UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 28, 2019
 
Apollo Endosurgery, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-35706
 
16-1630142
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
1120 S. Capital of Texas Highway
Building 1, Suite #300
Austin, Texas 78746
(Address of principal executive offices) (Zip Code)
(512) 279-5100
(Registrant’s telephone number, including area code)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter):
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o





Item 5.02      Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On February 28, 2019, upon the recommendation of the Compensation Committee of the Board of Directors (the “ Board ”) of Apollo Endosurgery, Inc. (the “ Company ”), the Board (i) approved, at its discretion under the Company's 2018 performance bonus plan, a cash bonus payment for fiscal year 2018 to certain of the Company's officers and employees, including each of our named executive officers (as set forth in our proxy statement for our Annual Meeting of Stockholders held on May 23, 2018), based on its assessment of the Company's corporate performance, and (ii) the Company's 2019 performance bonus plan (the “ 2019 Bonus Plan ”) for its named executive officers and certain other eligible employees. The 2019 Bonus Plan allows eligible employees to earn a proportion of their target bonus based on the Company's achievement of corporate performance goals and the remainder of their target bonus based on their individual performance assessment, except for our Chief Executive Officer Todd Newton, whose performance bonus will be based solely on the achievement of corporate goals. The corporate performance goals consist of revenue, gross margin and operating expense targets, and the individual performance goals consist of specific objectives and goals tailored to each plan participant. The Board may change the corporate performance goals, or use its judgment when evaluating the Company's results against these goals, and may elect to increase or decrease the amounts payable under the 2019 Bonus Plan at its sole discretion. The following table sets forth the bonuses for 2018 and base salary and target bonuses for 2019 for each of the Company's named executive officers and its chief financial officer.

Name and Principal Position
 
2018 Bonus
 
Total 2019 Target Performance Bonus as a Percentage of Base Salary
 
2019 Base Salary
Todd Newton
 
$123,600
 
60%
 
$424,360
Chief Executive Officer
 
 
 
Stefanie Cavanaugh
 
$50,406
 
35%
 
$296,677
Chief Financial Officer
 
 
 
Christopher J. Gostout, M.D.
 
$33,990
 
30%
 
$233,398
Chief Medical Officer
 
 
 
Bret Schwartzhoff
 
$25,375
 
40%
 
$298,700
Vice President, North America Sales and Global Marketing
 
 
 


Item 9.01      Financial Statements and Exhibits.

(d) Exhibits .
Exhibit No.
Description
10.1





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
APOLLO ENDOSURGERY, INC.
 
 
 
 
 
 
 
Dated:
March 5, 2019
 
 
 
 
 
 
 
By:
/s/ Todd Newton
 
 
 
 
Name:
Todd Newton
 
 
 
 
Title:
Chief Executive Officer
 







APOLLO ENDOSURGERY 2019 CORPORATE BONUS PLAN

PURPOSE OF THE PLAN
The Apollo Endosurgery Bonus Plan (the “Plan”) is designed to reward eligible employees for their contributions toward the successful accomplishment of specific financial and strategic business objectives, and individual performance for the fiscal year 2019, commencing January 1, 2019 and ending December 31, 2019 (the "Plan Year").
ELIGIBILITY
All part-time and full-time employees throughout the world, including Company executives are eligible to participate in the Plan; provided that each such participant has been hired on or before October 1st of each year and is not otherwise eligible for participation in a sales commission plan.
PERFORMANCE
Bonus amounts are determined based on both corporate performance and individual performance in relation to pre-established objectives corresponding to corporate performance and individual performance metrics.
Corporate Performance
Corporate performance will be measured based on financial objectives approved by the Company's Board of Directors (the "Board").

Individual Performance
Individual Performance will be measured based on the achievement of objectives and goals prepared by each Participant and his or her manager and documented on an Individual Performance Plan. Objectives and goals are established at the beginning of each Plan Year, but may be modified throughout the Plan Year as necessary or appropriate, with management approval. Objectives and goals will be expressed as specific, quantifiable measures of performance in relation to key operating decisions for the Participant’s department. While Individual Performance is normally based on the manager’s rating, the individual manager rating may be subject to override by the Chief Executive Officer.    
BONUS POOL CALCULATION AND ALLOCATIONS
The Plan will have two bonus pools - a Corporate pool (the “Corporate Component”) and an Individual pool (the “Individual Component”).
The bonus pools will have the following levels of achievement:
•
Individual Threshold - solely determined at the discretion of the Board upon their end of year review of the overall Company’s financial condition and operating performance.
•
Corporate Component Threshold - minimum Company financial performance required before any bonuses will be paid as a Corporate Component bonus.
•
Target - financial performance required before the corporate component is eligible to be paid at 100%.

