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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14AProxyStatementPursuanttoSection14(a)of
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441CharmanyDriveMadison,Wisconsin53719
June11,2020
DearStockholder:
YouarecordiallyinvitedtoattendtheannualmeetingofstockholdersofExactSciencesCorporationtobeheldat10:00a.m.,CentralTime,onThursday,July23,2020.WehavebeenmonitoringtheCOVID-19situationcloselyandhavedeterminedthatholdinganin-personannualmeetingcouldposearisktothehealthandsafetyofourstockholders,employees,anddirectors.Asaresult,thisyear'sannualmeetingwillbecompletelyvirtualandconductedvialivewebcast.Youwillbeabletoattendtheannualmeetingonlineandsubmityourquestionsduringthemeetingbyvisitinghttps://www.virtualshareholdermeeting.com/EXAS2020.Youwillalsobeabletovoteyourshareselectronicallyattheannualmeeting.
Weareexcitedtoembracethelatesttechnologytoprovideexpandedaccess,improvedcommunicationandcostsavingsforourstockholders.HostingavirtualmeetingenablesincreasedstockholderattendanceandparticipationsincestockholderscanparticipatefromanylocationaroundtheworldwithInternetconnectivity.Informationonhowtoparticipateinthisyear'svirtualmeetingcanbefoundbeginningonPage57oftheaccompanyingProxyStatement.
Foryourconvenience,wearealsopleasedtoofferare-playablewebcastoftheannualmeetingathttps://www.virtualshareholdermeeting.com/EXAS2020.
Yourvoteisimportanttous.Pleaseactassoonaspossibletovoteyourshares.ItisimportantthatyoursharesberepresentedatthemeetingwhetherornotyouplantoattendtheannualmeetingviatheInternet.PleasevoteelectronicallyovertheInternet,bytelephoneorif,youreceiveapapercopyoftheproxycardbymail,byreturningyoursignedproxycardintheenvelopeprovided.
OnbehalfoftheBoardofDirectorsandmanagement,itismypleasuretoexpressourappreciationforyourcontinuedsupport.
Verytrulyyours,
KevinT.ConroyChairman,PresidentandChiefExecutiveOfficer
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EXACTSCIENCESCORPORATION441CharmanyDriveMadison,Wisconsin53719
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 23, 2020To the Stockholders of Exact Sciences Corporation:
NOTICEISHEREBYGIVENthatthe2020AnnualMeetingofStockholdersofExactSciencesCorporation,aDelawarecorporation,willbeheldonThursday,July23,2020,at10:00a.m.,CentralTime.TheAnnualMeetingwillbeacompletelyvirtualmeeting,whichwillbeconductedvialivewebcast.YouwillbeabletoattendtheAnnualMeetingonlineandsubmityourquestionsduringthemeetingbyvisitinghttps://www.virtualshareholdermeeting.com/EXAS2020.ForinstructionsonhowtoattendandvoteyoursharesattheAnnualMeeting,seetheinformationintheaccompanyingProxyStatementinthesectiontitled"QuestionsandAnswers"beginningonpage56.
The Annual Meeting is being held for the following purposes:
1.ToelectthefournomineestoourBoardofDirectorsnominatedbyourBoardofDirectorstoserveforathreeyeartermasClassIIdirectors.
2.ToratifytheappointmentofPricewaterhouseCoopers,LLPasourindependentregisteredpublicaccountingfirmfor2020.
3.Toholdanadvisoryvoteonexecutivecompensation.
4.ToapproveanamendmenttoourCertificateofIncorporationincreasingthenumberofauthorizedsharesofcommonstockfrom200,000,000sharesto400,000,000shares.
5.Totransactsuchotherbusinessasmayproperlycomebeforetheannualmeetingandanyadjournmentsorpostponementsthereof.
WearepleasedtoutilizetheSecuritiesandExchangeCommission("SEC")rulesthatallowissuerstofurnishproxymaterialstotheirstockholdersontheInternet.WebelievetheserulesallowustoprovideyouwiththeinformationyouneedwhileloweringthecostsofdeliveryandreducingtheenvironmentalimpactoftheAnnualMeeting.OnoraboutJune11,2020,wewillmailtoourstockholdersofrecordasofJune1,2020(otherthanthosewhopreviouslyrequestedelectronicorpaperdeliveryonanongoingbasis)aNoticeofMeetingandImportantNoticeRegardingtheAvailabilityofProxyMaterialscontaininginstructionsonhowtoaccessourproxystatementandourAnnualReportonForm10-K.
ByOrderofourBoardofDirectors,
D.ScottCowardSeniorVicePresident,GeneralCounsel,ChiefAdministrativeOfficerandSecretary
Madison,WisconsinJune11,2020
This Notice of Annual Meeting and Proxy Statement are first being distributed or made available, as the case may be, on or about June 11, 2020.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting: This Proxy Statement and our Annual Report are available free of charge at www.proxyvote.com.
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TABLE OF CONTENTS
2020ProxySummary 1
Proposal1—ElectionofDirectors
5
InformationConcerningDirectorsandNomineesforDirector
6
InformationConcerningExecutiveOfficers
11
CorporateGovernancePrinciples,BoardMattersandNon-EmployeeDirectorCompensation
13
Proposal2—RatificationofAppointmentofIndependentRegisteredPublicAccountingFirm
24
CertainRelationshipsandRelatedTransactions
25
IndependentRegisteredPublicAccountingFirm
26
ReportoftheAuditandFinanceCommittee
27
Proposal3—AdvisoryVoteonExecutiveCompensation
28
CompensationandOtherInformationConcerningNamedExecutiveOfficers
29
ReportoftheCompensationandManagementDevelopmentCommittee
41
ExecutiveCompensationTables
42
EquityCompensationPlanInformation
49
CEOPayRatio
50
Proposal4—ApprovalofAmendmenttoCertificateofIncorporation
51
SecuritiesOwnershipofCertainBeneficialOwnersandManagement
53
Section16(a)BeneficialOwnershipReportingCompliance
55
OtherBusiness
55
ImportantNoticeRegardingtheAvailabilityofProxyMaterialsfortheStockholderMeetingtobeHeldonJuly23,2020
55
QuestionsandAnswers
56
AnnexA—CertificateofAmendmenttoSixthAmendedandRestatedCertificateofIncorporation
60
ExactSciences2020ProxyStatement i
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441CharmanyDriveMadison,Wisconsin53719
2020 PROXY SUMMARY
THISSUMMARYHIGHLIGHTSINFORMATIONCONTAINEDELSEWHEREINTHISPROXYSTATEMENT.ITDOESNOTCONTAINALLOFTHEINFORMATIONTHATYOUSHOULDCONSIDER.PLEASEREADTHEENTIREPROXYSTATEMENTCAREFULLYBEFOREVOTING.
2020 Annual Meeting of Stockholders Information
Your Vote
Yourvoteisveryimportant.OurBoardofDirectorsisrequestingyoutoallowyourCommonStocktoberepresentedatour2020AnnualMeetingbyproxiesnamedontheproxycard.
Inconnectionwiththisrequest,onoraboutJune11,2020,weexpecttosendtoourstockholders(otherthanthosewhopreviouslyrequestedelectronicorpaperdelivery)aNoticeofInternetAvailabilityofProxyMaterialscontaininginstructionsonhowtoaccessourproxymaterials,includingourproxystatementandourannualreport,andhowtovotethroughtheInternetorbytelephone.
How to Vote
StockholdersofrecordmayvotetheirsharespriortotheannualmeetingviatheInternet,bytelephoneorbymail.
Beneficialownersofsharesheldin"streetname"mayvotebyfollowingthevotinginstructionsprovidedtothembytheirbankorbroker.
Date and Time: Thursday,July23,2020,at10:00a.m.,CentralTime
Location: MeetingliveviatheInternetbyvisitinghttps://www.virtualshareholdermeeting.com/EXAS2020
Record Date: June1,2020
Admission: ToparticipateintheAnnualMeeting,visithttps://www.virtualshareholdermeeting.com/EXAS2020.Youwillneedthe16-digitcontrolnumberincludedonyourNoticeofInternetAvailabilityofProxyMaterials,onyourproxycardorontheinstructionsthataccompaniedyourproxymaterials.
ExactSciences2020ProxyStatement 1
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2020 PROXY SUMMARY
Summary of Voting Proposals and Voting Recommendations
Proposals Board Recommendation
PROPOSAL 1.Election of Directors (Page 5) FOR ALL
WeareaskingstockholderstovoteoneachdirectornomineetoourBoardofDirectorsnamedinthisProxyStatement.OurBoardofDirectorsbelievesthateachdirectornomineehasthequalifications,experience,andskillsnecessarytorepresentstockholdersthroughserviceonourBoardofDirectors.
