def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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
NxSTAGE MEDICAL, INC.
(Name of Registrant as Specified in
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ
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No fee required.
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o
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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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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(2)
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Form, Schedule or Registration Statement No.:
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NxSTAGE MEDICAL, INC.
439 South Union Street, 5th Floor
Lawrence, Massachusetts 01843
NOTICE OF 2009 ANNUAL MEETING
OF STOCKHOLDERS
To Be Held on May 28,
2009
To our stockholders:
We invite you to our 2009 Annual Meeting of Stockholders, which
will be held at the offices of Wilmer Cutler Pickering Hale
and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, on
Thursday, May 28, 2009 at 10:00 a.m., local time. At
the annual meeting, stockholders will consider and act upon the
following matters:
1. the election of eight members to our board of directors;
2. an amendment to our 2005 Stock Incentive Plan to, among
other things, increase the number of shares of our common stock
that may be issued pursuant to the plan by an additional
4,100,000 shares;
3. an amendment to our 2005 Employee Stock Purchase Plan to
increase the number of shares of our common stock that may be
issued pursuant to the plan by an additional 500,000 shares;
4. the ratification of the selection by our Audit Committee
of Ernst & Young LLP as our independent registered
public accounting firm for the 2009 fiscal year; and
5. the transaction of such other business as may properly
come before the meeting or any adjournment thereof.
Stockholders of record at the close of business on April 6,
2009, the record date for the annual meeting, are entitled to
notice of, and to vote at, the annual meeting. Your vote is
important regardless of the number of shares you own. Whether or
not you expect to attend the annual meeting, we hope you will
take the time to vote your shares. If you are a stockholder of
record, you may vote over the Internet, by telephone or by
completing and mailing the enclosed proxy card in the envelope
provided. If your shares are held in street name,
that is, held for your account by a broker or other nominee, you
will receive instructions from the holder of record that you
must follow for your shares to be voted at the annual meeting.
Our stock transfer books will remain open for the purchase and
sale of our common stock.
By Order of the Board of Directors,
Winifred L. Swan
Secretary
Lawrence, Massachusetts
April 29, 2009
TABLE OF
CONTENTS
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A-1
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B-1
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NxSTAGE
MEDICAL, INC.
439 South Union Street,
5th Floor
Lawrence, Massachusetts 01843
Proxy Statement for the 2009
Annual Meeting of Stockholders
To Be Held on May 28,
2009
This proxy statement contains information about the 2009 Annual
Meeting of Stockholders of NxStage Medical, Inc., including
postponements and adjournments of the meeting. We are holding
the annual meeting at Wilmer Cutler Pickering Hale and Dorr LLP,
60 State Street, Boston, Massachusetts 02109, on Thursday,
May 28, 2009 at 10:00 a.m., local time.
We are sending you this proxy statement in connection with the
solicitation of proxies by our Board of Directors for use at the
annual meeting.
We are mailing our Annual Report to Stockholders for the year
ended December 31, 2008 with these proxy materials on or
about April 29, 2009.
You can find our Annual Report on
Form 10-K
for the year ended December 31, 2008 on our website at
www.nxstage.com or through the Securities and
Exchange Commissions electronic data system, called EDGAR,
at www.sec.gov. You may also obtain a printed copy
of our Annual Report on
Form 10-K,
free of charge, from us by sending a written request to:
Investor Relations, NxStage Medical, Inc., 439 South Union
Street, 5th Floor, Lawrence, Massachusetts 01843. Exhibits
will be provided upon written request and payment of appropriate
processing fees.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 28,
2009.
The Notice of Annual Meeting of Stockholders, Proxy Statement
and 2008 Annual Report to Stockholders are available at
www.nxstage.com/proxy.
IMPORTANT
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
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Q.
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Who can vote at the annual meeting?
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A.
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To be able to vote, you must have been a stockholder of record
at the close of business on April 6, 2009, the record date for
our annual meeting. The number of outstanding shares entitled to
vote at the annual meeting is 46,550,921 shares of our
common stock.
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If you were a stockholder of record on that date, you will be
entitled to vote all of the shares that you held on that date at
the annual meeting, or any postponements or adjournments of the
annual meeting.
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Q.
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What are the voting rights of the holders of common stock?
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A.
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Each outstanding share of our common stock will be entitled to
one vote on each matter considered at the annual meeting.
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Q.
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How do I vote?
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A.
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If you are a record holder, meaning your shares are registered
in your name, you may vote:
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(1) Over the Internet: Go to the website of our
tabulator, Computershare Investor Services, at
www.investorvote.com/NXTM. Use the vote control
number printed on your enclosed proxy card to access your
account and vote your shares. You must specify how you want your
shares voted or your Internet vote cannot be completed and you
will receive an error message. Your shares will be voted
according to your instructions. You must submit your internet
proxy before 11:59 p.m. Eastern Time on May 27, 2009, the
day before the annual meeting, for your proxy to be valid and
your vote to count.
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(2) By Telephone: Call 1-800-652-VOTE (8683) toll
free from the U.S. and Canada, and follow the instructions on
your enclosed proxy card. You must specify how you want your
shares voted and confirm your vote at the end of the call or
your telephone vote cannot be completed. Your shares will be
voted according to your instructions. You must submit your
telephonic proxy before 11:59 p.m. Eastern Time on May 27,
2009, the day before the annual meeting, for your proxy to be
valid and your vote to count.
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(3) By Mail: Complete and sign your enclosed proxy
card and mail it in the enclosed postage prepaid envelope to
Computershare Investor Services. Your shares will be voted
according to your instructions. If you do not specify how you
want your shares voted, they will be voted as recommended by our
Board of Directors. Computershare must receive your proxy card
not later than May 27, 2009, the day before the annual meeting,
for your proxy to be valid and your vote to count.
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(4) In Person at the Meeting: If you attend the
meeting, you may deliver your completed proxy card in person or
you may vote by completing a ballot, which we will provide to
you at the meeting.
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If your shares are held in street name, meaning they
are held for your account by a broker or other nominee, you may
vote:
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(1) Over the Internet or by Telephone: You will
receive instructions from your broker or other nominee if they
permit Internet or telephone voting. You should follow those
instructions.
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(2) By Mail: You will receive instructions from your
broker or other nominee explaining how you can vote your shares
by mail. You should follow those instructions.
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(3) In Person at the Meeting: Contact your broker or
other nominee who holds your shares to obtain a brokers
proxy card and bring it with you to the meeting. A brokers
proxy card is not the form of proxy card enclosed with this
proxy statement. You will not be able to vote shares you
hold in street name in person at the meeting unless
you have a proxy from your broker issued in your name giving you
the right to vote your shares.
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Q.
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Can I change my vote?
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A.
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If your shares are registered directly in your name, you
may revoke your proxy and change your vote at any time before
the annual meeting. To do so, you must do one of the following:
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(1) Vote over the Internet or by telephone as instructed
above. Only your latest Internet or telephone vote is counted.
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(2) Sign a new proxy and submit it as instructed above.
Only your latest dated proxy will be counted.
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(3) Attend the annual meeting, request that your proxy be
revoked and vote in person as instructed above. Attending the
annual meeting will not revoke your proxy unless you
specifically request it.
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If your shares are held in street name, you may submit
new voting instructions by contacting your broker, bank or
nominee. You may also vote in person at the meeting if you
obtain a brokers proxy as described in the answer above.
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Q.
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Will my shares be voted if I dont return my proxy?
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If your shares are registered directly in your name, your shares
will not be voted if you do not vote over the Internet, by
telephone, by returning your proxy or voting by ballot at the
meeting. If your shares are held in street name,
your brokerage firm may, under certain circumstances, vote your
shares if you do not return your proxy. Brokerage firms can vote
customers unvoted shares on routine matters. If you do not
return a proxy to your brokerage firm to vote your shares, your
brokerage firm may, on routine matters, either vote your shares
or leave your shares unvoted. Your brokerage firm cannot vote
your shares on any matter that is not considered routine.
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Proposal 1, election of directors, and Proposal 4, ratification
of the selection of our independent registered public accounting
firm, are both considered routine matters. Proposal 2, approving
an amendment to our 2005 Stock Incentive Plan, and Proposal 3,
approving an amendment to our 2005 Employee Stock Purchase Plan,
are non-routine matters. Your brokerage firm cannot vote your
shares with respect to Proposal 2 or Proposal 3 unless it
receives your voting instructions. We encourage you to provide
voting instructions to your brokerage firm by giving your proxy
to them. This ensures that your shares will be voted at the
annual meeting according to your instructions. You should
receive directions from your brokerage firm about how to submit
your proxy to them at the time you receive this proxy statement.
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Q.
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How many shares must be present to hold the annual
meeting?
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A.
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A majority of our outstanding shares of our common stock must be
present at the annual meeting to hold the meeting and conduct
business. This is called a quorum. For purposes of determining
whether a quorum exists, we count as present any shares that are
voted over the Internet, by telephone or by completing and
submitting a proxy or that are represented in person at the
meeting. Further, for purposes of establishing a quorum, we will
count as present shares that a stockholder holds even if the
stockholder votes to abstain or votes on at least one of the
matters to be voted upon.
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If a quorum is not present, we expect to adjourn the meeting
until we obtain a quorum.
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Q.
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What vote is required to approve each matter and how are
votes counted?
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A.
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Proposal 1 Election of Directors
The nominees for directors who receive the highest number of votes FOR election will be elected as directors. This is called a plurality. Abstentions are not counted for purposes of electing directors. If your shares are held by your broker in street name, and you do not vote your shares, your brokerage firm may vote your unvoted shares on Proposal 1. You may:
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vote FOR any or all of the nominees; or
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WITHHOLD your vote from any or all of
the nominees.
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Votes that are withheld will not be included in the vote tally
for the election of the directors and will not affect the
results of the vote.
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Proposal 2 Approval of an amendment to our 2005
Stock Incentive Plan.
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To approve Proposal 2, stockholders holding a majority of the
shares of our common stock present or represented by proxy at
the meeting and voting on the matter must vote FOR the proposal.
If your shares are held by your broker in street
name and if you do not vote your shares, your brokerage
firm does not have the authority to vote your unvoted shares
held by the firm on Proposal 2, and there will be no effect on
the vote because these broker non-votes are not
considered present or represented at the meeting and voting on
the matter. If you vote to ABSTAIN on Proposal 2, your shares
will not be voted in favor of the proposal and will not be
counted as shares voting on the matter.
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Proposal 3 Approval of an amendment to our 2005
Employee Stock Purchase Plan.
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To approve Proposal 3, stockholders holding a majority of the
shares of our common stock present or represented by proxy at
the meeting and voting on the matter must vote FOR the proposal.
If your shares are held by your broker in street
name and if you do not vote your shares, your brokerage
firm does not have the authority to vote your unvoted shares
held by the firm on Proposal 3, and there will be no effect on
the vote because these broker non-votes are not
considered present or represented at the meeting and voting on
the matter. If you vote to ABSTAIN on Proposal 3, your shares
will not be voted in favor of the proposal and will not be
counted as votes cast or shares voting on the proposal.
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Proposal 4 Ratification of Selection of
Independent Registered Public Accounting Firm
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To approve Proposal 4, stockholders holding a majority of the
shares of our common stock present or represented by proxy at
the meeting and voting on the matter must vote FOR the proposal.
If your shares are held by your broker in street
name, and you do not vote your shares, your brokerage firm
may vote your unvoted shares on Proposal 4. If you vote to
ABSTAIN on Proposal 4, your shares will not be voted in favor of
or against the proposal and will also not be counted as votes
cast or shares voting on the matter. As a result, voting to
ABSTAIN will have no effect on the voting on the proposal.
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Although stockholder approval of our Audit Committees
selection of Ernst & Young LLP as our independent
registered public accounting firm is not required, we believe
that it is advisable to give stockholders an opportunity to
ratify this selection. If this proposal is not approved at the
annual meeting, our Audit Committee will reconsider its
selection of Ernst & Young LLP.
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Q:
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Are there other matters to be voted on at the annual
meeting?
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A.
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We do not know of any other matters that may come before the
meeting other than the election of directors, approval of the
amendment to our 2005 Stock Incentive Plan, approval of the
amendment to our 2005 Employee Stock Purchase Plan and the
ratification of the selection of our independent registered
public accounting firm. If any other matters are properly
presented to the meeting, the persons named in the accompanying
proxy intend to vote, or otherwise act, in accordance with their
judgment on the matter.
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Q.
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Where can I find the voting results?
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A.
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We expect to report the voting results in our Quarterly Report
on Form 10-Q for the second quarter ending June 30, 2009.
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Q.
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Who will bear the costs of soliciting proxies?
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A.
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We will bear the cost of soliciting proxies. In addition to
these proxy materials, our directors, officers and employees may
solicit proxies by telephone, e-mail, facsimile and in person,
without additional compensation. Upon request, we will also
reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable
out-of-pocket
expenses for distributing proxy materials.
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5
STOCK
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of
February 16, 2009, or such later date as indicated below,
with respect to the beneficial ownership of our common stock by:
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each person whom we know beneficially owns more than 5% of the
outstanding shares of our common stock;
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each of our directors, all of whom are nominees for election as
directors at the annual meeting;
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our principal executive officer, our principal financial officer
and our three other most highly compensated executive officers
who were serving as executive officers on December 31,
2008, whom we refer to collectively as our named executive
officers; and
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all of our directors and executive officers as a group.
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The number of shares of our common stock owned by each person is
determined under the rules of the Securities and Exchange
Commission, or SEC, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under
these rules, beneficial ownership includes any shares as to
which the individual has sole or shared voting power or
investment power and also any shares which the individual has
the right to acquire within 60 days after February 16,
2009, or April 17, 2009, through the exercise of any stock
option or other right. Unless otherwise indicated, each person
has sole investment and voting power, or shares such power with
his or her spouse, with respect to the shares set forth in the
following table. The inclusion in this table of any shares
deemed beneficially owned does not constitute an admission of
beneficial ownership of those shares.
Percentage of common stock outstanding is based on
46,549,546 shares of our common stock outstanding as of
February 16, 2009 Shares of common stock subject to
stock options currently exercisable, or exercisable within
60 days, are deemed outstanding for the percentage
ownership of the person holding such stock options but are not
deemed outstanding for any other person.
6
Unless otherwise indicated below, the address for each person is
to the care of NxStage Medical, Inc., 439 South Union Street,
5th Floor, Lawrence, Massachusetts 01843.
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Shares of
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Common Stock
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Percentage
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Beneficially
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of Common
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Name and Address
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Owned
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Stock Outstanding
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5% Stockholders
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David S. Utterberg
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8,540,806
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(1)(6)(7)
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18.3
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%
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Credit Suisse (Sprout Entities)
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7,431,118
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(2)(8)
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15.9
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Eleven Madison Avenue
New York, New York 10010
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OrbiMed Advisors, LLC
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6,841,034
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(3)
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14.7
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767 Third Avenue
New York, New York 10017
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Deerfield
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5,414,364
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(4)
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11.6
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780 Third Avenue, 37th Floor
New York, NY 10017
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Massachusetts Financial Services Company
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3,683,463
|
(5)
|
|
|
7.9
|
%
|
500 Boylston Street
Boston MA 02116
|
|
|
|
|
|
|
|
|
Directors(8)
|
|
|
|
|
|
|
|
|
Jeffrey H. Burbank
|
|
|
958,675
|
(7)
|
|
|
2.0
|
%
|
Philippe O. Chambon
|
|
|
7,239,051
|
(7)(8)
|
|
|
15.5
|
%
|
Daniel A. Giannini
|
|
|
76,328
|
(7)
|
|
|
*
|
|
Reid S. Perper
|
|
|
238,524
|
(7)
|
|
|
*
|
|
Craig W. Moore
|
|
|
109,642
|
(7)
|
|
|
*
|
|
Jonathan T. Silverstein
|
|
|
6,841,034
|
(3)(7)
|
|
|
14.7
|
%
|
Earl R. Lewis
|
|
|
33,166
|
(7)
|
|
|
*
|
|
Other Executive Officers
|
|
|
|
|
|
|
|
|
Robert S. Brown
|
|
|
154,590
|
(7)
|
|
|
*
|
|
Winifred L. Swan
|
|
|
169,447
|
(7)
|
|
|
*
|
|
Joseph E. Turk, Jr
|
|
|
251,506
|
(7)
|
|
|
*
|
|
Michael J. Webb
|
|
|
148,079
|
(7)
|
|
|
*
|
|
All directors and executive officers as a group (14 persons)
|
|
|
24,877,856
|
(9)
|
|
|
51.8
|
%
|
|
|
|
* |
|
Represents holdings of less than one percent. |
|
(1) |
|
Consists of (a) 8,485,309 shares of our common stock
and (b) 55,497 shares of common stock which
Mr. Utterberg has the right to acquire within 60 days
of February 16, 2009 upon exercise of outstanding stock
options (See Notes 6 and 7 below). |
|
(2) |
|
This information is provided by Credit Suisse jointly with its
affiliates, the Sprout Entities, and is as of February 16,
2009. As of February 16, 2009, the Sprout Entities may be
deemed to beneficially own an aggregate of 7,431,118 shares
of common stock, which includes 204,445 shares of common
stock issuable upon exercise of outstanding warrants, consisting
of (i) 2,768,323 shares of common stock and
81,755 shares of common stock issuable upon exercise of
outstanding warrants held directly by Sprout Capital IX, L.P.,
(ii) 2,473,236 shares of common stock and
73,040 shares of common stock issuable upon exercise of
outstanding warrants held directly by Sprout Capital VIII, L.P.,
(iii) 974,305 shares of common stock and
28,774 shares of common stock issuable upon exercise of
outstanding warrants held directly by Sprout Capital VII, L.P.,
(iv) 11,339 shares of common stock and 335 shares
of common stock issuable upon exercise of outstanding warrants
held directly by Sprout CEO Fund, L.P.,
(v) 11,030 shares of common stock and 326 shares
of common stock issuable upon exercise of outstanding warrants
held |
7
|
|
|
|
|
directly by Sprout Entrepreneurs Fund, L.P.,
(vi) 131,474 shares of common stock and
3,883 shares of common stock issuable upon exercise of
outstanding warrants held directly by Sprout IX Plan Investors,
L.P., (vii) 55,380 shares of common stock and
1,635 shares of common stock issuable upon exercise of
outstanding warrants held directly by Sprout Plan Investors,
L.P., (viii) 148,435 shares of common stock and
4,384 shares of common stock issuable upon exercise of
outstanding warrants held directly by Sprout Venture Capital,
L.P., (ix) 158,950 shares of common stock and
4,694 shares of common stock issuable upon exercise of
outstanding warrants held directly by DLJ ESC II, L.P.,
(x) 202,941 shares of common stock and
5619 shares of common stock issuable upon exercise of
outstanding warrants held directly by DLJ Capital Corporation,
or DLJCC, (xi) 272,582 shares of common stock held
directly by CSFB
Fund Co-Investment
Program, L.P. and (xii) 100 shares held directly by CS
SEC USA LLC. |
|
(3) |
|
This information is provided by OrbiMed Advisors LLC jointly
with its affiliated entities and is as of March 31, 2009.
As of March 31, 2009, OrbiMed Advisors LLC and its
affiliated entities beneficially own 6,841,034 shares of
common stock, including 1,111,111 shares issuable upon
exercise of outstanding warrants. Of this amount, Caduceus
Private Investments III, LP (Caduceus) and OrbiMed
Associates III, LP (Associates), hold 5,664,245 and
54,011 shares, respectively. OrbiMed Advisors LLC
(Advisors), pursuant to its authority under its
investment advisory contract with Associates, may be considered
to hold indirectly 54,011 shares of common stock and
OrbiMed Capital GP III LLC (Capital), pursuant to
its authority as general partner of Caduceus, may be considered
to hold indirectly 5,664,245 shares of common stock. This
amount represents (i) warrants to purchase
1,100,629 shares of common stock held by Caduceus, and
(ii) warrants to purchase 10,482 shares of common
stock held by Associates. Advisors, pursuant to its authority
under its investment advisory contract with Associates, may be
considered to hold indirectly warrants to purchase
10,482 shares of common stock and Capital, pursuant to its
authority as general partner of Caduceus, may be considered to
hold indirectly warrants to purchase 1,100,629 shares of
common stock. These amounts also include (i) options to
purchase 11,557 shares of common stock held by Caduceus,
and (ii) options to purchase 110 shares of common
stock held by Associates. The options were granted directly to
Mr. Silverstein, a director of NxStage.
Mr. Silverstein is also a general partner of Advisors and
Capital. Mr. Silverstein is obligated to transfer any
shares issued under the options to Associates and Caduceus.
Mr. Samuel D. Isaly is the owner of a controlling interest
in both OrbiMed Advisors LLC and OrbiMed Capital GP III LLC.
Thus, OrbiMed Advisors LLC, OrbiMed Capital GP III LLC and
Mr. Isaly may be deemed directly or indirectly, including
by reason of their mutual affiliation, to be the beneficial
owners of 6,841,034 shares of common stock, including
1,111,111 shares issuable upon exercise of warrants. |
|
(4) |
|
This information is taken from a Schedule 13G/A filed on
March 26, 2009 by Deerfield Management Co. and its
affiliated entities (Deerfield) and is as of
March 24, 2009. As of March 24, 2009, the Deerfield
entities beneficially owned, either directly or indirectly an
aggregate of 5,414,364 shares of common stock, including
251,111 shares of common stock issuable upon exercise of
outstanding warrants, consisting of (i) 736,018 shares
of common stock beneficially owned by Deerfield Partners, L.P.,
(ii) 1,029,077 shares of common stock, including
57,103 shares of common stock issuable upon exercise of
outstanding warrants beneficially owned by Deerfield Special
Situations Fund, L.P., (iii) 1,221,478 shares of
common stock beneficially owned by Deerfield International
Limited, (iv) 1,894,432 shares of common stock,
including 105,115 shares of common stock issuable upon
exercise of outstanding warrants beneficially owned by Deerfield
Special Situations Fund International Limited,
(v) 204,303 shares of common stock, including
34,050 shares of common stock issuable upon exercise of
outstanding warrants beneficially owned by Deerfield Private
Design Fund, L.P., and (vi) 329,056 shares of common
stock, including 54,843 shares of common stock issuable
upon exercise of outstanding warrants beneficially owned by
Deerfield Private Design International, L.P. In addition,
Mr. James E. Flynn holds controlling interests in all
Deerfield entities and may be deemed to beneficially own
5,414,364 shares of common stock, including
251,111 shares of common stock issuable upon exercise of
outstanding warrants. |
|
(5) |
|
This information is taken from a Schedule 13G filed on
February 3, 2009 and is as of December 31, 2008. As of
December 31, 2008 mutual funds and other client accounts
for which Massachusetts Financial Services Company, d/b/a MFS
Investment Management, or a subsidiary of Massachusetts
Financial Services Company (collectively, MFS), act
as investment adviser, beneficially owned 3,683,463 shares
of |
8
|
|
|
|
|
common stock, including 88,889 shares of common stock
issuable upon exercise of outstanding warrants. As an investment
advisor, MFS has sole voting and investment power over all of
the shares beneficially held by these funds and accounts. |
|
(6) |
|
David Utterberg, a 5% stockholder, is also a member of our Board
of Directors. |
|
(7) |
|
The number of shares of our common stock that each person is
deemed to beneficially own includes the number of shares of our
common stock which such person has the right to acquire within
60 days after February 16, 2009 upon exercise of
outstanding stock options as set forth opposite his or her name: |
|
|
|
|
|
|
|
Number of
|
|
Name
|
|
Shares
|
|
|
Jeffrey H. Burbank
|
|
|
506,974
|
|
Philippe O. Chambon
|
|
|
54,000
|
|
Daniel A. Giannini
|
|
|
57,000
|
|
Reid S. Perper
|
|
|
54,000
|
|
David S. Utterberg
|
|
|
55,497
|
|
Craig W. Moore
|
|
|
72,791
|
|
Jonathan T. Silverstein
|
|
|
11,667
|
|
Earl Lewis
|
|
|
8,166
|
|
Robert S. Brown
|
|
|
154,590
|
|
Winifred L. Swan
|
|
|
147,017
|
|
Joseph E. Turk, Jr
|
|
|
150,211
|
|
Michael J. Webb
|
|
|
148,079
|
|
|
|
|
(8) |
|
Includes 7,158,436 shares of common stock including
204,445 shares of common stock issuable upon exercise of
outstanding warrants held by various Sprout entities.
Dr. Chambon is a managing director of New Leaf Venture
Partners, L.L.C, or NLVP, and is a limited partner of DLJ
Associates IX, L.P., which is a general partner of Sprout
Capital IX, L.P. NLVP has entered into a sub-management
agreement with DLJCC whereby NLVP and its principals, including
Dr. Chambon, provide DLJCC with investment management
services on the investments held by various of the Sprout
venture capital funds, including (i) 2,768,323 shares
of common stock and 81,755 shares of common stock issuable
upon exercise of outstanding warrants held directly by Sprout
Capital IX, L.P., (ii) 2,473,236 shares of common
stock and 73,040 shares of common stock issuable upon
exercise of outstanding warrants held directly by Sprout Capital
VIII, L.P., (iii) 974,305 shares of common stock and
28,774 shares of common stock issuable upon exercise of
outstanding warrants held directly by Sprout Capital VII, L.P.,
(iv) 11,339 shares of common stock and 335 shares
of common stock issuable upon exercise of outstanding warrants
held directly by Sprout CEO Fund, L.P.,
(v) 11,030 shares of common stock and 326 shares
of common stock issuable upon exercise of outstanding warrants
held directly by Sprout Entrepreneurs Fund, L.P.,
(vi) 131,474 shares of common stock and
3,883 shares of common stock issuable upon exercise of
outstanding warrants held directly by Sprout IX Plan Investors,
L.P., (vii) 55,380 shares of common stock and
1,635 shares of common stock issuable upon exercise of
outstanding warrants held directly by Sprout Plan Investors,
L.P., (viii) 148,435 shares of common stock and
4,384 shares of common stock issuable upon exercise of
outstanding warrants held directly by Sprout Venture Capital,
L.P., (ix) 158,950 shares of common stock and
4,694 shares of common stock issuable upon exercise of
outstanding warrants held directly by DLJ ESC II, L.P., and
(x) 202,941 shares of common stock and
5,619 shares of common stock issuable upon exercise of
outstanding warrants held directly by DLJ Capital Corporation,
or DLJCC. Dr. Chambon expressly disclaims beneficial
ownership of these shares except to the extent of his pecuniary
interest therein. |
|
(9) |
|
Includes an aggregate of 1,514,009 shares of our common
stock which all executive officers and directors have the right
to acquire within 60 days after February 16, 2009 upon
exercise of outstanding stock options. |
9
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors recommends a vote FOR the
election of each of Messrs. Burbank, Chambon, Giannini,
Lewis, Moore, Perper, Silverstein and Utterberg.
