by dividing such portion by the Fair
Market Value of a share of Common Stock on the exercise date. No
fractional shares shall be used for such payment and the
Administrator shall determine whether cash shall be given in
lieu of such fractional shares or whether such fractional shares
shall be eliminated.
(c) Stock Awards.
(i) The Administrator may from time to time grant stock
awards to eligible participants in such amounts, on such terms
and conditions, and for such consideration, including no
consideration or such minimum consideration as may be required
by law, as it shall determine. A stock award may be denominated
in Common Stock or other securities, stock-equivalent units,
securities or debentures convertible into Common Stock, or any
combination of the foregoing and may be paid in Common Stock or
other securities, in cash, or in a combination of Common Stock
or other securities and cash, all as determined in the sole
discretion of the Administrator.
(ii) The Administrator may grant stock awards in a manner
constituting qualified performance-based
compensation within the meaning of Code
section 162(m). The grant of, or lapse of restrictions with
respect to, such performance-based stock awards shall be based
upon one or more Performance Measures and objective performance
targets to be attained relative to those Performance Measures,
all as determined by the Administrator. Performance targets may
include minimum, maximum, intermediate and target levels of
performance, with the size of the performance-based stock award
or the lapse of restrictions with respect thereto based on the
level attained. A performance target may be stated as an
absolute value or as a value determined relative to prior
performance, one or more indices, budget, one or more peer group
companies, any other standard selected by the Administrator, or
any combination thereof. The Administrator shall be authorized
to make adjustments in the method of calculating attainment of
Performance Measures and performance targets in recognition of:
(A) extraordinary or non-recurring items; (B) changes
in tax laws; (C) changes in generally accepted accounting
principles or changes in accounting policies; (D) changes
related to restructured or discontinued operations;
(E) restatement of prior period financial results; and
(F) any other unusual, non-recurring gain or loss that is
separately identified and quantified in the Companys
financial statements; provided that the Administrators
decision as to whether such adjustments will be made with
respect to any Covered Employee, within the meaning of Code
section 162(m), is determined when the performance targets
are established for the applicable performance period.
Notwithstanding the foregoing, the Administrator may, at its
sole discretion, modify the performance results upon which
Awards are based under the Plan to offset any unintended results
arising from events not anticipated when the Performance
Measures and performance targets were established; provided,
that such modifications may be made with respect to an Award
granted
A-6
to any Covered Employee, within the meaning of Code
section 162(m) only to the extent permitted by Code
section 162(m). Notwithstanding anything in the Plan to the
contrary, the Administrator is not authorized to waive or
accelerate the lapse of restrictions on a performance-based
stock award granted to any Covered Employee, within the meaning
of Code section 162(m) except upon death, disability or a
change of ownership or control of the Company. In the event that
a Change in Control occurs after a performance-based stock award
has been granted but before completion of the applicable
performance period, such Award shall become payable (or the
lapse restrictions shall lapse, as applicable) as of the date of
the Change in Control.
(a) Withholding of Taxes. Grantees and
holders of Awards shall pay to the Company or its Affiliate, or
make provision satisfactory to the Administrator for payment of,
any taxes required to be withheld in respect of Awards under the
Plan no later than the date of the event creating the tax
liability. The Company or its Affiliate may, to the extent
permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to the grantee or holder of an
Award. In the event that payment to the Company or its Affiliate
of such tax obligations is made in shares of Common Stock, such
shares shall be valued at Fair Market Value on the applicable
date for such purposes and shall not exceed in amount the
minimum statutory tax withholding obligation.
(b) Loans. To the extent otherwise
permitted by law, the Company or its Affiliate may make or
guarantee loans to grantees to assist grantees in exercising
Awards and satisfying any withholding tax obligations.
(c) Transferability. Except as otherwise
determined by the Administrator, and in any event in the case of
an incentive stock option, within the meaning of Code
section 422, or a stock appreciation right granted with
respect to an incentive stock option, no Award granted under the
Plan shall be transferable by a grantee otherwise than by will
or the laws of descent and distribution. Unless otherwise
determined by the Administrator in accord with the provisions of
the immediately preceding sentence, an Award may be exercised
during the lifetime of the grantee, only by the grantee or,
during the period the grantee is under a legal disability, by
the grantees guardian or legal representative.
(d) Adjustments for Corporate Transactions and Other
Events.