PROPOSAL 2.Ratification of Appointment of Independent Registered Public Accounting Firm (Page 24) FOR
OurAuditandFinanceCommitteehasappointedPricewaterhouseCoopers,LLP("PWC")toserveastheCompany'sindependentregisteredpublicaccountingfirmforthefiscalyearendingDecember31,2020.OurAuditandFinanceCommitteeandourBoardofDirectorsbelievethattheretentionofPWCtoserveasourindependentauditorisinthebestinterestsoftheCompanyanditsstockholders.Asamatterofgoodcorporategovernance,stockholdersarebeingaskedtoratifyourAuditandFinanceCommittee'sappointmentofPWC.
PROPOSAL 3.Non-Binding, Advisory Approval of Compensation to NEOs ("Say-on-Pay") (Page 28) FOR
WeareaskingourstockholderstoindicatetheirsupportforourexecutivecompensationprogramsasdescribedinthisProxyStatement.Thisvoteisreferredtoasa"Say-on-Pay"vote.
PROPOSAL 4.Approval of Amendment to our Certificate of Incorporation (Page 51) FOR
WeareaskingstockholderstoapproveanamendmenttoourCertificateofIncorporationincreasingthenumberofauthorizedsharesofcommonstockfrom200,000,000sharesto400,000,000shares.
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2020 PROXY SUMMARY
Nominees for Election as Directors and Continuing DirectorsOurBoardofDirectorsrecommendsavoteFORtheelectionofeachofthefollowingnomineesfordirector:
Director Director Committee MembershipName Age Since Class Primary Occupation AFC CMDC CGNC ITPC
Nominees for Election as Class II Directors
Eli Casdin* 47 2017 ClassII Founder,ChiefInvestmentOfficerandManagingDirector,CasdinCapital
James E. Doyle* 74 2014 ClassII FormerGovernorofWisconsin(2003-2011);CurrentlyOfCounsel,Foley&LardnerLLP,andPartner,Doyle&BoyceStrategies
Freda Lewis-Hall* 65 2020 ClassII FormerChiefPatientOfficer,ExecutiveVicePresident,andChiefMedicalOfficerofPfizerInc.
Kathleen Sebelius* 72 2019 ClassII FormerSecretaryoftheDepartmentofHealthandHumanServices(2009-2014)andformerGovernorofKansas(2003-2009);CurrentlyCEOofSebeliusResourcesLLC
Continuing Directors
Thomas D. Carey* 58 2013 ClassIII FounderandManagingDirector,PerspectiveGroup,LLC
Kevin T. Conroy 54 2009 ClassI President,CEOandChairmanoftheBoardofDirectors,ExactSciencesCorporation
Pierre Jacquet* 53 2019 ClassIII ViceChairman,GlobalHealthcareManagingDirector,L.E.K.Consulting
Daniel J. Levangie* 69 2010 ClassIII FormerCEOandPresident,CytycHealthCorporation;CurrentlyCo-founderandManager,ATONPartners
Andrew Slavitt 54 2019 ClassI FounderandGeneralPartnerofTownHallVentures;FormerActingAdministrator,CentersforMedicare&MedicaidServices
Michael S. Wyzga* 65 2015 ClassIII FormerExecutiveVicePresident,FinanceandChiefFinancialOfficer,GenzymeCorporation
Katherine S. Zanotti* 65 2009 ClassI FormerCEOofArbonneInternational
†
*Independent Chair Member LeadIndependentDirectorAFC = Audit and Finance Committee; CMDC = Compensation and Management Development Committee; CGNC = Corporate Governance & Nominating Committee;ITPC = Innovation,Technology and Pipeline Committee
†
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2020 PROXY SUMMARY
Governance Highlights
Nine of eleven directors independentAnnual evaluation of CEO by our Board of DirectorsAnnual Board and Committee self-evaluationsBoard exercising a strong, independent oversight functionRobust director nominee selection processCommitted to actively seeking female and minority board candidatesLead Independent Director exercising forceful, energetic and independent leadershipStanding Committees comprised entirely of independent directorsRobust stock ownership guidelines for independent directors and executive officersClawback provisions in our key compensation programsRegular executive sessions of non-management directorsAnnual "say on pay" advisory voteAnti-hedging, anti-short sale and anti-pledging policiesEngagement of independent compensation consultant
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PROPOSAL 1—ELECTION OF DIRECTORS
PROPOSAL 1—ELECTION OF DIRECTORS
WHAT YOU ARE VOTING ON:Atthe2020AnnualMeeting,fourClassIIdirectorsaretobeelected,eachtoholdofficeuntilthe2023AnnualMeetinganduntilhisorherrespectivesuccessor
iselectedandqualified,oruntilhisorherearlierdeath,resignationorremoval.
TheCompany'sBoardofDirectorscurrentlyconsistsofelevenmembersandisdividedintothreeclassesservingtermsofthreeyears.Stockholderselectoneclassofdirectorsateachannualmeeting.Theclassupforelectionatthe2020AnnualMeetingisClassII,whosemembersarecurrentlyEliCasdin,JamesE.Doyle,FredaLewis-HallandKathleenSebelius.UpontherecommendationoftheCorporateGovernanceandNominatingCommitteeofourBoardofDirectors,ourBoardofDirectorshasnominatedandrecommendedEliCasdin,JamesE.Doyle,FredaLewis-HallandKathleenSebeliusforre-electiontoourBoardofDirectorsasClassIIdirectors.
SharesrepresentedbyallproxiesreceivedbyourBoardofDirectorsandnotmarkedsoastowithholdauthoritytovoteforanyindividualnomineewillbevotedFORtheelectionofthenomineesnamedbelow.OurBoardofDirectorsknowsofnoreasonwhyanynomineewouldbeunableorunwillingtoserve,butifsuchshouldbethecase,proxiesmaybevotedfortheelectionofsomeotherpersonnominatedbyourBoardofDirectors.
TheCompany'sCorporateGovernanceGuidelinesprovideforamajorityvotingpolicyinuncontestedelectionsofnomineestoourBoardofDirectors.Underthemajorityvotingpolicy,anynomineefordirectorinanuncontestedelectionwhoreceivesagreaternumberofvotes"withheld"fromhisorherelectionthanvotes"for"suchelectionmustofferhisorherresignationasadirectortotheCorporateGovernanceandNominatingCommitteeofourBoardofDirectors.Uponreceiptofthisofferofresignation,theCorporateGovernanceandNominatingCommitteewillconsidertheofferofresignationandrecommendtoourBoardofDirectorsactiontobetakenwithrespecttotheofferofresignation,includingwhetherornottoacceptsuchofferofresignation.OurBoardofDirectorswillthenactuponsuchrecommendationandpromptlydiscloseitsdecision,togetherwithanexplanationofthereasonsbehindsuchdecision.OurmajorityvotingpolicyissetforthinourCorporateGovernanceGuidelines,whichcanbefoundonourwebsitelocatedatwww.exactsciences.comunder"InvestorRelations—CorporateGovernance."
Setforthbelowarethenomineestobeelectedatthe2020AnnualMeetingandothermembersofourBoardofDirectorsand,foreachsuchotherdirector,theyearsuchdirectorwasfirstelectedasadirector,theyeareachdirector'scurrenttermwillexpireandthecurrentclassofeachdirector.
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INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR
INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTORSetforthbelowisbackgroundinformationforeachcurrentdirectorandnomineefordirector,aswellasinformationregardingadditionalexperience,qualifications,attributesorskillsthatledourBoardofDirectorstoconcludethatsuchdirectorornomineeshouldserveonourBoardofDirectors.
Nominees for Class II Directors
ELI CASDIN DIRECTOR SINCE: 2017
CurrentClassofDirector:IICurrentTermExpiration:2020
Eli Casdin,age47,istheChiefInvestmentOfficerandfounderofCasdinCapital.Forthelast17yearshehasanalyzedandinvestedindisruptivetechnologiesandbusinessmodelsinlifesciencesandhealthcare.PriortofoundingCasdinCapital,Mr.CasdinwasavicepresidentatAllianceBernsteininits"thematic"basedinvestmentgroupwhereheresearchedandinvestedintheimplicationsofnewtechnologiesforthelifescienceandhealthcaresectors.HisAllianceBernsteinblackbook,"TheDawnofMolecularMedicine"detailedtheearlyyetalreadyacceleratingwaveofinnovationsinlifesciences,andthenextwaveofinvestmentopportunities.Mr.Casdin'spriorexperienceincludestimeatBearStearnsandCooperHillPartners,ahealthcarefocusedinvestmentfirm.Mr.Casdinearnedabachelor'sdegreefromColumbiaUniversityandanMBAfromColumbiaBusinessSchool.
