e10vkza
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
Amendment No. 2
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended: December 31, 2006 |
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to . |
Commission File Number: 000-51541
GENOMIC HEALTH, INC.
(Exact name of Registrant as specified in its charter)
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| Delaware
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77-0552594 |
| (State or other jurisdiction of
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(I.R.S. Employer |
| incorporation or organization)
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Identification Number) |
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| 301 Penobscot Drive
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94063 |
| Redwood City, California
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(Zip Code) |
| (Address of principal executive offices) |
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(650) 556-9300
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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| Title of Each Class
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Name of Each Exchange on Which Registered: |
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| Common Stock
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The NASDAQ Stock Market LLC |
Securities registered pursuant to Section 12(g) of the Act and Title of Class:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated
filer” in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated filer
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Accelerated filer
þ Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Act). Yes o No þ
As of June 30, 2006, the aggregate market value of voting and non-voting common stock held by
non-affiliates of the registrant was approximately $288.5 million, based on the closing price of
the common stock as reported on the NASDAQ Global Market for that date.
There were 24,570,241 shares of the registrant’s Common Stock issued and outstanding on March
31, 2007.
DOCUMENTS INCORPORATED BY REFERENCE
None.
EXPLANATORY NOTE
Genomic Health, Inc.
is filing this Amendment No. 2, or the
Amended Report, to our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, filed with
the Securities and Exchange
Commission, or the SEC, on March 16, 2007, as amended by our Form 10-K/A filed with the SEC on March
23, 2007, or, collectively, the Original Report, in order to add certain information required by
the following items of Form 10-K:
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Description |
ITEM 10.
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Directors, Executive Officers and Corporate Governance |
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ITEM 11.
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Executive Compensation |
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ITEM 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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ITEM 13.
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Certain Relationships and Related Transactions, and Director Independence |
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ITEM 14.
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Principal Accounting Fees and Services |
We hereby amend Items 10, 11, 12, 13 and 14 of Part III of our Original Report by
deleting the text of such Items 10, 11, 12, 13 and 14 in their entirety and replacing them with the
information provided below under the respective headings. The Amended Report does not affect any
other items in our Original Report. As a result of this amendment, we are also filing as exhibits
to this Amended Report the certifications pursuant to section 302 of the Sarbanes-Oxley Act of
2002. Because no financial statements are contained in this Amended Report, we are not including
certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Except as otherwise expressly stated for the items amended in this Amended Report, this
Amended Report continues to speak as of the date of the Original Report and we have not updated the
disclosure contained herein to reflect events that have occurred since the filing of the Original
Report. Accordingly, this Amended Report should be read in conjunction with our Original Report and
our other filings made with the SEC subsequent to the filing of the Original Report.
All references to the “Company, “we”, “us”, or “our” mean Genomic Health, Inc.
***
3
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance
Directors
The names of our directors, their ages as of March 15, 2007, their committee membership and certain biographical
information are set forth below.
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Age |
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Position with Company |
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Director Since |
Randal
W. Scott, Ph.D.
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Chairman of the Board and
Chief Executive Officer
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2000 |
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Kimberly J. Popovits
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President, Chief Operating
Officer and Director
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2002 |
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Julian C. Baker
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Director
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2001 |
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Brook H. Byers (2)
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Director
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2001 |
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Fred
E. Cohen, M.D., Ph.D. (2) (3)
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Director
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2002 |
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Samuel D. Colella (1) (2) (3)
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Director
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2001 |
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Michael D. Goldberg (1) (3)
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Director
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2001 |
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Randall S. Livingston (1)
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Director
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2004 |
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Woodrow
A. Myers, Jr., M.D. (2)
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Director
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2006 |
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Member of the Audit Committee |
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Member of the Compensation Committee |
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Member of the Nominating and Corporate Governance Committee |
Randal W. Scott, Ph.D.
has served as our Chairman of the Board and Chief Executive Officer
since our inception in August 2000 and served as President from
August 2000 to February 2002,
Chief Financial Officer from December 2000 to April 2004,
and Secretary from August 2000 to
December 2000 and from May 2003 to February 2005. Dr. Scott was a founder of Incyte
Corporation, which at the time was a genomic information company, and served Incyte in various
roles, including Chairman of the Board from August 2000 to December 2001, President from January
1997 to August 2000, and Chief Scientific Officer from March 1995 to August 2000. Dr. Scott holds
a B.S. in Chemistry from Emporia State University and a Ph.D. in Biochemistry from the University
of Kansas.
Kimberly J. Popovits has
served as our President and Chief Operating Officer since February
2002. From November 1987 to February 2002, Ms. Popovits served in various roles at Genentech, Inc.,
a biotechnology company, most recently serving as Senior Vice President, Marketing and Sales from
February 2001 to February 2002, and as Vice President, Sales from October 1994 to February 2001.
Prior to joining Genentech, she served as Division Manager, Southeast Region, for American Critical
Care, a Division of American Hospital Supply, a supplier of healthcare products to hospitals. Ms.
Popovits is a director of Nuvelo, Inc. Ms. Popovits holds a B.A. in Business from Michigan State
University.
Julian C. Baker is a Managing
Member of Baker Bros. Advisors, LLC, which he and his brother,
Felix Baker, Ph.D., founded in 2000. Mr. Baker’s firm manages Baker Brothers Investments, a family
of long-term investment funds for major university endowments and foundations, which are focused on
publicly traded life sciences companies. Mr. Baker’s career
as a fund manager began in 1994 when
he co-founded a biotechnology investing partnership with the Tisch Family. Previously, Mr. Baker
was employed from 1988 to 1993 by the private equity investment arm of Credit Suisse First Boston.
He is also a director of Incyte Corporation, Neurogen Corporation, Theravance, Inc. and Trimeris,
Inc. Mr. Baker holds an A.B. in Social Studies from Harvard University.