(i) Stock Dividend, Stock Split and Reverse Stock
Split. In the event of a stock dividend of, or
stock split or reverse stock split affecting, the Common Stock,
(A) the maximum number of shares of such Common Stock as to
which Awards may be granted under this Plan, the maximum number
of shares available for issuance pursuant to incentive stock
options intended to qualify under Code section 422, and the
maximum number of shares with respect to which Awards may be
granted during any one fiscal year of the Company to any
individual, as provided in Section 4 of the Plan, and
(B) the number of shares covered by and the exercise price
and other terms of outstanding Awards, shall, without further
action of the Board, be adjusted to reflect such event. The
Administrator may make adjustments, in its discretion, to
address the treatment of fractional shares and fractional cents
that arise with respect to outstanding Awards as a result of the
stock dividend, stock split or reverse stock split.
(ii) Non-Change in Control
Transactions. Except with respect to the
transactions set forth in Section 7(d)(i), in the event of
any change affecting the Common Stock, the Company or its
capitalization, by reason of a spin-off,
split-up,
dividend, recapitalization, merger, consolidation or share
exchange, other than any such change that is part of a
transaction resulting in a Change in Control of the Company, the
Administrator, in its discretion and without the consent of the
holders of the Awards, may make (A) appropriate adjustments
to the maximum number and kind of shares reserved for issuance
or with respect to which Awards may be granted under the Plan,
in the aggregate and with respect to any individual during any
one fiscal year of the Company, as provided in Section 4 of
the Plan; and (B) any adjustments in outstanding Awards,
including but not limited to modifying the number, kind and
price of securities subject to Awards.
(iii) Change in Control Transactions. In
the event of any transaction resulting in a Change in Control of
the Company, outstanding stock options and other Awards that are
payable in or convertible into Common Stock under this Plan will
terminate upon the effective time of such Change in Control
unless provision is made
A-7
in connection with the transaction for the continuation or
assumption of such Awards by, or for the substitution of the
equivalent awards, as determined in the sole discretion of the
Administrator, of, the surviving or successor entity or a parent
thereof. In the event of such termination, (A) the
outstanding stock options and other Awards that will terminate
upon the effective time of the Change in Control shall become
fully vested immediately before the effective time of the Change
in Control, and (B) the holders of stock options and other
Awards under the Plan will be permitted, immediately before the
Change in Control, to exercise or convert all portions of such
stock options or other Awards under the Plan that are then
exercisable or convertible or which become exercisable or
convertible upon or prior to the effective time of the Change in
Control.
(iv) Unusual or Nonrecurring Events. The
Administrator is authorized to make, in its discretion and
without the consent of holders of Awards, adjustments in the
terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events affecting the
Company, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations, or
accounting principles, whenever the Administrator determines
that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan provided always
that the rights of holders of Awards will be changed to the
extent necessary to comply with the Listing Rules applying to a
reorganization of capital at the time of the reorganization.
(e) Substitution of Awards in Mergers and
Acquisitions. Awards may be granted under the
Plan from time to time in substitution for awards held by
employees, officers, consultants or directors of entities who
become or are about to become employees, officers, consultants
or directors of the Company or an Affiliate as the result of a
merger or consolidation of the employing entity with the Company
or an Affiliate, or the acquisition by the Company or an
Affiliate of the assets or stock of the employing entity. The
terms and conditions of any substitute Awards so granted may
vary from the terms and conditions set forth herein to the
extent that the Administrator deems appropriate at the time of
grant to conform the substitute Awards to the provisions of the
Awards for which they are substituted.
(f) Termination, Amendment and Modification of the
Plan. The Board may terminate, amend or modify
the Plan or any portion thereof at any time. Except as otherwise
determined by the Board, termination of the Plan shall not
affect the Administrators ability to exercise the powers
granted to it hereunder with respect to Awards granted under the
Plan prior to the date of such termination.
(g) Non-Guarantee of Employment or
Service. Nothing in the Plan or in any Grant
Agreement thereunder shall confer any right on an individual to
continue in the service of the Company or shall interfere in any
way with the right of the Company to terminate such service at
any time with or without cause or notice and whether or not such
termination results in (i) the failure of any Award to
vest; (ii) the forfeiture of any unvested or vested portion
of any Award;
and/or
(iii) any other adverse effect on the individuals
interests under the Plan.
(h) Compliance with Securities Laws; Listing and
Registration. If at any time the Administrator
determines that the delivery of Common Stock under the Plan is
or may be unlawful under the laws of any applicable
jurisdiction, or United States federal or state securities laws,
or applicable
non-United
States securities laws, the right to exercise an Award or
receive shares of Common Stock pursuant to an Award shall be
suspended until the Administrator determines that such delivery
is lawful. If at any time the Administrator determines that the
delivery of Common Stock under the Plan is or may violate the
rules of the national exchange on which the shares of Common
Stock are then listed for trade, the right to exercise an Award
or receive shares of Common Stock pursuant to an Award shall be
suspended until the Administrator determines that such delivery
would not violate such rules. The Company shall have no
obligation to affect any registration or qualification of the
Common Stock under United States federal or state
securities laws, or applicable
non-United
States securities laws.