CasdinbringstoourBoardofDirectorssignificantfinancialandinvestmentexperienceandadeepknowledgeofthehealthcareandlifesciencesindustriesthatprovidesimportantinsightsintoourindustryandcompetitivelandscape.
JAMES E. DOYLE DIRECTOR SINCE: 2014
CurrentClassofDirector:IICurrentTermExpiration:2020
James E. Doyle,age74,iscurrentlyOfCounselatFoley&LardnerLLP,aninternationallawfirm,aswellaspartnerofDoyle&BoyceStrategies,aconsultanttoseveralnationalfoundations.Priortohiscurrentpositions,Mr.Doyleservedtwotermsasthe44thgovernorofthestateofWisconsinfrom2003to2011.Priortohisgubernatorialservice,Mr.DoyleservedthreetermsastheattorneygeneralofthestateofWisconsinfrom1991to2003.Inconnectionwithhisserviceasattorneygeneral,Mr.DoyleservedaspresidentoftheNationalAssociationofAttorneysGeneralfrom1997to1998.Mr.DoylealsopreviouslyservedastheDistrictAttorneyofDaneCounty,Wisconsinandworkedinprivatepractice.HisextensivepublicservicealsoincludesstintsinthePeaceCorpsasateacherinTunisiaandasanattorneyinafederallegalservicesofficeontheNavajoIndianReservation.Mr.Doyleearnedabachelor'sdegreefromtheUniversityofWisconsin—MadisonandaJDfromHarvardLawSchool.
Mr.DoylebringstoourBoardofDirectorsprovenleadershipandmanagerialcapabilitiesacquiredthroughhisextensivepublicandprivatesectorexperience.HealsoprovidesourBoardofDirectorswithdeepknowledgeofgovernmentalandlegalaffairs.
FREDA LEWIS-HALL DIRECTOR SINCE: 2020
CurrentClassofDirector:IICurrentTermExpiration:2020
Freda Lewis-Hall, M.D., DFAPA,age65,servedasChiefPatientOfficerandExecutiveVicePresidentofPfizerInc.(NYSE:PFE)fromJanuary2019toDecember2019.SheactedasaSeniorMedicalAdvisortotheCEOuntilherretirementinMarch2020.From2009toDecember2019,Dr.Lewis-HallservedasPfizer'sChiefMedicalOfficerandExecutiveVicePresident.PriortojoiningPfizerin2009,Dr.Lewis-HallheldvariousseniorleadershippositionsincludingChiefMedicalOfficerandExecutiveVicePresident,MedicinesDevelopmentatVertexPharmaceuticals,Inc.,abiopharmaceuticalcompany,from2008to2009,andSeniorVicePresident,U.S.Pharmaceuticals,MedicalAffairsforBristol-MyersSquibbCo.from2003to2008.Dr.Lewis-HallservesontheboardofdirectorsofSpringWorksTherapeutics,Inc.(NASDAQ:SWTX)and1LifeHealthcare,Inc.(NASDAQ:ONEM).FromDecember2014toMay2017,sheservedontheboardofdirectorsofTenetHealthcareCorporation(NYSE:THC).Dr.Lewis-HallcurrentlyservesontheboardoffellowsofTheHarvardSchoolandtheboardofadvisorsoftheDellMedicalSchool.ShealsoservesasamemberoftheboardofgovernorsforthePatient-CenteredOutcomesResearchInstitute.Dr.Lewis-HallearnedaB.A.inNaturalSciencesfromJohnsHopkinsUniversityandanM.D.fromHowardUniversityCollegeofMedicine.
Dr.Lewis-Hallbringssignificantexpertiseinthebiopharmaceuticalindustryandleadershipexperienceasaseniorexecutiveatvariousbiopharmaceuticalcompanies.Herleadershipinpatient-focusedmedicineandemphasisonpatientengagementandinclusionprovidescriticalinsighttoourBoardofDirectors.
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INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR KATHLEEN G.
SEBELIUS DIRECTOR SINCE: 2019
CurrentClassofDirector:IICurrentTermExpiration:2020
Kathleen G. Sebelius,age72,servesasCEOofSebeliusResourcesLLC,astrategicconsultingfirmthatadvisesprivatecompanies,non-profitorganizationsandfinancialinvestors.From2009through2014,Ms.SebeliusservedinPresidentBarackObama'sCabinetasthe21stSecretaryoftheDepartmentofHealthandHumanServices.AtHHS,Sebeliusmanaged11operatingagencies,90,000employeesin50countriesaroundtheworld,anda$1trillionbudget.PriortothatMs.SebeliusservedasGovernorofKansasfrom2003to2009.PreviouselectedofficesincludetwotermsastheKansasinsurancecommissionerandfourtermsintheKansasLegislature.Ms.SebeliusservesasadirectorofDermira,Inc.(Nasdaq:DERM),abiopharmaceuticalcompany,MyovantSciencesLtd.(NYSE:MYOV),abiopharmaceuticalcompany,andtheKaiserFamilyFoundation.Shealsoco-chairstheAspenInstituteHealthStrategyGroupandservesonadvisoryboardsfortheDoleInstituteofPolitics,SoleraHealth,OutLeadership,theEstéeLauderFoundation,andtheUniversityofKansasCollegeofLiberalArtsandSciences.Ms.Sebeliusearnedabachelor'sdegreefromTrinityWashingtonUniversityandamasterofpublicadministrationfromtheUniversityofKansas.
Ms.Sebeliusbringsawealthofstateandfederalgovernmentexpertise,managementinsightandhealthcareexperiencetoourBoardofDirectorswithdeepknowledgeofthesystemicchallengesandopportunitiestoimprovehealthcare.
Other Members of our Board of Directors
THOMAS D. CAREY DIRECTOR SINCE: 2013
CurrentClassofDirector:IIICurrentTermExpiration:2021
Thomas D. Carey,age58,isthefounderandManagingDirectorofPerspectiveGroup,LLC,ahumancapitalandexecutivesearchfirmservingthehealthcareindustry.Previously,Mr.CareywasamemberatSpencerStuart,aglobalexecutivesearchfirm,from2010through2015,wherehewasresponsibleforleadingthefirm'sglobaleffortsinprovidingboardservicestocompanieswithinallsegmentsofthehealthcaremarket.PriortoSpencerStuart,Mr.CareywaswithRussellReynoldsAssociatesfrom2001to2010whereheservedasaPartnerandCo-Headofthefirm'sGlobalLifeSciencesPracticeforthethreeyearsprecedinghismovetoSpencerStuart.Priortoenteringthesearchindustry,Mr.Careyservedasaninvestmentbankerandthenchieffinancialofficerofbothprivateandpublichealthcareandinformationtechnologycompanies.Mr.Careyearnedabachelor'sdegreefromtheCollegeoftheHolyCrossandanMBAfromtheKelloggGraduateSchoolofManagementatNorthwesternUniversity.
Mr.CareybringstoourBoardofDirectorsmorethan20yearsofbroadlifesciencesindustryexpertise.HisbackgroundinfinanceandtheexecutivesearchindustryalsoprovidesourBoardofDirectorsavaluableperspectivewithrespecttofinancialstrategy,keyexecutivehiresandotherpersonnel-relatedmatters.
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INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR KEVIN T. CONROY DIRECTOR SINCE: 2009
CurrentClassofDirector:ICurrentTermExpiration:2022
Kevin T. Conroy,age54,hasservedasourPresidentandChiefExecutiveOfficerandasadirectorsince2009,andasChairmanofourBoardofDirectorssince2014.Mr.ConroyservedaspresidentandchiefexecutiveofficerofThirdWaveTechnologies,Inc.,amoleculardiagnosticscompany,from2005untiltheacquisitionofThirdWavebyHologic,Inc.in2008.HejoinedThirdWavein2004andservedasgeneralcounseluntil2005.PriortojoiningThirdWave,Mr.ConroyheldleadershippositionsatGEHealthcareandpracticedintellectualpropertylawinprivatepractice.Mr.ConroyalsoservesasadirectorofEpizyme,Inc.(Nasdaq:EPZM),AdaptiveBiotechnologiesCorporation(Nasdaq:ADPT)andARYASciencesAcquisitionCorporation(Nasdaq:ARYAU:US).Heearnedabachelor'sdegreeinelectricalengineeringatMichiganStateUniversityandaJDfromtheUniversityofMichigan.