Brook H. Byers is a general
partner of Kleiner Perkins Caufield & Byers, a venture capital
firm which he joined in 1977. He was the founding president and chairman of four life science
companies: Hybritech Inc., IDEC Pharmaceuticals Corporation, InSite Vision Inc. and Ligand
Pharmaceuticals Inc. Mr. Byers currently serves as a director of a number of
4
privately held technology, healthcare and biotechnology companies. Mr. Byers holds a B.S. in
Electrical Engineering from the Georgia Institute of Technology and an M.B.A. from the Stanford
Graduate School of Business.
Fred E. Cohen, M.D., Ph.D. joined TPG Ventures, a venture capital firm, as a Managing Director
in 2001. Dr. Cohen is also a Professor of Medicine and Pharmacology at the University of
California, San Francisco, where he has taught since July 1988. Dr. Cohen is a director of Matrix
Laboratories Limited, Quintiles Transnational and a number of privately held companies. Dr. Cohen
holds a B.S. in Molecular Biophysics and Biochemistry from Yale University, a Ph.D. in Molecular
Biophysics from Oxford University and an M.D. from Stanford University.
Samuel D. Colella co-founded Versant Ventures, a healthcare and biotechnology venture capital
firm, in 1999. Mr. Colella is also a general partner of Institutional Venture Partners, a venture
capital firm he joined in 1984. Mr. Colella currently serves as a director of Symyx Technologies,
Inc., Alexza Pharmaceuticals, Thermage, Inc., and a number of privately held technology and
biotechnology companies. Mr. Colella has a B.S. in Business and Engineering from the University of
Pittsburgh and an M.B.A. from the Stanford Graduate School of Business.
Michael D. Goldberg
joined Mohr Davidow Ventures, a venture capital firm, as a general partner
in 2005. From October 2000 to December 2004, Mr. Goldberg served as the Managing Director of
Jasper Capital, a management and financial consultancy business. In 1995, Mr. Goldberg founded
OnCare, Inc., an oncology practice management company, and served as Chairman until August 2001 and
as Chief Executive Officer until March 1999. Previously, Mr. Goldberg was the founder, President
and Chief Executive Officer of Axion Inc., a cancer-focused healthcare service company. Prior to
Axion, Mr. Goldberg was director of Corporate Development and a member of the Operating Committee
at Cetus Corporation. He is also a director of several privately held companies. Mr. Goldberg holds
a B.A. in Philosophy from Brandeis University and an M.B.A. from the Stanford Graduate School of
Business.
Randall S. Livingston has served as Vice President for Business Affairs and Chief Financial
Officer of Stanford University since 2001. From 1999 to 2001, Mr. Livingston served as Executive
Vice President and Chief Financial Officer of OpenTV Corp., a provider of interactive television
services. From 1996 until 1999, Mr. Livingston served as a consultant and part-time executive for
several Silicon Valley technology companies. Prior to 1996, Mr. Livingston worked for Heartport,
Inc., Taligent, Apple Computer, Ingres Corporation and McKinsey & Company. Mr. Livingston holds a
B.S. in Mechanical Engineering from Stanford University and an M.B.A. from the Stanford Graduate
School of Business.
Woodrow A. Myers, M.D. has
served as Managing Director of Myers Ventures LLC, which
concentrates on opportunities in healthcare and education, since December 2005. He was the
Executive Vice President and Chief Medical Officer of WellPoint, Inc., a commercial health benefits
company, from September 2000 to January 2005. Dr. Myers holds a B.S. in Biological Sciences from
Stanford University, an M.D. from Harvard Medical School and an M.B.A. from the Stanford Graduate School of Business.
Executive Officers
Certain information required by this item concerning executive officers is set forth in Part I
of this Report under the caption “Executive Officers” and is incorporated herein by reference.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the
Securities Exchange Act of 1934 requires our executive officers and
directors, and persons who own more than 10% of a registered class of our equity securities, to
file reports of ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission, or the SEC.
Officers, directors and greater than 10% stockholders are required to furnish us with copies of all
Forms 3, 4 and 5 they file.
Based solely on our review of the copies of such forms we have received and written
representations from certain reporting person that they filed all required reports, we believe that
all of our officers, directors and greater than 10% stockholders complied with all Section 16(a)
filing requirements applicable to them with respect to transactions during 2006, except that Forms
4 related to automatic annual option grants to each of Messrs. Baker, Byers, Colella, Goldberg and
Livingston and Dr. Cohen on May 24, 2006, the day after our 2006 Annual Meeting of Stockholders,
were inadvertently not filed until September 2006.
5
Code of Ethics
We have adopted a Code of Business Conduct that applies to all of our officers and employees,
including our Chief Executive Officer, President and Chief Operating Officer, Chief Financial
Officer and other employees who perform financial or accounting functions. The Code of Business
Conduct sets forth the basic principles that guide the business conduct of our employees. We have
also adopted a Senior Financial Officers’ Code of Ethics that specifically applies to our Chief
Executive Officer, President and Chief Operating Officer, Chief Financial Officer, and key
management employees. Stockholders may request a free copy of our Code of Business Conduct and our
Senior Financial Officers’ Code of Ethics by contacting Genomic Health, Inc., Attention: CFO, 301
Penobscot Drive, Redwood City, California 94063.
To date, there have been no waivers under our Code of Business Conduct or Senior Financial
Officers’ Code of Ethics. We intend to disclose future amendments to certain provisions of our Code
of Business Conduct or Senior Financial Officers’ Code of Ethics or any waivers, if and when
granted, of our Code of Business Conduct or Senior Financial Officers’ Code of Ethics on
our website at http://www.genomichealth.com within four business days following the date of
such amendment or waiver.
Corporate Governance
Our board of directors has appointed an Audit Committee, comprised of Mr. Randall S.
Livingston, as Chairman, Mr. Samuel D. Colella and Mr. Michael D. Goldberg. The board of directors
has determined that Mr. Livingston qualifies as an Audit Committee Financial Expert under the
definition outlined by the SEC. In addition, each of the members of the Audit Committee qualifies
as an “independent director” under the current rules of The NASDAQ Stock Market and SEC rules and
regulations.