Our Board of Directors currently consists of eight members who
serve one-year terms. Our Board of Directors has set the
authorized number of directors at eight, and we are proposing
the election of eight members at the annual meeting.
The persons named in the enclosed proxy will vote to elect as
directors Jeffrey H. Burbank, Philippe O. Chambon, Daniel A.
Giannini, Earl R. Lewis, Craig W. Moore, Reid S. Perper,
Jonathan T. Silverstein, and David S. Utterberg, unless you
indicate on your proxy that your shares should be withheld from
one or more of these nominees. All nominees are currently
members of our Board of Directors.
If elected, the nominees will hold office until our Annual
Meeting of Stockholders in 2010 and until their successors are
duly elected and qualified. Each of the nominees has indicated
his willingness to serve, if elected; however, if any nominee
should be unable to serve, the shares of our common stock
represented by proxies may be voted for a substitute nominee
designated by our Board of Directors.
Below are the names, ages, the principal occupation and business
experience for at least the past five years for each member of
the Board of Directors, each of whom is a nominee for election
at the annual meeting. Information with respect to the number of
shares of our common stock beneficially owned by each director,
directly or indirectly, as of February 16, 2009 appears
above under the heading Stock Ownership of Certain
Beneficial Owners and Management.
Director
Nominees
Jeffrey H. Burbank, age 46, has been our President
and Chief Executive Officer and a director of NxStage since
1999. Prior to joining NxStage, Mr. Burbank was a founder
and the Chief Executive Officer of Vasca, Inc., a medical device
company that developed and marketed a blood access device for
dialysis patients. He gained significant renal industry
experience during his nine years at Gambro, Inc., in the Renal
Division, with his last position as Director of Marketing and
Advanced Technologies in 1995. Mr. Burbank received his BS
in Industrial Engineering from Lehigh University.
Philippe O. Chambon, M.D., Ph.D., age 51, has
served as a director of NxStage since 1998, has been Chairman of
our Board of Directors since December 2004 and currently serves
on our Compensation and Nominating and Corporate Governance
Committees. Dr. Chambon is a Managing Director and founder
of New Leaf Venture Partners, a spin-off from The Sprout Group,
or Sprout. He joined Sprout in May 1995 and became a General
Partner in January 1997. He invests broadly in healthcare
technology companies. He also is currently on the board of
Auxilium Pharmaceuticals as well as several private companies.
Previously, Dr. Chambon served as Manager in the Healthcare
Practice of The Boston Consulting Group from May 1993 to April
1995. From September 1987 to April 1993, he was an executive
with Sandoz Pharmaceutical, where he led strategic product
development, portfolio management and pre-marketing activities
in his capacity as Executive Director of New Product Management.
Dr. Chambon did graduate research in molecular immunology
at The Pasteur Institute and earned a MD, Ph.D. from the
University of Paris. He also has an MBA from Columbia University
in New York.
Daniel A. Giannini, age 59, has served as a director
of NxStage since October 2005 and currently serves as chair of
our Audit Committee and a member of our Nominating and Corporate
Governance Committee. He also serves as a director on several
private and non-profit company boards. Mr. Giannini retired
in June 2005, after a more than
30-year
career, as a Certified Public Accountant with
PricewaterhouseCoopers LLP. During his last five years at
PricewaterhouseCoopers LLP, Mr. Giannini served as an audit
partner and led the firms Atlanta offices
Technology, Information, Communications and Entertainment
practice. Mr. Giannini received a B.S. degree in Business
Administration from LaSalle University.
Earl R. Lewis, age 65, has served as a director of
NxStage since October 2008 and currently serves a member of our
Compensation Committee. Since 2000, Mr. Lewis has been the
Chairman, President and CEO of
10
Flir Systems Inc., a manufacturer of thermal imaging and
infrared camera systems. Prior to 2000, he served as CEO and
President at Thermo Instrument Systems, Inc. He also served
Thermo in various executive capacities, including President and
Chief Operating Officer, CEO and President of Thermo Optek
Corp., and President of Thermo Jarrell Ash Corp. In addition to
serving on the board of Flir Systems, Inc., Mr. Lewis is a
member of the Board of Directors of Harvard BioScience and
American DG Energy, Inc. Mr. Lewis is a Trustee of Clarkson
University and New Hampton School. Mr. Lewis holds a B.S.
from Clarkson College of Technology and has attended
post-graduate programs at the University of Buffalo,
Northeastern University and Harvard University. Mr. Lewis
has a professional Director Certification, earned through an
extended series of director education programs sponsored by the
Corporate Directors Group, an accredited organization of
RiskMetrics ISS.
Craig W. Moore, age 64, has served as a director of
NxStage since 2002 and currently serves as chair of our
Compensation Committee and a member of our Audit Committee. From
1986 to 2001, Mr. Moore was Chairman of the Board of
Directors and Chief Executive Officer at Everest Healthcare
Services Corporation, a provider of dialysis to patients with
renal failure. Since 2001, Mr. Moore has acted as a
consultant to various companies in the healthcare services
industry. From 1986 through 2001, Mr. Moore was President
of Continental Health Care, Ltd., an extracorporeal services and
supply company, and from 1990 through 2004, he was President of
New York Dialysis Management, a dialysis management business.
Mr. Moore serves as a director on several private company
boards.
Reid S. Perper, age 49, has served as a director of
NxStage since September 2005 and currently serves as a member of
our Audit Committee. From January 2004 to March 2009,
Mr. Perper was Managing Director of Healthcare Investment
Partners LLC. From November 2000 through June 2003,
Mr. Perper was a Managing Director and Co-Head of Europe
for CSFB Private Equity. Prior to joining CSFB, Mr. Perper
was a Managing Director of DLJ Merchant Banking Partners.
Mr. Perper joined Donaldson, Lufkin & Jenrette in
1988. Mr. Perper also served as an investment professional
for Caxton Europe Asset Management Ltd. from May 2004 through
July 2005.
Jonathan T. Silverstein, age 42, has served as a
director of NxStage since July 2008 and currently serves as a
member of our Nominating and Governance Committee. Since 1998,
Mr. Silverstein has been a General Partner at OrbiMed
Advisors, LLC., an asset management firm solely focused in
healthcare with several billion in assets under management.
Prior to 1998, Mr. Silverstein was the Director of Life
Sciences in the Investment Banking Department at Sumitomo Bank.
Mr. Silverstein currently serves on the board of directors
of a number of private companies. Mr. Silverstein has a
B.A. in Economics from Denison University and a J.D. and M.B.A.
from the University of San Diego. NxStage appointed
Mr. Silverstein, a General Partner of OrbiMed Advisors,
LLC, to its Board in connection with a private placement of
shares of NxStages common stock and warrants to purchase
shares of its common stock, which was completed on
August 1, 2008.
David S. Utterberg, age 63, has served as a director
of NxStage since 1998. Between 1981 and 2007, Mr. Utterberg
served as the Chief Executive Officer, President and sole
stockholder of Medisystems Corporation, which was acquired by
NxStage, together with certain affiliated entities, on
October 1, 2007. Mr. Utterberg presently serves as the
President and Director of Lifestream Medical Corporation, a
private medical device company, as well as the President,
Director and Chairman of DSU Medical Corporation, or DSU, a
private company. DSU holds and licenses over 90 U.S. and
foreign patents and other intellectual property in medical
technology focused on extracorporeal therapy devices.
CORPORATE
GOVERNANCE
General
Our Board of Directors believes that good corporate governance
is important to ensure that NxStage is managed for the long-term
benefit of our stockholders. This section describes key
corporate governance guidelines and practices that we have
adopted. Complete copies of our corporate governance guidelines,
committee charters and code of conduct described below are
available under the investor information section of our website
at www.nxstage.com. Alternatively, you can request
a copy of any of these documents by writing to: Investor
Relations, NxStage Medical, Inc., 439 South Union Street,
5th Floor,
Lawrence, Massachusetts 01843.
11
Corporate
Governance Guidelines
Our Board of Directors has adopted corporate governance
guidelines to assist it in the exercise of its duties and
responsibilities and to serve the best interests of NxStage and
our stockholders. These guidelines, which provide a framework
for the conduct of our Board of Directors, provide that:
|
|
|
|
|
the principal responsibility of our directors is to oversee our
management;
|
|
|
|
a majority of the members of our Board of Directors shall be
independent directors;
|
|
|
|
independent directors meet periodically in executive session;
|
|
|
|
directors have full and free access to management and, as
necessary and appropriate, independent advisors; and
|
|
|
|
at least annually our Board of Directors and its committees will
seek to conduct a self-evaluation to determine whether they are
functioning effectively.
|
Board
Determination of Independence
Under applicable NASDAQ rules, a director will only qualify as
an independent director if, in the opinion of our
Board of Directors, that person does not have a relationship
that would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director. Our Board of
Directors has determined that Dr. Chambon and
Messrs. Giannini, Lewis, Moore, Perper, and Silverstein
each do not have a relationship that would interfere with the
exercise of independent judgment in carrying out the
responsibilities of a director and that each of these directors
is an independent director as defined under
Rule 4200(a)(15) of the NASDAQ Stock Market Marketplace
Rules.
Communicating
with the Independent Directors
Our Board of Directors will give appropriate attention to
written communications that are submitted by stockholders and
other interested parties, and will respond if, and as,
appropriate. Dr. Chambon, the Chairman of our Board of
Directors, with the assistance of our General Counsel, is
primarily responsible for monitoring communications from
stockholders and for providing copies or summaries to the other
directors.
Under procedures approved by a majority of the independent
directors, communications will be forwarded to all directors if
they relate to important substantive matters and include
suggestions or comments that the Chairman of our Board of
Directors considers to be important for the directors to know.
In general, communications relating to corporate governance and
corporate strategy are more likely to be forwarded than
communications relating to ordinary business affairs, personal
grievances and matters as to which we may in the future receive
repetitive or duplicative communications.
Stockholders who wish to send communications on any topic to our
Board of Directors should address such communications to Board
of Directors,
c/o Winifred
L. Swan, Esq., Senior Vice President and General Counsel,
NxStage Medical, Inc., 439 South Union Street, 5th Floor,
Lawrence, Massachusetts 01843.
Director
Nomination Process
Our Nominating and Corporate Governance Committee is responsible
for identifying individuals qualified to become directors,
consistent with the criteria approved by our Board of Directors,
and recommending the persons to be nominated for election as
directors, except where we are legally required by contract to
provide third parties with the right to nominate. The process
followed by our Nominating and Corporate Governance Committee to
identify and evaluate candidates includes requests to members of
our Board of Directors and others for recommendations, the
utilization of director search firms, meetings from time to time
to evaluate biographical information and background material
relating to potential candidates and interviews of selected
candidates by members of the Nominating and Corporate Governance
Committee and our Board of Directors.
In considering whether to recommend any candidate for inclusion
in the Board of Directors slate of recommended director
nominees, including candidates recommended by stockholders, the
Nominating and
12
Corporate Governance Committee applies the criteria that are set
forth in our Corporate Governance Guidelines. These criteria
include the candidates integrity, business acumen,
knowledge of our business and industry, experience, diligence,
conflicts of interest and the ability to act in the interests of
all stockholders. The Nominating and Corporate Governance
Committee does not assign specific weights to particular
criteria and no particular criterion is a prerequisite for each
nominee. We believe that the backgrounds and qualifications of
the directors, considered as a group, should provide a
significant composite mix of experience, knowledge and abilities
that will allow our Board of Directors to fulfill its
responsibilities.
In connection with our acquisition of Medisystems Corporation
and certain affiliated entities, we agreed that if
Mr. Utterberg is no longer a director of NxStage, our Board
of Directors will nominate for election to our Board of
Directors any director nominee proposed by Mr. Utterberg,
subject to certain conditions.
Stockholders may recommend individuals to the Nominating and
Corporate Governance Committee for consideration as potential
director candidates by submitting their names, together with
appropriate biographical information and background materials
and, if the stockholder is not a stockholder of record, a
statement as to whether the stockholder or group of stockholders
making the recommendation has beneficially owned more than 5% of
our common stock for at least a year as of the date such
recommendation is made, to the Nominating and Corporate
Governance Committee,
c/o Winifred
L. Swan, Senior Vice President and General Counsel, NxStage
Medical, Inc., 439 South Union Street,
5th Floor,
Lawrence, Massachusetts 01843. Assuming that appropriate
biographical and background material has been provided on a
timely basis, the Nominating and Corporate Governance Committee
will evaluate stockholder-recommended candidates by following
substantially the same process, and applying substantially the
same criteria, as it follows for candidates submitted by others.
Our stockholders also have the right to nominate director
candidates themselves, without any prior review or
recommendation by the Nominating and Corporate Governance
Committee or our Board of Directors, by following the procedures
set forth under the heading Other Matters
Stockholder Proposals for the 2010 Annual Meeting.
At the annual meeting, stockholders will be asked to consider
the election of Jeffrey H. Burbank, Philippe O. Chambon,
Daniel A. Giannini, Earl R. Lewis, Craig W. Moore, Reid S.
Perper, Jonathan T. Silverstein, and David S. Utterberg, each of
whom is being nominated for re-election to our Board of
Directors.
Board
Meetings and Attendance
Our Board of Directors met 22 times, either in person or by
teleconference, during the year ended December 31, 2008, or
fiscal 2008. During fiscal 2008, except as set forth below, each
of our directors attended at least 75% of the number of Board
meetings and meetings held by all committees of the Board on
which he then served. Mr. Lewis, who joined our Board in
October 2008, attended one of the two Board meetings, and one
Compensation Committee meeting held during 2008 following his
election to our Board.
Director
Attendance at Annual Meeting of Stockholders
Our Corporate Governance Guidelines provide that directors are
expected to attend the annual meeting. All of our directors
attended the 2008 Annual Meeting of Stockholders, and we expect
substantially all of our directors to attend the 2009 annual
meeting.
Board
Committees
Our Board of Directors has established three standing
committees Audit, Compensation and Nominating and
Corporate Governance each of which operates under a
charter that has been approved by our Board of Directors.
Current copies of each committees charter are posted on
the Corporate Governance section of our website,
www.nxstage.com.
Our Board of Directors has determined that all of the members of
each of our three standing Board committees are independent as
defined under NASDAQ rules, including, in the case of all
members of the Audit Committee, the independence requirements
contemplated by
Rule 10A-3
under the Securities Exchange Act of 1934, or the Exchange Act.
13
Audit
Committee
The Audit Committees responsibilities include:
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appointing, approving the compensation of, and assessing the
independence of our registered public accounting firm;
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overseeing the work of our registered public accounting firm,
including through the receipt and consideration of reports from
the firm;
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reviewing and discussing with management and the registered
public accounting firm our annual and quarterly financial
statements and related disclosures;
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monitoring our internal controls over financial reporting,
disclosure controls and procedures and code of business conduct
and ethics;
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overseeing our internal audit function;
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discussing our risk management policies;
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establishing policies regarding hiring employees from the
registered public accounting firm and procedures for the receipt
and retention of accounting related complaints and concerns;
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meeting independently with our internal auditing staff,
registered public accounting firm and management;
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reviewing and approving or ratifying any related person
transactions; and
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preparing the audit committee report required by SEC rules,
which is included on page 15 of this proxy statement.
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The members of the Audit Committee are Messrs. Giannini
(Chair), Moore and Perper. The Board of Directors has determined
that each of these members is independent, as that term is
defined by applicable NASDAQ and SEC rules and that
Mr. Giannini is an audit committee financial
expert as defined in Item 407(a)(5) of
Regulation S-K
under the Exchange Act. The Audit Committee met 14 times during
fiscal 2008.
The Audit Committee currently acts under a charter that was
amended and restated on April 26, 2007. Our policies and
procedures for the review and approval of related person
transactions are summarized on page 19 of this proxy
statement.
Compensation
Committee
Our Compensation Committee, among other things, provides
recommendations to the Board of Directors regarding our
compensation programs, and has the following principal duties:
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annually reviewing and approving, or making recommendations to
our Board of Directors, with respect to, the compensation of our
Chief Executive Officer, or CEO, and our other executive
officers;
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overseeing an evaluation of our executive officers, including
our CEO;
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reviewing and making recommendations to our Board of Directors
with respect to management succession planning;
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overseeing and administering our cash and equity incentive plans;
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reviewing and making recommendations to our Board of Directors
with respect to director compensation;
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reviewing and discussing annually with management our
Compensation Discussion and Analysis, which is
included beginning on page 20 of this proxy
statement; and
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preparing the Compensation Committee report required by SEC
rules, which is included on page 27 of this proxy
statement.
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14
Our Compensation Committee retains the services of third party
executive compensation specialists and consultants from time to
time, as it sees fit, in connection with the establishment of
cash and equity compensation and related policies.
The processes and procedures followed by our Compensation
Committee in considering and determining executive and director
compensation are described below under the heading
Compensation Discussion and Analysis.
The members of the Compensation Committee are Messrs. Moore
(Chair) and Lewis and Dr. Chambon. The Board of Directors
has determined that each of these members is independent, as
that term is defined by applicable NASDAQ rules. The
Compensation Committee met nine times during fiscal 2008.
Nominating
and Corporate Governance Committee
Our Nominating and Corporate Governance Committee has the
following principal responsibilities:
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identifying individuals qualified to become members of our Board
of Directors;
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recommending to our Board of Directors the persons to be
nominated for election as directors and to each of the
committees;
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developing and recommending to our Board of Directors corporate
governance principles; and
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overseeing an annual evaluation of our Board of Directors.
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The processes and procedures followed by the Nominating and
Corporate Governance Committee in identifying and evaluating
director candidates are described above under the heading
Director Nomination Process.
The members of the Nominating and Corporate Governance Committee
are currently Mr. Silverstein (Chair), Dr. Chambon and
Mr. Giannini. The Board of Directors has determined that
each of these members is independent, as that term is defined by
applicable NASDAQ rules. The Nominating and Corporate Governance
Committee met one time during fiscal 2008.
Code of
Business Conduct and Ethics
We have adopted a written Code of Business Conduct and Ethics
that applies to our directors, officers and employees, including
our principal executive officer, principal financial officer,
principal accounting officer and controller, or persons
performing similar functions. We have posted a copy of the code
on our website, www.nxstage.com. In addition, we intend
to post on our website all disclosures that are required by law
or NASDAQ Global Market listing standards concerning any
amendments to, or waivers of, our code.
Audit
Committee Report
The purpose of the Audit Committee is to assist the Board of
Directors oversight of NxStages accounting and
reporting processes and the audits of NxStages
consolidated financial statements. The Audit Committee is
composed of three members and acts under a written charter first
adopted and approved on September 7, 2005 and subsequently
amended and restated on April 26, 2007. A copy of the
Amended and Restated Audit Committee Charter is available on
NxStages website, www.nxstage.com.
The Audit Committee has reviewed NxStages audited
financial statements for the fiscal year ended December 31,
2008 and has discussed these financial statements with
NxStages management and independent registered public
accounting firm.
The Audit Committee has also received from, and discussed with,
Ernst & Young LLP, NxStages independent
registered public accounting firm, various communications that
NxStages independent registered public accounting firm is
required to provide to the Audit Committee under Statement on
Auditing Standards No. 61 (as amended), as adopted by the
Public Company Accounting Oversight Board in Rule 3200T,
other
15
standards of the Public Company Accounting Oversight Board, the
rules and regulations of the Securities and Exchange Commission,
and other applicable regulations.
NxStages independent registered public accounting firm
also provided the Audit Committee with the written disclosures
and the letter required by the applicable requirements of the
Public Company Accounting Oversight Board regarding
NxStages independent registered public accounting
firms communication with the Audit Committee concerning
independence, and has discussed with the Audit Committee its
independence.
Based on its discussions with management and the independent
registered public accounting firm, and its review of the
representations and information provided by management and the
independent registered public accounting firm, the Audit
Committee recommended to NxStages Board of Directors that
the audited financial statements be included in its Annual
Report on
Form 10-K
for the year ended December 31, 2008.
By the Audit Committee of the Board of Directors
Daniel A. Giannini (Chair)
Craig W. Moore
Reid S. Perper
Fees of
Independent Registered Public Accounting Firm
The following table summarizes the fees of Ernst &
Young LLP, our independent registered public accounting firm,
billed to us for each of the last two fiscal years.
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Fee Category
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Fiscal 2008
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Fiscal 2007
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Audit Fees(1)
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1,186,000
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$
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1,057,000
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Audit-related(2)
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24,000
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130,000
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Tax Fees(3)
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71,000
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53,000
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All Other Fees(4)
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2,000
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5,000
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Total Fees
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$
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1,283,000
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$
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1,245,000
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(1) |
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The audit fees for fiscal 2008 consisted of fees for the audit
of our consolidated financial statements, the audit of our
internal control over financial reporting, the review of the
interim financial statements included in our quarterly reports
on
Form 10-Q,
and other professional services provided in connection with
statutory and regulatory filings or engagements. The audit fees
for fiscal 2007 consisted of fees for the audit of our
consolidated financial statements, the audit of our internal
control over financial reporting, the review of the interim
financial statements included in our quarterly reports on
Form 10-Q,
other professional services provided in connection with
statutory and regulatory filings or engagements and fees in an
aggregate amount of $302,000 relating to our acquisition of the
MDS Entities. |
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Audit-related fees for fiscal 2008 consisted of fees for
assurance and related services that are reasonably related to
the performance of the audit and the review of our consolidated
financial statements and which are not reported under
Audit Fees. Audit-related fees for fiscal 2007
included $108,000 related to our acquisition of the MDE
Entities. Fees related to the audit of our 401K plan amounted to
$24,000 and $22,000 for fiscal 2008 and 2007, respectively. |
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Tax fees consist of fees for tax compliance and tax advice. Tax
compliance services, which relate to the preparation of federal
and state tax returns, accounted for $67,000 of the total tax
fees billed in fiscal 2008 and $53,000 of the total tax fees
billed in fiscal 2007. Tax advice services accounted for $4,000
of the total tax fees billed in fiscal 2008. |
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Other fees for fiscal 2008 and fiscal 2007 consist of fees for
using the on-line accounting research tools of Ernst &
Young LLP. |
All such services were approved by our Audit Committee in
accordance with the pre-approval policies and procedures
described below.
16
Pre-Approval
Policies and Procedures
The Audit Committee has adopted policies and procedures relating
to the approval of all audit and non-audit services that are to
be performed by our independent registered public accounting
firm. This policy generally provides that we will not engage our
independent registered public accounting firm to render audit or
non-audit services unless the service is specifically approved
in advance by the Audit Committee or the engagement is entered
into pursuant to the pre-approval procedures described below.
From time to time, the Audit Committee may pre-approve specific
services to be provided by our independent registered public
accounting firm. At the time of such pre-approval, the type of
services to be provided, and the fees relating to those
services, are detailed.
Before the commencement of any audit, tax or other services, our
management obtains an engagement letter from our independent
registered public accounting firm that is signed by both our
Chief Financial Officer and the Chair of the Audit Committee.
Our Chief Financial Officer has the ability, without obtaining
prior Audit Committee approval, to engage our independent
registered public accounting firm to perform general
pre-approved services on projects, up to a maximum of $50,000
annually. The Audit Committee reviews with management all
services provided by our independent registered public
accounting firm, whether or not the services were pre-approved,
and all related fees charged on a quarterly and annual basis.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Our
Relationship with David Utterberg
David S. Utterberg is a director and significant stockholder of
NxStage. On June 4, 2007, we entered into a stock purchase
agreement with Mr. Utterberg under which we agreed to
purchase from Mr. Utterberg the issued and outstanding
shares of Medisystems Corporation and Medisystems Services
Corporation, 90% of the issued and outstanding shares of
Medisystems Europe S.p.A. (the remaining equity of which is held
by Medisystems Corporation) and 0.273% of the issued and
outstanding equity participation of Medisystems Mexico s. de
R.L. de C.V. (the remaining equity of which is held by
Medisystems Corporation), which are collectively referred to as
the MDS Entities. We refer to our acquisition of the MDS
Entities as the Medisystems Acquisition. The Medisystems
Acquisition was completed on October 1, 2007 and, as a
result, each of the MDS Entities is a direct or indirect
wholly-owned subsidiary of NxStage. In addition, as a result of
completion of the Medisystems Acquisition, the supply agreement,
dated January 2007, with Medisystems, under which Medisystems
agreed to provide cartridges for use with the System One, was
terminated. In consideration for the Medisystems Acquisition, we
issued Mr. Utterberg 6.5 million shares of our common
stock, valued at approximately $97.4 million, based on the
last sale price of NxStages common stock on
October 1, 2007, which we refer to as the Acquisition
Shares. In addition, we may be required to issue additional
shares of our common stock to Mr. Utterberg. Pursuant to
the terms of the stock purchase agreement, Mr. Utterberg
and we have agreed to indemnify each other in the event of
certain breaches or failures, and any such indemnification
amounts must be paid in shares of our common stock, valued at
the time of payment. However, we will not be required to issue
shares for indemnification purposes that in the aggregate would
exceed 20% of the then outstanding shares of our common stock
without first obtaining stockholder approval, and any such
shares will not be registered under the Securities Act of 1933,
as amended. An aggregate of 0.5 million of the shares
issued to Mr. Utterberg remain in escrow to cover potential
indemnification claims we may have against him. In connection
with the Medisystems Acquisition and as a result of Medisystems
Corporation, one of the MDS Entities, becoming a direct
wholly-owned subsidiary of ours, we acquired rights under an
existing license agreement between Medisystems Corporation and
DSU. We refer to this agreement as the license agreement.
Additionally, as a condition to the parties obligations to
consummate the Medisystems Acquisition, Mr. Utterberg and
DSU entered into a consulting agreement with us dated
October 1, 2007, which we refer to as the consulting
agreement.