Mr.Conroybringsextensivebusiness,legalandexecutiveleadershipexperiencetoourBoardofDirectors.Withhissignificantknowledgeof,andbreadthofexperiencein,thehealthcareindustryingeneralandthemoleculardiagnosticsindustryandourCompanyinparticular,heprovidesourBoardofDirectorswithavitalunderstandingofourbusinessandindustry.
PIERRE JACQUET DIRECTOR SINCE: 2019
CurrentClassofDirector:IIICurrentTermExpiration:2021
Pierre Jacquet,age53,isViceChairman,GlobalHealthcareManagingDirectorofL.E.K.Consulting.HehasservedinavarietyofleadershiprolesforL.E.K.,includingthefirm'sGlobalLeadershipTeam,theAmericasmanagementcommittee,andvariouspartneroperatingcommitteessince2001.Mr.Jacquethasspentmorethantwodecadesfocusedoncorporatestrategyconsulting,mergerandacquisitionadvisoryservices,andvaluemanagement,bothdomesticallyandinternationally.Aformerphysician,heworkedwithArthurD.Littlefrom1998to2000asamanagerofitspharmaceuticalpracticeandperformedbusinessdevelopmentforGenzymein1997.Duringhismedicalcareer,hewasaFellowattheWashingtonCancerInstitutefrom1993to1996,whereheauthoredover40publicationsandpresentations.PierrehasalsoservedontheAdvisoryBoardofLifeScienceCaressince2017.Mr.JacquetearnedaMasterofBusinessAdministrationfromtheDardenGraduateSchoolattheUniversityofVirginiain1998,wasawardedaDoctorofMedicinewithhighdistinctionin1991,andaDoctorofPhilosophyinbiomedicalsciencesin1996fromtheUniversityofLiègeinBelgium.
Mr.JacquetbringstoourBoardofDirectorsextensivebusinessandmanagerialexperienceinthehealthcareindustryandhisserviceasaphysicianandfellowatanoncologyfocusedmedicalinstituteprovidesvaluableinsighttoourBoardofDirectors.
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INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR DANIEL J. LEVANGIE DIRECTOR SINCE: 2010
CurrentClassofDirector:IIICurrentTermExpiration:2021
Daniel J. Levangie,age69,isanexperiencedexecutiveandcorporatedirectorwithsenioroperatingexperienceinthefieldofmedicaldevicesandinvitrodiagnostics.Mr.Levangieisco-founderandmanagerofATONPartners,aprivateinvestmentfirm,andChairman,President&CEOofCereVasc,LLC,anearly-stagemedicaldevicecompany.From2013throughJanuary2017,Mr.LevangieservedasPresidentofInsuletDrugDeliverySystems.From2011through2013,Mr.LevangiewaschiefexecutiveofficerofDuneMedicalDevices,Inc.andco-founderandmanagingpartnerofConstitutionMedicalInvestors,Inc.,aBoston-basedprivateinvestmentandproductdevelopmentfirmacquiredbyRocheDiagnosticsCorporationin2013.Priortotheabove,Mr.LevangieheldavarietyofexecutivemanagementpositionswithCytycCorporationuntiltheacquisitionofCytycbyHologic,Inc.in2007.Thesepositionsincludeexecutivevicepresidentandchiefoperatingofficer,chiefexecutiveofficerandpresidentofCytycHealthCorporation,executivevicepresidentandchiefcommercialofficerandpresident,CytycSurgicalProductsDivision.PriortojoiningCytycCorporationin1992,Mr.Levangieheldanumberofsales,marketingandmanagementpositionswithAbbottLaboratories,adiversifiedhealthcarecompany.Mr.LevangieiscurrentlyadirectorofCereVasc,LLC,DuneMedicalDevicesandRenovia,Inc.HepreviouslyservedasadirectorofInsuletCorporation,amedicaldevicecompany(Nasdaq:PODD),Liposcience,Inc.,adiagnosticscompany(formerlyNasdaq:LIPO),ev3,Inc.,amedicaldevicecompany,andHologic,Inc.,adiagnostic,imagingsystemsandsurgicalproductscompany(Nasdaq:HOLX).Mr.LevangieisamemberoftheAdvisoryBoardoftheBarnettInstituteofNortheasternUniversityandisatrusteeofExcelCharterSchool,EastBoston.Mr.Levangieearnedabachelor'sdegreeinpharmacyfromNortheasternUniversity.
Levangiebringsawealthofexecutive,managerialandleadershipexperienceinthehealthcareindustrytoourBoard.Hehassignificantboardofdirectorexperiencefromhisserviceontheboardsofdirectorsofnumerousmedicaldeviceandbiotechnologycompanies.
ANDREW SLAVITT DIRECTOR SINCE: 2019
CurrentClassofDirector:ICurrentTermExpiration:2022
Andrew Slavitt,age54,isthefounderandGeneralPartnerofTownHallVentures,whichinvestsinhealthcareinnovationsinvulnerablecommunities,apositionhehasheldsince2018.Priortothat,heservedastheActingAdministratorfortheCentersforMedicare&MedicaidServicesfrom2015to2017,andasGroupExecutiveVicePresidentofOptum,UnitedHealthGroup'shealthservicesplatform,from2012to2014.From2006through2011,Mr.SlavittwastheCEOofOptumInsight(formerlyIngenix),aUnitedHealthGroupsubsidiary.HeservesontheBoardofDirectorsofUnitedStatesofCare,anationalnon-profithealththink-tankandadvocacyorganization,isco-chairoftheFutureofHealthcareInitiativeattheBipartisanPolicyCenter,andpreviouslyservedasadirectorofCapellaEducationCompany,aneducationservicescompany(formerlyNasdaq:CPLA).Mr.SlavittreceivedhisMBAfromHarvardBusinessSchoolandbachelorofartsandbachelorofsciencedegreesfromtheUniversityofPennsylvania.
Mr.SlavittbringstoourBoardofDirectorsextensiveexecutiveandleadershipexperienceinthehealthcareindustry.HisleadershipatCentersforMedicare&MedicaidServicesandwithinthehealthcareinsuranceindustryprovidesavaluableperspectivetoourBoard.
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INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR MICHAEL S.
WYZGA DIRECTOR SINCE: 2015
CurrentClassofDirector:IIICurrentTermExpiration:2021
Michael S. Wyzga,age65,isanindependenthealthcareconsultantandservedasthePresidentandChiefExecutiveOfficerandamemberoftheboardofdirectorsofRadiusHealth,Inc.,abiopharmaceuticalcompanyfocusedondevelopingnewtherapeuticsforthetreatmentofosteoporosisandotherwomen'shealthconditions,fromDecember2011toNovember2013.Priortothat,Mr.WyzgaservedinvariousseniormanagementpositionsatGenzymeCorporation,aglobalbiotechnologycompany.Mr.WyzgajoinedGenzymeinMarch1997andmostrecentlyservedasExecutiveVicePresident,FinancefromMay2003untilNovember2011andasChiefFinancialOfficerfromJuly1999untilNovember2011.Mr.WyzgacurrentlyservesasChairmanoftheBoardofDirectorsofGensightBiologicsS.A.,aclinical-stagebiologicscompany(EPA:SIGHT),ChairmanoftheBoardofDirectorsofX4Pharmaceuticals,abiopharmaceuticalcompany(Nasdaq:XFOR),adirectorofMereoBioPharmaGroupplc,aclinical-stagebiopharmaceuticalcompany(Nasdaq:MREO),andLogiBioTherapeutics,Inc.,abiopharmaceuticalcompany(Nasdaq:LOGC),andpreviouslyservedasadirectorofAkebiaTherapeutics,Inc.(Nasdaq:AKBA),ProsensaHoldingN.V.(formerlyNasdaq:RNA),abiotechnologycompany,andIdenixPharmaceuticals,Inc.(formerlyNasdaq:IDIX),apharmaceuticalcompany.Mr.Wyzgaearnedabachelor'sdegreefromSuffolkUniversityandanMBAfromProvidenceCollege.
Mr.WyzgabringsextensivefinancialandmanagerialexperienceinthebiotechnologyandbiopharmaceuticalindustriestoourBoardofDirectorswithkeyinsightintofinancialandstrategicinitiativesaswellasextensivepubliccompanyboardservicewithinourindustry.