ITEM 11. Executive Compensation.
Compensation Discussion and Analysis
Our Compensation Philosophy and Objectives
We believe that compensation of our executive officers should encourage creation of
stockholder value and achievement of strategic corporate objectives, attract and retain qualified,
skilled and dedicated executives on a long-term basis, reward past performance, and provide
incentives for future performance. Our philosophy is to align the interests of our stockholders
and management by integrating compensation with our annual and long-term corporate and financial
objectives, including through equity ownership by management. In order to attract and retain
qualified personnel, we strive to offer a total compensation package competitive with companies in
the life sciences industry, taking into account relative company size, performance and geographic
location as well as individual responsibilities and performance. Our compensation philosophy with
respect to our executive officers currently focuses more on the use of equity-based compensation
rather than cash-based compensation.
In setting the level of cash and equity compensation for our executive officers, the
Compensation Committee of our board of directors and the independent members of our board consider
various factors, including the performance of the Company and the individual executive during the
year, the uniqueness and relative importance of the executive’s skill set to the Company, the
executive’s expected future contributions to the Company, the percentage of vested versus unvested
options held by the executive, the level of the executive’s stock ownership and the Company’s
compensation philosophy for all employees. While the Compensation Committee and independent
members of the board did not use market benchmarks to determine executive compensation for 2006,
the Compensation Committee reviewed survey data with respect to companies in the San Francisco Bay
Area with revenues in a broadly similar range as the Company’s revenues and data with respect to a
peer group of biotechnology, life sciences and diagnostic companies, which included competitive
information relating to compensation levels for comparable positions in those industries. The
Compensation Committee and the independent members of the board, who have a broad range of
experience relating to executive compensation matters for similarly situated companies, consider as
well the compensation levels of other employees of the Company. When establishing each
element of an executive officer’s compensation, the Compensation Committee and independent members
of the board also take into consideration the executive’s historical cash and equity compensation,
level of equity ownership, and total current and potential compensation.
6
We do not enter into employment or severance contracts with our executive officers as we do
not believe these types of arrangements facilitate our compensation goals and objectives. We do
not have a stock ownership or stock retention policy that requires executive officers to own stock
in Genomic Health or retain options they exercise. We do not have an employee stock purchase plan,
nor have we made contributions to our executive officers’ 401(k) plans. In 2007, we will make up
to a $1,000 matching 401(k) contribution for all eligible employees and executive officers.
We generally intend to qualify executive compensation for deductibility without limitation
under section 162(m) of the Internal Revenue Code. Section 162(m) provides that, for purposes of
the regular income tax and the alternative minimum tax, the otherwise allowable deduction for
compensation paid or accrued with respect to a covered employee of a publicly-held corporation
(other than certain exempt performance-based compensation) is limited to no more than $1 million
per year. None of the non-exempt compensation we paid to any of our executive officers for 2006
as calculated for purposes of section 162(m) exceeded the $1 million limit.
Elements of Executive Compensation
Our compensation structure for executive officers consists of a combination of
salary and stock options; because of our egalitarian culture, we do not have programs
providing for personal-benefit perquisites to officers. The Compensation Committee makes
recommendations with respect to executive officer compensation, to be approved by the independent
members of the board of directors. For 2007, executive officers will be eligible to receive cash
bonuses as well.
Base Salary. Our Compensation Committee reviews base salaries for executive officers on an
annual basis, considering recommendations by the Chief Executive Officer for executive officers
other than the Chief Executive Officer, and adjusting salaries based on individual and company
performance. The Compensation Committee also considers market information and the base salaries
and other incentives paid to executive officers of other similarly sized companies within our
industry. However, the Compensation Committee does not limit its decisions to or target any particular range
or level of total compensation paid to executive officers at these companies. The Chief Executive
Officer is involved in the decisions on base salary adjustments for executives other than the Chief
Executive Officer.
Annual Bonus. While we have had a bonus pool that is tied to corporate and operational goals
for our non-executives, we have not in the past paid cash bonuses to our executive officers. For
2007, our executive officers will be eligible to participate in our cash bonus program. The
eligible bonus pool for all employees will be 10% of the Company’s total salary base, but there
will be no preset limitations on minimum or maximum bonus amounts. While bonuses for non-executive
employees will be based in part on achievement of corporate goals established by our executive
officers, bonuses for executive officers will be determined by the Compensation Committee and
independent members of our board of directors at the time of their annual compensation review based on their assessment of corporate and individual
achievements.
Equity-Based Compensation.
Our Compensation Committee administers our stock option plan for
executive officers, employees, consultants and outside directors, under which it grants options to
purchase our common stock with an exercise price equal to the fair market value of a share of our
common stock on the date of grant, which is the closing price on the date of grant.
Option grants to Randal W. Scott that were intended to qualify as incentive stock options while he
owned more than 10% of our common stock were made at an exercise price of 110% of fair market
value on the date of grant and have a five-year term.
We believe that providing
executive officers who have responsibility for our management and
growth with an opportunity to increase their stock ownership aligns the interests of the executive
officers with those of our stockholders. Accordingly, the Compensation Committee also considers
stock option grants to be an important aspect in compensating and providing incentives to management. Each executive
officer is initially granted an option when
he or she begins working for us. The amount of the grant is based on
his or her position with us, relevant
prior experience and market conditions. These initial grants generally vest over four years and no
shares vest before the one-year anniversary of the option grant. We spread the vesting of our
options over four years to compensate executives for their contribution over a period of time and
to provide an incentive to focus on our longer term goals. The
Compensation Committee also sets annual grants
as part of its and the independent members of the board’s annual compensation review process. The
Compensation Committee determines the number of shares underlying each stock option grant based
upon the executive officer’s and the Company’s performance, the executive officer’s role and
responsibilities, the executive officer’s base salary, and comparison with comparable awards to
individuals in similar positions in our industry. Additionally, in the future our Compensation
Committee and independent members of our board of directors may consider awarding additional or
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alternative forms of equity incentives, such as grants of restricted stock, restricted stock
units and other performance-based awards. We do not coordinate the timing of equity award grants
with the release of financial results or other material announcements by the Company; our annual
equity grants are made at regularly scheduled board and Compensation Committee meetings.