Under the license agreement, Medisystems Corporation received an
exclusive, irrevocable, sublicensable, royalty-free, fully paid
license to certain DSU patents, or the licensed patents, in
exchange for a one-time payment of $2.7 million. The
licensed patents fall into two categories, those patents that
are used exclusively
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by the MDS Entities, referred to as the Class A patents,
and those patents that are used by the MDS Entities and other
companies owned by Mr. Utterberg, referred to as the
Class B patents. Pursuant to the terms of the license
agreement, Medisystems Corporation has a license to (1) the
Class A patents, to practice in all fields for any purpose
and (2) the Class B patents, solely with respect to
certain defined products for use in the treatment of
extracorporeal fluid treatments
and/or renal
insufficiency treatments. The license agreement further provides
that the rights of Medisystems Corporation under the agreement
are qualified by certain sublicenses previously granted to third
parties. We have agreed that Mr. Utterberg retains the
right to the royalty income under one of these sublicenses.
Under the consulting agreement, Mr. Utterberg and DSU will
provide consulting, advisory and related services to us for a
period of two years following the consummation of the
Medisystems Acquisition. In addition, under the terms of the
consulting agreement, Mr. Utterberg and DSU have agreed
during the term of the agreement not to compete with NxStage
during the term of the consulting agreement in the field defined
in the consulting agreement and not to encourage or solicit any
of our employees, customers or suppliers to alter their
relationship with us. The consulting agreement further provides
that (1) Mr. Utterberg and DSU assign to us certain
inventions and proprietary rights received by him/it during the
term of the agreement and (2) we grant Mr. Utterberg
and DSU an exclusive, worldwide, perpetual, royalty-free
irrevocable, sublicensable, fully paid license under such
assigned inventions and proprietary rights for any purpose
outside the inventing field, as defined in the consulting
agreement. Under the terms of the consulting agreement,
Mr. Utterberg and DSU will receive an aggregate of $200,000
per year, plus expenses, in full consideration for the services
and other obligations provided for under the terms of the
consulting agreement. The consulting agreement also requires
Mr. Utterberg and NxStage to indemnify each other in the
event of certain breaches and failures under the agreement and
requires that any such indemnification liability be satisfied
with shares of our common stock, valued at the time of payment.
However, we will not be required to issue shares for
indemnification purposes that in the aggregate would exceed 20%
of the then outstanding shares of our common stock without first
obtaining stockholder approval, and any such shares will not be
registered under the Securities Act of 1933, as amended.
We assumed a $2.8 million liability owed to DSU as a result
of the acquisition of the MDS Entities. The amount owed
represents consideration owed to DSU by the MDS Entities for the
termination of a royalty-bearing sublicense agreement of
$0.1 million and the one-time payment for the establishment
of the royalty-free license agreement of $2.7 million. We
paid $2.0 million of the liability owed during the quarter
ended March 31, 2008 and the remaining liability of
$0.6 million, net of receivable from DSU for reimbursements
of costs related to the acquisition of $0.2 million, during
the quarter ended September 30, 2008.
Finally, in connection with the Medisystems Acquisition, we
agreed that if Mr. Utterberg is no longer a director of
NxStage, our Board of Directors will nominate for election to
our Board of Directors any director nominee proposed by
Mr. Utterberg, subject to certain conditions.
Our
Relationship with Jonathan T. Silverstein
Mr. Silverstein, a general partner of OrbiMed Advisors,
LLC, (OrbiMed), was appointed to our Board on
July 23, 2008 in connection with a private placement of
shares of our common stock and warrants to purchase shares of
our common stock announced on May 23, 2008 (the
Private Placement). The Private Placement took place
in two closings, in which a total of 9,555,556 shares of
our common stock, and warrants to purchase 1,911,111 shares
of our common stock were issued, with aggregate gross proceeds
to us of approximately $43 million.
Funds affiliated with OrbiMed purchased an aggregate of
5,555,556 shares of our common stock and warrants to
purchase 1,111,111 shares of our common stock in the first
closing of the Private Placement on May 28, 2008. The
Securities Purchase Agreement executed in connection with the
Private Placement, dated as of May 22, 2008, required that
we appoint one individual nominated by OrbiMed to our Board of
Directors upon the earlier of the second closing of the Private
Placement or 60 days after the first closing of the Private
Placement. The appointment of Mr. Silverstein to our Board
satisfied this requirement.
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Our
Relationship with the Sprout Entities
In the second closing of the Private Placement, which took place
on August 1, 2008, following the special meeting of our
stockholders during which the stockholders approved the second
closing, an aggregate of 4,000,000 shares of our common
stock and warrants to purchase 800,000 shares of our common
stock were issued and sold by us and purchased by
(a) unaffiliated investors and (b) investors who are
our affiliates, including one investor, the Sprout Entities, who
is affiliated with a member of our Board of Directors. The
Sprout Entities purchased 1,022,221 shares of our common
stock and warrants to purchase 204,445 shares of our common
stock in the Private Placement. Other than the different closing
dates and the stockholder approval requirement for the second
closing, all other terms of the private placement are identical
in the two closings.
Policies
and Procedures Regarding Review, Approval and Ratification of
Related Person Transactions
Our Board of Directors has adopted written policies and
procedures for the review of any transaction, arrangement or
relationship in which we are a participant, the amount involved
exceeds $120,000, and one of our executive officers, directors,
director nominees or 5% stockholders (or their immediate family
members), each of whom we refer to as a related
person, has a direct or indirect material interest.
If a related person proposes to enter into such a transaction,
arrangement or relationship, which we refer to as a
related person transaction, the related person must
report the proposed related person transaction to our General
Counsel. The policy calls for the proposed related person
transaction to be reviewed and, if deemed appropriate, approved
by our Audit Committee. Any related person transactions that are
ongoing in nature will be reviewed annually.
Whenever practicable, the reporting, review and approval will
occur prior to entry into the transaction. If advance review and
approval is not practicable, the committee will review, and, in
its discretion, may ratify the related person transaction. The
policy also permits the chairman of the committee to review and,
if deemed appropriate, approve proposed related person
transactions that arise between committee meetings, subject to
ratification by the committee at its next meeting.
A related person transaction reviewed under the policy will be
considered approved or ratified if it is authorized by the Audit
Committee after full disclosure of the related persons
interest in the transaction. As appropriate for the
circumstances, the Audit Committee will review and consider:
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the related persons interest in the related person
transaction;
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the approximate dollar value of the amount involved in the
related person transaction;
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the approximate dollar value of the amount of the related
persons interest in the transaction without regard to the
amount of any profit or loss;
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whether the transaction was undertaken in the ordinary course of
our business;
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whether the terms of the transaction are no less favorable to us
than terms that could have been reached with an unrelated third
party;
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the purpose of, and the potential benefits to us of, the
transaction; and
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any other information regarding the related person transaction
or the related person in the context of the proposed transaction
that would be material to investors in light of the
circumstances of the particular transaction.
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The Audit Committee may approve or ratify the transaction only
if the Audit Committee determines that, under all of the
circumstances, the transaction is in our best interests. The
Audit Committee may impose any conditions on the related person
transaction that it deems appropriate.
In addition to the transactions that are excluded by the
instructions to the SECs related person transaction
disclosure rule, our Board of Directors has determined that the
following transactions do not create a material
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direct or indirect interest on behalf of related persons and,
therefore, are not related person transactions for purposes of
this policy:
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interests arising solely from the related persons position
as an executive officer of another entity (whether or not the
person is also a director of such entity), that is a participant
in the transaction, where (a) the related person and all
other related persons own in the aggregate less than a 1% equity
interest in such entity, (b) the related person and his or
her immediate family members are not involved in the negotiation
of the terms of the transaction and do not receive any special
benefits as a result of the transaction, and (c) the amount
involved in the transaction equals less than the greater of
$200,000 or 2% of the annual gross revenues of the company
receiving payment under the transaction; and
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a transaction that is specifically contemplated by provisions of
our charter or bylaws.
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The policy provides that transactions involving compensation of
executive officers shall be reviewed and approved by the
Compensation Committee in the manner specified in its charter.
INFORMATION
ABOUT EXECUTIVE AND DIRECTOR COMPENSATION
Compensation
Discussion and Analysis
Our Compensation Committee is responsible for overseeing the
compensation of our executive officers, which includes our Chief
Executive Officer, or CEO, and our other named executive
officers. In this capacity, our Compensation Committee designs,
implements, reviews and approves all compensation for our CEO
and other named executive officers.
In order to conserve cash and due to current economic
conditions, the Compensation Committee determined not to
increase base salaries for executive officers for either of 2008
or 2009 and, after consultation with, and upon the
recommendation of Mr. Burbank, determined not to pay
bonuses that were earned for 2008 performance.
Our
Executive Compensation Philosophy and Objectives
Our executive compensation philosophy is to provide our
executives with appropriate and competitive individual pay
opportunities, with total compensation significantly influenced
by the attainment of corporate performance objectives,
individual performance and the creation of shareholder value.
The primary objectives of our executive compensation program are
to:
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attract, retain and reward executives who can help us to achieve
our business objectives;
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promote the achievement of key strategic and financial
performance measures by linking short- and long-term cash and
equity incentives to the achievement of measurable performance
goals; and
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align executives long-term incentives with the interests
of our stockholders.
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To achieve these objectives, the Compensation Committee
evaluates our executive compensation program with the goal of
setting compensation at levels the Committee believes are
competitive with those of other companies in our industry and
our region that compete with us for executive talent. In order
to better align the interests of our executives with
stockholders, a significant percentage of executives total
annual compensation is put at risk, dependent upon the
achievement of key strategic, financial and operational goals.
Performance is rewarded through annual incentive bonuses,
intended to pay for the achievement of short-term performance
goals, and long-term equity incentives, intended to both retain
executives and allow them to participate in the longer-term
success of NxStage as reflected in stock price appreciation. We
believe this compensation philosophy more effectively aligns
with the interest of stockholders by preserving cash, and
rewarding long-term stockholder value creation.
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How
Executive Compensation is Determined
Our Compensation Committee has primary responsibility for
reviewing, setting and approving the compensation of our named
executive officers. Information about our Compensation Committee
and its composition and responsibilities can be found on
page 14 of this proxy statement, under the heading
Compensation Committee. In fulfilling this
responsibility, the Compensation Committee relies on three key
elements: market referencing, performance considerations and CEO
and Compensation Committee judgment.
Role of Compensation Consultant. From time to
time, the Compensation Committee engages the services of one or
more independent consulting firms to assist in the
Committees evaluation of executive compensation. In
connection with our initial public offering, the Compensation
Committee engaged the services of the Hay Group to assist in the
Committees analysis of executive compensation. In 2008,
the Compensation Committee engaged the services of the Radford
Surveys and Consulting, an Aon Consulting Company, or Radford,
to provide further executive compensation analysis. Working with
the Compensation Committee, Radford (a) helped to define
the group of companies that should be included in our peer
compensation group, or Peer Group, (b) provided market data
on executive compensation, and benchmarked our executive
compensation against the Peer Group, and (c) analyzed and
made recommendations regarding all aspects of executive
compensation, including base and short- and long-term incentive
awards. Representatives of Radford attended several Compensation
Committee meetings in 2008.
Market Referencing Against a Peer Group. We
base our compensation decisions partly on market considerations,
by benchmarking our executive compensation against compensation
paid to employees in comparable roles at peer companies, which
we refer to as our Peer Group. Our Peer Group consists of
national and regional medical device companies that we believe
are generally comparable to NxStage in terms of organizational
structure, size and stage of development, and against which we
believe we compete for executive talent. To help establish our
Peer Group, we relied on Radford to identify publicly traded,
US-based companies in the medical device, biotechnology, and
pharmaceutical industry between 1/3 and 3 times the size of
NxStage, based on number of employees, revenue and market value.
Radford then evaluated each such company based on products and
business strategy and selected for inclusion in our Peer Group
those companies that were most comparable to NxStage based on
product focus and financial profile.
The companies comprising our current Peer Group are:
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Align Technology, Inc.
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AngioDynamics Incorporated
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Aspect Medical Systems, Inc.
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Cantel Medical Corp.
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Cardiac Science Corporation
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CardioNet, Inc.
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Cutera, Inc.
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Cyberonics Inc.
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Datascope Corp.
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FoxHollow Technologies, Inc.
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ICU Medical, Inc.
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I-Flow Corporation
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Merit Medical Systems, Inc.
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Micrus Endovascular
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Nuvasive, Inc.
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Sonic Innovations, Inc.
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SonoSite, Inc.
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Thoratec Corporation
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Vital Signs, Inc.
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Vnus Medical Technologies, Inc.
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Volcano Corporation.
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The Compensation Committee expects to periodically review and
update this Peer Group, to ensure that those included are
generally comparable to our company and are representative of
those companies against which we compete for executive talent.
We generally target base salaries and executive benefits at the
50th percentile,
cash incentive performance awards between the
50th and
75th percentile
and the grant value of equity awards between the
50th and
75th percentile
of our Peer Group. These are overall guidelines, and variations
to these general targets may occur as dictated by the
performance and experience level of the individual, the
importance of the executives position to NxStage and the
difficulty of replacing the individual, the performance of
NxStage, and other market factors. Historically, the
compensation of our named executives has generally been set
consistent with these overall guidelines, with the exception of
our CEO compensation, which has historically been below the
50th percentile
for base salary and cash incentives when compared to our Peer
Group. Historically, our CEOs
21
compensation has been heavily weighted towards long-term equity
incentives, thereby further aligning his interests with those of
our stockholders and preserving cash. In order to conserve cash
and due to current economic conditions, the Compensation
Committee did not adjust base salary compensation for 2008 or
2009, and base salary is now, in general, below the
50th percentile
for executive officers.
Performance Considerations. In addition to
considering market rates for executive compensation, we award
our executives compensation based on their performance as a team
in achieving our business objectives, as well as their
individual performance. To assist our evaluation of executive
performance, we conduct an annual performance review. The
performance review process is designed to guide performance
discussions, establish performance objectives and communicate
annual achievements. Our CEO conducts each named executive
officers performance review, in consultation with the
Audit Committee for the Chief Financial Officer, and the
Compensation Committee conducts the performance review for the
CEO.
CEO and Compensation Committee Judgment. Our
total compensation program operates not only based on the
application of market referencing and corporate and individual
performance considerations, but also through the application of
CEO and Compensation Committee judgment. We do not employ a
purely formulaic approach to any of our compensation plans.
There are guidelines in place, but there are also individual
performance factors and executive retention considerations that
permit our Compensation Committee discretion to increase or
decrease cash and equity awards based on those considerations.
In making its compensation determinations, the Compensation
Committee reviews the total of all elements of compensation for
each of our named executive officers. In addition, the
Compensation Committee considers the economic value as well as
the retention value of prior equity grants received by our named
executive officers in determining current and future
compensation, and considers each named executive officers
compensation compared to the compensation of other executives
and other employees generally. In determining the reasonableness
of our named executive officers total compensation, the
Compensation Committee reviews not only corporate and individual
performance, but also the nature of each element of compensation
provided, including salary, short-term incentive compensation,
long-term incentive compensation, and accumulated realized and
unrealized stock option grants, as well as the terms of
severance and change of control arrangements.
In addition, while the Compensation Committee is solely
responsible for setting the targets and approving the awards,
the Compensation Committee relies on the judgment of the CEO to
evaluate the actual performance of each named executive officer
(other than the CEO) and recommend appropriate salary and
incentive awards. The CEO participates in Compensation Committee
meetings, at the request of the Committee, in order to provide
background information and explanations supporting his
recommendations. The CEO does not participate during any portion
of Compensation Committee meetings at which his compensation is
discussed.
Components
of our Executive Compensation Program and 2008 Executive
Compensation
Overview of Compensation. Our executive
compensation program consists of fixed compensation elements,
such as base salary and benefits, and variable performance-based
elements, such as annual and long-term incentives. Our fixed
compensation elements are designed to provide a stable source of
income and financial security to our executives. Our variable
performance-based compensation elements are designed to reward
performance at two levels: actual corporate performance compared
to annual business goals, and corporate performance in terms of
long-term shareholder value creation. Through these performance
incentive awards, we reward the achievement of short-term goals,
such as annual growth in revenues, improvements in costs of
goods sold, and reductions in operating expenses, and long-term
goals, such as business growth, product innovation and stock
price appreciation.
We compensate our executives primarily through base salary,
performance-based annual short-term incentive bonuses and
long-term incentive equity awards. This three-part compensation
approach enables us to remain competitive with our industry
peers and Peer Group while ensuring that executives are
appropriately incentivized to deliver short-term results while
creating long-term shareholder value.
22
We do not have any formal or informal policy or target for
allocating compensation between long-term and short-term
compensation, between cash and non-cash compensation or among
the different forms of non-cash compensation. Instead, the
Compensation Committee, after reviewing publicly available
information regarding the executive compensation of the Peer
Group, determines subjectively what it believes to be the
appropriate level and mix of the various compensation
components. Historically, and going forward, the Compensation
Committee has chosen to put a significant percentage of each
executives pay at risk, as variable compensation,
contingent upon the achievement of certain goals within our
strategic plan and overall corporate achievement. Long-term
incentive compensation, in particular, is a significant focus of
our executive compensation program, and key to our objective of
rewarding superior performance.
Base
Salary
Base salary is used to recognize the experience, skills,
knowledge and responsibilities required of all of our employees,
including our executives. When establishing base salaries, the
Compensation Committee considers compensation in the Peer Group,
other available compensation survey data, as well as a variety
of other factors, including the seniority of the individual, the
level of the individuals responsibility, the ability to
replace the individual, the base salary of the individual at his
or her prior place of employment, if applicable, and the number
of well qualified candidates able to assume the
individuals role. Our Compensation Committee reviews base
salaries at least annually and adjusts them from time to time to
realign salaries with market levels after taking into account
individual responsibilities, performance and experience.
2008
Base Salary
CEO Base Salary Mr. Burbanks base
salary of $330,000 was unchanged in 2008 from 2007. His base
salary was last increased effective January 1, 2007, from
$298,700 to $330,000, in recognition of his expanded
responsibilities due to our growth, and his increased
responsibilities following our initial public offering. In
establishing Mr. Burbanks base salary in 2007, the
Compensation Committee primarily looked to comparative market
data, including data from our Peer Group as well as compensation
surveys we purchase from the Hay Group, Top Five Data Service,
Inc. and The Survey Group, as well as corporate and individual
performance. Although the Compensation Committee generally
targets base salary for executives at the market
50th percentile,
Mr. Burbanks base compensation was set at the market
25th percentile
in 2007, consistent with historical practices.
Mr. Burbanks compensation is heavily weighted towards
long-term incentive compensation, which effectively aligns his
interests with stockholders and preserves cash.
Other Named Executive Officer Base Salary
None of our named executive officers base salaries
were changed in 2008 from 2007. Mr. Turks base salary
was last increased effective January 1, 2007, from $223,871
to $260,000, in recognition of his expanded responsibilities due
to our growth. Mr. Browns base salary has not been
adjusted since he was hired at the end of 2006, and
Ms. Swans base salary has not been adjusted since the
end of 2006. Mr. Webbs base salary was last increased
effective August 17, 2007, from $190,000 to $220,000, at
the time of his promotion to Senior Vice President, Quality,
Regulatory and Clinical Affairs. In establishing the base
salaries of our named executives in 2007, the Compensation
Committee primarily considered comparative market data,
including data from our Peer Group as well as compensation
surveys we purchased from the Hay Group, Top Five Data Service,
Inc. and The Survey Group, as well as corporate performance and
individual responsibilities and performance. Historically, the
Compensation Committee has targeted base salary at the market
50th percentile
for each of these named executive officers. Without adjustment
in 2008, base salaries for named executives are, in general,
below the
50th percentile
for executive officers.
2009
Base Salary
Given the challenging business environment, our goal to conserve
cash, and other factors, after consultation with, and upon the
recommendation of Mr. Burbank, the Compensation Committee
decided not to increase the base salaries of any of our named
executive officers again in 2009.
23
The salaries paid for 2008 to our named executive officers are
shown in the Summary Compensation Table for Fiscal Years-Ended
December 31, 2008, 2007 and 2006 on page 28 of this
proxy statement.
Annual
Short-Term Incentive Awards
We have an annual short-term incentive plan for our executives.
Annual short-term incentives are intended to compensate for the
achievement of corporate performance objectives. Amounts payable
under the annual short-term incentive plan are calculated as a
percentage of the applicable executives base salary, with
higher level executives typically being compensated at a higher
percentage of base salary. The corporate performance objectives
under the plan generally conform to the financial metrics
contained in the internal business plan adopted by our board of
directors. Each year, the Compensation Committee works with the
CEO to develop corporate goals that they believe can be
reasonably achieved with hard work over the next year. The
Compensation Committee approves each years plan and
metrics to ensure an accelerated and ongoing degree of
difficulty commensurate with our short and long-term business
plan.
2008
Short-Term Incentive Awards
The Compensation Committee approved our 2008 Corporate Bonus
Plan on March 27, 2008. Payouts under the 2008 Corporate
Bonus Plan were contingent upon the achievement of a revenue
target, with the amount of the award to be determined by the
achievement of gross margin and cash consumption targets, with
both factors being weighted equally. The Compensation Committee
assessed our performance against these metrics at its
March 5, 2009 meeting and determined that awards under the
2008 Corporate Bonus Plan should be paid out at 45% of target
amounts.
The Compensation Committee set Mr. Burbanks and our
other named executive officers target short-term incentive
awards at the following percentages for 2008:
|
|
|
|
|
|
|
2008 Target
|
|
Officer
|
|
(as % of 2008 Base Salary)
|
|
|
Jeffrey H. Burbank
|
|
|
50
|
%
|
Robert S. Brown
|
|
|
35
|
%
|
Winifred L. Swan
|
|
|
35
|
%
|
Joseph E. Turk, Jr.
|
|
|
45
|
%
|
Michael J. Webb
|
|
|
25
|
%
|
In setting these target percentages, the Compensation Committee
looked to comparative market data from our Peer Group, as well
as each named executive officers role and responsibilities
within NxStage. The Compensation Committee targeted each of the
named executive officers short-term cash incentive
compensation at the market
50th percentile.
Applying the metrics of the 2008 Corporate Bonus Plan, each of
the named executive officers would have been entitled to a
short-term incentive award for 2008 of approximately 45% of his
or her targeted amount; however, given the challenging business
environment, our goal to conserve cash, and other factors, after
consultation with, and upon the recommendation of
Mr. Burbank, the Compensation Committee determined not to
pay any cash bonus awards under the 2008 Corporate Bonus Plan.
2009
Short-Term Incentive Awards
The Compensation Committee approved our 2009 Corporate Bonus
Plan in March 2009. Under this plan, each named executive
officers 2009 short term incentive payout will be
determined based on a comparison of actual corporate results
against our sales and operating expense budget, as measured by
the following metrics: revenues and cash consumption, as well as
such other metrics as may be added within the discretion of the
Compensation Committee as changes within our business
environment may dictate. Payouts under the 2009 Corporate Bonus
Plan will be determined based on the achievement of revenue and
cash consumption targets, with both factors being weighted
equally. Awards to named executive officers may be paid in cash
or stock, at the discretion of the Compensation Committee.
Target bonus awards, as a percentage of salary, for named
executives under the 2009 Corporate Bonus Plan remain unchanged
from the levels in 2008.
24
Special
Recognition Awards
In addition to cash payments under Compensation Committee
approved annual short-term incentive plans, we periodically make
special awards in recognition of extraordinary achievements. We
did not grant any special recognition bonuses to named executive
officers for performance in 2008.
Long-Term
Incentives
Our equity award program is the primary vehicle for offering
long-term incentives to our executives. We believe that equity
awards provide our executives with a strong link to our
long-term performance create an ownership culture and help to
align the interests of our executives and our stockholders. In
addition, the vesting feature of our equity awards should
further our goal of executive retention because this feature
provides an incentive to our executives to remain in our employ
during the vesting period. In determining the size of equity
awards to our executives, our Compensation Committee considers
comparative share ownership of executives in our compensation
Peer Group, our business performance, the applicable
executives performance, the amount of equity previously
awarded to the executive, the vesting of such awards and the
recommendations of management.
We typically make an initial equity award of stock options to
new executives and subsequent equity grants from time to time
thereafter as part of our overall executive compensation
program. All grants of options and restricted stock to our named
executive officers are approved by the Compensation Committee.
Our equity awards have typically taken the form of stock
options, and in limited circumstances we have also made
restricted stock grants. We typically grant restricted stock
awards at no cost to the executive. Because the shares have a
built-in value at the time the restricted stock awards are
granted, we generally grant significantly fewer shares of
restricted stock than the number of stock options we would grant
for a similar purpose. Typically, the stock options and
restricted stock we grant to our executives vest monthly at a
rate of 25% per year over a period of four years. Vesting rights
cease upon termination of employment and stock option exercise
rights cease 90 days following termination of employment,
except in the case of death or disability. Prior to the exercise
of an option, the holder has no rights as a stockholder with
respect to the shares subject to such option, including voting
rights and the right to receive dividends or dividend
equivalents. We set the exercise price of all stock options to
equal the closing price of our common stock on the NASDAQ Global
Market on the date of grant.
2008
Long-Term Incentive Awards
Consistent with market data from our Peer Group, and in
recognition of the heavily vested position of most of our named
executive officers, we made the following equity awards to our
named executive officers on March 27, 2008.
CEO Long-Term Incentive Awards Our
Compensation Committee approved the grant of 206,500 stock
options to Mr. Burbank, vesting over four years in equal
monthly installments, at an exercise price equal to our closing
stock price on the date of grant.
Other Named Executive Officer Long-Term Incentive
Awards Our Compensation Committee approved the
grant of (i) 74,000 stock options to Mr. Brown,
(ii) 74,000, stock options to Ms. Swan,
(iii) 74,000 stock options to Mr. Turk, and
(iv) 57,000 stock options to Mr. Webb. These awards
also vest over four years in equal monthly installments, and
have an exercise price equal to our closing stock price on the
date of grant.
The number of stock options granted to our named executive
officers, and the value of those grants determined in accordance
with SFAS 123R, are shown below in the Grants-of-Plan-Based
Awards at Fiscal Year-End 2008 table.
In 2008, we expanded our equity program to also include a
performance share plan, which we refer to as the 2008
Performance Share Plan, intended to further align the interests
of our executives with our stockholders and to link pay to
performance. Under this plan, executives were eligible to
receive shares of restricted stock depending upon the
achievement of established corporate objectives that were
consistent with
25
those of our 2008 Corporate Bonus Plan. Under our 2008
Performance Share Plan, the number of shares our named executive
officers were eligible to receive was determined based on a
comparison of actual corporate results against our sales and
operating expense budget, as measured by the following metrics:
revenues, gross margins and cash consumption. Like our 2008
Corporate Bonus Plan, payouts under the 2008 Performance Share
Plan were contingent upon the achievement of a revenue target,
with the amount of the award determined by the achievement of
gross margin and cash consumption targets, with both factors
being weighted equally. Applying the metrics of the 2008
Performance Share Plan, it was determined that none of our named
executive officers were eligible for awards of performance
shares under that plan.