KATHERINE S. ZANOTTI DIRECTOR SINCE: 2009
CurrentClassofDirector:ICurrentTermExpiration:2022
Katherine S. Zanotti,age65,servedaschiefexecutiveofficerofArbonneInternationalfrom2009until2018.Ms.ZanottialsoservedasChairofNaturalProductsGroup(theholdingcompanyofArbonne,Nature'sGate,andLevlad)from2010until2018whenGroupeRocheracquiredNaturalProductsGroupandArbonneInternational.Arbonneisabotanicallybasedskincare,cosmeticandnutritioncompanymarketedinsevencountries,withrevenueofover$600million.From2002to2006,sheservedasseniorvicepresidentofmarketingatMcDonald'sCorporation.PriortojoiningMcDonald'sMs.ZanottiwasavicepresidentattheProcter&GambleCompanyandmostrecentlyservedasvicepresidentandgeneralmanageroftheNorthAmericanpharmaceuticalbusinessandthecorporatewomen'shealthplatform.Ms.ZanotticurrentlyservesontheBoardofTrusteesofXavierUniversity.Ms.ZanotticurrentlyservesasadirectorofCutera,Inc.,adeveloperofcosmeticandaestheticlaserequipment(Nasdaq:CUTR).ShepreviouslyservedasadirectorofHill-RomHoldings,Inc.,aworldwidemanufacturerandproviderofmedicaltechnologiesandrelatedservices(NYSE:HRC);MentorCorporation,amedicaldevicecompany;AlbertoCulverCompany,apersonalcareproductscompany;andThirdWaveTechnologies,Inc.,amoleculardiagnosticscompany.Ms.Zanottiearnedabachelor'sdegreeineconomicsandstudiofineartsfromGeorgetownUniversityandanMBAwithaconcentrationinmarketingandfinancefromXavierUniversity.
Ms.Zanotti'sextensiveexecutive,managerialandleadershipexperience,includingmanyyearsinthepharmaceuticalindustry,positionsherwelltoserveasamemberofourBoard.HerbusinessacumenandexperienceontheboardsofdirectorsofnumerouscompaniesmakeheravaluableadditiontoourBoardofDirectors.
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INFORMATION CONCERNING EXECUTIVE OFFICERS
INFORMATION CONCERNING EXECUTIVE OFFICERSSetforthbelowisbackgroundinformationrelatingtoourexecutiveofficers.Kevin T. ConroyisdiscussedaboveunderInformation Concerning Directors and Nominees for Director.
JEFFREY T. ELLIOTT
Position: Chief Financial Officer
Jeffrey T. Elliott,age42,hasservedasourChiefFinancialOfficersinceNovember2016.PriortohisappointmentasChiefFinancialOfficer,Mr.ElliottservedastheCompany'sVicePresident,BusinessDevelopmentandStrategy,fromJune2016toNovember2016.PriortojoiningtheCompany,from2007to2016,Mr.ElliottwaswithRobertW.Baird&Co.,wherefromJune2012toJune2016hewasaseniorresearchanalystwhocovereddiagnosticsandlifesciencetoolscompanies.Earlierinhiscareer,Mr.ElliottworkedinasupplychainroleforWalgreensandasaconsultantatCapGeminiErnst&Young.Mr.Elliottearnedabachelor'sdegreeinbusinessadministrationfromtheUniversityofIllinoisatUrbana-ChampaignandanMBAfromtheUniversityofChicagoBoothSchoolofBusiness.Mr.ElliottisaCFAcharterholder.
MARK STENHOUSE
Position: General Manager,Screening
Mark Stenhouse,age53,hasservedasGeneralManager,ScreeningsinceNovember2019andservedasPresident,CologuardfromApril2018untilNovember2019.PriortojoiningtheCompany,Mr.Stenhouseworkedforover25yearsatAbbottLaboratories(NYSE:ABT)andAbbVie,Inc.(NYSE:ABVV),includinginanumberofexecutiveandmanagerialpositionswithinitsU.S.Immunologydivision.Mostrecently,fromOctober2016untilMarch2018,Mr.StenhouseservedasVicePresident,U.S.Immunology,whereMr.StenhousedevelopedAbbVie'sU.S.expansionintotheimmunologymarketplace.FromApril2010untilSeptember2016,Mr.StenhouseservedasVicePresidentandVicePresident/GeneralManager,U.S.Immunology—GastroenterologyFranchise,whereMr.Stenhouseledasuccessfulturnaroundofthefranchise,includingapprovalofHUMIRAfortreatmentofUlcerativeColitis.FromSeptember2006throughMarch2010,Mr.Stenhouseheldvariousseniormanagement,marketingandsalespositionswithinAbbottLaboratories'U.S.Immunologydivision.Mr.Stenhouseearnedabachelor'sdegreeinbusinessadministrationfromCollegeofCharleston.
TORSTEN HOOF
Position: General Manager,International
Torsten Hoof,age60,hasservedasourGeneralManager,InternationalsincetheCompany'sacquisitionofGenomicHealthinNovember2019.Mr.HoofjoinedGenomicHealthinSeptember2017asSeniorVicePresident,International.Mr.HoofpreviouslyservedfromMay2015toMarch2017astheVicePresidentandHeadofOncologyEMEAatBaxalta,wherehebuiltthecompany'soncologypresenceinEurope.FromFebruary2013toOctober2014,Mr.HoofwasalsotheEuropeanGeneralManagerforEndocyte,whereheestablisheditsEuropeanorganizationdesignedtobringaninnovative,precisionmedicinesolutiontopatientswithovariancancer.Duringhis10yearsatBristol-MyersSquibb,heledtheglobalhaemato-oncologyfranchiseandwasEMEAGeneralManagerandVicePresidentforHIVandPrimaryCare.InhiscareerwithRoche,TorstenledtheTamiflulaunchasaGlobalBusinessLeaderandestablishedRoche'sGermanleadershippositioninVirology.TorstenalsoservedasanIndependentDirectoratHRAPharmauntilitsacquisitionbyGoldmanSachsandAstorginFebruary2016.Mr.HoofearnedPhDandmaster'sdegreesfromtheUniversityofHannover,GermanyandisanalumnusoftheBoehringerIngelheimFonds,Germany.
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INFORMATION CONCERNING EXECUTIVE OFFICERS JAKE
ORVILLE
Position: General Manager,Pipeline
Jake Orville,age46,hasservedasourGeneralManager,PipelinesinceNovember2019andservedasSeniorVicePresident,PipelinefromFebruary2019toNovember2019.Mr.Orvillepreviouslyservedasgeneralmanager,Cardiometabolic&EndocrinologyFranchise,QuestDiagnostics,Inc.fromNovember2017toFebruary2018.Mr.Orvilleco-foundedClevelandHeartLab,Inc.inDecember2008andservedasitschiefexecutiveofficerfromDecember2008toNovember2017.EarlierinhiscareerMr.OrvilleservedinleadershipandoperationalrolesatNextGenSciences,Inc.andThirdWaveTechnologies,Inc.Mr.Orvilleearnedabachelor'sdegreefromUniversityofMassachusetts-AmherstandanMBAfromtheUniversityofWisconsin-Madison.
GISELA PAULSEN
Position: General Manager,Precision Oncology
Gisela Paulsen,age54,hasservedasourGeneralManager,PrecisionOncologysinceApril2020.PriortojoiningtheCompany,Ms.PaulsenservedinvariousmanagementrolesatF.Hoffmann-LaRocheLtd.andGenentech,IncsinceNovember2005.SheservedasRocheandGenentech'sSeniorVicePresident,GlobalHead,ProductDevelopment,ClinicalOperationsfromJanuary2018toApril2020,asRocheandGenentech'sVicePresident,GlobalHead,ProductDevelopment,GlobalProductStrategy&Late-StagePortfolioFinancebeginningfromMarch2017toFebruary2018,andasGenentech'sVicePresident,AccessSolutionsfromSeptember2014toFebruary2017.Ms.Paulsenreceivedabachelorofscience,pharmacyandamasterofscience,pharmaceuticsanddrugdeliveryfromUppsalaUniversityinSweden.
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CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION
CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTORCOMPENSATION
Board Independence
OurBoardofDirectorshasdeterminedthateachofThomasD.Carey,EliCasdin,JamesE.Doyle,PierreJacquet,DanielJ.Levangie,FredaLewis-Hall,KathleenSebelius,MichaelS.WyzgaandKatherineS.ZanottiisanindependentdirectorwithinthemeaningofthedirectorindependencestandardsofTheNASDAQStockMarket,Inc.("NASDAQ").Furthermore,ourBoardofDirectorshasdeterminedthatallofthemembersofourAuditandFinanceCommittee,CompensationandManagementDevelopmentCommittee,CorporateGovernanceandNominatingCommitteeandInnovation,TechnologyandPipelineCommitteeareindependentwithinthemeaningofthedirectorindependencestandardsofNASDAQandtherulesoftheSECapplicabletoeachsuchcommittee.