Other Compensation. All of our full-time employees, including our executive officers, may
participate in our health programs, such as medical, dental and vision care coverage, and our
401(k) and life and disability insurance programs.
Named Executive Officers
The 2006 Summary Compensation Table, 2006 Grants of Plan-Based Awards Table and the tables
that follow provide compensation information for our named executive officers, including Randal W.
Scott, as Chief Executive Officer, G. Bradley Cole, as Chief Financial Officer, and the three most
highly compensated executive officers of the Company who were serving as executive officers at the
end of 2006 which, in 2006, were Kimberly J. Popovits, Joffre B. Baker and Steven Shak.
2006 Summary Compensation Table
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Option |
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| Name and Principal Position |
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Year |
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Salary ($) |
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Awards ($) (1) |
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Total ($) |
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Randal W. Scott, Ph.D.
Chief Executive Officer
and Chairman |
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2006 |
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252,500 |
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181,200 |
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433,700 |
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G. Bradley Cole
Executive Vice President,
Chief Financial Officer
and Secretary |
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2006 |
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262,000 |
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252,900 |
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514,900 |
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Kimberly J. Popovits
President and Chief
Operating Officer |
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2006 |
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303,000 |
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206,700 |
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509,700 |
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Joffre B. Baker, Ph.D.
Chief Scientific Officer |
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2006 |
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288,000 |
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187,400 |
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475,400 |
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Steven Shak, M.D.
Chief Medical Officer |
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2006 |
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288,000 |
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187,400 |
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475,400 |
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| (1) |
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Represents the compensation expense related to outstanding options we
recognized for the year ended December 31, 2006 under Statement of
Financial Accounting Standards No. 123 (revised 2004), or SFAS 123R, rather than
amounts paid to or realized by the named individual, and includes expense we recognized in 2006 for option grants in prior periods. Compensation expense is
determined by computing the fair value of each option on the grant date in accordance
with SFAS 123R and recognizing that amount as expense ratably over the option vesting
term. See Note 9 of Notes to our Consolidated Financial Statements set forth in Item 8
of this Report for the assumptions made in determining SFAS 123R values. The SFAS 123R
value of an option as of the grant date is spread over the number of months in which
the option is subject to vesting and includes ratable amounts expensed for option
grants in prior years. There can be no assurance that options will be exercised (in
which case no value will be realized by the individual) or that the value on exercise
will approximate the compensation expense we recognized. |
8
2006 Grants of Plan-Based Awards
The following table sets forth information on grants of options to purchase shares of our
common stock in 2006 to our named executive officers:
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All Other Option |
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Awards: Number |
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Exercise or Base |
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Grant Date Fair |
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of Securities |
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Price |
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Value of Option |
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Grant |
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Underlying Options |
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of Option Awards |
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Awards |
| Name |
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Date |
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(#) |
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($ per share) |
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($) |
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Randal W. Scott, Ph.D. |
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11/30/06 |
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40,000 |
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18.89 |
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460,412 |
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G. Bradley Cole |
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11/30/06 |
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40,000 |
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18.89 |
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460,412 |
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Kimberly J. Popovits |
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11/30/06 |
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40,000 |
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18.89 |
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460,412 |
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Joffre B. Baker, Ph.D. |
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11/30/06 |
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40,000 |
|
|
|
18.89 |
|
|
|
460,412 |
|
Steven Shak, M.D. |
|
|
11/30/06 |
|
|
|
40,000 |
|
|
|
18.89 |
|
|
|
460,412 |
|
Outstanding Equity Awards at Fiscal Year-End 2006
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Number of |
|
|
|
|
| |
|
|
|
|
|
Securities |
|
|
|
|
| |
|
Number of Securities |
|
Underlying |
|
|
|
|
| |
|
Underlying |
|
Unexercised |
|
|
|
|
| |
|
Unexercised Options |
|
Options |
|
Option Exercise |
|
Option |
| |
|
(#) |
|
Unexercisable |
|
Price |
|
Expiration |
| Name |
|
Exercisable |
|
(#)(1) |
|
($)(2) |
|
Date |
| |
Randal W. Scott, Ph.D. |
|
|
34,674 |
|
|
|
34,674 |
(2) |
|
|
3.17 |
|
|
|
12/02/09 |
|
|
|
|
12,500 |
|
|
|
37,500 |
(3) |
|
|
10.33 |
|
|
|
12/01/10 |
|
|
|
|
0 |
|
|
|
40,000 |
(4) |
|
|
18.89 |
|
|
|
11/30/16 |
|
| |
G. Bradley Cole |
|
|
94,270 |
|
|
|
61,763 |
(5) |
|
|
1.33 |
|
|
|
07/06/14 |
|
|
|
|
8,669 |
|
|
|
8,669 |
(2) |
|
|
2.88 |
|
|
|
12/02/14 |
|
|
|
|
12,500 |
|
|
|
37,500 |
(3) |
|
|
9.39 |
|
|
|
12/01/15 |
|
|
|
|
0 |
|
|
|
40,000 |
(4) |
|
|
18.89 |
|
|
|
11/30/16 |
|
| |
Kimberly J. Popovits |
|
|
43,345 |
|
|
|
0 |
|
|
|
0.63 |
|
|
|
01/31/12 |
|
|
|
|
34,674 |
|
|
|
34,674 |
(2) |
|
|
2.88 |
|
|
|
12/02/14 |
|
|
|
|
12,500 |
|
|
|
37,500 |
(3) |
|
|
9.39 |
|
|
|
12/01/15 |
|
|
|
|
0 |
|
|
|
40,000 |
(4) |
|
|
18.89 |
|
|
|
11/30/16 |
|
| |
Joffre B. Baker, Ph.D. |
|
|
34,674 |
|
|
|
34,674 |
(2) |
|
|
2.88 |
|
|
|
12/02/14 |
|
|
|
|
12,500 |
|
|
|
37,500 |
(3) |
|
|
9.39 |
|
|
|
12/01/15 |
|
|
|
|
0 |
|
|
|
40,000 |
(4) |
|
|
18.89 |
|
|
|
11/30/16 |
|
| |
Steven Shak, M.D. |
|
|
34,674 |
|
|
|
34,674 |
(2) |
|
|
2.88 |
|
|
|
12/02/14 |
|
|
|
|
12,500 |
|
|
|
37,500 |
(3) |
|
|
9.39 |
|
|
|
12/01/15 |
|
|
|
|
0 |
|
|
|
40,000 |
(4) |
|
|
18.89 |
|
|
|
11/30/16 |
|
| |
|
|
|
| (1) |
|
Options vest over a four-year period, becoming exercisable as to 25% of the shares
on the first anniversary of the grant date with the remaining shares vesting monthly
thereafter over the following 36 months. |
9
|
|
|
| (2) |
|
Except for the grants to Dr. Scott at $3.17 per share and $10.33 per share, the
option exercise price is equal to the fair market value of our common stock on the date of
grant. The specified option grants to Dr. Scott were equal to 110% of the fair market value
of our common stock on the date of grant. |
Other than the grants to Dr. Scott noted in footnote (2) above that have a term of five years,
all of the options have a term of ten years, subject to earlier termination in specified events
related to termination of employment.