The key financial or operational targets of the Company form the basis for the Corporate Component, which is reviewed and set annually. Exceptions to this and modifications to this Bonus Plan can be made at any time at the board’s sole discretion.
At Target, the Corporate Component of the bonus pool is 100% as is the Individual Component (which is based on a Participant's manager's rating, which is subject to adjustment). The Corporate Component and the Individual Component form the individual’s aggregate bonus amount for the Plan Year.

A multiplier will be applied for performance between the Corporate Threshold and Target to determine the percentage of the bonus pool, as well as performance that is above Target, if any. The minimum percentage applicable to the Corporate Component bonus pool is 40%; there is no pre-established maximum funding limit for over achieving Target.
Plan Year Corporate Component Weightings
•
50% weighting . Target achievement of 2019 Endo product revenues
•
30% weighting . Target achievement of 2019 Endo gross margin
•
20% weighting . Target achievement of 2019 operating expenses






BONUS POOL ADJUSTMENTS AND DIFFERENTIATION BY DEPARTMENT
The bonus pool may be allocated to the business units/function level by the Company’s Chief Executive Officer based on such matters as he may determine to be appropriate, including but not limited to operating income results vs. budget, performance in relation to pre-established objectives and other financial results. For example, a business unit or department that exceeds its goals may receive a greater share of the total bonus pool than a business unit that under performs.
At the end of the Plan Year, the Company’s Chief Executive Officer may recommend adjustments to the Corporate Component and Individual Component to the Board after consideration of key operating results. When calculating the Corporate Component, the Board has sole discretion to consider such matters as it determines to be appropriate, including any or all of the following:
•
Extraordinary financial or corporate transactions that may occur during the plan year
•
Effects of accounting changes
•
Expenses for productivity initiatives
•
Other non-operating items
•
Integration activities or expense
•
Performance in relation to pre-established objectives
•
Any other items of significant income or expense which are determined to be appropriate adjustments

Individual Bonus Calculation
Target bonus awards will be expressed as a percentage of the employee’s eligible base earnings for the Plan Year. Eligible earnings are defined as regular earnings paid during the year, holiday, vacation, and personal leave time. The target percentages will vary by position level. A participant’s actual bonus award may vary above or below the targeted level based on corporate performance, the overall performance of his or her business unit relative to the overall performance of the Company, and the participant’s performance in relation to his or her pre-determined individual objectives.
Payment of the Bonus

Any bonuses payable under the Plan will be paid not later than March 31, 2020. A Participant is required to be employed by the Company on the date any bonus is paid.

General Provisions

Tax Withholding . The Company will withhold all applicable taxes from any Actual Award, including any federal, state, and local taxes (including, but not limited to, the Participant's FICA and SDI obligations).

No Effect on Employment or Service . Nothing in the Plan will interfere with or limit in any way the right of the Company to terminate any Participant's employment or service at any time, with or without cause. Employment with the Company and its Affiliates is on an at-will basis only. The Company expressly reserves the right, which may be exercised at any time and without regard to when during a Performance Period such exercise occurs, to terminate any individual's employment with or without cause, and to treat him or her without regard to the effect that such treatment might have upon him or her as a Participant.

Participation . No employee will have the right to be selected to receive a bonus under this Plan, or, having been so selected, to be selected to receive a future bonus.

Successors . All obligations of the Company under the Plan, with respect to awards granted hereunder, will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.

Nontransferability . No bonus granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution. All rights with respect to an award granted to a Participant will be available during his or her lifetime only to the Participant.

Amendment, Suspension, or Termination . The Board, in its sole discretion, may amend or terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension, or termination of the Plan will not, without the consent of





the Participant, alter or impair any rights or obligations under any bonus theretofore earned by such Participant. No award may be granted during any period of suspension or after termination of the Plan.

Bonus Plan . The Plan is intended to be a "bonus program" as defined under the U.S. Department of Labor regulation 2510.3-2(c) and will be construed and administered in accordance with such intention.

APOLLO ENDOSURGERY 2019 CORPORATE BONUS PLAN
Position Level
Corporate Component Percentage
Individual Component Percentage
CEO
100%
Board Discretion
C-Level and VPs
80%
20%
Directors, GMs, and Sr. Managers
50%
50%
Managers and Professional Level (Exempt)
25%
75%
Hourly
0%
100%