Executive Sessions of Independent Directors
Executivesessionsofourindependentdirectorsaregenerallyscheduledfollowingeachregularlyscheduledin-personmeetingofourBoardofDirectors.ExecutivesessionsareledbyJamesE.Doyle,ourleadindependentdirector,whoactivelysolicitsotherindependentdirectorsforagendaitemsinadvanceofsuchmeetings.Theindependentdirectorsutilizetheexecutivesessionstodiscuss,amongotheritems,corporatestrategyandplanning,includingsuccessionplanningforourexecutiveofficers.
Board Qualifications
OurCorporateGovernanceandNominatingCommitteeisresponsibleforidentifyingtheappropriatequalifications,skillsandcharacteristicsdesiredofmembersofourBoardofDirectorsinthecontextoftheneedsofthebusinessandthecurrentcompositionandneedsofourBoardofDirectors.
Directorcandidatesareconsideredbaseduponavarietyofcriteria,includingdemonstratedbusinessandprofessionalskillsandexperiencesrelevanttoourbusinessandstrategicdirection,concernforlong-termstockholderinterests,personalintegrityandsoundbusinessjudgment.OurBoardofDirectorsseeksmembersfromdiverseprofessionalbackgroundswhocombineabroadspectrumofrelevantindustryandstrategicexperienceandexpertisethat,inconcert,offerusandourstockholdersdiversityofopinionandinsightintheareasmostimportanttousandourcorporatemission.Inaddition,nomineesfordirectorareselectedtohavecomplementary,ratherthanoverlapping,skillsets.WearecommittedtoactivelyseekingfemaleandminoritycandidatesforthepoolfromwhichBoardcandidatesarechosen.AllcandidatesfordirectornomineemusthavetimeavailabletodevotetotheactivitiesofourBoardofDirectors.OurCorporateGovernanceandNominatingCommitteealsoconsiderstheindependenceofcandidatesfordirectornominee,includingtheappearanceofanyconflictinservingasadirector.CandidatesfordirectornomineeswhodonotmeetallofthesecriteriamaystillbeconsideredfornominationtoourBoardofDirectorsifourCorporateGovernanceandNominatingCommitteebelievesthatthecandidatewillmakeanexceptionalcontributiontousandourstockholders.
Board Leadership Structure
Currently,Mr.ConroyservesasboththeChairmanofourBoardofDirectorsandtheChiefExecutiveOfficeroftheCompany.Ourby-lawspermitthesepositionstobeheldbythesameperson,andourBoardofDirectorsbelievesthatitisinthebestinterestsoftheCompanytoretainflexibilityindeterminingwhethertoseparateorcombinetherolesofChairmanandChiefExecutiveOfficerbasedonourcircumstances.WhileourBoardofDirectorsdoesnothaveaformalpolicyregardingtheseparationoftherolesofChairmanandChiefExecutiveOfficer,ourBoardofDirectorsrecognizesthatoneofitskeyresponsibilitiesistoevaluateanddetermineitsoptimalleadershipstructuresoastoprovideindependentoversightofseniormanagement,ahighlyengagedBoardofDirectors,andtherightbalancebetween(i)effectiveindependentoversightoftheCompany'sbusiness,(ii)ourBoardofDirectors'activitiesand(iii)consistentcorporateleadership.Onatleastanannualbasis,ourCorporateGovernanceandNominatingCommitteereviewsourcorporateleadershipstructure.Aspartofitsmostrecentsuchassessment,theCorporateGovernanceandNominatingCommitteegavethoroughconsiderationtoanumberoffactors,including,butnotlimitedto,theprosandconsofalternativeleadershipstructuresgiventheCompany'scurrentoperatingandgovernanceenvironment,areviewofempiricaldataonthetopic,investorfeedbackandthedynamicsofourBoardofDirectors.
BasedupontheseconsiderationsandtherecommendationoftheCorporateGovernanceandNominatingCommittee,theBoardofDirectorsdeterminedtomaintainourBoardofDirectors'currentleadershipstructurewithMr.ConroyservingasboththeChairmanofourBoardofDirectorsandtheChiefExecutiveOfficeroftheCompany.TheBoardofDirectorsbasedthisdeterminationon(1)Mr.Conroy'sextensiveexperienceinandknowledgeoftheCompany,themoleculardiagnosticsindustryandtheregulatoryenvironment,(2)thehighlyeffectivebridgeMr.Conroy'sserviceprovidesbetweenourBoardofDirectorsandtheCompany'smanagement,(3)Mr.Conroy'scontinuedleadershipandvisionnecessarytoleadourBoardofDirectorsandtheCompanythroughitschallengingindustryandmacroeconomicenvironments,(4)Mr.Conroy'sinvestor-focusedperspectiveand(5)theeffectiveindependentleadershipprovidedontheBoardofDirectorsbyourLeadIndependentDirectorandotherindependentdirectorsaswellasourstandingcommitteeswhichareallcomprisedentirelyofindependentdirectors.
PursuanttoourCorporateGovernanceGuidelines,atanytimethattheCompanydoesnothaveanindependentchairmanoftheBoardofDirectors,theBoardofDirectorsappointsanindependentdirectortoserveasLeadIndependentDirector.TheLeadIndependentDirectoriselectedtoserveaone-yeartermcommencingupontheadjournmentoftheannualmeetingofstockholdersuntiltheadjournmentofthefollowingyear'sannualmeetingofstockholders.OurCorporateGovernanceGuidelinesempowerourLeadIndependentDirectorwithwell-defineddutiesthatarefurthersummarizedbelow.Inaddition,ourBoardofDirectors—whichcurrentlyiscomprisedof82%independentdirectors—exercisesa
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strong,independentoversightfunctionwhichenhancestheaccountabilityoftheseniormanagementteamtoourBoardofDirectorsandprovidesforrobustandimpartialleadershipandaunifiedvoicethatisaccountabletoourstockholders.ThisoversightfunctionisenhancedbythefactthatourAuditandFinance,CompensationandManagementDevelopment,CorporateGovernanceandNominatingandInnovation,TechnologyandPipelineCommitteesarecomprisedentirelyofindependentdirectors.Further,ourBoardofDirectorsmeetingsincluderegularexecutivesessionsoftheindependentdirectorsandanannualevaluationofourCEO'sperformanceagainstpre-determinedgoals.OurBoardofDirectorscanandwillchangeitsleadershipstructureifourBoardofDirectorsdeterminesthatdoingsoisinthebestinterestoftheCompanyanditsstockholders.
Lead Independent Director Duties
» CounseltheCEOonissuesofinterestand/orconcerntotheindependentdirectors
» Coordinate,developtheagendaforandchairexecutivesessionsoftheBoard'sindependentdirectors
» ActasprincipalliaisonbetweentheindependentdirectorsandtheCEOonsensitiveissues
» LeadtheannualCEOreviewprocessandmeetwiththeCEOtodiscusssuchevaluation
» ReviewrecommendationsforretentionofconsultantswhoreportdirectlytotheBoard
» ProvidetheBoard'schairpersonwithinputastothepreparationoftheagendaforBoardmeetings
» AdvisetheBoard'schairpersonastothequantity,qualityandtimelinessoftheflowofinformationfrommanagementtotheindependentdirectors
Corporate Governance Guidelines
OurBoardofDirectorshasapproved,upontherecommendationoftheCorporateGovernanceandNominatingCommittee,asetofCorporateGovernanceGuidelinesunderwhichourBoardofDirectorsanditscommitteesoperate.OurCorporateGovernanceGuidelinesassisttheBoardanditscommitteesintheexerciseoftheirresponsibilitiesandestablishacommonsetofexpectationsandguidelinesinordertoprovideastrongandrobustgovernanceframeworkfortheCompany.Amongothertopics,ourCorporateGovernanceGuidelinesaddressthefollowingmatters:
» BoardEvaluation:OurBoardofDirectorsannuallyconductsaconfidentialperformanceevaluationtodeterminewhetheritanditscommitteesarefunctioningadequatelyandeffectively.Aspartofthisevaluation,eachdirectorcompletesawrittenself-assessmentquestionnairewithavarietyofquestionsdesignedtogathersuggestionsforimprovingtheeffectivenessoftheBoardofDirectorsanditscommitteesandtosolicitfeedbackonarangeofissues,includingBoardcomposition,Boarddynamics,theBoard'srelationshipwithseniormanagement,Boardagendasandmeetings,BoardprocessesandBoardcommittees.