Report of the Compensation Committee of the Board of Directors on Executive Compensation
The following report of the Compensation Committee shall not be deemed
to be “soliciting material” or “filed” with the SEC or deemed to be incorporated by reference into any other filing by Genomic Health
under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference
into a document filed under those Acts.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis
set forth herein with Genomic Health’s management. Based on its review and those discussions, the
Compensation Committee recommended to the Board of Directors that the Compensation Discussion and
Analysis be included in this Report and in our proxy statement for our 2007 Annual Meeting of
Stockholders.
Compensation Committee
Samuel D. Colella
Brook H. Byers
Fred E. Cohen, M.D., Ph.D.
Woodrow A. Myers, Jr., M.D.
10
2006 Director Compensation
The following table sets forth cash amounts and the value of other compensation paid to our
outside directors for their service in 2006:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fees Earned |
|
|
|
|
| |
|
or Paid in |
|
Option Awards |
|
|
| Name |
|
Cash ($) |
|
$(2)(3) |
|
Total ($) |
Julian C. Baker |
|
|
20,000 |
|
|
|
35,000 |
|
|
|
55,000 |
|
Brook H. Byers |
|
|
20,000 |
|
|
|
35,000 |
|
|
|
55,000 |
|
Fred E. Cohen, M.D., Ph.D. |
|
|
20,000 |
|
|
|
35,000 |
|
|
|
55,000 |
|
Samuel D. Colella |
|
|
20,000 |
|
|
|
35,000 |
|
|
|
55,000 |
|
Michael D. Goldberg |
|
|
20,000 |
|
|
|
35,000 |
|
|
|
55,000 |
|
Randall S. Livingston |
|
|
30,000 |
|
|
|
58,030 |
|
|
|
88,030 |
|
Woodrow A. Myers, Jr.,
M.D.(1) |
|
|
10,000 |
|
|
|
19,500 |
|
|
|
29,500 |
|
|
|
|
| (1) |
|
Dr. Myers joined our board of directors on April 11, 2006. |
| |
| (2) |
|
Represents the compensation expense related to outstanding options we recognized for the year ended December 31, 2006 under SFAS 123R rather than amounts paid to or
realized by the named individual and, except with respect to Dr. Myers, includes expenses
we recognized in 2006 for option grants in prior periods. Compensation expense is
determined by computing the fair value of each option on the grant date in accordance with
SFAS 123R and recognizing that amount as expense ratably over the option vesting term. See
Note 9 of Notes to our Consolidated Financial Statements set forth in Item 8 of this Report
for the assumptions made in determining SFAS 123R values. The SFAS 123R value of an option as
of the grant date is spread over the number of months in which the option is subject to
vesting and includes ratable amounts expensed for option grants in prior years. There can be
no assurance that options will be exercised (in which case no value will be realized by the
individual) or that the value on exercise will approximate the compensation expense we recognized.
In 2006, Messrs. Baker, Byers, Colella, Goldberg and Livingston and Dr. Cohen
each received an option to purchase 8,250 shares of our common stock with a grant date fair value
of $59,300, and Dr. Myers received an option to purchase 16,500 shares of our common stock
with a grant date fair value of $110,000. |
| |
| (3) |
|
The following table sets forth the aggregate number of shares of common stock
underlying option awards outstanding at December 31, 2006: |
| |
|
|
|
|
| Name |
|
Number of Shares(1) |
Julian C. Baker
|
|
|
8,250 |
|
Brook H. Byers
|
|
|
8,250 |
|
Fred E. Cohen, M.D., Ph.D.
|
|
|
13,541 |
|
Samuel D. Colella
|
|
|
8,250 |
|
Michael D. Goldberg
|
|
|
8,250 |
|
Randall S. Livingston
|
|
|
25,596 |
|
Woodrow A. Myers, Jr., M.D.
|
|
|
16,500 |
|
|
|
|
| (1) |
|
Options with respect to an aggregate of 66,000 shares
automatically accelerate upon a change of
control. |
Directors who are employees of the Company do not receive any fees for their service on our
board of directors or any committee. During 2006, Dr. Scott and Ms. Popovits were the Company’s
only employee directors.