The Company may require that a grantee, as a condition to
exercise of an Award, and as a condition to the delivery of any
share certificate, make such written representations (including
representations to the effect that such person will not dispose
of the Common Stock so acquired in violation of United States
federal or state securities laws, or applicable
non-United
States securities laws) and furnish such information as may, in
the opinion of counsel for the Company, be appropriate to permit
the Company to issue the Common Stock in compliance with
applicable United States federal or state securities laws, or
applicable
non-United
States securities laws. The stock certificates for any shares of
Common Stock issued pursuant to this Plan may bear a legend
restricting transferability of the
A-8
shares of Common Stock unless such shares are registered or an
exemption from registration is available under the Securities
Act of 1933, as amended, and applicable state or applicable
non-United
States securities laws.
(i) No Trust or
Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund
of any kind or a fiduciary relationship between the Company and
a grantee or any other person. To the extent that any grantee or
other person acquires a right to receive payments from the
Company pursuant to an Award, such right shall be no greater
than the right of any unsecured general creditor of the Company.
(j) Governing Law. The validity,
construction and effect of the Plan, of Grant Agreements entered
into pursuant to the Plan, and of any rules, regulations,
determinations or decisions made by the Administrator relating
to the Plan or such Grant Agreements, and the rights of any and
all persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in accordance with
applicable federal laws and the laws of the State of Delaware,
without regard to its conflict of laws principles.
(k) 409A Savings Clause. The Plan and all
Awards granted hereunder are intended to comply with, or
otherwise be exempt from, Code section 409A. The Plan and
all Awards granted under the Plan shall be administered,
interpreted, and construed in a manner consistent with Code
section 409A to the extent necessary to avoid the
imposition of additional taxes under Code
section 409A(a)(1)(B). Should any provision of the Plan,
any Award Agreement, or any other agreement or arrangement
contemplated by the Plan be found not to comply with, or
otherwise be exempt from, the provisions of Code
section 409A, such provision shall be modified and given
effect (retroactively if necessary), in the sole discretion of
the Administrator, and without the consent of the holder of the
Award, in such manner as the Administrator determines to be
necessary or appropriate to comply with, or to effectuate an
exemption from, Code section 409A. Notwithstanding anything
in the Plan to the contrary, in no event shall the Administrator
exercise its discretion to accelerate the payment or settlement
of an Award where such payment or settlement constitutes
deferred compensation within the meaning of Code
section 409A unless, and solely to the extent, that such
accelerated payment or settlement is permissible under Treasury
Regulation
section 1.409A-3(j)(4)
or any successor provision.
(l) Effective Date; Termination Date. The
Plan became effective on November 11, 2009 when the Plan
was adopted initially by the Board, subject to approval of the
stockholders within twelve months before or after such date. No
Award shall be granted under the Plan after the close of
business on November 10, 2019. Subject to other applicable
provisions of the Plan, all Awards made under the Plan prior to
such termination of the Plan shall remain in effect until such
Awards have been satisfied or terminated in accordance with the
Plan and the terms of such Awards.
(m) Listing Rules. While the Shares are
listed for trading on any securities exchange or market
(including, without limitation, ASX and NASDAQ Stock Market),
the Company and the Administrator agree that they will not make
any amendments to this Plan or issue any Awards or take any
other action unless such action complies with the relevant
Listing Rules.
(n) Stockholder Rights. No person to whom
an Award is made pursuant to this Plan has the rights of a
stockholder with respect to Common Stock until the Common Stock
have been issued and the Company shall make no adjustment for
dividends, distributions or other rights for which the record
date is before the date the Common Stock are issued.
(o) The Board. The Administrator may
elect not to offer Awards under the Plan to persons who are
resident outside of the United States of America if it
determines that it may be illegal or impracticable to do so and
the Board may formulate special terms and conditions, in
addition to those set out in this document, to apply to persons
resident outside of the United States of America.
A-9
Unilife Corporation
Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. X
Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two voting
methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by
12:00 p.m., Eastern Standard Time, on November 30, 2011.
Vote by Internet
Log on to the Internet and go to
www.envisionreports.com/unis
Follow the steps outlined on the secured website.
Vote by telephone
Call toll free 1-800-652-VOTE (8683) within the USA,
US territories & Canada any time on a touch tone
telephone. There is NO CHARGE to you for the call.
Follow the instructions provided by the recorded message.
Annual Meeting Proxy Card
qIF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
Proposals The Board of Directors recommends that you vote FOR the re-election of each of the
directors named in proposal No. 1 and FOR proposals No.