» LimitationonOtherBoardService:CarryingoutthedutiesandfulfillingtheresponsibilitiesasamemberofourBoardofDirectorsrequiresasignificantcommitmentofanindividual'stimeandattention.WhileourBoardofDirectorsdoesnotbelievethatexplicitlimitsonthenumberofotherboardsofdirectorsonwhichdirectorsmayservearecurrentlyappropriate,eachdirectormustnotifytheChairmaninconnectionwithacceptingaseatontheboardofdirectorsofanotherbusinesscorporationsothatthepotentialforconflictsorotherfactorscompromisingsuchdirector'sabilitytoperformhisorherdutiesforourBoardofDirectorsmaybefullyassessed.
» BoardandCommitteeMeetingAttendance:EachmemberoftheBoardisexpectedtomakereasonableeffortstoattendregularlyscheduledmeetingsoftheBoardandtoparticipateintelephoneconferencemeetingsorotherspecialmeetingsoftheBoard.Attendanceandparticipationatmeetingsisanimportantcomponentofthedirectors'dutiesand,assuch,attendanceratesaretakenintoaccountbytheCorporateGovernanceandNominatingCommitteeinconnectionwithassessmentsofdirectorcandidatesforre-nominationasdirectors.
» DirectorOrientationandContinuingEducation:OurCorporateGovernanceandNominatingCommitteehasdevelopedanorientationprogramdesignedtofamiliarizenewdirectorswithourbusinessandstrategicplans,keypoliciesandpractices,principalofficersandmanagementstructure,auditingandcomplianceprocessesandourCodeofBusinessConductandEthics.Inaddition,ourBoardcommitteesmonitorthecontinuingeducationneedsoftheirmembersandrecommendactiontotheBoardwhereappropriate.Further,ourexecutiveofficersareresponsibleforperiodicallyprovidingmaterialsorbriefingsessionsforcontinuingdirectorstoassistthemindischargingtheirduties.
» DirectorAccesstoManagementandAdvisors:Directorshavecompleteaccesstoseniormembersofourmanagement.OurBoardofDirectorsandeachofitscommitteesisauthorizedtorequestthatanyCompanyofficeroremployee,outsidelegalcounsel,independentauditororotherprofessionalretainedbytheCompanytorenderadvicetotheCompany,attendanymeetingoftheBoardorsuchcommittee,orotherwisemeetwithmembersoforadvisorstotheBoardofDirectors.OurBoardofDirectorsandeachcommitteeisauthorizedtoengagelegal,accountingorotheradvisorstoprovideitwithadviceandinformationinconnectionwithcarryingoutitsortheirresponsibilities.
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CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION
Management Succession Planning
OurBoardofDirectorsrecognizesthatoneofitsmostimportantdutiesistoensurecontinuityintheCompany'sseniorleadershippositionsbyoverseeingthedevelopmentofexecutivetalentandplanningforthesuccessionofourseniormanagement,includingourChiefExecutiveOfficer.
OurCorporateGovernanceandNominatingCommitteeandCompensationandManagementDevelopmentCommitteereviewandoverseethedevelopmentandimplementationofseniormanagementsuccessionplans.ThesecommitteesperiodicallyreporttotheBoardofDirectorson(i)suchmanagementsuccessionplans,includingrecommendationsandevaluationsofpotentialsuccessorstotheChiefExecutiveOfficerandothermembersofseniormanagementand(ii)anydevelopmentplansforthen-currentmembersofseniormanagement.
Stockholder Engagement
Webelieveeffectivecorporategovernancerequiresregular,constructiveandthoughtfulengagementwithourstockholdersonanumberoftopics,includingoperatingperformance,corporategovernance,long-termstrategy,executivecompensation,corporatesocialresponsibilityandgovernance-relatedissues.OurBoardofDirectors,CEOandseniormanagementteamplayacentralroleinourstockholderengagementstrategyandweregularlyengagestockholdersthroughouttheyearandconsidertheirinput.Inaddition,ourCompensationandManagementDevelopmentCommitteeischargedwithmonitoringandevaluatingtheCompany'sengagementwithstockholderstosolicitfeedbackontheCompany'scompensationphilosophy,structure,programs,practicesandpolicies.
Wesolicitongoingfeedbackfrommajorstockholdersandstriveforcontinuedandrobuststockholderengagementthroughouttheyear.OurBoardofDirectorswelcomesfeedbackonitscorporategovernanceandexecutivecompensationpracticesandpoliciesandbelievesthatcontinuedengagementwithstockholderswillfurtheralignthelong-terminterestsofourBoardofDirectors,theCompany,itsmanagementanditsstockholders.
AssetforthinourCorporateGovernanceGuidelines,acopyofwhichisavailableatwww.exactsciences.com,securityholderswhowishtocommunicatedirectlywithourBoardofDirectors,theindependentdirectorsofourBoardofDirectorsoranyindividualmemberofourBoardofDirectorsmaydosobysendingsuchcommunicationbycertifiedmailaddressedtotheChairmanofourBoardofDirectors,asarepresentativeoftheentireBoardofDirectors,theLeadIndependentDirector,asarepresentativeoftheindependentdirectorsofourBoardofDirectors,ortotheindividualdirectorordirectors,ineachcase,c/oSecretary,ExactSciencesCorporation,441CharmanyDrive,Madison,Wisconsin53719.TheSecretaryreviewsanysuchsecurityholdercommunicationandforwardsrelevantcommunicationstotheaddressee.
Policies Regarding Director Nominations
OurBoardofDirectorshasadoptedapolicyconcerningdirectornominations,acopyofwhichisavailableatwww.exactsciences.com.Setforthbelowisasummaryofcertainprovisionsofthispolicy.
Process for Identifying and Evaluating Director Nominees
OurBoardofDirectorsisresponsibleforselectingnomineesforelectiontoourBoardofDirectorsbyourstockholders.OurBoardofDirectorsdelegatestheselectionprocesstoourCorporateGovernanceandNominatingCommittee,withtheexpectationthatothermembersofourBoardofDirectors,andofmanagement,mayberequestedtotakepartintheprocessasappropriate.Generally,ourCorporateGovernanceandNominatingCommitteeidentifiescandidatesfordirectornomineesinconsultationwithmanagement,throughtheuseofsearchfirmsorotheradvisers,throughtherecommendationssubmittedbyotherdirectorsorstockholdersorthroughsuchothermethodsasourCorporateGovernanceandNominatingCommitteedeemsappropriate.WearecommittedtoactivelyseekingfemaleandminoritycandidatesforthepoolfromwhichBoardcandidatesarechosen.Oncecandidateshavebeenidentified,ourCorporateGovernanceandNominatingCommitteeconfirmsthatthecandidatesmeetthequalificationsfordirectornomineesestablishedbyourCorporateGovernanceandNominatingCommittee.OurCorporateGovernanceandNominatingCommitteemaygatherinformationaboutthecandidatesthroughinterviews,detailedquestionnaires,comprehensivebackgroundchecks,oranyothermeansthatourCorporateGovernanceandNominatingCommitteedeemstobehelpfulintheevaluationprocess.OurCorporateGovernanceandNominatingCommitteethenmeetsasagrouptodiscussandevaluatethequalitiesandskillsofeachcandidate,bothonanindividualbasisandtakingintoaccounttheoverallcompositionandneedsofourBoardofDirectors.Basedontheresultsoftheevaluationprocess,ourCorporateGovernanceandNominatingCommitteerecommendscandidatesforourBoardofDirectors'approvalasnomineesforelectiontoourBoardofDirectors.OurCorporateGovernanceandNominatingCommitteealsorecommendscandidatesforourBoardofDirectors'appointmentstothestandingcommitteesofourBoardofDirectors.
