Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
2018 Base Salary for Named Executive Officers
On January 25, 2018, the Compensation Committee of the Board of Directors (the “
Committee
”) of Endologix, Inc. (the “
Company
”) approved the adoption of a corporate bonus program that will be utilized to calculate the cash bonuses that may become payable to the named executive officers and other senior management personnel with respect to fiscal year 2018 (the “
Cash Bonus Plan
”). The Cash Bonus Plan is designed to align plan participants with the Company’s business goals and strategies and to further the objectives of the Company’s executive compensation program. The Cash Bonus Plan is intended to reward plan participants for their individual contributions to the Company’s achievement of pre-established Company objectives for fiscal year 2018.
Target Cash Bonus Amount
The target cash bonus amount for each named executive officer is set as a percentage of the named executive officer’s base salary as determined by the Committee. The 2018 base salary, target percentage and resulting target cash bonus amount for each named executive officer is set forth in the table below:
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Name
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2018 Base Salary
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Target Percentage
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Target Cash Bonus
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John McDermott
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$572,000
|
100%
|
$ 572,500
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Vaseem Mahboob
|
$380,000
|
55%
|
$ 209,000
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Michael Chobotov
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$310,000
|
45%
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$ 139,500
|
Performance Objectives
Cash bonuses may be earned under the Cash Bonus Plan based on the achievement by the Company of pre-established Company Performance Objectives, and by plan participants based on their individual achievement of pre-determined MBOs. The percentage of the target cash bonus for each named executive officer that is subject to the Company Performance Objectives and the MBOs is set forth in the table below:
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Name
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Company Performance Objectives
% of Total Cash Bonus
|
MBOs
% of Total Cash Bonus
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John McDermott
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100%
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0%
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Vaseem Mahboob
|
70%
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30%
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Michael Chobotov
|
70%
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30%
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Company Performance Objectives
The Company Performance Objectives relate to the Company’s achievement of specified Company objectives relating to financial performance and non-financial performance, including quality, compliance, and new product development objectives. The percentage of the target cash bonus that relates to the Company Performance Objective component of the Cash Bonus Plan for each named executive officer is set forth in the table below:
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Company Performance Objectives
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% of Company Performance Objective
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Financial Performance Objectives
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Sales and Expenses
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50%
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Non-Financial Performance Objectives
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Quality, Compliance, and New Product Development
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50%
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TOTAL
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100%
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Company Financial Performance Objectives
The portion of the cash bonuses that relates to the Company financial objectives may be earned based on the Company’s actual global sales and total operating expenses for fiscal year 2018 relative to the target amounts established by the Committee. For these Company financial objectives, Company achievement at the threshold amount will result in payment at 50% of target; Company achievement at the target amount will result in payment at 100% of target; and Company achievement at the maximum amount will result in payment at 150% of target. The Committee will determine the actual Company achievement based on the audited financial statements for fiscal year 2018.
Company Non-Financial Performance Objectives
The portion of the cash bonuses that relates to the Company non-financial performance objectives generally requires the Company to meet enterprise risk management goals, achieve specified quality metrics, submit regulatory filings, obtain regulatory clearance and/or launch certain products under development, within specified time periods. For these quality, compliance, and new product development objectives, Company achievement at the threshold level will result in payment at 75% of target; Company achievement at the target level will result in payment at 100% of target; and Company achievement at the maximum level will result in payment at 125% of target.
MBOs
With respect to Messrs. Mahboob and Chobotov, 30% of their cash bonus opportunity under the Cash Bonus Plan is based on their individual achievement relative to specified MBOs that will be communicated to the executives. These objectives are specific to each plan participant and are generally designed to support the achievement of the Company Performance Objectives. The Committee has not established any specific MBOs for Mr. McDermott as his cash bonus opportunity is based 100% on the achievement of the Company Performance Objectives.