Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
.
2019 Short Term Incentive Plan
On June 6, 2019, the Board of Directors (the “
Board
”) 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 our named executive officers (other than our Chief Executive Officer) and other senior management personnel with respect to fiscal year 2019 (the “
Short Term Incentive Plan
”). The Short Term Incentive Plan was initially recommended to the Board for approval by the Compensation Committee of the Board (the “
Committee
”) on January 31, 2019, and the version of the plan approved by the Board is materially consistent with the version initially recommended by the Committee in the first quarter of 2019.
The Short Term Incentive 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 Short Term Incentive Plan is intended to reward plan participants for their individual contributions to the Company’s achievement of pre-established financial and non-financial Company performance objectives for fiscal year 2019.
Target Cash Bonus Amount
The target cash bonus amount for each participating named executive officer is set as a percentage of the named executive officer’s base salary as determined by the Committee. The 2019 base salary, target bonus percentage and resulting target cash bonus amount for each participating named executive officer is set forth in the table below:
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Name
|
2019 Base Salary
|
Target Bonus Percentage
|
Target Cash Bonus
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Vaseem Mahboob
|
$435,000
|
55%
|
$239,250
|
|
Matthew Thompson M.D.
|
$435,000
|
45%
|
$195,750
|
|
Jeremy Hayden
|
$388,125
|
45%
|
$174,656
|
Performance Objectives
Cash bonuses may be earned under the Short Term Incentive 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 “Management by Objectives” (MBOs). The percentage of the target cash bonus for each participating 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
|
Company Performance Objectives
% of Total Cash Bonus
|
MBOs
% of Total Cash Bonus
|
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Vaseem Mahboob
|
70%
|
30%
|
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Matthew Thompson M.D.
|
70%
|
30%
|
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Jeremy Hayden
|
70%
|
30%
|
Company Performance Objectives
The Company Performance Objectives relate to both financial and non-financial performance metrics. The percentage of the target cash bonus that relates to the Company Performance Objectives 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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Revenue
|
25%
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Cash Management
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20%
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Non-Financial Performance Objectives
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Clinical Development
|
20%
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Quality and Compliance
|
25%
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Product Development
|
10%
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TOTAL
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100%
|
Company Financial Performance Objectives
The portion of the cash bonus opportunity that relates to the Company financial performance objectives may be earned based on the Company’s actual global revenue and cash flow from operations for fiscal year 2019 relative to the target amounts established by the Committee. For the Company financial performance objectives, Company achievement at the “threshold” amount will generally result in payment at 70% of target, Company achievement at the “target” amount will generally result in payment at 100% of target, and Company achievement at the “maximum” amount will generally result in payment at 125% of target. The Committee will determine the actual Company performance based on the audited financial statements for fiscal year 2019. In addition, the final bonus amount to be paid with respect to the Company financial performance objectives (if any) may be increased (but not decreased) based on the Company’s separate achievement of certain additional performance objectives, which relate to achieving minimum revenue from key products, sequential quarterly revenue growth, sequential cash management targets, minimum gross margin targets and working inventory balance reductions.
Company Non-Financial Performance Objectives
The portion of the cash bonus opportunity that relates to the Company non-financial performance objectives generally requires the Company to complete enrollment in certain clinical studies, achieve specified quality, compliance and training metrics, and obtain regulatory clearance for certain products under development, each within specified time periods. For the non-financial performance objectives, the timing of completion of the objectives during 2019 will impact the bonus payment for which a participant is eligible.
Company Culture Multiplier
Once the total cash bonus amount has been calculated based on the foregoing, the amount may be further adjusted (increased or decreased) based on the Company’s achievement of, or failure to meet, certain specified objectives related to employee attrition and risk management effectiveness.
MBOs
With respect to the participating named executive officers, 30% of their cash bonus opportunity under the Short Term Incentive Plan will be based on their individual achievement relative to specified MBOs. These MBOs will be specific to each plan participant and will generally be designed to support the achievement of the Company Performance Objectives. While a targeted performance level will be established for each MBO, actual achievement may be above or below the targeted amount, which will be determined by our Chief Executive Officer with final approval of the Committee.