2-3 and No. 5-11, excluding Slavko James Joseph Bosnjak (with respect to proposal No. 5), Jeff
Carter (with respect to proposal No. 6), William Galle (with
respect to proposal No. 7), John Lund (with respect to proposal No. 8), Mary Katherine Wold (with
respect to proposal No. 9), Marc Firestone (with respect to
proposal No. 10) and Alan D. Shortall (with respect to proposal No. 11) who abstain from making 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 you vote for a THREE YEAR frequency on proposal
No. 4. The Board of Directors makes no recommendation regarding proposal No. 12 due to their
interest in the outcome of that proposal.
1. To elect seven directors, identified in the accompanying proxy statement, to hold office
until our annual meeting of stockholders to be held in 2012 and until his or her successor is duly
elected and
qualified, or until his or her earlier resignation or removal:
For Withhold For Withhold For Withhold
For Withhold
01 Slavko James
Joseph Bosnjak
05 Mary Katherine Wold
02 Jeff Carter
06 Marc Firestone
03 William Galle
07 Alan D. Shortall
04 John Lund
2. To ratify the appointment of KPMG LLP as our independent registered
public accounting firm for the fiscal year ending June 30, 2012.
3. To consider and act on an advisory vote regarding the approval of
compensation paid to certain executive officers.
4. To consider and act on an advisory vote regarding the frequency
of stockholder approval of the compensation paid to certain
executive officers.
5. For the purposes of ASX Listing Rule 10.14 and for all other purposes, to
approve the grant of up to 45,000 securities to Slavko James Joseph Bosnjak.
6. For the purposes of ASX Listing Rule 10.14 and for all other purposes,
to approve the grant of up to 45,000 securities to Jeff Carter.
7. For the purposes of ASX Listing Rule 10.14 and for all other purposes, to
approve the grant of up to 45,000 securities to William Galle.
For Against Abstain
1 Yr 2 Yrs 3 Yrs Abstain
8. For the purposes of ASX Listing Rule 10.14 and for all other purposes,
to approve the grant of up to 45,000 securities to John Lund.
9. For the purposes of ASX Listing Rule 10.14 and for all other purposes,
to approve the grant of up to 45,000 securities to Mary Katherine Wold.
10. For the purposes of ASX Listing Rule 10.14 and for all other purposes,
to approve the grant of up to 45,000 securities to Marc Firestone.
11. For the purposes of ASX Listing Rule 10.14 and for all other purposes,
to approve the grant of up to 1,916,000 securities to Alan D. Shortall.
12. For the purposes of ASX Listing Rule 7.2 (Exception 9) and for all
other purposes, to approve the 2009 Stock Incentive Plan, as
proposed to be amended. |
qIF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
Proxy Unilife Corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF UNILIFE CORPORATION
Failing the individual or body corporate named in the paragraph below by the undersigned, a
stockholder of Unilife Corporation, a Delaware corporation (the Company), or
if no individual or body corporate is named in the paragraph below, the undersigned does hereby
appoint R. Richard Wieland II and J. Christopher Naftzger and each of them
as Proxies with full power of substitution in each of them, in the name, place and stead of the
undersigned, to vote at the annual meeting of stockholders of the Company to
be held at Intercontinental New York Barclay, 111 East 48th Street, New York, New York 10017 USA,
on Thursday December 1, 2011, at 4:00 P.M., U.S. Eastern Standard
Time (Friday December 2, 2011, at 8:00 A.M., Australian Eastern Daylight Time) (the Annual
Meeting) and at any adjournment or postponement thereof, all of the shares
of the Companys common stock that the undersigned would be entitled to vote if personally present.
R. Richard Wieland II and J. Christopher Naftzger intend to vote
undirected proxies in favor of proposals No. 1-3 and No. 5-12 and for a THREE YEAR frequency on
proposal No. 4.
If the undersigned does not wish to appoint R. Richard Wieland II or J. Christopher Naftzger as
Proxy, then the undersigned does hereby appoint _________________ as
Proxy with full power of substitution, in the name, place and stead of the undersigned to vote at
the Annual Meeting of Stockholders and at any adjournment or postponement
thereof, all of the shares of the Companys common stock the undersigned would be entitled to vote
if personally present.
Non-Voting Items
Meeting Attendance
Mark box to the right if
you plan to attend the
Annual Meeting.
Change of Address Please print new address below.
C Authorized Signatures This section must be completed for your vote to be counted.
Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give
full title.
Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box.
Signature 2 Please keep signature within the box.
IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A C ON BOTH SIDES OF THIS CARD. +
+
qIF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q |