Our outside directors receive an annual retainer of $20,000 and Mr. Livingston, as chairman of
our audit committee, receives an annual retainer of $30,000. We also reimburse our non-employee
directors for reasonable expenses in connection with attendance at board of director and committee
meetings.
11
In addition to cash compensation for services as a member of the board, non-employee directors
also are eligible to receive nondiscretionary automatic grants of stock options under our 2005
Stock Incentive Plan. An outside director who joins our board is automatically granted an initial
option to purchase 16,500 shares upon first becoming a member of our board of directors. The
initial option vests and becomes exercisable over four years, with the first 25% of the shares
subject to the initial option vesting on the first anniversary of the date of grant and the
remainder vesting monthly thereafter. Immediately after each of our regularly scheduled annual
meetings of stockholders, each outside director is automatically granted a nonstatutory option to
purchase 8,250 shares of our common stock, provided the director has served on our board of
directors for at least six months. These options vest and become exercisable on the first
anniversary of the date of grant or immediately prior to our next annual meeting of stockholders,
if earlier. The options granted to outside directors under our 2005 Stock Incentive Plan have a
per share exercise price equal to 100% of the fair market value of the underlying shares on the
date of grant, a term of ten years, and become fully vested in the event of a change in control.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
The
following table sets forth certain information as of March 31, 2007, as to shares of our
common stock beneficially owned by: (1) each person who is known by us to own beneficially more
than 5% of our common stock, (2) each of our named executive officers listed in the Summary
Compensation Table under Item 11 of this Report, (3) each of our directors and (4) all of our
directors and executive officers as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. Except as
indicated by the footnotes below, we believe, based on the information furnished to us, that the
persons and entities named in the table below have sole voting and investment power with respect to
all shares of common stock that they beneficially own, subject to applicable community property
laws.
In computing the number of shares of common stock beneficially owned by a person and the
percentage ownership of that person, we deemed outstanding shares of common stock subject to
options held by that person that are currently exercisable or exercisable within 60 days after
March 31, 2007. We did not deem these shares outstanding, however, for the purpose of computing the
percentage ownership of any other person.
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Percentage |
| |
|
Number of |
|
of |
| |
|
Shares of |
|
Common |
| |
|
Common Stock |
|
Stock |
| |
|
Beneficially |
|
Beneficially |
| Name and Address of Beneficial Owner (1) |
|
Owned |
|
Owned |
5% Stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entities Affiliated with Baker Brothers Advisors(2) |
|
|
2,941,272 |
|
|
|
12.0 |
% |
Entities Affiliated with Kleiner Perkins Caufield & Byers(3) |
|
|
2,366,625 |
|
|
|
9.6 |
% |
Entities Affiliated with Versant Ventures(4) |
|
|
2,192,150 |
|
|
|
8.9 |
% |
Entities Affiliated with TPG Ventures(5) |
|
|
1,910,273 |
|
|
|
7.8 |
% |
|
|
|
|
|
|
|
|
|
Directors and Named Executive Officers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Julian C. Baker(2)(6) |
|
|
2,949,522 |
|
|
|
12.0 |
% |
Brook H. Byers(3)(6) |
|
|
2,374,875 |
|
|
|
9.7 |
% |
Fred E. Cohen, M.D., Ph.D.(5)(7) |
|
|
1,973,143 |
|
|
|
8.0 |
% |
Samuel D. Colella(4)(6) |
|
|
2,200,400 |
|
|
|
9.0 |
% |
Michael D. Goldberg(8) |
|
|
56,963 |
|
|
|
* |
|
Randall S. Livingston(9) |
|
|
25,596 |
|
|
|
* |
|
Woodrow A. Myers, M.D.(10) |
|
|
16,468 |
|
|
|
* |
|
Joffre B. Baker, Ph.D.(11) |
|
|
478,824 |
|
|
|
1.9 |
% |
G. Bradley Cole(12) |
|
|
151,003 |
|
|
|
* |
|
Kimberly J. Popovits(13) |
|
|
470,734 |
|
|
|
1.9 |
% |
Randal W. Scott, Ph.D.(14) |
|
|
2,284,399 |
|
|
|
9.3 |
% |
Steven Shak, M.D.(15) |
|
|
488,082 |
|
|
|
2.0 |
% |
All directors and executive officers as a group (12
persons) (16) |
|
|
13,470,009 |
|
|
|
53.7 |
% |
12
|
|
|
| * |
|
Represents beneficial ownership of less than 1%. |
| |
| (1) |
|
Unless otherwise stated, the address of each beneficial owner listed on the table
is c/o Genomic Health, Inc., 301 Penobscot Drive, Redwood City, California 94063. |
| |
| (2) |
|
According to Amendment No. 1 to Schedule 13D filed jointly on March 9, 2007 by
Julian C. Baker and Felix J. Baker, Julian C. Baker and Felix J. Baker share voting and
dispositive power with respect to 2,941,272 shares of the Company’s common stock, including
173,897 shares owned by Baker Bros. Investments, L.P., 193,759 shares owned by Baker/Tisch
Investments, L.P., 16,444 shares owned by Baker Bros. Investments II, L.P., 606,709 shares
owned by Baker Biotech Fund I, L.P., 1,738,099 shares owned by Baker Brothers Life
Sciences, L.P., 38,467 shares owned by 14159, L.P., each, a limited partnership, and
173,897 shares owned by FBB Associates, a general partnership of which Julian C. Baker and
Felix J. Baker are the sole partners. The principal address for entities affiliated with
Baker Brothers Advisors is 677 Madison Avenue, New York, New York 10021. Mr. Baker
disclaims beneficial ownership of the shares held by these entities except to the extent of
his pecuniary interest therein. |
| |
| (3) |
|
According to a Schedule 13G filed jointly on February 14, 2006 by Kleiner Perkins
Caufield & Byers X-A, L.P., Kleiner Perkins Caufield & Byers X-B, L.P. and KPCB X
Associates, L.P., 1,619,483 shares are beneficially owned by Kleiner Perkins Caufield &
Byers X-A, L.P. and 45,677 shares are beneficially owned by Kleiner Perkins Caufield &
Byers X-B, L.P. KPCB X Associates, L.P. is the general partner of Kleiner Perkins Caufield
& Byers X-A, L.P. and Kleiner Perkins Caufield & Byers X-B, L.P. and has shared power to
vote and dispose of or direct the disposition of the shares of stock held by Kleiner
Perkins Caufield & Byers X-A, L.P. and Kleiner Perkins Caufield & Byers X-B, L.P. The
principal address for the Kleiner Perkins Caufield & Byers entities is 2750 Sand Hill Road,
Menlo Park, California 94025. Mr. Byers, who is also one of our directors, is a managing
member of the general partner and, as such, has shared voting and investment authority over
these shares. However, Mr. Byers disclaims beneficial ownership of these shares except to
the extent of his pecuniary interest therein. |
| |
| (4) |
|
According to a Schedule 13G/A filed jointly on February 9, 2007 by Versant
Venture Capital I, L.P., Versant Side Fund I, L.P., Versant Affiliates Fund I-A, L.P.,
Versant Affiliates Fund I-B, L.P., Versant Ventures I, LLC, Brian G. Atwood, Ross A. Jaffe,
Samuel D. Colella, Donald B. Milder, Barbara N. Lubash, Rebecca B. Robertson and William J.