2009
Long-Term Incentive Awards
Consistent with market data for annual long-term incentive
grants from our Peer Group, we made the following equity awards
to our named executives on March 6, 2009. The size of the
awards remained consistent with those in 2008. Given current
economic conditions and our need to conserve cash, the
Compensation Committee chose to weight total executive
compensation more heavily towards equity compensation rather
than cash. It also determined, as an exception to historical
grant practices, to provide for three year vesting of options
rather than four years.
CEO Long-Term Incentive Awards Our
Compensation Committee approved the grant of 206,500 stock
options to Mr. Burbank, vesting over three years in equal
monthly installments, at an exercise price equal to our closing
stock price on the date of grant.
Other Named Executive Officer Long-Term Incentive
Awards Our Compensation Committee approved the
grant of, (i) 74,000 stock options to Mr. Brown,
(ii) 74,000, stock options to Ms. Swan,
(iii) 74,000 stock options to Mr. Turk, and
(iv) 57,000 stock options to Mr. Webb. These awards
also vest over three years in equal monthly installments, and
have an exercise price equal to our closing stock price on the
date of grant.
In 2009, we also maintained our performance share plan, which we
refer to as the 2009 Performance Share Plan. Under this plan,
executives may be eligible to receive shares of restricted stock
depending upon the achievement of established corporate
objectives that are nearly identical to those of our 2009
Corporate Bonus Plan. Under our 2009 Performance Share Plan, the
number of shares our named executive officers will be eligible
to receive will be determined based on a comparison of actual
corporate results against our sales and operating expense
budget, as measured by the following metrics: revenues and cash
consumption. Like our 2009 Corporate Bonus Plan, payouts under
the 2009 Performance Share Plan will be determined based on the
achievement of revenues and cash consumption targets, with both
factors being weighted equally. If earned, awards to named
executive officers will vest in equal installments over three
years.
Elements
of Indirect Pay
In addition to the direct pay elements described above, we also
provide our executives with indirect pay in the form of
benefits. We maintain broad-based benefits that are provided to
all employees, including health and dental insurance, life and
disability insurance and a 401(k) plan. Executives are eligible
to participate in all of our employee benefit plans, in each
case on the same basis as other employees. We match 100% of the
first 3%, and 50% of the next 2%, of the employees
compensation contributed to the 401(k) plan, subject to
then-current Internal Revenue Service limits on the amount that
may be contributed by employees to such plans. All of our named
executives participate in our 401(k) plan and receive matching
contributions according to this formula.
Severance
and Change-of-Control Benefits
Pursuant to employment agreements we have entered into with each
of our named executive officers and our 2005 Stock Incentive
Plan, our named executive officers are entitled to specified
benefits in the event of the termination of their employment
under certain circumstances, including termination following a
change of control of our company. We do not consider specific
amounts payable under these arrangements when establishing
annual compensation. Instead, the purpose of these benefits is
to ensure that we remain competitive in attracting and retaining
executives within our industry and Peer Group and that we retain
our
26
key executives during a potentially critical time in the event
of a sale or merger of NxStage. After reviewing the practices of
companies represented in the Peer Group, we believe that our
severance and change of control benefits are generally in line
with severance packages offered to executives in the Peer Group.
We have structured our named executive officers
change-of-control benefits as double trigger
benefits. In other words, the change of control does not itself
trigger benefits; rather, benefits are paid only if the
employment of the executive is terminated during a specified
period after the change of control. We believe a double
trigger benefit maximizes shareholder value because it
prevents an unintended windfall to executives in the event of a
friendly change of control, while still providing them
appropriate incentives to cooperate in negotiating any change of
control in which they believe they may lose their jobs.
We have provided more detailed information about these benefits,
along with estimates of their value under various circumstances,
under the caption Potential Payments Upon Termination or
Change of Control below.
Tax
Considerations
Section 162(m) of the Internal Revenue Code of 1986, as
amended, generally disallows a tax deduction for compensation in
excess of $1.0 million paid to our CEO and to each other
officer (other than the Chief Financial Officer) whose
compensation is required to be reported to our stockholders
pursuant to the Exchange Act by reason of being among our most
highly paid executive officers. Qualifying performance-based
compensation is not subject to the deduction limitation if
specified requirements are met. We periodically review the
potential consequences of Section 162(m) and we generally
intend to structure the performance-based portion of our
executive compensation, where feasible, to comply with
exemptions in Section 162(m) so that the compensation
remains tax deductible to us. However, the Compensation
Committee may, in its judgment, authorize compensation payments
that do not comply with the exemptions in Section 162(m)
when it believes that such payments are appropriate to attract
and retain executive talent.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
section of this proxy statement entitled Compensation
Committee Discussion and Analysis with management. Based
on this review and discussion, the Compensation Committee has
recommended to the Board of Directors that such section be
included in this proxy statement and incorporated by reference
in NxStages Annual Report on
Form 10-K
for the year ended December 31, 2008.
By the Compensation Committee of the Board of Directors
Craig W. Moore (Chair)
Philippe O. Chambon
Earl R. Lewis
27
Executive
Compensation
The following table sets forth information regarding
compensation earned by our Chief Executive Officer, our Chief
Financial Officer, and each of our three other most highly
compensated executive officers during fiscal 2008, 2007 and
2006. We refer to these executive officers as our named
executive officers elsewhere in this proxy statement.
SUMMARY
COMPENSATION TABLE FOR THE FISCAL YEARS-ENDED 2008, 2007 AND
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position(1)
|
|
Year
|
|
|
$
|
|
|
$
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
($)
|
|
|
Jeffrey H. Burbank
|
|
|
2008
|
|
|
|
330,000
|
|
|
|
|
|
|
|
|
|
|
|
480,953
|
|
|
|
|
|
|
|
12,145
|
|
|
|
823,098
|
|
President, Chief Executive
|
|
|
2007
|
|
|
|
330,000
|
|
|
|
30,000
|
(6)
|
|
|
|
|
|
|
181,872
|
|
|
|
60,000
|
|
|
|
11,945
|
|
|
|
613,817
|
|
Officer and Director
|
|
|
2006
|
|
|
|
298,700
|
|
|
|
|
|
|
|
|
|
|
|
170,516
|
|
|
|
112,505
|
|
|
|
11,745
|
|
|
|
593,466
|
|
Robert S. Brown
|
|
|
2008
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
374,791
|
|
|
|
|
|
|
|
8,938
|
|
|
|
633,729
|
|
Senior Vice President and
|
|
|
2007
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
281,030
|
|
|
|
45,000
|
|
|
|
9,228
|
|
|
|
585,258
|
|
Chief Financial Officer
|
|
|
2006
|
|
|
|
24,639
|
(7)
|
|
|
90,650
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75
|
|
|
|
115,364
|
|
Winifred L. Swan
|
|
|
2008
|
|
|
|
260,000
|
|
|
|
|
|
|
|
|
|
|
|
177,648
|
|
|
|
|
|
|
|
9,200
|
|
|
|
446,848
|
|
Senior Vice President,
|
|
|
2007
|
|
|
|
260,000
|
|
|
|
|
|
|
|
22,300
|
|
|
|
58,740
|
|
|
|
45,000
|
|
|
|
9,245
|
|
|
|
395,285
|
|
General Counsel and Secretary
|
|
|
2006
|
|
|
|
214,936
|
|
|
|
|
|
|
|
1,855
|
|
|
|
53,286
|
|
|
|
63,576
|
|
|
|
9,401
|
|
|
|
343,054
|
|
Joseph E. Turk
|
|
|
2008
|
|
|
|
260,000
|
|
|
|
|
|
|
|
|
|
|
|
212,064
|
|
|
|
|
|
|
|
7,800
|
|
|
|
479,864
|
|
Senior Vice President,
|
|
|
2007
|
|
|
|
260,000
|
|
|
|
40,000
|
(9)
|
|
|
|
|
|
|
42,864
|
|
|
|
60,000
|
|
|
|
8,674
|
|
|
|
411,538
|
|
Commercial Operations
|
|
|
2006
|
|
|
|
223,871
|
|
|
|
|
|
|
|
|
|
|
|
31,972
|
|
|
|
65,583
|
|
|
|
11,800
|
|
|
|
333,226
|
|
Michael J. Webb
|
|
|
2008
|
|
|
|
220,000
|
|
|
|
|
|
|
|
|
|
|
|
182,506
|
|
|
|
|
|
|
|
8,989
|
|
|
|
411,495
|
|
Senior Vice President,
|
|
|
2007
|
|
|
|
207,519
|
|
|
|
|
|
|
|
|
|
|
|
85,234
|
|
|
|
25,000
|
|
|
|
9,480
|
|
|
|
327,233
|
|
Quality, Regulatory and
|
|
|
2006
|
|
|
|
182,000
|
(10)
|
|
|
|
|
|
|
|
|
|
|
27,658
|
|
|
|
20,800
|
|
|
|
7,712
|
|
|
|
238,170
|
|
Clinical Affairs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The titles noted in the table are each named executive
officers respective title as of December 31, 2008.
Mr. Webb became our Senior Vice President, Quality,
Regulatory and Clinical Affairs on August 16, 2007. |
|
(2) |
|
The amounts in the Stock Awards column reflect the dollar amount
recognized as compensation cost for financial statement
reporting purposes for the fiscal years ended December 31,
2008, 2007 and 2006, in accordance with FAS 123R of
restricted stock awarded under our equity plans and may include
amounts from awards granted in and prior to the applicable year.
There can be no assurance that the FAS 123R amounts will
ever be realized. The assumptions we used to calculate these
amounts are included in footnote 2 to our audited financial
statements for the fiscal year ended December 31, 2008
included in our Annual Report on
Form 10-K
filed with the SEC on March 16, 2009. |
|
(3) |
|
The amounts in the Option Awards column reflect the dollar
amount recognized as compensation cost for financial statement
reporting purposes for the fiscal years ended December 31,
2008, 2007 and 2006, in accordance with FAS 123R of stock
options granted under our equity plans and may include amounts
from stock options granted in and prior to the applicable year.
There can be no assurance that the FAS 123R amounts will
ever be realized. The assumptions we used to calculate these
amounts are included in footnote 12 to our audited financial
statements for the fiscal year ended December 31, 2008
included in our Annual Report on
Form 10-K
filed with the SEC on March 16, 2009. |
|
(4) |
|
The amounts in the Non-Equity Incentive Plan Compensation column
reflect performance-based bonuses earned in the years ended
December 31, 2008, 2007 and 2006 pursuant to our 2008
Corporate Bonus Plan, 2007 Corporate Bonus Plan, and 2006
Corporate Bonus Plan, respectively. |
28
|
|
|
(5) |
|
For fiscal 2008, amounts reported under the All Other
Compensation column consist of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life
|
|
|
Dollar Amount of
|
|
|
|
|
|
|
Insurance
|
|
|
Contributions
|
|
|
|
|
|
|
Premiums
|
|
|
Made to
|
|
|
Telephone
|
|
|
|
Paid by
|
|
|
Executives
|
|
|
Stipend
|
|
Name
|
|
NxStage ($)
|
|
|
401(k) Plan ($)
|
|
|
($)
|
|
|
Jeffrey H. Burbank
|
|
|
545
|
|
|
|
9,200
|
|
|
|
2,400
|
|
Robert S. Brown
|
|
|
|
|
|
|
8,938
|
|
|
|
|
|
Winifred L. Swan
|
|
|
|
|
|
|
9,200
|
|
|
|
|
|
Joseph E. Turk Jr.
|
|
|
|
|
|
|
7,800
|
|
|
|
|
|
Michael J. Webb
|
|
|
|
|
|
|
8,989
|
|
|
|
|
|
|
|
|
(6) |
|
Mr. Burbank was awarded a special recognition bonus in
April 2007 of $30,000 in recognition of his contribution to our
completion of agreements with three significant dialysis chains. |
|
(7) |
|
Mr. Brown became our Chief Financial Officer in August
2007. This amount represents the pro rated portion of his annual
base salary of $250,000 for fiscal 2006. |
|
(8) |
|
This amount includes an $8,650 bonus that was guaranteed to
Mr. Brown under his employment agreement and an $82,000
signing bonus paid to Mr. Brown on the date that he joined
NxStage. |
|
(9) |
|
Mr. Turk was awarded a special recognition bonus in April
2007 of $40,000 in recognition of his contribution to our
completion of agreements with three significant dialysis chains. |
|
(10) |
|
Mr. Webb became our Senior Vice President, Quality,
Regulatory and Clinical Affairs on August 16, 2007. |
The following table sets forth information concerning each grant
of an option or restricted stock award made to a named executive
officer during fiscal 2008 under any plan, contract,
authorization or arrangement pursuant to which cash, securities,
similar instruments or other property may be received.
GRANTS OF
PLAN-BASED AWARDS FOR FISCAL YEAR-END 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Targeted
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
Option Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Future Payouts
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Non-Equity
|
|
|
Securities
|
|
|
Exercise
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
Incentive Plan
|
|
|
Underlying
|
|
|
Price of
|
|
|
Value of
|
|
|
|
|
|
|
Awards
|
|
|
Options
|
|
|
Option Awards
|
|
|
Option Awards
|
|
Name
|
|
Grant Date
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)
|
|
|
($)(3)
|
|
|
Jeffrey H. Burbank
|
|
|
3/27/2008
|
|
|
|
165,000
|
|
|
|
206,500(2
|
)
|
|
|
4.54
|
|
|
|
520,380
|
|
Robert S. Brown
|
|
|
3/27/2008
|
|
|
|
87,500
|
|
|
|
74,000(2
|
)
|
|
|
4.54
|
|
|
|
186,480
|
|
Winifred L. Swan
|
|
|
3/27/2008
|
|
|
|
91,000
|
|
|
|
74,000(2
|
)
|
|
|
4.54
|
|
|
|
186,480
|
|
Joseph E. Turk
|
|
|
3/27/2008
|
|
|
|
117,000
|
|
|
|
74,000(2
|
)
|
|
|
4.54
|
|
|
|
186,480
|
|
Michael J. Webb
|
|
|
3/27/2008
|
|
|
|
55,000
|
|
|
|
57,000(2
|
)
|
|
|
4.54
|
|
|
|
143,640
|
|
|
|
|
(1) |
|
Reflects the target award amounts under our 2008 Corporate Bonus
Plan. As none of the named executives accepted awards under the
2008 Corporate Bonus Plan, a zero balance is shown above in the
Summary Compensation Table in the Non-Equity Incentive Plan
column for the 2008 fiscal year. |
|
(2) |
|
The shares of common stock underlying the option vest in equal
monthly installments over the 48 months following
March 27, 2008. |
|
(3) |
|
The amount reported under Grant Date Fair Value of Option Award
is computed in accordance with FAS 123R and represents the
FAS 123R value of the option awarded as of the grant date. |
29
Information
Relating to Equity Awards and Holdings
The following table sets forth information concerning restricted
stock that has not vested, stock options that have not been
exercised and equity incentive plan awards for each of the named
executive officers outstanding as of December 31, 2008.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Shares That
|
|
|
of Shares
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
That Have
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Not Vested
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(1)
|
|
|
Jeffrey H. Burbank
|
|
|
54,840
|
(2)
|
|
|
|
|
|
|
3.76
|
|
|
|
01/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
54,840
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
08/22/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
36,560
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
03/07/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
36,560
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
02/04/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
39,718
|
(9)
|
|
|
167,782
|
|
|
|
4.54
|
|
|
|
03/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
44,603
|
(2)
|
|
|
|
|
|
|
5.47
|
|
|
|
02/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
71,595
|
(2)
|
|
|
1,525
|
|
|
|
6.84
|
|
|
|
01/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
95,053
|
(3)
|
|
|
51,187
|
|
|
|
8.55
|
|
|
|
09/15/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
29,999
|
(8)
|
|
|
90,001
|
|
|
|
14.44
|
|
|
|
12/07/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S. Brown
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,874
|
(9)
|
|
|
60,126
|
|
|
|
4.54
|
|
|
|
03/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
104,165
|
(4)
|
|
|
95,835
|
|
|
|
8.92
|
|
|
|
11/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
8,749
|
(8)
|
|
|
26,251
|
|
|
|
14.44
|
|
|
|
12/07/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winifred L. Swan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,792
|
(10)
|
|
|
12,795
|
|
|
|
|
25,555
|
(2)
|
|
|
|
|
|
|
2.74
|
|
|
|
11/27/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
3,656
|
(2)
|
|
|
|
|
|
|
3.76
|
|
|
|
08/22/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
20,839
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
03/07/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
7,494
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
02/04/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
13,874
|
(9)
|
|
|
60,126
|
|
|
|
4.54
|
|
|
|
03/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
6,997
|
(2)
|
|
|
|
|
|
|
5.47
|
|
|
|
02/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
10,739
|
(2)
|
|
|
229
|
|
|
|
6.84
|
|
|
|
01/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
29,704
|
(5)
|
|
|
6,856
|
|
|
|
8.55
|
|
|
|
09/15/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
12,499
|
(8)
|
|
|
37,501
|
|
|
|
14.44
|
|
|
|
12/07/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph E. Turk, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,656
|
(2)
|
|
|
|
|
|
|
3.42
|
|
|
|
01/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
7,312
|
(2)
|
|
|
|
|
|
|
3.76
|
|
|
|
08/22/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
12,613
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
03/07/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
14,989
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
02/04/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
13,874
|
(9)
|
|
|
60,126
|
|
|
|
4.54
|
|
|
|
03/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
13,986
|
(2)
|
|
|
|
|
|
|
5.47
|
|
|
|
02/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
28,638
|
(2)
|
|
|
610
|
|
|
|
6.84
|
|
|
|
01/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
17,822
|
(5)
|
|
|
4,144
|
|
|
|
8.55
|
|
|
|
09/15/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
19,999
|
(8)
|
|
|
60,001
|
|
|
|
14.44
|
|
|
|
12/07/2014
|
|
|
|
|
|
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Shares That
|
|
|
of Shares
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
That Have
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Not Vested
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(1)
|
|
|
Michael J. Webb
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,408
|
(2)
|
|
|
|
|
|
|
3.76
|
|
|
|
08/22/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
1,316
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
03/07/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
8,043
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
02/04/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
10,687
|
(9)
|
|
|
46,313
|
|
|
|
4.54
|
|
|
|
03/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
7,516
|
(2)
|
|
|
|
|
|
|
5.47
|
|
|
|
02/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
3,579
|
(2)
|
|
|
77
|
|
|
|
6.84
|
|
|
|
01/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
10,416
|
(6)
|
|
|
9,584
|
|
|
|
8.15
|
|
|
|
11/06/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
14,852
|
(5)
|
|
|
3,428
|
|
|
|
8.55
|
|
|
|
09/15/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
13,333
|
(7)
|
|
|
26,667
|
|
|
|
13.54
|
|
|
|
08/16/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
3,749
|
(8)
|
|
|
11,251
|
|
|
|
14.44
|
|
|
|
12/07/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on $2.67 per share, the last sale price of NxStage common
stock on December 31, 2008. |
|
(2) |
|
These stock options were fully exercisable on the date of grant
and, upon exercise, were subject to a repurchase right in favor
of NxStage. This repurchase right terminated upon the closing of
our initial public offering and all such options are currently
exercisable. |
|
(3) |
|
This option was granted on September 15, 2005. This option
vested as to 20% of the shares on September 15, 2006 and
vests in equal monthly installments over the 48 months
following September 15, 2006. |
|
(4) |
|
This option was granted on November 27, 2006. This option
vested as to 25% of the shares on November 27, 2007 and
vests in equal monthly installments over the 36 months
following November 27, 2007. |
|
(5) |
|
This option was granted on September 15, 2005. This option
vested as to 25% of the shares on September 15, 2006 and
vests in equal monthly installments over the 36 months
following September 15, 2006. |
|
(6) |
|
This option was granted on November 6, 2006. This option
vests in equal monthly installments over the 48 months
following November 6, 2006. |
|
(7) |
|
This option was granted on August 16, 2007. This option
vests in equal monthly installments over the 48 months
following August 16, 2007. |
|
(8) |
|
This option was granted on December 7, 2007. This option
vests in equal monthly installments over the 48 months
following December 7, 2007. |
|
(9) |
|
This option was granted on March 27, 2008. This option
vests in equal monthly installments over the 48 months
following March 27, 2008. |
|
(10) |
|
This restricted stock grant was made on November 27, 2006
and the figure shown represents the unvested portion of the
restricted stock grant made. This grant vests in equal
installments over 48 months following November 27,
2006. |
31
The following table sets forth information concerning the
exercise of stock options and the vesting of restricted stock
during fiscal 2008 for each of the named executive officers.
FISCAL
2008 OPTION EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Vesting
|
|
|
on Vesting
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)(2)
|
|
|
Jeffrey H. Burbank
|
|
|
|
|
|
|
|
|
|
|
14,146
|
|
|
|
32,819
|
|
Robert S. Brown
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winifred L. Swan
|
|
|
2,500
|
|
|
|
12,453
|
|
|
|
|
|
|
|
|
|
Joseph E. Turk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Webb
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Value realized upon vesting is based on the closing sales price
of our common stock on the applicable vesting date. |
|
(2) |
|
Measured based on the difference between the exercise price of
the option and the fair market value of our common stock on the
date of exercise (excluding any gains or losses recognized by
the named executive). |
Employment
Agreements with Named Executive Officers
We have entered into employment agreements with each of our
named executive officers, the terms of which are summarized
below.
Jeffrey H. Burbank. For 2008, we paid
Mr. Burbank an annual base salary of $330,000.
Mr. Burbanks salary was not increased for 2009. His
target short-term incentive award remains equal to 50% of his
base salary pursuant to our 2009 Corporate Bonus Plan. If,
before a change in control of NxStage, as defined in his
employment agreement, we terminate Mr. Burbanks
employment without cause or he resigns for good reason, each as
defined in his employment agreement, then Mr. Burbank will
be entitled to receive:
|
|
|
|
|
severance payments in an amount equal to his then-current base
salary, which will be paid over the 12 months following
termination of his employment;
|
|
|
|
continued medical coverage during the 12 months following
termination of his employment; and
|
|
|
|
continued vesting during the 12 months following
termination of his employment in all stock options and stock
awards he holds at the time his employment is terminated as if
he continued to be employed during such period, and, except as
described below, he will have up to 90 days following the
expiration of such period to exercise such options.
|
If, following a change in control, (i) we terminate
Mr. Burbanks employment, or (ii) we had
terminated Mr. Burbanks employment at any time three
months prior to announcement of the change in control and we
cannot reasonably demonstrate that such termination did not
arise in connection with such change in control, or if
Mr. Burbank resigns for good reason within 12 months
following a change in control, then he will be entitled to:
|
|
|
|
|
a lump sum severance payment equal to two times his then-current
base salary and two times the greater of his annual bonus for
the fiscal year preceding his termination or his target bonus
for the then-current fiscal year;
|
|
|
|
continue to receive medical coverage during the 24 months
following termination of his employment;
|
|
|
|
full vesting and acceleration of stock options and stock awards
he holds at the time his employment is terminated and a period
of 90 days to exercise such stock options; and
|
|
|
|
receive a
gross-up
amount on benefits received under this agreement to compensate
for excise taxes and associated penalties imposed by
Section 4999 of the Internal Revenue Code of 1986, as
amended.
|
32
Robert S. Brown. For 2008, we paid
Mr. Brown an annual base salary of $250,000.
Mr. Browns base salary was not increased for 2009.
His target short-term incentive award remains equal to 35% of
his base salary pursuant to our 2009 Corporate Bonus Plan. If,
before a change in control of NxStage, we terminate
Mr. Browns employment without cause or he resigns for
good reason, each as defined in his employment agreement, then
Mr. Brown will be entitled to receive:
|
|
|
|
|
severance payments in an amount equal to 0.5 times his
then-current base salary, which will be paid over the six months
following termination of his employment;
|
|
|
|
continued medical coverage during the six months following
termination of his employment; and
|
|
|
|
continued vesting during the six months following termination of
his employment in all stock options and stock awards he holds at
the time his employment is terminated as if he continued to be
employed during such period, and, except as described below, he
will have up to 90 days following the expiration of such
period to exercise such options.
|
If, following a change in control, (i) we terminate
Mr. Browns employment, or (ii) we have
terminated Mr. Browns employment at any time three
months prior to announcement of the change in control, and we
cannot reasonably demonstrate that such termination did not
arise in connection with such change in control, or if
Mr. Brown resigns for good reason within 12 months
following a change in control, then he will be entitled to:
|
|
|
|
|
a lump severance payment equal to his then-current base salary
and the greater of his annual bonus for the fiscal year
preceding his termination or his target bonus for the
then-current fiscal year;
|
|
|
|
continued medical coverage during the 12 months following
termination of his employment;
|
|
|
|
full vesting and acceleration of stock options and stock awards
he holds at the time his employment is terminated and a period
of 90 days to exercise such stock options; and
|
|
|
|
receive a
gross-up
amount on benefits received under this agreement to compensate
for excise taxes and associated penalties imposed by
Section 4999 of the Internal Revenue Code of 1986, as
amended.
|
Winifred L. Swan. For 2008, we paid
Ms. Swan an annual base salary of $260,000.
Ms. Swans base salary was not increased for 2009. Her
target short-term incentive award remains equal to 35% of her
base salary pursuant to our 2009 Corporate Bonus Plan. If,
before a change in control of NxStage, as defined in her
employment agreement, we terminate Ms. Swans
employment without cause or she resigns for good reason, each as
defined in her employment agreement, then Ms. Swan will be
entitled to receive:
|
|
|
|
|
severance payments in an amount equal to 0.5 times her
then-current base salary, which will be paid over the six months
following termination of her employment;
|
|
|
|
continued medical coverage during the six months following
termination of her employment; and
|
|
|
|
continued vesting during the six months following termination of
her employment in all stock options and stock awards she holds
at the time her employment is terminated as if she continued to
be employed during such period, and, except as described below,
will have up to 90 days following the expiration of such
period to exercise such options.
|
If, following a change in control, (i) we terminate
Ms. Swans employment, or (ii) we had terminated
Ms. Swans employment at any time three months prior
to announcement of the change in control and we cannot
reasonably demonstrate that such termination did not arise in
connection with such change in control, or if Ms. Swan
resigns for good reason within 12 months following a change
in control, then she will be entitled to:
|
|
|
|
|
a lump sum severance payment equal to 1.25 times her
then-current base salary and 1.25 times the greater of her
annual bonus for the fiscal year preceding her termination or
her target bonus for the then-current fiscal year;
|
|
|
|
continue to receive medical coverage during the 15 months
following termination of her employment;
|
33
|
|
|
|
|
full vesting and acceleration of stock options and stock awards
she holds at the time her employment is terminated and a period
of 90 days to exercise such stock options; and
|
|
|
|
receive a
gross-up on
benefits received under this agreement to compensate for excise
taxes and associated penalties imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended.
|
Joseph E. Turk, Jr. For 2008, we paid
Mr. Turk an annual base salary of $260,000.
Mr. Turks base salary was not increased for 2009. His
short-term incentive target award remains equal to 45% of his
base salary pursuant to our 2009 Corporate Bonus Plan. If,
before a change in control of NxStage, as defined in his
employment agreement, we terminate Mr. Turks
employment without cause or he resigns for good reason, each as
defined in his employment agreement, then Mr. Turk will be
entitled to receive:
|
|
|
|
|
severance payments in an amount equal to 0.5 times his
then-current base salary, which will be paid over the six months
following termination of his employment;
|
|
|
|
continued medical coverage during the six months following
termination of his employment; and
|
|
|
|
continued vesting during the six months following termination of
his employment in all stock options and stock awards he holds at
the time his employment is terminated as if he continued to be
employed during such period, and, except as described below,
will have up to 90 days following the expiration of such
period to exercise such options.
|
If, following a change in control, (i) we terminate
Mr. Turks employment, or (ii) we had terminated
Mr. Turks employment at any time three months prior
to announcement of the change in control and we cannot
reasonably demonstrate that such termination did not arise in
connection with such change in control, or if Mr. Turk
resigns for good reason within 12 months following a change
in control, then he will be entitled to:
|
|
|
|
|
a lump sum severance payment equal to his then-current base
salary and the greater of his annual bonus for the fiscal year
preceding his termination or his target bonus for the
then-current fiscal year;
|
|
|
|
continue to receive medical coverage during the 12 months
following termination of his employment;
|
|
|
|
full vesting and acceleration of stock options and stock awards
he holds at the time his employment is terminated and a period
of 90 days to exercise such stock options; and
|
|
|
|
receive a
gross-up
amount on benefits received under this agreement to compensate
for excise taxes and associated penalties imposed by
Section 4999 of the Internal Revenue Code of 1986, as
amended.
|
Michael J. Webb. For 2008, we paid
Mr. Webb total base salary of $220,000.
Mr. Webbs base salary was not increased for 2009. His
target short-term incentive award remains equal to 25% of his
base salary pursuant to our 2009 Corporate Bonus Plan. If,
before a change in control of NxStage, as defined in his
employment agreement, we terminate Mr. Webbs
employment without cause or he resigns for good reason, each as
defined in his employment agreement, then Mr. Webb will be
entitled to receive:
|
|
|
|
|
severance payments in an amount equal to 0.5 times his
then-current base salary, which will be paid over the six months
following termination of his employment;
|
|
|
|
continued medical coverage during the six months following
termination of his employment; and
|
|
|
|
continued vesting during the six months following termination of
his employment in all stock options and stock awards he holds at
the time his employment is terminated as if he continued to be
employed during such period, and, except as described below,
will have up to 90 days following the expiration of such
period to exercise such options.
|
If, following a change in control, (i) we terminate
Mr. Webbs employment, or (ii) we had terminated
Mr. Webbs employment at any time three months prior
to announcement of the change in control and we cannot
reasonably demonstrate that such termination did not arise in
connection with such change in control,
34
or if Mr. Webb resigns for good reason within
12 months following a change in control, then he will be
entitled to:
|
|
|
|
|
a lump sum severance payment equal to his then-current base
salary and the greater of his annual bonus for the fiscal year
preceding his termination or his target bonus for the
then-current fiscal year;
|
|
|
|
continued medical coverage during the 12 months following
termination of his employment; and
|
|
|
|
full vesting and acceleration of stock options and stock awards
he holds at the time his employment is terminated and a period
of 90 days to exercise such stock options.
|
In addition to the terms set forth above, the executive
officers employment agreements also provide that each
executive officer is entitled to:
|
|
|
|
|
participate in short-term and long-term incentive programs,
which incentive compensation will be subject to the terms of the
applicable plans and paid on the basis of the executive
officers individual performance, as determined by our
Board of Directors or Compensation Committee; and
|
|
|
|
receive retirement and welfare benefits that we make available
from time to time to our senior level executives.
|
If an executive officer terminates employment with NxStage
voluntarily, other than for good reason, if we terminate an
executive officers employment as a result of physical or
mental disability or for cause, each as defined in the
officers agreement, or if an executive officer dies, the
executive officer will receive compensation and benefits through
the last day of employment.
Each of Messrs. Burbank, Brown, Turk and Webb and
Ms. Swan has signed agreements providing for the protection
of our confidential information and the transfer of ownership
rights to intellectual property developed by such executive
officer while he or she was employed by us. If the executive
officer fails to comply with the provisions of the proprietary
information agreement between NxStage and the executive officer,
the payments and benefits described above will cease.
35
Potential
Termination and Change in Control Payments
The following table describes the potential payments, benefits
and acceleration of vesting applicable to stock options and
restricted stock awards pursuant to employment agreements with
each of Messrs. Burbank, Brown, Turk and Webb and
Ms. Swan. The amounts shown below assume that the
termination of each executive is effective as of
December 31, 2008. Actual amounts payable to each executive
listed below upon his or her termination can only be determined
definitively at the time of each executives actual
departure. The payments and benefits that each officer would
receive upon termination are further described above under the
heading Employment Agreements with Named Executive
Officers. In addition to the amounts shown in the table
below, each executive would receive payments for amounts of base
salary and vacation time accrued through the date of
termination. For information relating to compensation earned by
each of our named executive officers, see Executive
Compensation Summary Compensation Table for Fiscal
Years-Ended 2008, 2007 and 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
Three Months Prior to
|
|
|
|
|
|
|
|
|
Change in Control;
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
at Any Time After a
|
|
|
|
|
|
|
|
|
Change in Control;
|
|
|
|
|
|
|
|
|
Resignation for
|
|
|
|
|
|
Termination
|
|
|
Good Reason
|
|
|
|
|
|
Without Cause
|
|
|
During the 12 Months
|
|
|
|
|
|
or Resignation
|
|
|
Following a Change
|
|
|
|
|
|
for Good Reason
|
|
|
in Control
|
|
Name
|
|
Benefit
|
|
($)
|
|
|
($)
|
|
|
Jeffrey H. Burbank
|
|
Severence Benefits
|
|
|
|
|
|
|
|
|
|
|
Severence Payments
|
|
|
330,000
|
(3)
|
|
|
990,000
|
(6)
|
|
|
Healthcare Benefits(1)
|
|
|
12,361
|
(4)
|
|
|
24,722
|
(7)
|
|
|
Market Value of Stock Vesting on Termination(2)
|
|
|
0
|
(5)
|
|
|
0
|
(8)
|
|
|
Tax Gross Up
|
|
|
N/A
|
|
|
|
142,714
|
|
|
|
Total
|
|
|
342,361
|
|
|
|
1,157,436
|
|
Robert S. Brown
|
|
Severence Benefits
|
|
|
|
|
|
|
|
|
|
|
Severence Payments
|
|
|
125,000
|
(9)
|
|
|
337,500
|
(12)
|
|
|
Healthcare Benefits(1)
|
|
|
6,181
|
(10)
|
|
|
12,361
|
(13)
|
|
|
Market Value of Stock Vesting on Termination(2)
|
|
|
0
|
(11)
|
|
|
0
|
(8)
|
|
|
Tax Gross Up
|
|
|
N/A
|
|
|
|
20,895
|
|
|
|
Total
|
|
|
131,180
|
|
|
|
370,756
|
|
Winifred L. Swan
|
|
Severence Benefits
|
|
|
|
|
|
|
|
|
|
|
Severence Payments
|
|
|
130,000
|
(9)
|
|
|
438,750
|
(14)
|
|
|
Healthcare Benefits(1)
|
|
|
5,682
|
(10)
|
|
|
14,206
|
(15)
|
|
|
Market Value of Stock Vesting on Termination(2)
|
|
|
3,338
|
(11)
|
|
|
12,795
|
(8)
|
|
|
Tax Gross Up
|
|
|
N/A
|
|
|
|
45,208
|
|
|
|
Total
|
|
|
135,682
|
|
|
|
498,164
|
|
Joseph E. Turk
|
|
Severence Benefits
|
|
|
|
|
|
|
|
|
|
|
Severence Payments
|
|
|
130,000
|
(9)
|
|
|
377,000
|
(12)
|
|
|
Healthcare Benefits(1)
|
|
|
6,181
|
(10)
|
|
|
12,361
|
(13)
|
|
|
Market Value of Stock Vesting on Termination(2)
|
|
|
0
|
(11)
|
|
|
0
|
(8)
|
|
|
Tax Gross Up
|
|
|
N/A
|
|
|
|
30,729
|
|
|
|
Total
|
|
|
136,181
|
|
|
|
420,090
|
|
Michael J. Webb
|
|
Severence Benefits
|
|
|
|
|
|
|
|
|
|
|
Severence Payments
|
|
|
110,000
|
(9)
|
|
|
275,000
|
(12)
|
|
|
Healthcare Benefits(1)
|
|
|
6,181
|
(10)
|
|
|
12,361
|
(13)
|
|
|
Market Value of Stock Vesting on Termination(2)
|
|
|
0
|
(11)
|
|
|
0
|
(8)
|
|
|
Tax Gross Up
|
|
|
N/A
|
|
|
|
19,008
|
|
|
|
Total
|
|
|
116,181
|
|
|
|
306,369
|
|
|
|
|
(1) |
|
This value is based upon the type of insurance coverage we
carried for each executive officer as of December 31, 2008
and is valued at the premiums in effect on December 31,
2008. |
36
|
|
|
(2) |
|
Based on the last sale price of NxStage common stock on
December 31, 2008, or $2.67 per share. |
|
(3) |
|
Represents aggregate severance payments equal to
Mr. Burbanks base salary at the time of his
termination, payable over the
12-month
period following his termination. |
|
(4) |
|
Represents amounts payable over 12 months for continuation
of coverage under medical and dental plans for Mr. Burbank,
his spouse and his dependents. |
|
(5) |
|
Represents continued vesting of Mr. Burbanks stock
options and stock awards as of December 31, 2008 through
December 31, 2009. |
|
(6) |
|
Represents a lump sum payment equal to two times
Mr. Burbanks base salary at the time of his
termination plus an amount equal to two times the higher of his
annual bonus target for fiscal 2008 or bonus amount paid to him
during fiscal 2007. |
|
(7) |
|
Represents amounts payable over 24 months for continuation
of coverage under medical and dental plans for Mr. Burbank. |
|
(8) |
|
Represents immediate vesting of all unvested stock options and
other stock awards held by the executive as of December 31,
2008. |
|
(9) |
|
Represents aggregate severance payments in an amount equal to
0.5 times the executives then current base salary at the
time of his or her termination, payable over the following six
months. |
|
(10) |
|
Represents amounts payable over six months for continuation of
coverage under medical and dental plans for the executive. |
|
(11) |
|
Represents continued vesting of the executives stock
options and stock awards for six months following termination. |
|
(12) |
|
Represents a lump sum payment equal to the executives then
current base salary at the time of his or her termination plus
an amount equal to the higher of the annual bonus target for
fiscal 2008 or bonus amount paid to the executive during fiscal
2007. |
|
(13) |
|
Represents amounts payable over 12 months for continuation
of coverage under medical and dental plans for the executive. |
|
(14) |
|
Represents a lump sum payment equal to 1.25 times
Ms. Swans then current base salary at the time of her
termination plus an amount equal to 1.25 times the higher of the
annual bonus target for fiscal 2008 or bonus amount paid to
Ms. Swan during fiscal 2007. |
|
(15) |
|
Represents amounts payable over 15 months for continuation
of coverage under medical and dental plans for Ms. Swan. |
Securities
Authorized for Issuance Under Our Equity Compensation
Plan
The following table provides information about the securities
authorized for issuance under our equity compensation plans as
of December 31, 2008.
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
Number of
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Securities to be
|
|
|
|
|
|
Future Issuance
|
|
|
|
Issued Upon
|
|
|
Weighted-Average
|
|
|
Under Equity
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Compensation Plans
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
(Excluding Securities
|
|
|
|
Options
|
|
|
Options
|
|
|
Reflected in Column(a))
|
|
Plan Category
|
|
(a)(2)
|
|
|
(b)
|
|
|
(c)(1)
|
|
|
Equity compensation plans approved by security holders
|
|
|
5,458,874
|
|
|
$
|
8.40
|
|
|
|
1,576,309
|
|
|
|
|
(1) |
|
Consists of 1,576,270 shares of common stock available for
future issuance under our 2005 Stock Incentive Plan (excluding
the additional 4,100,000 shares to be available under the
2005 Stock Incentive Plan if the amendment to such plan
contemplated by Proposal 2 of this proxy statement is
approved at the annual meeting) and 35 shares available for
future issuance under our 2005 Employee Stock Purchase Plan |
37
|
|
|
|
|
(excluding the additional 500,000 shares to be available
under the 2005 Employee Stock Purchase Plan if the amendment to
such plan contemplated by Proposal 3 of this proxy
statement is approved at the annual meeting). |
|
(2) |
|
Consists of 5,437,097 stock options and 21,777 unvested
restricted stock. |
Director
Compensation
Under our non-employee director compensation policy, last
amended in March 2006, our non-employee directors receive:
|
|
|
|
|
a $15,000 annual retainer for their service as directors, to be
paid quarterly in advance;
|
|
|
|
$2,500 for each Board meeting attended by the director in
person, $1,000 for each Board meeting attended by telephone and
$1,000 for each committee meeting attended where the committee
meeting is scheduled on a date other than a Board meeting;
|
|
|
|
if he or she is a member of the Audit Committee, an additional
annual retainer of $6,000 (or $10,000 for the Audit Committee
Chair), paid quarterly in advance;
|
|
|
|
if he or she is a member of any committee other than the Audit
Committee, an additional annual retainer of $4,000 for each
other committee, paid quarterly in advance;
|
|
|
|
expense reimbursement for attending Board of Directors and
committee meetings; and
|
|
|
|
on the date of our annual meeting of stockholders at which a
non-employee director is elected, a fully vested stock option to
purchase 14,000 shares of our common stock with an exercise
price equal to the then fair market value of our common stock,
as determined by the closing price of our common stock on the
date of the annual meeting. For a director elected or otherwise
appointed to the Board of Directors on a date other than the
date of an annual meeting of stockholders, such director will
receive a fully vested stock option to purchase
14,000 shares of our common stock pro-rated for the period
between the date he or she is first elected to the Board and May
31 of the year in which such director is elected or appointed to
our Board of Directors.
|
No director shall receive more than $50,000 in any calendar year
for Board fees, without the prior approval of the Compensation
Committee. For 2007, in recognition of the significant number of
meetings held over the course of the year, the cap on fees was
raised to $60,000. The cap was not waived for 2008.
In March 2006, our Board of Directors amended our non-employee
director compensation policy so that directors may elect to
receive shares of our common stock in lieu of the cash
compensation described above. A director must make his election
to receive equity in lieu of cash compensation on the date of
the annual meeting of stockholders at which such director is
elected. A directors election to receive equity in lieu of
cash compensation will apply to all compensation to be paid
after the date of election and will remain in effect until the
next annual meeting of stockholders. If a non-employee director
elects to receive equity in lieu of cash, we will issue the
director shares of our common stock on the last business day of
each calendar quarter in an amount equal to the quotient of the
total cash consideration due as of the last business day of each
calendar quarter and the closing price of our common stock on
the last trading day of that quarter. Presently, each of
Dr. Chambon and Messrs. Giannini, Moore and Perper has
elected to receive shares of common stock in lieu of cash
compensation for their service on our Board of Directors. All
shares of our common stock issued to our directors in lieu of
cash are issued under our 2005 Stock Incentive Plan.
We do not compensate directors who are also employees for their
services as directors.
38
The following table sets forth information concerning the
compensation of our directors who are not also named executive
officers for the fiscal year ended December 31, 2008.
DIRECTOR
COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)(4)
|
|
|
($)
|
|
|
($)
|
|
|
Philippe O. Chambon
|
|
|
|
|
|
|
50,000
|
|
|
|
25,317
|
|
|
|
|
|
|
|
75,317
|
|
Daniel A. Giannini
|
|
|
|
|
|
|
50,000
|
|
|
|
25,317
|
|
|
|
|
|
|
|
75,317
|
|
Reid S. Perper
|
|
|
|
|
|
|
50,000
|
|
|
|
25,317
|
|
|
|
|
|
|
|
75,317
|
|
Peter P. Phildius(5)
|
|
|
46,750
|
|
|
|
|
|
|
|
25,317
|
|
|
|
|
|
|
|
72,067
|
|
David S. Utterberg
|
|
|
23,750
|
|
|
|
20,250
|
|
|
|
25,317
|
|
|
|
|
|
|
|
69,317
|
|
Craig W. Moore
|
|
|
|
|
|
|
50,000
|
|
|
|
25,317
|
|
|
|
|
|
|
|
75,317
|
|
Jonathan T. Silverstein
|
|
|
15,917
|
|
|
|
|
|
|
|
17,423
|
|
|
|
|
|
|
|
33,340
|
|
Earl R. Lewis
|
|
|
7,750
|
|
|
|
|
|
|
|
11,384
|
|
|
|
|
|
|
|
19,134
|
|
|
|
|
(1) |
|
The fees earned by our non-employee directors in fiscal 2008
consist of the following: (i) an annual retainer,
(ii) $2,500 for each Board meeting attended by the director
in person, $1,000 for each Board meeting attended by telephone
and $1,000 for each committee meeting attended where the
committee meeting is scheduled on a date other than a Board
meeting date, and (iii) an annual fee for chairing and
being a member of each of the audit, compensation and nominating
and corporate governance committees. See footnote 2 below for
shares of common stock issued in lieu of this cash compensation
to certain of our directors. |
|
(2) |
|
The amounts in this column reflect the dollar amount recognized
as compensation cost for financial statement reporting purposes
for the fiscal year ended December 31, 2008 in accordance
with FAS 123R. These shares were issued pursuant to our
non-employee director compensation policy, as amended in March
2006, in connection with the election by each of
Messrs. Chambon, Giannini, Perper and Moore to receive
shares of our common stock in lieu of cash compensation during
fiscal 2008. Mr. Utterberg elected to receive shares of our
common stock in lieu of cash compensation for the first and
second quarters of fiscal 2008 only. Accordingly, we issued
shares of our common stock to each of these directors as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash
|
|
|
Closing
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration
|
|
|
Price of
|
|
|
|
|
|
Total Shares of
|
|
|
|
|
|
|
Due as of
|
|
|
Common Stock
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
Last Business
|
|
|
on Last Trading
|
|
|
|
|
|
Issued in Lieu of
|
|
|
|
|
|
|
Day of Quarter
|
|
|
Day of Quarter
|
|
|
Equity
|
|
|
Cash Consideration
|
|
Name
|
|
Quarter Ending
|
|
|
($)
|
|
|
($)
|
|
|
Issuance Date
|
|
|
#
|
|
|
Phillippe O. Chambon
|
|
|
3/31/2008
|
|
|
|
16,250
|
|
|
|
4.32
|
|
|
|
3/31/2008
|
|
|
|
3,761
|
|
|
|
|
6/30/2008
|
|
|
|
19,250
|
|
|
|
3.84
|
|
|
|
6/30/2008
|
|
|
|
5,013
|
|
|
|
|
9/30/2008
|
|
|
|
14,250
|
|
|
|
4.22
|
|
|
|
9/30/2008
|
|
|
|
3,376
|
|
|
|
|
12/31/2008
|
|
|
|
250
|
|
|
|
2.67
|
|
|
|
12/31/2008
|
|
|
|
93
|
|
Daniel A. Giannini
|
|
|
3/31/2008
|
|
|
|
16,750
|
|
|
|
4.32
|
|
|
|
3/31/2008
|
|
|
|
3,877
|
|
|
|
|
6/30/2008
|
|
|
|
21,250
|
|
|
|
3.84
|
|
|
|
6/30/2008
|
|
|
|
5,533
|
|
|
|
|
9/30/2008
|
|
|
|
12,000
|
|
|
|
4.22
|
|
|
|
9/30/2008
|
|
|
|
2,843
|
|
|
|
|
12/31/2008
|
|
|
|
|
|
|
|
2.67
|
|
|
|
12/31/2008
|
|
|
|
|
|
Reid S. Perper
|
|
|
3/31/2008
|
|
|
|
14,750
|
|
|
|
4.32
|
|
|
|
3/31/2008
|
|
|
|
3,414
|
|
|
|
|
6/30/2008
|
|
|
|
18,250
|
|
|
|
3.84
|
|
|
|
6/30/2008
|
|
|
|
4,752
|
|
|
|
|
9/30/2008
|
|
|
|
12,750
|
|
|
|
4.22
|
|
|
|
9/30/2008
|
|
|
|
3,021
|
|
|
|
|
12/31/2008
|
|
|
|
4,250
|
|
|
|
2.67
|
|
|
|
12/31/2008
|
|
|
|
1,591
|
|
David S. Utterberg
|
|
|
3/31/2008
|
|
|
|
11,250
|
|
|
|
4.32
|
|
|
|
3/31/2008
|
|
|
|
2,604
|
|
|
|
|
6/30/2008
|
|
|
|
9,000
|
|
|
|
3.84
|
|
|
|
6/30/2008
|
|
|
|
2,343
|
|
|
|
|
9/30/2008
|
|
|
|
|
|
|
|
4.22
|
|
|
|
9/30/2008
|
|
|
|
|
|
|
|
|
12/31/2008
|
|
|
|
|
|
|
|
2.67
|
|
|
|
12/31/2008
|
|
|
|
|
|
Craig W. Moore
|
|
|
3/31/2008
|
|
|
|
18,750
|
|
|
|
4.32
|
|
|
|
3/31/2008
|
|
|
|
4,340
|
|
|
|
|
6/30/2008
|
|
|
|
22,250
|
|
|
|
3.84
|
|
|
|
6/30/2008
|
|
|
|
5,794
|
|
|
|
|
9/30/2008
|
|
|
|
9,000
|
|
|
|
4.22
|
|
|
|
9/30/2008
|
|
|
|
2,132
|
|
|
|
|
12/31/2008
|
|
|
|
|
|
|
|
2.67
|
|
|
|
12/31/2008
|
|
|
|
|
|
39
|
|
|
(3) |
|
The amounts in this column reflect the dollar amount recognized
as compensation cost for financial statement reporting purposes
for the fiscal year ended December 31, 2008, in accordance
with FAS 123R of stock options granted under our equity
plans and may include amounts from stock options granted in and
prior to 2008. There can be no assurance that the FAS 123R
amounts will ever be realized. The assumptions we used to
calculate these amounts are included in footnote 12 to our
audited financial statements for the fiscal year ended
December 31, 2008 included in our Annual Report on
Form 10-K
filed with the SEC on March 16, 2009. |
|
(4) |
|
On May 29, 2008, the day of our 2008 annual meeting of
stockholders, we granted each of our non-employee directors,
including Messrs. Chambon, Giannini, Perper, Moore, and
Utterberg, an option to purchase 14,000 shares of our
common stock, each with an exercise price equal to $5.39 per
share, the closing price of our common stock on the date of the
2008 annual meeting. As Mr. Silverstein was named a
director on July 23, 2008, he was granted an option to
purchase 11,667 shares of our common stock, the pro-rated
portion of the annual option award, each with an exercise price
equal to $4.36, the closing price of our common stock on
July 23, 2008. As Mr. Lewis was named a director on
October 27, 2008, he was granted an option to purchase
8,166 shares of our common stock, the pro-rated portion of
the annual option award, each with an exercise price equal to
$4.24, the closing price of our common stock on October 27,
2008. All such options were immediately exercisable on the date
of grant. |
|
(5) |
|
Mr. Phildius resigned from our Board of Directors effective
October 24, 2008. |
The following table shows the aggregate number of shares of
common stock subject to outstanding stock options for each
director not listed as a named executive officer as of
December 31, 2008, as well as the grant date fair value of
each stock option:
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Shares
|
|
|
Awards
|
|
|
|
Subject to
|
|
|
Pursuant
|
|
|
|
Stock
|
|
|
to SFAS
|
|
Name
|
|
Options
|
|
|
123(R) ($)
|
|
|
Philippe O. Chambon
|
|
|
54,000
|
|
|
|
351,320
|
|
Daniel A. Giannini
|
|
|
57,000
|
|
|
|
377,060
|
|
Reid S. Perper
|
|
|
54,000
|
|
|
|
351,320
|
|
David S. Utterberg
|
|
|
54,000
|
|
|
|
351,320
|
|
Craig W. Moore
|
|
|
72,791
|
|
|
|
421,974
|
|
Jonathan T. Silverstein
|
|
|
11,667
|
|
|
|
29,868
|
|
Earl R. Lewis
|
|
|
8,166
|
|
|
|
19,517
|
|
Peter P. Phildius
|
|
|
77,743
|
|
|
|
377,455
|
|
Compensation
Committee Interlocks and Insider Participation
The current members of the Compensation Committee are
Messrs. Lewis and Moore and Dr. Chambon. No member of
the Compensation Committee was at any time during fiscal 2008,
or formerly, an officer or employee of ours or any subsidiary of
ours. During 2008, Mr. Lewis was President and CEO of Flir
Systems, Inc. No member of the Compensation Committee had any
relationship with us requiring disclosure under Item 404 of
Regulation S-K
under the Exchange Act.
No executive officer of NxStage has served as a director or
member of the compensation committee (or other committee serving
an equivalent function) of any other entity, one of whose
executive officers served as a director of or member of our
Compensation Committee.
40
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO OUR 2005 STOCK INCENTIVE
PLAN,
Our Board of Directors has adopted, subject to approval by
stockholders, an amendment to the 2005 Stock Incentive Plan, or
2005 Plan to, among other things, increase by 4,100,000 the
number of shares available for award under the 2005 Plan. The
Board believes this amendment is in the best interests of
NxStage and the best interests of our stockholders and
recommends a vote FOR this proposal.