Link, Versant Venture Capital I, L.P. has the sole power to vote and dispose of or direct
the disposition of 2,192,150 shares, Versant Side Fund I. L.P. has the sole power to vote
and dispose of or direct the disposition of 42,994 shares, Versant Affiliates Fund I-A,
L.P. has the sole power to vote and dispose of or direct the disposition of 42,412 shares,
Versant Affiliates Fund I-B, L.P. has the sole power to vote and dispose of or direct the
disposition of 89,066 shares, Versant Ventures I, LLC, the general partner of Versant
Venture Capital I, L.P., Versant Side Fund I, L.P., Versant Affiliates Fund I-A, L.P. and
Versant Affiliates Fund I-B, L.P., has the sole power to vote and dispose of or direct the
disposition of 2,336,622 shares, and Brian G. Atwood, Ross A. Jaffe, Samuel D. Colella,
Donald B. Milder, Barbara N. Lubash, Rebecca B. Robertson and William J. Link, who are the
Managing Directors of Versant Ventures I, LLC, have shared power to vote and dispose of or
direct the disposition of 2,366,622 shares. Under certain circumstances set forth in the
Limited Partnership Agreements of Versant Venture Capital I, L.P., Versant Side Fund I,
L.P., Versant Affiliates Fund I-A, L.P. and Versant Affiliates Fund I-B, L.P., the general
partner and limited partners of each of such funds have the right to receive dividends
from, or the proceeds from the sale of the common stock of the Company owned by each such
fund. The principal address for Versant Ventures affiliated entities is 3000 Sand Hill
Road, Building Four, Suite 210, Menlo Park, California 94025. Mr. Colella, who is also one
of our directors, is a managing director of Versant Ventures I, LLC, the general partner of
Versant Venture Capital I, L.P., Versant Side Fund I, L.P., Versant Affiliates Fund I-A,
L.P. and Versant Affiliates Fund I-B, L.P., of which Versant Ventures I, LLC is the general
member. In such capacity, Mr. Colella may be deemed to share voting and investment power
with respect to the shares held by Versant Venture Capital I, L.P., Versant Side Fund I,
L.P., Versant Affiliates Fund I-A, L.P. and Versant Affiliates Fund I-B, L.P. Mr. Colella
disclaims beneficial ownership of the shares owned by these funds, except to the extent of
his pecuniary interest therein. |
| |
| (5) |
|
According to a Schedule 13G filed jointly on February 14, 2006 by Tarrant
Advisors, Inc., Tarrant Advisors, Inc. is the beneficial owner of and has the sole power to
vote and dispose of or direct the disposition of the shares which are beneficially owned by
TPG Ventures, L.P. and TPG Biotechnology Partners, L.P. Tarrant Advisors is the general
partner of TPG Ventures Professional, L.P., which in turn is the managing member of TPG
Venture Holdings, L.L.C., which is the |
13
|
|
|
| |
|
sole member of each of TPG Venture Advisors, L.L.C. and TPG Biotech Advisors, L.L.C. TPG
Biotech Advisors, L.L.C. is the general partner of TPG Biotechnology GenPar, L.P., which is
the general partner of TPG Biotechnology Partners, L.P. The principal address for TPG
Ventures affiliated entities is 301 Commerce Street #3300, Fort Worth, Texas 76102. Dr.
Cohen, who is also one of our directors, is a managing director of Texas Pacific Group
Ventures. In such capacity, Dr. Cohen may be deemed to share voting and investment power
with respect to the shares held by TPG Ventures, L.P. and TPG Biotechnology Partners, L.P.
Dr. Cohen disclaims beneficial ownership of the shares owned by these funds, except to the
extent of his pecuniary interest therein. |
| |
| (6) |
|
Includes options to purchase 8,250 shares of common stock that are exercisable
within 60 days of March 31, 2007. |
| |
| (7) |
|
Also includes options to purchase 13,451 shares of common stock that are
exercisable within 60 days of March 31, 2007 and 6,068 shares held in a family trust, of
which Dr. Cohen is a trustee. |
| |
| (8) |
|
Includes options to purchase options to purchase 8,250 shares of common stock
that are exercisable within 60 days of March 31, 2007 and 6,068 shares held in a family
trust, of which Mr. Goldberg is trustee. |
| |
| (9) |
|
Includes options to purchase 19,447 shares of common stock that are exercisable
within 60 days of March 31, 2007. |
| |
| (10) |
|
Includes options to purchase 4,468 shares of common stock that are exercisable
within 60 days of March 31, 2007. |
| |
| (11) |
|
Includes options to purchase 59,604 shares of common stock that are exercisable
within 60 days of March 31, 2007. Also includes 116,343 shares held in a family trust of
which Dr. Baker is a trustee. |
| |
| (12) |
|
Includes options to purchase 138,705 shares of common stock that are exercisable
within 60 days of March 31, 2007. |
| |
| (13) |
|
Includes options to purchase 102,950 shares of common stock that are exercisable
within 60 days of March 31, 2007. Also includes 8,670 shares held by Ms. Popovits’
child. |
| |
| (14) |
|
Includes options to purchase 59,604 shares of common stock that are exercisable
within 60 days of March 31, 2007. Also includes 5,199 shares held for the benefit of Dr.