At the annual meeting and any adjournment thereof, our
stockholders will be asked to consider and vote upon a proposal
to increase by 4,100,000 (the Fungible Pool) the
number of shares of our common stock available for issuance
under the 2005 Plan. Any shares subject to an award from the
Fungible Pool which for any reason expires or terminates
unexercised or is not earned in full shall be added back to the
Fungible Pool and may again be made subject to an award under
the 2005 Plan. The following shares shall not be added back to
the Fungible Pool and shall not again be made available for
issuance as awards under the 2005 Plan: (i) shares not
issued or delivered as a result of the net settlement of an
outstanding Stock Appreciation Right (SAR),
(ii) shares used to pay the exercise price or withholding
taxes related to an outstanding award, or (iii) shares
repurchased on the open market with the exercise price proceeds
received by our Company upon the exercise of an award.
In addition, the amendment provides that each share issued or to
be issued from the Fungible Pool in connection with any award
other than a stock option or SAR shall be counted against the
Fungible Pool as 1.23 shares. Each share to be issued from
the Fungible Pool in connection with any stock option or SAR
shall be counted against the Fungible Pool as one
(1) share. For these purposes, the number of shares taken
into account with respect to a SAR shall be the number of shares
underlying the SAR at grant, and not the final number of shares
delivered upon exercise of the SAR. For example, if we grant
100 shares of restricted stock from the Fungible Pool, we
would reduce the number of shares available in the Fungible Pool
under the 2005 Plan by 123 shares. Any shares previously
the subject of an award from the Fungible Pool that again become
available for grant shall be added back to the Fungible Pool in
the same proportion, and using the same multiplier, pursuant to
which such awards reduced the shares in the Fungible Pool. The
Administrator shall determine the appropriate methodology for
calculating the number of shares issued pursuant to the 2005
Plan.
Reasons
for the Proposal
The Board believes that approval of this Amendment is in our
best interest and the best interest of our stockholders, as
equity awards granted under the plan will help to attract,
motivate and retain talented employees, align employee and
stockholder interests and link employee compensation with
company performance. We believe the 2005 Plan furthers these
objectives. As previously approved by our stockholders, the
maximum number of shares of common stock that may be issued
under the 2005 Plan is 7,401,457. At April 6, 2009, there
were 99,521 shares remaining available for future grant
under the 2005 Plan. Accordingly, on April 24, 2009, our
Board adopted, subject to stockholder approval, an amendment to
the 2005 Plan that increased from 7,401,457 to 11,501,457 the
number of shares of common stock available for issuance under
our 2005 Plan, subject to adjustment in the event of stock
splits and similar events.
Outstanding
Stock Option and Restricted Stock Data
As of December 31, 2008, stock options to purchase
5,437,097 shares of our common stock were outstanding. The
weighted average option grant price for these options was $8.38
and the weighted average contractual life was 5.1 years. In
addition, we had 21,777 shares of unvested restricted stock.
41
The weighted-average fair value of stock options granted during
the twelve months ended December 31, 2008 was $2.85. The
fair value of stock options at date of grant was estimated using
the Black-Scholes option-pricing model with the following
assumptions:
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Twelve Months
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Ended
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December 31,
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2008
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Expected life
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4.75 years(1)
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Risk-free interest rate
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2.40-3.70%(2)
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Expected stock price volatility
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67%(3)
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Expected dividend yield
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(1) |
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The expected term was determined using the simplified method as
defined in SAB 107. |
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(2) |
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The risk-free interest rate for each grant is equal to the U.S.
Treasury rate in effect at the time of grant for instruments
with an expected life similar to the expected option term. |
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(3) |
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Because we have no options that are traded publicly and because
of its limited trading history as a public company, the stock
volatility assumption is based on an analysis of our historical
volatility and the volatility of the common stock of comparable
companies in the medical device and technology field. |
Purpose
of the 2005 Plan
The purpose of the Plan is to encourage ownership in our company
by our employees and directors whose long-term employment by or
involvement with our company is considered essential to our
continued progress and, thereby, aligning the interests of the
award recipients and stockholders and permitting the award
recipients to share in our success. The 2005 Plan provides an
essential component of the total compensation package offered to
our key employees. It reflects the importance placed by us on
motivating employees to achieve superior results over the long
term and paying employees based on that kind of achievement. We
strongly believes that our equity compensation programs and
emphasis on employee stock ownership have been integral to our
progress and that a continuation of those programs and that
emphasis is necessary for us to achieve superior performance in
the future.
Summary
of the 2005 Plan, as amended
The following is a brief summary of the material terms of the
2005 Plan, as proposed to be amended.
Types of Awards. The 2005 Plan provides for
the grant of incentive stock options intended to qualify under
Section 422 of the Internal Revenue Code of 1986, as
amended, or the Code, non-statutory stock options, stock
appreciation rights, restricted stock, restricted stock units
and other stock-based awards as described below, collectively
referred to as awards.
Incentive Stock Options and Nonstatutory Stock
Options. Optionees receive the right to purchase
a specified number of shares of common stock at a specified
option price and subject to such other terms and conditions as
are specified in connection with the option grant. Options may
be granted at an exercise price equal to or greater than the
fair market value of the common stock on the date of grant.
Under present law, incentive stock options and options intended
to qualify as performance-based compensation under
Section 162(m) of the Code may not be granted at an
exercise price less than 100% of the fair market value of our
common stock on the date of grant (or less than 110% of the fair
market value in the case of incentive stock options granted to
optionees holding more than 10% of the voting power of NxStage).
Options may not be granted for a term in excess of ten years.
The 2005 Plan permits the following forms of payment of the
exercise price of options: (i) payment by cash, check or
through a broker providing for such method of payment,
(ii) subject to certain conditions, delivery to us of
shares of our common stock, (iii) delivery to us of a
promissory note on terms determined by our Board of Directors,
(iv) any other lawful means, or (v) any combination of
these forms of payment.
42
Stock Appreciation Rights. A stock
appreciation right, or SAR, is an award entitling the holder,
upon exercise, to receive an amount in our common stock
determined by reference to appreciation, from and after the date
of grant, in the fair market value of a share of common stock.
SARs may not be granted at an exercise price less than 100% of
the fair market value of our common stock on the date of grant
and may be granted independently or in tandem with an option.
Restricted Stock Awards; Restricted Stock
Units. Restricted stock awards entitle recipients
to acquire shares of our common stock, subject to our right to
repurchase all or part of such shares from the recipient in the
event that the conditions specified in the applicable award are
not satisfied prior to the end of the applicable restriction
period established for such award. Restricted stock units
entitle recipients to receive shares of common stock to be
delivered at the time such shares of common stock vest. The 2005
Plan, as proposed to be amended, provides that each share issued
under a restricted stock or restricted stock unit award after
the effective date of the amended 2005 plan will reduce the
number of total shares available under the Fungible Pool for
issuance under the amended 2005 plan by 1.23 shares.
Other Stock-Based Awards. Under the 2005 Plan,
our Board of Directors has the right to grant other awards based
upon our common stock having such terms and conditions as the
Board may determine, including the grant of shares based upon
certain conditions, the grant of awards that are valued in whole
or in part by reference to, or otherwise based on, shares of
common stock, and the grant of awards entitling recipients to
receive shares of common stock to be delivered in the future.
Transferability of Awards. Except as our Board
of Directors may otherwise determine or provide in an award,
awards may not be sold, assigned, transferred, pledged or
otherwise encumbered by the person to whom they are granted,
either voluntarily or by operation of law, except by will or the
laws of descent and distribution or, other than in the case of
an incentive stock option, pursuant to a qualified domestic
relations order. During the life of the participant, awards are
exercisable only by the participant.
Eligibility to Receive Awards. Our employees,
officers, directors, consultants and advisors are eligible to be
granted awards under the 2005 Plan. Under present law, however,
incentive stock options may only be granted to our employees.
The maximum number of shares with respect to which awards may be
granted to any participant under the 2005 Plan may not exceed
1,000,000 shares per calendar year. For the purpose of each
share of common stock to be issued in connection with any award
from the Fungible Pool other than a stock option or SAR, such
award will be counted against this per-participant maximum as
1.23 shares of common stock.
Plan Benefits. As of April 6, 2009, a
total of 267 persons were participants in the 2005 Plan,
including our five named executive officers and seven
non-employee directors.
The following table sets forth, as of April 6, 2009, the
stock option and restricted stock grants made under the 2005
Plan since its adoption.
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No. of Options /
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Shares Granted
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Executive Officers:
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Jeffrey H. Burbank
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679,240
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Robert S. Brown
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383,000
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Winifred L. Swan
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244,560
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Joseph E. Turk, Jr.
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249,936
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Michael J. Webb
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207,280
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All Executive Officers as a Group
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2,182,016
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All Directors who are not Executive Officers as a Group
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292,833
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Each Associate of any of such Directors or Executive Officers
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Each Other Person who Received or is to Receive 5% of Awards
under the 2005 Plan
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All Employees who are not Executive Officers, as a Group(1)
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1,126,572
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(1) |
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This number excludes stock options that expired prior to being
exercised. |
Administration. The 2005 Plan is administered
by our Board of Directors. The Board has the authority to adopt,
amend and repeal the administrative rules, guidelines and
practices relating to the 2005 Plan and to interpret the
provisions of the 2005 Plan. Pursuant to the terms of the 2005
Plan, the Board may delegate authority under the 2005 Plan to
one or more committees or subcommittees of the Board.
Subject to any applicable limitations contained in the 2005
Plan, the Board of Directors, the compensation committee, or any
other committee to whom the Board of Directors delegates
authority, as the case may be, selects the recipients of awards
and determines (1) the number of shares of common stock
covered by options and the dates upon which such options become
exercisable, (2) the exercise price of options,
(3) the duration of options (which may not exceed
10 years), and (4) the number of shares of common
stock subject to any SAR, restricted stock award, restricted
stock unit award or other stock-based awards and the terms and
conditions of such awards, including conditions for repurchase,
issue price and repurchase price.
We will be required to make appropriate adjustments in
connection with the 2005 Plan and any outstanding awards to
reflect stock splits, stock dividends, recapitalizations,
spin-offs and other similar changes in capitalization.
The 2005 Plan also contains provisions addressing the
consequences of any Reorganization Event, which is
defined as (a) any merger or consolidation of NxStage with
or into another entity as a result of which all of our common
stock converted into or exchanged for the right to receive cash,
securities or other property, or is cancelled or (b) any
exchange of all of our common stock for cash, securities or
other property pursuant to a share exchange transaction or
(c) any liquidation or dissolution of NxStage. Upon the
occurrence of a reorganization event, all outstanding options
and restricted stock will be assumed or equivalent options or
restricted stock substituted by the successor corporation. Our
repurchase and other rights with respect to shares of restricted
stock will inure to the benefit of our successor and will apply
equally to the cash, securities or other property into which our
common stock is then converted. If there is a change in control
event (as defined in the 2005 Plan), regardless of whether such
event also constitutes a reorganization event, 50% of the shares
that underlie each option outstanding under the 2005 Plan and
that are unvested as of the date of the reorganization event
will become immediately exercisable. In addition, 50% of the
shares of restricted stock outstanding under any award will
become immediately free of all restrictions and conditions. If a
reorganization event or change in control event occurs and
within one year of the reorganization event or change in control
event an option holders employment with us or our
succeeding corporation is terminated by such holder for good
reason (as defined in the 2005 Plan) or is terminated by us or
the succeeding corporation without cause (as defined in the 2005
Plan), each option held by the holder will become immediately
exercisable for the remaining 50% of the shares that had been
unvested as of the date of the change of control event. In the
case of restricted stock, in the case of a change in control
event, the remaining 50% of such holders restricted stock
that had been unvested as of the date of the change of control
event will become immediately free of all restrictions and
conditions. Notwithstanding the foregoing, if the acquiring or
succeeding corporation in a reorganization event does not agree
to assume or substitute for outstanding options, our Board of
Directors will provide that all unexercised options will become
exercisable in full prior to the reorganization event and the
options, if unexercised, will terminate on the date the
reorganization event takes place. If under the terms of the
reorganization event holders of our common stock receive cash
for their shares, our Board may instead provide for a cash-out
of the value of any outstanding options less the applicable
exercise price.
Our Board of Directors or the compensation committee may at any
time provide that any award will become immediately exercisable
in full or in part, free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the
case may be.
If any award expires or is terminated, surrendered, canceled
without having been fully exercised, or forfeited in whole or in
part, the unused shares of our common stock covered by such
award will again be available for grant under the 2005 Plan, as
proposed to be amended, in proportion to the number of shares by
44
which the total shares available for issuance was originally
reduced at the time of grant or issuance, subject, however, in
the case of incentive stock options, to any limitations under
the Code.
Substitute Options. In connection with a
merger or consolidation of an entity with NxStage or the
acquisition by us of property or stock of an entity, our Board
of Directors may grant options in substitution for any options
or other stock or stock-based awards granted by such entity or
an affiliate thereof. Substitute options may be granted on such
terms, as the Board deems appropriate in the circumstances,
notwithstanding any limitations on options contained in the 2005
Plan.
Amendment or Termination. No award may be made
under the 2005 Plan after September 6, 2015 but awards
previously granted may extend beyond that date. The Board of
Directors may at any time amend, suspend or terminate the 2005
Plan; provided that, no amendment requiring stockholder approval
under any applicable legal, regulatory or listing requirement
will become effective until such stockholder approval is
obtained.
Federal Income Tax Consequences of the 2005
Plan. The following generally summarizes the
U.S. federal income tax consequences that generally will
arise with respect to awards granted under the 2005 Plan. This
summary is based on the federal tax laws in effect as of the
date of this proxy statement. This summary assumes that all
awards are exempt from, or comply with, the rules under
Section 409A of the Internal Revenue Code, as amended, or
the Code, relating to nonqualified deferred compensation.
Changes to these laws could alter the tax consequences described
below.
Incentive Stock Options. A participant will
not have income upon the grant of an incentive stock option.
Also, except as described below, a participant will not have
income upon exercise of an incentive stock option if the
participant has been employed by us or a 50% or more owned
corporate subsidiary at all times beginning with the option
grant date and ending three months before the date the
participant exercises the option. If the participant has not
been so employed during that time, then the participant will be
taxed as described below under Nonstatutory Stock
Options. The exercise of an incentive stock option may
subject the participant to the alternative minimum tax.
A participant will have income upon the sale of the stock
acquired under an incentive stock option at a profit (if sales
proceeds exceed the exercise price). The type of income will
depend on when the participant sells the stock. If a participant
sells the stock more than two years after the option was granted
and more than one year after the option was exercised, then all
of the profit will be long-term capital gain. If a participant
sells the stock prior to satisfying these waiting periods, then
the participant will have engaged in a disqualifying disposition
and a portion of the profit will be ordinary income and a
portion may be capital gain. This capital gain will be long-term
if the participant has held the stock for more than one year and
otherwise will be short-term. If a participant sells the stock
at a loss, meaning sales proceeds are less than the exercise
price, then the loss will be a capital loss. This capital loss
will be long-term if the participant held the stock for more
than one year and otherwise will be short-term.
Nonstatutory Stock Options. A participant will
not have income upon the grant of a nonstatutory stock option. A
participant will have compensation income upon the exercise of a
nonstatutory stock option equal to the value of the stock on the
day the participant exercised the option less the exercise
price. Upon sale of the stock, the participant will have capital
gain or loss equal to the difference between the sales proceeds
and the value of the stock on the day the option was exercised.
This capital gain or loss will be long-term if the participant
has held the stock for more than one year and otherwise will be
short-term.
Stock Appreciation Rights. A participant will
not have income upon the grant of a SAR. A participant generally
will recognize compensation income upon the exercise of a SAR
equal to the amount of the cash and fair market value of any
stock received. Upon the sale of the stock, the participant will
have capital gain or loss equal to the difference between the
sales proceeds and the value of the stock on the day the SAR was
exercised. This capital gain or loss will be long-term if the
participant held the stock for more than one year and otherwise
will be short-term.
Restricted Stock. A participant will not have
income upon the grant of restricted stock unless an election
under Section 83(b) of the Code is made within 30 days
of the date of grant. If a timely 83(b) election is
45
made, then a participant will have compensation income equal to
the value of the stock less the purchase price, if any. When the
stock is sold, the participant will have capital gain or loss
equal to the difference between the sales proceeds and the value
of the stock on the date of grant. If the participant does not
make an 83(b) election, then when the stock vests the
participant will have compensation income equal to the value of
the stock on the vesting date less the purchase price, if any.
When the stock is sold, the participant will have capital gain
or loss equal to the sales proceeds less the value of the stock
on the vesting date. Any capital gain or loss will be long-term
if the participant held the stock for more than one year and
otherwise will be short-term.
Other Stock-Based Awards. The tax consequences
associated with any other stock-based award granted under the
2005 plan will vary depending on the specific terms of such
award. Among the relevant factors are whether or not the award
has a readily ascertainable fair market value, whether or not
the award is subject to forfeiture provisions or restrictions on
transfer, the nature of the property to be received by the
participant under the award and the participants holding
period and tax basis for the award or underlying common stock.
Tax Consequences to NxStage. There will be no
tax consequences to us except that we will be entitled to a
deduction when a participant has compensation income. Any such
deduction will be subject to the limitations of
Section 162(m) of the Code.
PROPOSAL 3
AMENDMENT OF OUR 2005 EMPLOYEE STOCK PURCHASE PLAN
Our Board of Directors believes that the proposed increase in
the number of shares of our common stock available for issuance
under the 2005 Employee Stock Purchase Plan is in the best
interests of NxStage and the best interests of our stockholders
and recommends a vote FOR this proposal.
We are asking stockholders to approve an amendment to our 2005
Employee Stock Purchase Plan, or 2005 purchase plan, to increase
the number of shares of our common stock which may be issued
under the 2005 purchase plan by an additional
500,000 shares. Our Board of Directors approved this
amendment on December 16, 2008, subject to stockholder
approval. The 2005 purchase plan allows our employees to
purchase our common stock at a discount from market price twice
each year from us through one or more offerings. The 2005
purchase plan is intended to qualify as an employee stock
purchase plan under Section 423 of the Internal Revenue
Code of 1986. If the plan is qualified under Section 423,
our employees who participate in the plan may enjoy certain tax
advantages, as described below. Stockholder approval is required
for the plan to be qualified under Section 423. To approve
this amendment, stockholders holding a majority of the shares
present or represented at the annual meeting and voting on the
matter must vote FOR proposal 3.
Reasons
for the Proposal
We believe that the 2005 purchase plan is an important benefit
that helps us attract and retain employees, as well as to
encourage our employees participation in and commitment to
our business and financial success through ownership of our
stock. Employee participation in this plan has been strong, with
approximately thirty percent (30%) of all employees
participating in the 2005 purchase plan. We will not be able to
continue to offer shares under this plan unless the proposed
share increase is approved. As approved by our Compensation
Committee, we have granted options relating to the additional
share request prior to obtaining stockholder approval for the
increase to allow our employees to participate in an offering
for the period between April 1, 2009 through June 30,
2009. However, such options will not become exercisable unless
and until our stockholders approve the increase. In the event we
do not obtain stockholder approval prior to the end of such plan
period, these options will be cancelled and become null and
void. In such case, our Board or a committee appointed by our
Board will, on a pro rata basis, allot any shares then available
for issuance and cancel any remaining options.
Summary
of the 2005 Employee Stock Purchase Plan
The following is a summary of the material terms of our 2005
purchase plan.
46
Administration. The 2005 purchase plan is
administered by our Compensation Committee. Our Compensation
Committee interprets and construes all provisions of the 2005
purchase plan and any rules and regulations adopted for the
administration of the plan.
Offerings. We may make one or more offerings
to employees to purchase our common stock under the plan, as
determined by the Compensation Committee. Unless otherwise
specified by our Compensation Committee, offerings will begin
each January 1 and July 1, or the first business day
thereafter. Each offering commencement date will begin a
six-month plan period during which payroll
deductions will be made and held for the purchase of common
stock at the end of the plan period.
Eligibility. All employees of NxStage or any
NxStage subsidiary designated by the Compensation Committee are
eligible to participate in the 2005 purchase plan if:
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they are customarily employed by NxStage or a designated
subsidiary for more than 20 hours per week and for more
than three months in a calendar year;
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they have been employed by NxStage or a designated subsidiary
for at least three months prior to enrolling in the
plan; and
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they are employed by NxStage or a designated subsidiary on the
first day of the applicable plan period.
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An employee may not participate in the 2005 purchase plan if,
immediately after the grant, the employee would own stock,
and/or hold
outstanding options to purchase stock, equal to five percent
(5%) or more of the total combined voting power or value of all
classes of our stock. Non-employee directors are not eligible to
participate in this plan.
Approximately, 90 employees currently participate in the
2005 purchase plan. Since its inception, our Chief Executive
Officer, our current and former Chief Financial Officers and
each of our three other most highly compensated executive
officers, have not participated in the 2005 purchase plan.
Shares Available. 150,000 shares of
our common stock have previously been approved for issuance
under the 2005 purchase plan. During 2008, 85,691 shares
were issued pursuant to the plan and currently 39 shares of
common stock are available for issuance.
Deductions. An employee may authorize a
payroll deduction under the 2005 purchase plan equal in any
dollar amount up to a maximum of 10% of the compensation he or
she received during the applicable plan period. Payroll
deductions may be at the rate of 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%,
9% or 10% of compensation. Our Compensation Committee may
establish a minimum payroll deduction amount for any plan period.
Limitations. No employee may purchase in any
one calendar year under the 2005 purchase plan (and any other
employee stock purchase plan of ours) shares of our common stock
having an aggregate fair market value in excess of $25,000,
determined as of the first trading day of the plan period during
which such shares are purchased.
Purchase Price. On the commencement date of
each offering, we will grant each participant in the 2005
purchase plan an option to purchase on the last day of the plan
period the largest number of full shares of our common stock
that does not exceed the participants accumulated payroll
deductions as of the exercise date divided by the purchase price
for the plan period. Our Compensation Committee will determine
the purchase price for each plan period. The purchase price may
be based on the lesser of the closing price of our common stock
on (i) the first business day of the plan period or
(ii) the exercise date, or may be based solely on the
closing price of our common stock on the exercise date. In the
absence of a determination by our Compensation Committee, the
purchase price will be 95% of the closing price of our common
stock on the date of exercise. Historically, the exercise price
has been the lower of 95% of the closing price of our common
stock on (i) the first business day of the plan period, or
(ii) the exercise date.
Amendment. Our Compensation Committee may at
any time amend the 2005 purchase plan in any respect, except
that if the approval of our stockholders is required under
Section 423 of the Internal Revenue
47
Code, the amendment will not be effected without their approval,
and in no event may any amendment be made which would cause the
plan to fail to comply with Section 423 of the Internal
Revenue Code.
Adjustments for Changes in Capitalization and Reorganization
Events. Appropriate adjustments will be made to
the number of shares available under the 2005 purchase plan,
applicable purchase prices and applicable purchase limitations
in the event of a stock split, dividend or similar changes in
our capitalization. In the event of a merger, consolidation or
other reorganization event, our Compensation Committee is
authorized to take any one or more of the following actions as
to outstanding options under the 2005 purchase plan:
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provide that options will be assumed, or substantially
equivalent options will be substituted, by the acquiring or
succeeding corporation;
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provide that all outstanding options will be terminated as of
the effective date of the merger, consolidation or other
reorganization event, and that all such outstanding options will
become exercisable to the extent of accumulated payroll
deductions as of a date specified by the Compensation Committee;
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provide that all outstanding options will be cancelled as of a
date prior to the effective date of the merger, consolidation or
other reorganization event and that all accumulated payroll
deductions will be returned to participants on such
date; and
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upon the occurrence of certain reorganization events, provide
that participants will receive a cash payment equal to the
acquisition price times the number of shares of common stock
subject to the participants option minus the aggregate
option price of such option, in exchange for the termination of
such option.
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Federal
Income Tax Consequences
The following is a summary of the federal income tax
consequences that generally apply to U.S. employees who
participate in the 2005 purchase plan as well as the tax
consequences to us. This summary assumes that all awards are
exempt from, or comply with, Section 409A of the Code
relating to non-qualified deferred compensation. Changes to the
tax laws could alter the tax consequences described below.
Tax Consequences to the Employee. Generally,
U.S. employees will not have income when they enroll in the
2005 purchase plan or when they purchase shares of common stock
at the end of an offering. Employees may have both ordinary
compensation income and a capital gain or loss when they sell
stock acquired under the plan. The amount and type of income and
loss will depend on when the employee sells his or her shares.
If shares of stock are sold at a profit (the sales proceeds
exceed the purchase price) more than two years after the
commencement of the offering during which the employee purchased
the stock and more than one year after the date that the
employee purchased the stock, then the employee will have
compensation income equal to the lesser of:
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5% of the value of the stock on the commencement date; and
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the employees profit.
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Any excess profit will be long-term capital gain. If the
employee sells the stock at a loss after satisfying these
waiting periods, then the loss will be a long-term capital loss.
If the employee sells the stock prior to satisfying these
waiting periods, then the employee will have engaged in a
disqualifying disposition. Upon a disqualifying disposition, the
employee will have compensation income equal to the value of the
stock on the day he or she purchased the stock less the purchase
price. The employee also will have a capital gain or loss equal
to the difference between his or her sales proceeds and the
value of the stock on the day he or she purchased the stock.
This capital gain or loss will be long-term if the employee has
held the stock for more than one year and otherwise will be
short-term.
Withholding. The amount that an employee
elects to have deducted from his or her base pay for the
purchase of stock under the 2005 purchase plan constitutes
compensation income and is subject to withholding
48
for income, medicare and social security taxes, as applicable.
There is no withholding of income, medicare or social security
taxes upon the purchase of stock under the 2005 purchase plan or
upon the sale of stock acquired under the plan.
Tax Consequences to NxStage. There will be no
tax consequences to us except that we will be entitled to a
deduction when an employee has compensation income upon a
disqualifying disposition. Any such deduction will be subject to
the limitations of Section 162(m) of the Code.
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Board of Directors believes that the selection of
Ernst & Young LLP as our independent registered public
accounting firm is in the best interest of NxStage and our
stockholders and therefore recommends a vote FOR this
proposal.
Our Audit Committee has selected the firm of Ernst &
Young LLP as our independent registered public accounting firm
for the current fiscal year. Ernst & Young LLP has
served as our independent registered public accounting firm
since 2002. Although stockholder approval of the selection of
Ernst & Young LLP is not required by law, the Board of
Directors believes that it is advisable to give stockholders an
opportunity to ratify this selection. If this proposal is not
approved at our annual meeting, our Audit Committee will
reconsider its selection of Ernst & Young LLP.