Scott’s children, of which Dr. Scott’s sister is trustee. |
| |
| (15) |
|
Includes options to purchase 59,604 shares of common stock that are exercisable
within 60 days of March 31, 2007. |
| |
| (16) |
|
Includes options to purchase 490,833 shares of common stock that are exercisable
within 60 days of March 31, 2007. |
Equity Compensation Plan Information
The following table sets forth, as of December 31, 2006, information about our equity
compensation plans that have been approved by our stockholders, including the number of shares of
our common stock exercisable under all outstanding options, the weighted-average exercise price of
all outstanding options and the number of shares available for future issuance under our equity
compensation plans. We do not have any equity compensation plans that have not been approved by our
stockholders.
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
(c) |
| |
|
|
|
|
|
|
|
|
|
Number of securities |
| |
|
(a) |
|
(b) |
|
remaining available for |
| |
|
Number of securities to be |
|
Weighted-average |
|
future issuance under |
| |
|
issued upon exercise |
|
exercise price of |
|
equity compensation |
| |
|
of outstanding options, |
|
outstanding options, |
|
plans excluding securities |
| Plan Category |
|
warrants and rights |
|
warrants and rights |
|
reflected in column (a) |
Equity Compensation Plans Approved by Stockholders |
|
|
2,940,803 |
|
|
$ |
9.10 |
|
|
|
3,258,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plans Not Approved by Stockholders |
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
14
ITEM 13. Certain Relationships and Related Transactions, and Director Independence.
Certain Relationships and Related Transactions
It is our policy that all employees, officers and directors must avoid any activity that is or
has the appearance of conflicting with the interests of the Company. This policy is included in
our Code of Business Conduct. We conduct a review of all related party transactions for potential
conflict of interest situations on an ongoing basis and all such transactions relating to executive officers and directors must be approved by
the independent and disinterested members of our board of directors or an independent and disinterested committee of the board.
Director Independence
Our board of directors has determined that, except for Dr. Scott and Ms. Popovits, each
individual who currently serves as a member of the board is, and each individual who served as a
member of the board in 2006 was, an “independent director” within the meaning of Rule 4200 of The
NASDAQ Stock Market. Dr. Scott and Ms. Popovits are not independent because they are employed by
the Company. For Messrs. Byers, Colella, Goldberg and Livingston and Drs. Cohen and Myers, the
board of directors considered their relationship and transactions with the Company as directors and
securityholders of the Company. For Mr. Baker, the board of directors considered Mr. Baker’s status
as a director and securityholder and ordinary course transactions between the Company and another company
for which Mr. Baker serves as a director.
ITEM 14. Principal Accounting Fees and Services.
Ernst & Young LLP has audited our financial statements since our inception in 2000. Aggregate
fees for professional services rendered for us by Ernst & Young LLP for the years ended December
31, 2006 and 2005, were as follows:
| |
|
|
|
|
|
|
|
|
| Services Provided |
|
2006 |
|
|
2005 |
|
Audit |
|
$ |
527,000 |
|
|
$ |
858,000 |
|
Audit-Related |
|
|
— |
|
|
|
28,000 |
|
Tax |
|
|
19,000 |
|
|
|
15,000 |
|
All Other |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
Total |
|
$ |
546,000 |
|
|
$ |
901,000 |
|
|
|
|
|
|
|
|
Audit fees. For the years ended December 31, 2006 and 2005, audit fees were for the audits of
our financial statements. For the year ended December 31, 2006, audit fees also included the audit
of our internal control over financial reporting. For the year ended December 31, 2005, audit fees
also included services provided in connection with our initial public offering, including review of
quarterly financial information contained in the our registration statement on Form S-1, work
related to our S-8, comfort letters and consents, and review of our filings with the SEC.
Audit-Related fees. For the year ended December 31, 2005, audit-related fees were for review
of our documentation of internal control over financial reporting under Section 404 of the
Sarbanes-Oxley Act.
Tax fees. For the years ended December 31, 2006 and 2005, tax fees were for the preparation
of our tax returns, tax planning and tax consulting services.
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has implemented pre-approval policies and procedures related to the
provision of audit and non-audit services. Under these procedures, the Audit Committee
pre-approves both the type of services to be provided by Ernst & Young LLP and the estimated fees
related to these services. All of the services in 2006 were pre-approved.
15
During the approval process, the Audit Committee considers the impact of the types of services
and the related fees on the independence of the independent registered public accounting firm. The
services and fees must be deemed compatible with the maintenance of that firm’s independence,
including compliance with rules and regulations of the SEC.
Throughout the year, the Audit Committee will review any revisions to the estimates of audit
and non-audit fees initially approved.
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| |
|
|
|
|
|
|
|
|
GENOMIC HEALTH, INC. |
|
|
|
|
|
|
|
By:
|
|
/s/ Randal W. Scott |
|
|
|
|
|
|
|
|
|
Randal W. Scott, Ph.D.
Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer) |
Date:
April 6, 2007
17
EXHIBIT INDEX
| |
|
|
| Exhibit No. |
|
Description of Document |
31.3
|
|
Rule 13a — 14(a) Certification of Chief Executive Officer. |
31.4
|
|
Rule 13a — 14(a) Certification of the Chief Financial Officer. |