Representatives of Ernst & Young LLP are expected to
be present at the annual meeting and will have the opportunity
to make a statement if they desire to do so and will also be
available to respond to appropriate questions from stockholders.
OTHER
MATTERS
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors,
executive officers and holders of more than 10% of our common
stock to file with the SEC initial reports of ownership and
reports of changes in ownership of common stock and other of our
equity securities. Based solely on our review of copies of
Section 16(a) reports furnished to us and representations
made to us, we believe that, except as otherwise set forth in
the following sentences, during 2008 our officers, directors and
holders of more than 10% of our common stock complied with all
Section 16(a) filing requirements. OrbiMed Advisors, LLC
failed to timely file a Form 4 in connection with Mr.
Silversteins receipt of an option to purchase
11,667 shares of our stock. Such option was granted to
Mr. Silverstein in his capacity as a director of NxStage.
Mr. Lewis failed to report on his Form 3 ownership of
25,000 shares of our stock he acquired on the open market.
Delivery
of Security Holder Documents
Some banks, brokers and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
our proxy statement and Annual Report to Stockholders may have
been sent to multiple stockholders in your household. We will
promptly deliver a separate copy of these documents to you if
you call or write us at the following address: 439 South Union
Street, 5th Floor, Lawrence, Massachusetts 01843, Attention:
Investor Relations, or
978-687-4700.
If you want to receive separate copies of the Notice of Internet
Availability of Proxy Materials, proxy statement or Annual
Report to Stockholders in the future, or if you are receiving
multiple copies and would like to receive only one copy for your
household, you should contact your bank, broker or other nominee
record holder, or you may contact us at the above address.
Stockholder
Proposals for the 2010 Annual Meeting
Proposals of stockholders intended to be presented at the 2010
Annual Meeting of Stockholders must be received by us at our
principal office in Lawrence, Massachusetts not later than
December 30, 2009 for inclusion in the proxy statement for
that meeting.
49
In addition, our bylaws require that we be given advance notice
of stockholder nominations for election to our Board of
Directors and of other matters which stockholders wish to
present for action at an annual meeting of stockholders, other
than matters included in our proxy statement in accordance with
Rule 14a-8.
The required notice must be in writing and received by our
Corporate Secretary, Winifred L. Swan, at our principal offices
not later than 90 days nor more than 120 days prior to
the first anniversary of our 2009 Annual Meeting of
Stockholders. However, if the 2010 Annual Meeting of
Stockholders is advanced by more than 20 days, or delayed
by more than 60 days, from the first anniversary of the
2009 Annual Meeting of Stockholders, notice must be received not
earlier than the 120th day prior to such annual meeting and
not later than the close of business on the later of
(1) the 90th day prior to such annual meeting and
(2) the 10th day following the date on which notice of
the date of such annual meeting was mailed or public disclosure
of the date of such annual meeting was made, whichever occurs
first. Our bylaws also specify requirements relating to the
content of the notice which stockholders must provide, including
a stockholder nomination for election to the Board of Directors,
to be properly presented at the 2009 Annual Meeting of
Stockholders.
By Order of the Board of Directors,
WINIFRED L. SWAN
Secretary
April 29, 2009
OUR BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL GREATLY FACILITATE
ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED.
50
Appendix A
NxSTAGE
MEDICAL, INC.
2005
STOCK INCENTIVE PLAN, AS AMENDED
The purpose of this 2005 Stock Incentive Plan (the
Plan) of NxStage Medical, Inc., a Delaware
corporation (the Company), is to advance the
interests of the Companys stockholders by enhancing the
Companys ability to attract, retain and motivate persons
who are expected to make important contributions to the Company
and by providing such persons with equity ownership
opportunities and performance-based incentives that are intended
to align their interests with those of the Companys
stockholders. Except where the context otherwise requires, the
term Company shall include any of the Companys
present or future parent or subsidiary corporations as defined
in Sections 424(e) or (f) of the Internal Revenue Code
of 1986, as amended, and any regulations promulgated thereunder
(the Code) and any other business venture
(including, without limitation, joint venture or limited
liability company) in which the Company has a controlling
interest, as determined by the Board of Directors of the Company
(the Board).
All of the Companys employees, officers, directors,
consultants and advisors are eligible to receive options, stock
appreciation rights, restricted stock, restricted stock units
and other stock-based awards (each, an Award) under
the Plan. Each person who receives an Award under the Plan is
deemed a Participant.
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3.
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Administration
and Delegation
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(a) Administration by Board of
Directors. The Plan will be administered by the
Board. The Board shall have authority to grant Awards and to
adopt, amend and repeal such administrative rules, guidelines
and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the
manner and to the extent it shall deem expedient to carry the
Plan into effect and it shall be the sole and final judge of
such expediency. All decisions by the Board shall be made in the
Boards sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in
any Award. No director or person acting pursuant to the
authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good
faith.
(b) Appointment of Committees. To the
extent permitted by applicable law, the Board may delegate any
or all of its powers under the Plan to one or more committees or
subcommittees of the Board (a Committee). All
references in the Plan to the Board shall mean the
Board or a Committee of the Board to the extent that the
Boards powers or authority under the Plan have been
delegated to such Committee.
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4.
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Stock
Available for Awards
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(a) Number of Shares. Subject to
adjustment under Section 9, Awards may be made under the
Plan for up to an aggregate of 11,501,457 shares of common
stock, $0.001 par value per share, of the Company (the
Common Stock); provided, however, that of the
3,800,000 shares of Common Stock added to the Plan as of
October 1, 2007, the maximum number of shares with respect
to which Restricted Stock, Restricted Stock Units and Other
Stock-Based Awards may be granted shall be 1,500,000.
Additionally, this 1,500,000 share limit does not apply to
Restricted Stock, Restricted Stock Unit and Other Stock-Based
Awards made from the 4,100,000 shares added to the Plan as
of the Stockholder Approval Date (as defined below) (the
Fungible Pool). For purposes of counting the number
of shares available for the grant of Awards under the Plan and
under the sublimits contained in Section 4(a) and 4(b),
(i) all shares of Common Stock covered by independent SARs
shall be counted against the number of shares available for the
grant of Awards; provided, however, that independent SARs that
may be settled in cash only shall not be so counted;
(ii) if any Award (A) expires or is terminated,
surrendered or canceled without having been fully exercised or
is forfeited in whole or in part
A-1
(including as the result of shares of Common Stock subject to
such Award being repurchased by the Company at the original
issuance price pursuant to a contractual repurchase right) or
(B) results in any Common Stock not being issued (including
as a result of an independent SAR that was settleable either in
cash or in stock actually being settled in cash), the unused
Common Stock covered by such Award shall again be available for
the grant of Awards; provided, however, in the case of Incentive
Stock Options (as hereinafter defined), the foregoing shall be
subject to any limitations under the Code; and provided further,
in the case of independent SARs, that the full number of shares
subject to any stock-settled SAR shall be counted against the
shares available under the Plan and against the sublimits listed
in the first clause of this Section regardless of the number of
shares actually used to settle such SAR upon exercise;
(iii) shares of Common Stock tendered to the Company by a
Participant to (A) purchase shares of Common Stock upon the
exercise of an Award or (B) satisfy tax withholding
obligations (including shares retained from the Award creating
the tax obligation) shall not be added back to the number of
shares available for the future grant of Awards; and
(iv) shares of Common Stock repurchased by the Company on
the open market using the proceeds from the exercise of an Award
shall not increase the number of shares available for future
grant of Awards. For Awards issued from the Fungible Pool only,
the following provisions apply in addition to those listed above
in this Section 4(a): (i) each share of Common Stock
issued or to be issued in connection with any Award other than a
Stock Option or SAR shall be counted against the Fungible Pool
as 1.23 shares of Common Stock; (ii) each share of
Common Stock to be issued in connection with any Stock Option or
SAR shall be counted against the Fungible Pool as one share (for
SAR awards under the Fungible Pool, the number counted against
the Fungible Pool shall be the number of shares underlying the
SAR on the date of grant, and not the final number of shares
delivered upon exercise of the SAR); and (iii) shares not
issued or delivered as a result of the net settlement of an
outstanding SAR will not be added back to the Fungible Pool and
shall not again be made available for issuance as Awards under
the Plan.
(b) Per-Participant Limit. Subject to
adjustment under Section 9, for Awards granted after the
Common Stock is registered under the Securities Exchange Act of
1934 (the Exchange Act), the maximum number of
shares of Common Stock with respect to which Awards may be
granted to any Participant under the Plan shall be 1,000,000 per
calendar year. For purposes of the foregoing limit, the
combination of an Option in tandem with an SAR (as each is
hereafter defined) shall be treated as a single Award. For the
purposes of each share of Common Stock to be issued in
connection with any Award from the Fungible Pool other than a
Stock Option or SAR, such Award shall be counted against this
per-Participant limit as 1.23 shares of Common Stock. The
per-Participant limit described in this Section 4(b) shall
be construed and applied consistently with Section 162(m)
of the Code or any successor provision thereto, and the
regulations thereunder (Section 162(m)).
(a) General. The Board may grant options
to purchase Common Stock (each, an Option) and
determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the
conditions and limitations applicable to the exercise of each
Option, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
An Option which is not intended to be an Incentive Stock Option
(as hereinafter defined) shall be designated a
Nonstatutory Stock Option.
(b) Incentive Stock Options. An Option
that the Board intends to be an incentive stock
option as defined in Section 422 of the Code (an
Incentive Stock Option) shall only be granted to
employees of NxStage, any of NxStages present or future
parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Code, and any other
entities the employees of which are eligible to receive
Incentive Stock Options under the Code, and shall be subject to
and shall be construed consistently with the requirements of
Section 422 of the Code. The Company shall have no
liability to a Participant, or any other party, if an Option (or
any part thereof) that is intended to be an Incentive Stock
Option is not an Incentive Stock Option or for any action taken
by the Board pursuant to Section 10(f), including without
limitation the conversion of an Incentive Stock Option to a
Nonstatutory Stock Option.
A-2
(c) Exercise Price. The Board shall
establish the exercise price of each Option and specify the
exercise price in the applicable option agreement. The exercise
price shall be not less than 100% of the Fair Market Value (as
defined below) on the date the Option is granted; provided that
if the Board approves the grant of an Option with an exercise
price to be determined on a future date, the exercise price
shall be not less than 100% of the Fair Market Value on such
future date. The Fair Market Value of a share of
Common Stock for purposes of the Plan will be determined as
follows: (i) if the Common Stock trades on a national
securities exchange, the closing sale price (for the primary
trading session) on the date of grant; or (ii) if the
Common Stock does not trade on any such exchange, the average of
the closing bid and asked prices as reported by an authorized
OTCBB market data vendor as listed on the OTCBB website
(otcbb.com) on the date of grant; or (iii) if the Common
Stock is not publicly traded, the Board will determine the Fair
Market Value for purposes of the Plan using any measure of value
it determines to be appropriate (including, as it considers
appropriate, relying on appraisals) in a manner consistent with
the valuation principles under Code Section 409A, except as
the Board or Committee may expressly determine otherwise.
(d) Duration of Options. Each Option
shall be exercisable at such times and subject to such terms and
conditions as the Board may specify in the applicable option
agreement; provided, however, that no Option will be granted
with a term in excess of 10 years.
(e) Exercise of Option. Options may be
exercised by delivery to the Company of a written notice of
exercise signed by the proper person or by any other form of
notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f)
for the number of shares for which the Option is exercised.
Shares of Common Stock subject to the Option will be delivered
by the Company following exercise either as soon as practicable
or, subject to such conditions as the Board shall specify, on a
deferred basis (with the Companys obligation to be
evidenced by an instrument providing for future delivery of the
deferred shares at the time or times specified by the Board).
(1) After giving effect to the proposed reverse stock split
of the Companys Common Stock in anticipation of the
initial public offering.
(f) Payment Upon Exercise. Common Stock
purchased upon the exercise of an Option granted under the Plan
shall be paid for as follows:
(1) in cash or by check, payable to the order of the
Company;
(2) except as the Board may otherwise provide in an option
agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver
promptly to the Company sufficient funds to pay the exercise
price and any required tax withholding or (ii) delivery by
the Participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the
exercise price and any required tax withholding;
(3) when the Common Stock is registered under the Exchange
Act, by delivery of shares of Common Stock owned by the
Participant valued at their fair market value as determined by
(or in a manner approved by) the Board (Fair Market
Value), provided (i) such method of payment is then
permitted under applicable law, (ii) such Common Stock, if
acquired directly from the Company, was owned by the Participant
for such minimum period of time, if any, as may be established
by the Board in its discretion and (iii) such Common Stock
is not subject to any repurchase, forfeiture, unfulfilled
vesting or other similar requirements;
(4) to the extent permitted by applicable law and by the
Board, by (i) delivery of a promissory note of the
Participant to the Company on terms determined by the Board, or
(ii) payment of such other lawful consideration as the
Board may determine; or
(5) by any combination of the above permitted forms of
payment.
(g) Substitute Options. In connection
with a merger or consolidation of an entity with the Company or
the acquisition by the Company of property or stock of an
entity, the Board may grant Options in substitution for any
options or other stock or stock-based awards granted by such
entity or an affiliate thereof. Substitute Options may be
granted on such terms as the Board deems appropriate in the
circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in
Section 2. Substitute Options
A-3
shall not count against the overall share limit set forth in
Section 4(a), except as may be required by reason of
Section 422 and related provisions of the Code.
(h) Limitation on Repricing. Unless such
action is approved by the Companys stockholders:
(1) no outstanding Option granted under the Plan may be
amended to provide an exercise price per share that is lower
than the then-current exercise price per share of such
outstanding Option (other than adjustments pursuant to
Section 9) and (2) the Board may not cancel or
repurchase for cash any outstanding option (whether or not
granted under the Plan) and grant in substitution therefor new
Awards under the Plan covering the same or a different number of
shares of Common Stock and having an exercise price per share
lower than the then-current exercise price per share of the
cancelled option.
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6.
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Stock
Appreciation Rights
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(a) General. A Stock Appreciation Right,
or SAR, is an Award entitling the holder, upon exercise, to
receive an amount of Common Stock determined by reference to
appreciation, from and after the date of grant, in the fair
market value of a share of Common Stock. The date as of which
such appreciation or other measure is determined shall be the
exercise date.
(b) Grants. Stock Appreciation Rights may
be granted in tandem with, or independently of, Options granted
under the Plan.
(1) Rules Applicable to Tandem
Awards. When Stock Appreciation Rights are
expressly granted in tandem with Options, (i) the Stock
Appreciation Right will be exercisable only at such time or
times, and to the extent, that the related Option is exercisable
(except to the extent designated by the Board in connection with
a Reorganization Event or a Change in Control Event) and will be
exercisable in accordance with the procedure required for
exercise of the related Option; (ii) the Stock Appreciation
Right will terminate and no longer be exercisable upon the
termination or exercise of the related Option, except to the
extent designated by the Board in connection with a
Reorganization Event or a Change in Control Event and except
that a Stock Appreciation Right granted with respect to less
than the full number of shares covered by an Option will not be
reduced until the number of shares as to which the related
Option has been exercised or has terminated exceeds the number
of shares not covered by the Stock Appreciation Right;
(iii) the Option will terminate and no longer be
exercisable upon the exercise of the related Stock Appreciation
Right; and (iv) the Stock Appreciation Right will be
transferable only with the related Option.
(2) Exercise of Independent SARs. A Stock
Appreciation Right not expressly granted in tandem with an
Option will become exercisable at such time or times, and on
such conditions, as the Board may specify in the SAR Award.
(c) Exercise. Stock Appreciation Rights
may be exercised by delivery to the Company of a written notice
of exercise signed by the proper person or by any other form of
notice (including electronic notice) approved by the Board,
together with any other documents required by the Board.
(d) Exercise Price. The Board shall
establish the exercise price of each SAR and specify the
exercise price in the applicable SAR agreement. The exercise
price shall not be less than 100% of the Fair Market Value of
our common stock on the date the SAR is granted; provided that
if the Board approves the grant of a SAR with an exercise price
to be determined on a future date, the exercise price shall be
not less than 100% of the Fair Market Value of our common stock
on such future date.
(e) Limitation on Repricing. Unless such
action is approved by the Companys stockholders:
(1) no outstanding SAR granted under the Plan may be
amended to provide a exercise price per share that is lower than
the then-current exercise price per share of such outstanding
SAR (other than adjustments pursuant to Section 9) and
(2) the Board may not cancel any outstanding SAR (whether
or not granted under the Plan) and grant in substitution
therefor new Awards under the Plan covering the same or a
different number of shares of Common Stock and having a exercise
price per share lower than the then-current exercise price per
share of the cancelled SAR.
A-4
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7.
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Restricted
Stock; Restricted Stock Units
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(a) General. The Board may grant Awards
entitling recipients to acquire shares of Common Stock
(Restricted Stock), subject to the right of the
Company to repurchase all or part of such shares at their issue
price or other stated or formula price (or to require forfeiture
of such shares if issued at no cost) from the recipient in the
event that conditions specified by the Board in the applicable
Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such
Award. Instead of granting Awards for Restricted Stock, the
Board may grant Awards entitling the recipient to receive shares
of Common Stock to be delivered at the time such shares of
Common Stock vest (Restricted Stock Units)
(Restricted Stock and Restricted Stock Units are each referred
to herein as a Restricted Stock Award).
(b) Terms and Conditions. The Board shall
determine the terms and conditions of a Restricted Stock Award,
including the conditions for repurchase (or forfeiture) and the
issue price, if any.
(c) Stock Certificates. Any stock
certificates issued in respect of a Restricted Stock Award shall
be registered in the name of the Participant and, unless
otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company
(or its designee). At the expiration of the applicable
restriction periods, the Company (or such designee) shall
deliver the certificates no longer subject to such restrictions
to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by
a Participant to receive amounts due or exercise rights of the
Participant in the event of the Participants death (the
Designated Beneficiary). In the absence of an
effective designation by a Participant, Designated
Beneficiary shall mean the Participants estate.
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8.
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Other
Stock-Based Awards
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Other Awards of shares of Common Stock, and other Awards that
are valued in whole or in part by reference to, or are otherwise
based on, shares of Common Stock or other property, may be
granted hereunder to Participants (Other Stock Unit
Awards), including without limitation Awards entitling
recipients to receive shares of Common Stock to be delivered in
the future. Such Other Stock Unit Awards shall also be available
as a form of payment in the settlement of other Awards granted
under the Plan or as payment in lieu of compensation to which a
Participant is otherwise entitled. Other Stock Unit Awards may
be paid in shares of Common Stock or cash, as the Board shall
determine. Subject to the provisions of the Plan, the Board
shall determine the conditions of each Other Stock Unit Award,
including any purchase price applicable thereto.
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9.
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Adjustments
for Changes in Common Stock and Certain Other Events
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(a) Changes in Capitalization. In the
event of any stock split, reverse stock split, stock dividend,
recapitalization, combination of shares, reclassification of
shares, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than
an ordinary cash dividend, (i) the number and class of
securities available under this Plan, (ii) the
per-Participant limit set forth in Section 4(b),
(iii) the number and class of securities and exercise price
per share of each outstanding Option, (iv) the share- and
per-share provisions of each Stock Appreciation Right,
(v) the repurchase price per share subject to each
outstanding Restricted Stock Award, and (vi) the share- and
per-share-related provisions of each outstanding Other Stock
Unit Award, shall be appropriately adjusted by the Company (or
substituted Awards may be made, if applicable) to the extent
determined by the Board.
(b) Reorganization and Change in Control Events
(1) Definitions
(a) A Reorganization Event shall mean:
(i) any merger or consolidation of the Company with or into
another entity as a result of which all of the Common Stock of
the Company is converted into or exchanged for the right to
receive cash, securities or other property or is cancelled;
(ii) any exchange of all of the Common Stock of the Company
for cash, securities or other property pursuant to a share
exchange transaction; or
(iii) any liquidation or dissolution of the Company.
A-5
(b) A Change in Control Event shall mean:
(i) the acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a Person) of beneficial ownership of
any capital stock of the Company if, after such acquisition,
such Person beneficially owns (within the meaning of
Rule 13d-3
promulgated under the Exchange Act) 50% or more of either
(x) the then-outstanding shares of common stock of the
Company (the Outstanding Company Common Stock) or
(y) the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the
election of directors (the Outstanding Company Voting
Securities); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute
a Change in Control Event: (A) any acquisition directly
from the Company or (B) any acquisition by any corporation
pursuant to a Business Combination (as defined below) which
complies with clauses (x) and (y) of
subsection (iii) of this definition; or
(ii) such time as the Continuing Directors (as defined
below) do not constitute a majority of the Board (or, if
applicable, the Board of Directors of a successor corporation to
the Company), where the term Continuing Director
means at any date a member of the Board (x) who was a
member of the Board on the date of the initial adoption of this
Plan by the Board or (y) who was nominated or elected
subsequent to such date by at least a majority of the directors
who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or
endorsed by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election;
provided, however, that there shall be excluded from this
clause (y) any individual whose initial assumption of
office occurred as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents,
by or on behalf of a person other than the Board; or
iii) the consummation of a merger, consolidation,
reorganization, recapitalization or share exchange involving the
Company or a sale or other disposition of all or substantially
all of the assets of the Company (a Business
Combination), unless, immediately following such Business
Combination, each of the following two conditions is satisfied:
(x) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding
shares of common stock and the combined voting power of the
then-outstanding securities entitled to vote generally in the
election of directors, respectively, of the resulting or
acquiring corporation in such Business Combination (which shall
include, without limitation, a corporation which as a result of
such transaction owns the Company or substantially all of the
Companys assets either directly or through one or more
subsidiaries) (such resulting or acquiring corporation is
referred to herein as the Acquiring Corporation) in
substantially the same proportions as their ownership of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, respectively, immediately prior to such Business
Combination and (y) no Person (excluding any employee
benefit plan (or related trust) maintained or sponsored by the
Company or by the Acquiring Corporation) beneficially owns,
directly or indirectly, 50% or more of the then-outstanding
shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such
corporation entitled to vote generally in the election of
directors (except to the extent that such ownership existed
prior to the Business Combination); or
(iv) the liquidation or dissolution of the Company.
(c) Good Reason shall mean any
significant diminution in the Participants title,
authority, or responsibilities from and after such
Reorganization Event or Change in Control Event, as the case may
be, or any reduction in the annual cash compensation payable to
the Participant from and after such Reorganization Event or
Change in Control Event, as the case may be, or the relocation
of the place of business at which the Participant is principally
located to a location that is greater than 50 miles from
its location immediately prior to such Reorganization Event or
Change in Control Event.
A-6
(d) Cause shall mean any
(i) willful failure by the Participant, which failure is
not cured within 30 days of written notice to the
Participant from the Company, to perform his or her material
responsibilities to the Company or (ii) willful misconduct
by the Participant which affects the business reputation of the
Company. The Participant shall be considered to have been
discharged for Cause if the Company determines,
within 30 days after the Participants resignation,
that discharge for Cause was warranted.
(2) Effect on Options
(a) Reorganization Event. Upon the
occurrence of a Reorganization Event (regardless of whether such
event also constitutes a Change in Control Event), or the
execution by the Company of any agreement with respect to a
Reorganization Event (regardless of whether such event will
result in a Change in Control Event), the Board shall provide
that all outstanding Options shall be assumed, or equivalent
options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof); provided that if such
Reorganization Event also constitutes a Change in Control Event,
except to the extent specifically provided to the contrary in
the instrument evidencing any Option or any other agreement
between a Participant and the Company (A) one-half of the
number of shares subject to the Option which were not already
vested shall be exercisable upon the occurrence of such
Reorganization Event and, subject to (B) below, the
remaining one-half of such number of shares shall continue to
become vested in accordance with the original vesting schedule
set forth in such option, with one-half of the number of shares
that would otherwise have become vested on each subsequent
vesting date in accordance with the original schedule becoming
vested on each subsequent vesting date and (B) such assumed
or substituted options shall become immediately exercisable in
full if, on or prior to the first anniversary of the date of the
consummation of the Reorganization Event, the Participants
employment with the Company or the acquiring or succeeding
corporation is terminated for Good Reason by the Participant or
is terminated without Cause by the Company or the acquiring or
succeeding corporation. For purposes hereof, an Option shall be
considered to be assumed if, following consummation of the
Reorganization Event, the Option confers the right to purchase,
for each share of Common Stock subject to the Option immediately
prior to the consummation of the Reorganization Event, the
consideration (whether cash, securities or other property)
received as a result of the Reorganization Event by holders of
Common Stock for each share of Common Stock held immediately
prior to the consummation of the Reorganization Event (and if
holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if
the consideration received as a result of the Reorganization
Event is not solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for
the consideration to be received upon the exercise of Options to
consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in value (as
determined by the Board) to the per share consideration received
by holders of outstanding shares of Common Stock as a result of
the Reorganization Event.
Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume,
or substitute for, such Options, or in the event of a
liquidation or dissolution of the Company, the Board shall, upon
written notice to the Participants, provide that all then
unexercised Options will become exercisable in full as of a
specified time prior to the Reorganization Event and will
terminate immediately prior to the consummation of such
Reorganization Event, except to the extent exercised by the
Participants before the consummation of such Reorganization
Event; provided, however, that in the event of a Reorganization
Event under the terms of which holders of Common Stock will
receive upon consummation thereof a cash payment for each share
of Common Stock surrendered pursuant to such Reorganization
Event (the Acquisition Price), then the Board may
instead provide that all outstanding Options shall terminate
upon consummation of such Reorganization Event and that each
Participant shall receive, in exchange therefor, a cash payment
equal to the amount (if any) by which (A) the Acquisition
Price multiplied by the number of shares of Common Stock subject
to such outstanding Options (whether or not then exercisable),
exceeds (B) the aggregate exercise price of such Options.
(b) Change in Control Event that is not a Reorganization
Event. Upon the occurrence of a Change in Control
Event that does not also constitute a Reorganization Event,
except to the extent specifically provided to the contrary in
the instrument evidencing any Option or any other agreement
between a Participant and the
A-7
Company, the vesting schedule of such Option shall be
accelerated in part so that one-half of the number of shares
that would otherwise have first become vested on any date after
the date of the Change in Control Event shall immediately become
exercisable. The remaining one-half of such number of shares
shall continue to become vested in accordance with the original
vesting schedule set forth in such Option, with one-half of the
number of shares that would otherwise have become vested on each
subsequent vesting date in accordance with the original schedule
becoming vested on each such subsequent vesting date; provided,
however, that each such Option shall be immediately exercisable
in full if, on or prior to the first anniversary of the date of
the consummation of the Change in Control Event, the
Participants employment with the Company or the acquiring
or succeeding corporation is terminated for Good Reason by the
Participant or is terminated without Cause by the Company or the
acquiring or succeeding corporation.
(3) Effect on Restricted Stock Awards
(a) Reorganization Event that is not a Change in Control
Event. Upon the occurrence of a Reorganization
Event that is not a Change in Control Event, the repurchase and
other rights of the Company under each outstanding Restricted
Stock Award shall inure to the benefit of the Companys
successor and shall apply to the cash, securities or other
property which the Common Stock was converted into or exchanged
for pursuant to such Reorganization Event in the same manner and
to the same extent as they applied to the Common Stock subject
to such Restricted Stock Award.
(b) Change in Control Event. Upon the
occurrence of a Change in Control Event (regardless of whether
such event also constitutes a Reorganization Event), except to
the extent specifically provided to the contrary in the
instrument evidencing any Restricted Stock Award or any other
agreement between a Participant and the Company, the vesting
schedule of all Restricted Stock Awards shall be accelerated in
part so that one-half of the number of shares that would
otherwise have first become free from conditions or restrictions
on any date after the date of the Change in Control Event shall
immediately become free from conditions or restrictions. Subject
to the following sentence, the remaining one- half of such
number of shares shall continue to become free from conditions
or restrictions in accordance with the original schedule set
forth in such Restricted Stock Award, with one-half of the
number of shares that would otherwise have become free from
conditions or restrictions on each subsequent vesting date in
accordance with the original schedule becoming free from
conditions or restrictions on each subsequent vesting date. In
addition, each such Restricted Stock Award shall immediately
become free from all conditions or restrictions if, on or prior
to the first anniversary of the date of the consummation of the
Change in Control Event, the Participants employment with
the Company or the acquiring or succeeding corporation is
terminated for Good Reason by the Participant or is terminated
without Cause by the Company or the acquiring or succeeding
corporation.
(4) Effect on Stock Appreciation Rights and Other Stock
Unit Awards.
The Board may specify in an Award at the time of the grant the
effect of a Reorganization Event and Change in Control Event on
any SAR and Other Stock Unit Award.
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10.
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General
Provisions Applicable to Awards
|
(a) Transferability of Awards. Except as
the Board may otherwise determine or provide in an Award, Awards
shall not be sold, assigned, transferred, pledged or otherwise
encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws
of descent and distribution or, other than in the case of an
Incentive Stock Option, pursuant to a qualified domestic
relations order, and, during the life of the Participant, shall
be exercisable only by the Participant. References to a
Participant, to the extent relevant in the context, shall
include references to authorized transferees.
(b) Documentation. Each Award shall be
evidenced in such form (written, electronic or otherwise) as the
Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise
provided by the Plan, each Award may be made alone or in
addition or in relation to any other Award. The terms of each
Award need not be identical, and the Board need not treat
Participants uniformly.
A-8
(d) Termination of Status. The Board
shall determine the effect on an Award of the disability, death,
retirement, authorized leave of absence or other change in the
employment or other status of a Participant and the extent to
which, and the period during which, the Participant, or the
Participants legal representative, conservator, guardian
or Designated Beneficiary, may exercise rights under the Award.
(e) Withholding. Each Participant shall
pay to the Company, or make provision satisfactory to the
Company for payment of, any taxes required by law to be withheld
in connection with an Award to such Participant. Except as the
Board may otherwise provide in an Award, for so long as the
Common Stock is registered under the Exchange Act, Participants
may satisfy such tax obligations in whole or in part by delivery
of shares of Common Stock, including shares retained from the
Award creating the tax obligation, valued at their Fair Market
Value; provided, however, except as otherwise provided by the
Board, that the total tax withholding where stock is being used
to satisfy such tax obligations cannot exceed the Companys
minimum statutory withholding obligations (based on minimum
statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to such
supplemental taxable income). Shares surrendered to satisfy tax
withholding requirements cannot be subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.
The Company may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to a
Participant.
(f) Amendment of Award. The Board may
amend, modify or terminate any outstanding Award, including but
not limited to, substituting therefor another Award of the same
or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a
Nonstatutory Stock Option, provided that the Participants
consent to such action shall be required unless the Board
determines that the action, taking into account any related
action, would not materially and adversely affect the
Participant.
(g) Conditions on Delivery of Stock. The
Company will not be obligated to deliver any shares of Common
Stock pursuant to the Plan or to remove restrictions from shares
previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the
Companys counsel, all other legal matters in connection
with the issuance and delivery of such shares have been
satisfied, including any applicable securities laws and any
applicable stock exchange or stock market rules and regulations,
and (iii) the Participant has executed and delivered to the
Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any
applicable laws, rules or regulations.
(h) Acceleration. The Board may at any
time provide that any Award shall become immediately exercisable
in full or in part, free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the
case may be.
(a) No Right To Employment or Other
Status. No person shall have any claim or right
to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued
employment or any other relationship with the Company. The
Company expressly reserves the right at any time to dismiss or
otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly
provided in the applicable Award.
(b) No Rights As Stockholder. Subject to
the provisions of the applicable Award, no Participant or
Designated Beneficiary shall have any rights as a stockholder
with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder of
such shares. Notwithstanding the foregoing, in the event the
Company effects a split of the Common Stock by means of a stock
dividend and the exercise price of and the number of shares
subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date
for such dividend), then an optionee who exercises an Option
between the record date and the distribution date for such stock
dividend shall be entitled to receive, on the distribution date,
the stock dividend with respect to the shares of Common Stock
acquired upon such Option exercise, notwithstanding the fact
that such shares were not outstanding as of the close of
business on the record date for such stock dividend.
A-9
(c) Effective Date and Term of Plan. The
Plan shall become effective on the date on which it is adopted
by the Board. No Awards shall be granted under the Plan after
the completion of 10 years from the earlier of (i) the
date on which the Plan was adopted by the Board or (ii) the
date the Plan was approved by the Companys stockholders,
but Awards previously granted may extend beyond that date.
(d) Amendment of Plan. The Board may
amend, suspend or terminate the Plan or any portion thereof at
any time; provided that, to the extent determined by the Board,
no amendment requiring stockholder approval under any applicable
legal, regulatory or listing requirement shall become effective
until such stockholder approval is obtained.
(e) Authorization of
Sub-Plans. The
Board may from time to time establish one or more
sub-plans
under the Plan for purposes of satisfying applicable blue sky,
securities or tax laws of various jurisdictions. The Board shall
establish such
sub-plans by
adopting supplements to this Plan containing (i) such
limitations on the Boards discretion under the Plan as the
Board deems necessary or desirable or (ii) such additional
terms and conditions not otherwise inconsistent with the Plan as
the Board shall deem necessary or desirable. All supplements
adopted by the Board shall be deemed to be part of the Plan, but
each supplement shall apply only to Participants within the
affected jurisdiction and the Company shall not be required to
provide copies of any supplement to Participants in any
jurisdiction which is not the subject of such supplement.
(f) Compliance with Code
Section 409A. No Award shall provide for
deferral of compensation that does not comply with
Section 409A of the Code, unless the Board, at the time of
grant, specifically provides that the Award is not intended to
comply with Section 409A of the Code.
(g) Governing Law. The provisions of the
Plan and all Awards made hereunder shall be governed by and
interpreted in accordance with the laws of the State of
Delaware, excluding
choice-of-law
principles of the law of such state that would require the
application of the laws of a jurisdiction other than such state.
Adopted by the Board of Directors on September 7, 2005.
Approved by the stockholders on October 14, 2005.
Amendment No. 1 adopted by the Board of Directors on
July 25, 2007 and by the stockholders on October 1,
2007.
Amendment No. 2 adopted by the Board of Directors on
April 24, 2009 and by the stockholders
on ,
2009 (the Stockholder Approval Date)
A-10
Appendix B
NxSTAGE
MEDICAL, INC.
2005
EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED
The purpose of this Plan is to provide eligible employees of
NxStage Medical, Inc. (the Company) and certain of
its subsidiaries with opportunities to purchase shares of the
Companys common stock, $.001 par value (the
Common Stock), commencing January 1, 2006 (the
Commencement Date). An aggregate of
650,000 shares of Common Stock have been approved for this
purpose as of the Stockholder Approval Date. This Plan is
intended to qualify as an employee stock purchase
plan as defined in Section 423 of the Internal
Revenue Code of 1986, as amended (the Code), and the
regulations promulgated thereunder, and shall be interpreted
consistent therewith.
1. Administration. The Plan will
be administered by the Companys Board of Directors (the
Board) or by a Committee appointed by the Board (the
Committee). The Board or the Committee has authority
to make rules and regulations for the administration of the Plan
and its interpretation and decisions with regard thereto shall
be final and conclusive.
2. Eligibility. All employees of
the Company, including Directors who are employees, and all
employees of any subsidiary of the Company (as defined in
Section 424(f) of the Code) designated by the Board or the
Committee from time to time (a Designated
Subsidiary), are eligible to participate in any one or
more of the offerings of Options (as defined in
Section 9) to purchase Common Stock under the Plan
provided that:
(a) they are customarily employed by the Company or a
Designated Subsidiary for more than 20 hours a week and for
more than three months in a calendar year; and
(b) they have been employed by the Company or a Designated
Subsidiary for at least three months prior to enrolling in the
Plan; and
(c) they are employees of the Company or a Designated
Subsidiary on the first day of the applicable Plan Period (as
defined below).
No employee may be granted an option hereunder if such employee,
immediately after the option is granted, owns 5% or more of the
total combined voting power or value of the stock of the Company
or any subsidiary. For purposes of the preceding sentence, the
attribution rules of Section 424(d) of the Code shall apply
in determining the stock ownership of an employee, and all stock
which the employee has a contractual right to purchase shall be
treated as stock owned by the employee.
3. Offerings. The Company will
make one or more offerings (Offerings) to employees
to purchase stock under this Plan. Offerings will begin each
January 1 and July 1, or the first business day thereafter
(the Offering Commencement Dates). Each Offering
Commencement Date will begin a six-month period (a Plan
Period) during which payroll deductions will be made and
held for the purchase of Common Stock at the end of the Plan
Period. The Board or the Committee may, at its discretion,
choose a different Plan Period of twelve (12) months or
less for subsequent Offerings.
4. Participation. An employee
eligible on the Offering Commencement Date of any Offering may
participate in such Offering by completing and forwarding a
payroll deduction authorization form to the employees
appropriate payroll office at least five business days prior to
the applicable Offering Commencement Date. The form will
authorize a regular payroll deduction from the Compensation
received by the employee during the Plan Period. Unless an
employee files a new form or withdraws from the Plan, his
deductions and purchases will continue at the same rate for
future Offerings under the Plan as long as the Plan remains in
effect. The term Compensation means the amount of
money reportable on the employees Federal Income Tax
Withholding Statement, excluding overtime, shift premium,
incentive or bonus awards, allowances and reimbursements for
expenses such as relocation allowances for travel expenses,
income or gains on the exercise of Company stock options or
stock appreciation rights, and similar items, whether or not
shown on the employees Federal Income Tax Withholding
Statement, but including, in the case of salespersons, sales
commissions to the extent determined by the Board or the
Committee.
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5. Deductions. The Company will
maintain payroll deduction accounts for all participating
employees. With respect to any Offering made under this Plan, an
employee may authorize a payroll deduction in any dollar amount
up to a maximum of 10% of the Compensation he or she receives
during the Plan Period or such shorter period during which
deductions from payroll are made. Payroll deductions may be at
the rate of 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9% or 10% of
Compensation with any change in compensation during the Plan
Period to result in an automatic corresponding change in the
dollar amount withheld. The minimum payroll deduction is such
percentage of compensation as may be established from time to
time by the Board or the Committee.
6. Deduction Changes. An employee
may decrease or discontinue his payroll deduction once during
any Plan Period, by filing a new payroll deduction authorization
form. However, an employee may not increase his payroll
deduction during a Plan Period. If an employee elects to
discontinue his payroll deductions during a Plan Period, but
does not elect to withdraw his funds pursuant to Section 8
hereof, funds deducted prior to his election to discontinue will
be applied to the purchase of Common Stock on the Exercise Date
(as defined below).
7. Interest. Interest will not be
paid on any employee accounts, except to the extent that the
Board or the Committee, in its sole discretion, elects to credit
employee accounts with interest at such per annum rate as it may
from time to time determine.
8. Withdrawal of Funds. An
employee may at any time prior to the close of business on the
last business day in a Plan Period and for any reason
permanently draw out the balance accumulated in the
employees account and thereby withdraw from participation
in an Offering. Partial withdrawals are not permitted. The
employee may not begin participation again during the remainder
of the Plan Period. The employee may participate in any
subsequent Offering in accordance with terms and conditions
established by the Board or the Committee.
9. Purchase of Shares.
(a) Number of Shares. On the
Offering Commencement Date of each Plan Period, the Company will
grant to each eligible employee who is then a participant in the
Plan an option (Option) to purchase on the last
business day of such Plan Period (the Exercise Date)
at the applicable purchase price (the Option Price)
the largest number of whole shares of Common Stock of the
Company as does not exceed the employees accumulated
payroll deductions as of the Exercise Date divided by the Option
Price for such Plan Period; provided, however, that no employee
may be granted an Option which permits his rights to purchase
Common Stock under this Plan and any other employee stock
purchase plan (as defined in Section 423(b) of the Code) of
the Company and its subsidiaries, to accrue at a rate which
exceeds $25,000 of the fair market value of such Common Stock
for each calendar year in which the Option is outstanding at any
time.
(b) Option Price. The Board or the
Committee shall determine the Option Price for each Plan Period,
including whether such Option Price shall be determined based on
the lesser of (i) the closing price of the Common Stock on
the first business day of the Plan Period or (ii) the
Exercise Date, or shall be based solely on the closing price of
the Common Stock on the Exercise Date; provided, however, that
such Option Price shall be at least 85% of the applicable
closing price. In the absence of a determination by the Board or
the Committee, the Option Price will be 95% of the closing price
of the Common Stock on the Exercise Date. The closing price
shall be (x) the closing price on any national securities
exchange on which the Common Stock is listed, (y) the
closing price of the Common Stock on the Nasdaq National Market
or (z) the average of the closing bid and asked prices in
the
over-the-counter-market,
whichever is applicable, as published in The Wall Street
Journal. If no sales of Common Stock were made on such a day,
the price of the Common Stock for purposes of clauses (x)
and (y) above shall be the reported price for the next
preceding day on which sales were made.
(c) Exercise of Option. Each
employee who continues to be a participant in the Plan on the
Exercise Date shall be deemed to have exercised his Option at
the Option Price on such date and shall be deemed to have
purchased from the Company the number of whole shares of Common
Stock reserved for the purpose of
B-2
the Plan that his accumulated payroll deductions on such date
will pay for, but not in excess of the maximum number determined
in the manner set forth above.
(d) Return of Unused Payroll
Deductions. Any balance remaining in an
employees payroll deduction account at the end of a Plan
Period will be automatically refunded to the employee, except
that any balance which is less than the purchase price of one
share of Common Stock will be carried forward into the
employees payroll deduction account for the following
Offering, unless the employee elects not to participate in the
following Offering under the Plan, in which case the balance in
the employees account shall be refunded.
10. Issuance of
Certificates. Certificates representing
shares of Common Stock purchased under the Plan may be issued
only in the name of the employee, in the name of the employee
and another person of legal age as joint tenants with rights of
survivorship, or (in the Companys sole discretion) in the
name of a brokerage firm, bank or other nominee holder
designated by the employee. The Company may, in its sole
discretion and in compliance with applicable laws, authorize the
use of book entry registration of shares in lieu of issuing
stock certificates.
11. Rights on Retirement, Death or Termination of
Employment. In the event of a participating
employees termination of employment prior to the last
business day of a Plan Period, no payroll deduction shall be
taken from any pay due and owing to an employee and the balance
in the employees account shall be paid to the employee or,
in the event of the employees death, (a) to a
beneficiary previously designated in a revocable notice signed
by the employee (with any spousal consent required under state
law) or (b) in the absence of such a designated
beneficiary, to the executor or administrator of the
employees estate or (c) if no such executor or
administrator has been appointed to the knowledge of the
Company, to such other person(s) as the Company may, in its
discretion, designate. If, prior to the last business day of the
Plan Period, the Designated Subsidiary by which an employee is
employed shall cease to be a subsidiary of the Company, or if
the employee is transferred to a subsidiary of the Company that
is not a Designated Subsidiary, the employee shall be deemed to
have terminated employment for the purposes of this Plan.
12. Optionees Not
Stockholders. Neither the granting of an
Option to an employee nor the deductions from his pay shall
constitute such employee a stockholder of the shares of Common
Stock covered by an Option under this Plan until such shares
have been purchased by and issued to him.
13. Rights Not
Transferable. Rights under this Plan are not
transferable by a participating employee other than by will or
the laws of descent and distribution, and are exercisable during
the employees lifetime only by the employee.
14. Application of Funds. All
funds received or held by the Company under this Plan may be
combined with other corporate funds and may be used for any
corporate purpose.
15. Adjustment for Changes in Common Stock and
Certain Other Events.
(a) Changes in Capitalization. In
the event of any stock split, reverse stock split, stock
dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in
capitalization or event, or any distribution to holders of
Common Stock other than an ordinary cash dividend, (i) the
number and class of securities available under this Plan,
(ii) the share limitations set forth in Section 9, and
(iii) the Option Price shall be appropriately adjusted to
the extent determined by the Board or the Committee.
(b) Reorganization Events.
(1) Definition. A
Reorganization Event shall mean: (a) any merger
or consolidation of the Company with or into another entity as a
result of which all of the Common Stock of the Company is
converted into or exchanged for the right to receive cash,
securities or other property or is cancelled, (b) any
exchange of all of the Common Stock of the Company for cash,
securities or other property pursuant to a share exchange
transaction or (c) any liquidation or dissolution of the
Company.
(2) Consequences of a Reorganization Event on
Options. In connection with a Reorganization
Event, the Board or the Committee shall take any one or more of
the following actions as to outstanding Options on
B-3
such terms as the Board or the Committee determines:
(i) provide that Options shall be assumed, or substantially
equivalent Options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof), (ii) upon
written notice to employees, provide that all outstanding
Options will be terminated as of the effective date of the
Reorganization Event and that all such outstanding Options will
become exercisable to the extent of accumulated payroll
deductions as of a date specified by the Board or the Committee
in such notice, which date shall not be less than ten
(10) days preceding the effective date of the
Reorganization Event, (iii) upon written notice to
employees, provide that all outstanding Options will be
cancelled as of a date prior to the effective date of the
Reorganization Event and that all accumulated payroll deductions
will be returned to participating employees on such date,
(iv) in the event of a Reorganization Event under the terms
of which holders of Common Stock will receive upon consummation
thereof a cash payment for each share surrendered in the
Reorganization Event (the Acquisition Price), make
or provide for a cash payment to an employee equal to
(A) the Acquisition Price times the number of shares of
Common Stock subject to the employees Option (to the
extent the Option Price does not exceed the Acquisition Price)
minus (B) the aggregate Option Price of such Option, in
exchange for the termination of such Option, (v) provide
that, in connection with a liquidation or dissolution of the
Company, Options shall convert into the right to receive
liquidation proceeds (net of the Option Price thereof) and
(vi) any combination of the foregoing.
For purposes of clause (i) above, an Option shall be
considered assumed if, following consummation of the
Reorganization Event, the Option confers the right to purchase,
for each share of Common Stock subject to the Option immediately
prior to the consummation of the Reorganization Event, the
consideration (whether cash, securities or other property)
received as a result of the Reorganization Event by holders of
Common Stock for each share of Common Stock held immediately
prior to the consummation of the Reorganization Event (and if
holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if
the consideration received as a result of the Reorganization
Event is not solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for
the consideration to be received upon the exercise of Options to
consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in value (as
determined by the Board) to the per share consideration received
by holders of outstanding shares of Common Stock as a result of
the Reorganization Event.
16. Amendment of the Plan. The
Board may at any time, and from time to time, amend this Plan in
any respect, except that (a) if the approval of any such
amendment by the shareholders of the Company is required by
Section 423 of the Code, such amendment shall not be
effected without such approval, and (b) in no event may any
amendment be made which would cause the Plan to fail to comply
with Section 423 of the Code.
17. Insufficient Shares. In the
event that the total number of shares of Common Stock specified
in elections to be purchased under any Offering plus the number
of shares purchased under previous Offerings under this Plan
exceeds the maximum number of shares issuable under this Plan,
the Board or the Committee will allot the shares then available
on a pro rata basis.
18. Termination of the Plan. This
Plan may be terminated at any time by the Board. Upon
termination of this Plan all amounts in the accounts of
participating employees shall be promptly refunded.
19. Governmental Regulations. The
Companys obligation to sell and deliver Common Stock under
this Plan is subject to listing on a national stock exchange or
quotation on the Nasdaq National Market (to the extent the
Common Stock is then so listed or quoted) and the approval of
all governmental authorities required in connection with the
authorization, issuance or sale of such stock.
20. Governing Law. The Plan shall
be governed by Delaware law except to the extent that such law
is preempted by federal law.
21. Issuance of Shares. Shares may
be issued upon exercise of an Option from authorized but
unissued Common Stock, from shares held in the treasury of the
Company, or from any other proper source.
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22. Notification upon Sale of
Shares. Each employee agrees, by entering the
Plan, to promptly give the Company notice of any disposition of
shares purchased under the Plan where such disposition occurs
within two years after the date of grant of the Option pursuant
to which such shares were purchased.
23. Withholding. Each employee
shall, no later than the date of the event creating the tax
liability, make provision satisfactory to the Board for payment
of any taxes required by law to be withheld in connection with
any transaction related to Options granted to or shares acquired
by such employee pursuant to the Plan. The Company may, to the
extent permitted by law, deduct any such taxes from any payment
of any kind otherwise due to an employee.
24. Effective Date and Approval of
Shareholders. The Plan shall take effect on
the Commencement Date subject to approval by the shareholders of
the Company as required by Section 423 of the Code, which
approval must occur within twelve months of the adoption of the
Plan by the Board.
Adopted by the Board of Directors
on September 7, 2005, and approved
by the stockholders on October 14, 2005.
Adopted by the Board of Directors
on April 26, 2007, and approved
by the stockholders on May 30, 2007.
Adopted by the Board of Directors
on April 29, 2008, and approved
by the stockholders on May 29, 2008.
Adopted by the Board of Directors
on December 16, 2008.
B-5
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NXSTAGE MEDICAL, INC.
2009 ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 2009
Those signing on the reverse side, revoking any prior proxies, hereby appoint(s) Robert S.
Brown and Winifred L. Swan, or each of them, with full power of substitution, as proxies for those
signing on the reverse side to act and vote at the 2009 Annual Meeting of Stockholders of NxStage
Medical, Inc. and at any adjournments thereof as indicated upon all matters referred to on the
reverse side and described in the proxy statement for the annual meeting, and, in their discretion,
upon any other matters which may properly come before the annual meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED STOCKHOLDER.
IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON
THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR PROPOSAL NUMBERS 2, 3 AND 4.
Please sign this proxy exactly as your name appears hereon. Joint owners should each sign
personally. Trustees and other fiduciaries should indicate the capacity in which they sign. If a
corporation or partnership, this signature should be that of an authorized officer who should state
his or her title.
UNLESS YOU INTEND TO VOTE YOUR SHARES BY INTERNET OR
TELEPHONE, PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD
PROMPTLY IN ENCLOSED REPLY ENVELOPE
ADDRESS CHANGES/COMMENTS?
(If you noted any address changes/comments above, please mark corresponding box on other side)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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NXSTAGE
439 SOUTH UNION ST., 5th FLR
LAWRENCE, MA 01843
ATTN:
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VOTE BY
INTERNETwww.investorvote.com/NXTM.
Use the Internet to transmit your
voting instructions and for
electronic delivery of information
up until 11:59 p.m. Eastern Time the
day before the cut-off date or
meeting date. Have your proxy card
in hand when you access the website
and follow the instructions to
obtain your records and to create an
electronic voting instruction form. |
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VOTE BY PHONE 1-800-652-VOTE (8683)
Use any touch-tone telephone to
transmit your voting instructions up
until 11:59 p.m. Eastern Time the
day before the cut-off date or
meeting date. Have your proxy card
in hand when you call and then
follow the instructions. |
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VOTE BY MAIL
Mark, sign and date your proxy card
and return it in the postage-paid
envelope we have provided or return
it to NxStage Medical, Inc., c/o
Computershare Investor Services, PO
Box 43010, Providence, RI 02940-3010 |
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TO VOTE, MARK BLOCKS IN BLUE OR BLACK
INK AS FOLLOWS
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KEEP THIS PORTION FOR
YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
A VOTE FOR THE DIRECTOR NOMINEE AND FOR PROPOSALS NUMBERED 2, 3 AND 4 IS
RECOMMENDED BY THE BOARD OF DIRECTORS
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For All |
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For |
Withhold |
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Except |
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1. Election
of Directors
NOMINEES
(01) Jeffrey H. Burbank |
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To withhold authority
to vote, mark For All Except and write the nominees number on the line below. The shares will be voted for the remaining nominee(s). |
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(02) Philippe O. Chambon |
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(03) Daniel A. Giannini |
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(04) Earl R. Lewis |
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(05) Craig W. Moore |
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(06) Reid S. Perper |
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(07) Jonathan T. Silverstein |
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(08) David S. Utterberg |
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2. To amend our 2005 Stock Incentive Plan to increase the number
of shares of our common stock which may be issued pursuant to the plan
by an additional 4,100,000 shares.
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FOR
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AGAINST
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ABSTAIN |
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3. To amend our 2005 Employee Stock
Purchase Plan to increase the number of
shares of our common stock which may be
issued pursuant to the plan by an additional
500,000 shares.
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4. To ratify the selection of Ernst &
Young LLP as our independent registered
public accounting firm for 2008. |
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5. To transact such other business as
may properly come before the meeting or any
adjournment thereof. |
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For address changes/comments, please check this box and write them on the back where indicated
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YES
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NO |
HOUSEHOLDING ELECTION. Please indicate if you consent to
receive certain future investor communications in a single
package per household |
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Signature:
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Date: |
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Signature:
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Date: |
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