Procedures for Recommendation of Director Nominees by Stockholders
ThepolicyofourCorporateGovernanceandNominatingCommitteeistoconsiderproperlysubmittedstockholderrecommendationsfordirectorcandidates.TosubmitarecommendationtoourCorporateGovernanceandNominatingCommitteefordirectornomineecandidates,astockholdermustmakesuchrecommendationinwritingandinclude:
» thenameandaddressofthestockholdermakingtherecommendation,astheyappearonourbooksandrecords,andofsuchrecordholder'sbeneficialowner,ifany;
» theclassandnumberofsharesofourequitythatareownedbeneficiallyandheldofrecordbysuchstockholderandsuchbeneficialownerincludingall"syntheticequityinstruments"(e.g.,derivatives,swaps,hedges,etc.),votingrights,rightstofees,dividends,orothermaterialrights;
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» adescriptionofthematerialtermsofanyagreements,arrangementsorunderstandings(whetherornotinwriting)enteredintobetweensuchstockholderorsuchbeneficialownerandanyotherpersonforthepurposeofacquiring,holding,disposingorvotingofanysharesofanyclassofourequity;
» thefollowinginformationregardingthedirectornominee:
» thename,age,businessaddressandresidenceaddressofsuchperson;
» theprincipaloccupationoremploymentofsuchperson;and
» theclassandnumberofsharesofourequitythatare,directlyorindirectly,ownedbeneficiallyorheldofrecordbysuchpersonoranyofitsaffiliatesorassociatesincludingall"syntheticequityinstruments"(e.g.,derivatives,swaps,hedges,etc.),votingrights,rightstofees,dividends,orothermaterialrights;
» certainrepresentationsandagreementsofsuchdirectornomineeassetforthindetailinourby-laws;
» whysuchrecommendedcandidatemeetsourcriteriaandwouldbeabletofulfillthedutiesofadirector;
» howtherecommendedcandidatemeetsapplicableindependencerequirementsestablishedbytheSECandNASDAQ;
» arepresentationthatthestockholdergivingthenoticeofrecommendationintendstoappearinpersonorbyproxyattheapplicablemeetingofstockholderstonominatethepersonsnamedinitsnoticeofrecommendation;and
» allotherinformationrelatingtotherecommendedcandidateandtherecommendingstockholderthatwouldberequiredtobedisclosedinsolicitationsofproxiesfortheelectionofdirectorsorisotherwiserequired,ineachcasepursuanttoRegulation14AundertheExchangeActorourby-laws,includingtherecommendedcandidate'swrittenconsenttobeingnamedintheproxystatementasanomineeandtoservingasadirectorifapprovedbyourBoardofDirectorsandelected.
RecommendationsmustbesenttotheChairpersonofourCorporateGovernanceandNominatingCommittee,c/oSecretary,ExactSciencesCorporation,441CharmanyDrive,Madison,Wisconsin53719.TheSecretarymustreceiveanysuchrecommendationfornominationnotlaterthanthecloseofbusinessonthe90thdaynorearlierthanthecloseofbusinessonthe120thdaypriortothefirstanniversaryofthedateoftheproxystatementdeliveredtostockholdersinconnectionwiththeprecedingyear'sannualmeetingofstockholders;provided,however,thatwithrespecttoaspecialmeetingofstockholderscalledbyusforthepurposeofelectingdirectorstoourBoardofDirectors,theSecretarymustreceiveanysuchrecommendationnotearlierthanthe90thdaypriortosuchspecialmeetingnorlaterthanthelaterof(1)thecloseofbusinessonthe60thdaypriortosuchspecialmeetingor(2)thecloseofbusinessonthe10thdayfollowingthedayonwhichapublicannouncementisfirstmaderegardingsuchspecialmeeting.WewillpromptlyforwardanysuchnominationstoourCorporateGovernanceandNominatingCommittee.OnceourCorporateGovernanceandNominatingCommitteereceivesarecommendationforadirectorcandidate,suchcandidatewillbeevaluatedinthesamemannerasothercandidatesandarecommendationwithrespecttosuchcandidatewillbedeliveredtoourBoardofDirectors.
Policy Governing Director Attendance at Annual Meetings of Stockholders
OurpolicyistoschedulearegularmeetingofourBoardofDirectorsonthesamedateasourannualmeetingofstockholdersand,accordingly,directorsareencouragedtobepresentatsuchstockholdermeetings.Withtheexceptionofonedirector,allindividualsservingonourBoardofDirectorsatthetimeofthe2019annualmeeting,attendedthe2019annualmeetingofstockholders.
Code of Business Conduct and Ethics
WehaveinplaceaCodeofBusinessConductandEthics(the"CodeofEthics")thatappliestoallofourdirectors,officersandemployees.TheCodeofEthicsisdesignedtodeterwrongdoingandpromote:
» honestandethicalconduct,includingtheethicalhandlingofactualorapparentconflictsofinterestbetweenpersonalandprofessionalrelationships;
» full,fair,accurate,timelyandunderstandabledisclosureinreportsanddocumentsthatwefilewith,orsubmitto,theSECandinotherpubliccommunicationsthatwemake;
» compliancewithapplicablegovernmentallaws,rulesandregulations;
» thepromptinternalreportingofviolationsoftheCodeofEthicstoanappropriatepersonidentifiedintheCodeofEthics;
» accountabilityforadherencetotheCodeofEthics;and
» anonymousreportingofviolationsoftheCodeofEthicsviareportingmechanismsapprovedbyourAuditandFinanceCommittee.
AcurrentcopyoftheCodeofEthicsisavailableatwww.exactsciences.com.Acopymayalsobeobtained,freeofcharge,fromusuponarequestdirectedtoExactSciencesCorporation,441CharmanyDrive,Madison,Wisconsin53719,attention:InvestorRelations.WeintendtodiscloseanyamendmentstoorwaiversofaprovisionoftheCodeofEthicsbypostingsuchinformationonourwebsiteavailableatwww.exactsciences.comand/orinourpublicfilingswiththeSEC.
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CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION
Additional Governance Matters—Corporate Sustainability
Corporatesustainabilityisconsistentwithandsupportsourmissiontoempowerpatientsandthecoloncancercommunitywiththemosteffectivemethodsofdetectiontoeradicatethediseaseandsavelives.Webelievethattoservepatientswell,itisimportanttoalsoactresponsiblyinourrelationshipswithouremployees,ourcommunitiesandtheenvironment.Wearecommittedto:(1)investinginourhumancapital;(2)conductingourbusinesswiththehighestprofessionalandethicalstandards;(3)qualityandthecontinuingeffectivenessofourqualitymanagementsystem;(4)makingiteasyandaffordabletocompleteourtests;(5)andworkingsafelyandbeingenvironmentallyresponsible.Our2019SustainabilityReport,whichoutlinesthesegoalsinfurtherdetailanddescribesoursustainabilitypracticesisavailableathttp://investor.exactsciences.com/investor-relations/corporate-governance/default.aspx.
Our Board of Directors and its Committees
Board of Directors
Ourby-lawsstatethatthenumberofdirectorsconstitutingtheentireBoardofDirectorsshallbedeterminedbyresolutionofourBoardandthatourBoardhastheauthoritytoincreasethenumberofdirectors,fillanyvacanciesonourBoardandtodecreasethenumberofdirectorstoeliminateanyvacancies.ThenumberofdirectorscurrentlyfixedbyourBoardofDirectorsiseleven.
OurBoardofDirectorsisclassifiedintothreeseparateclasses(ClassesI,IIandIII),withoneclassofdirectorsnominatedforelectioneachyear.OurBoardofDirectorsbelievestheclassificationoftheBoardisimportanttoourphilosophyofmanagingandpromotingtheCompany'slong-termgrowth.Giventhehighlycompetitivenatureofourbusinessandthecomplexityandevolutionofthelifesciencesindustrymorebroadly,itcantakeseveralyearstogainarobustunderstandingofourbusinessandstrategy,theCompany'sorganizationandstructure,ourproductsandourindustry.Electingdirectorstoathreeyeartermisintendedtopromotecontinuityandstabilityofstrategyandbusinessdirectionforthelong-terminterestsandexpectationsofourstockholdersandotherstakeholders.
OurBoardofDirectorsmet18timesduringtheyearendedDecember31,2019.Alldirectorsattendedatleast75%oftheaggregateofallmeetingsofourBoardofDirectorsandallcommitteesofourBoardofDirectorsonwhichheorsheservedduring2019.
Committees
OurBoardofDirectorshasstandingAuditandFinance,CompensationandManagementDevelopment,CorporateGovernanceandNominatingandInnovation,TechnologyandPipelineCommittees.OurBoardofDirectorsandeachstandingcommitteeretainstheauthoritytoengageitsownadvisorsandconsultants.EachstandingcommitteehasacharterthathasbeenapprovedbyourBoardofDirectors.Acopyofeachcommitteecharterisavailableatwww.exactsciences.com.Eachcommitteereviewstheappropriatenessofitscharterannuallyoratsuchotherintervalsaseachcommitteedetermines.
ThefollowingtablesetsforththecurrentmembersofeachstandingcommitteeofourBoard:
Chair Member
NAME AUDIT AND FINANCE
COMPENSATION AND MANAGEMENT
DEVELOPMENT
CORPORATE GOVERNANCE AND
NOMINATING
INNOVATION, TECHNOLOGY AND
PIPELINE
ThomasD.Carey
EliCasdin
JamesE.Doyle
PierreJacquet
DanielJ.Levangie
FredaLewis-Hall
KathleenG.Sebelius
AndrewSlavitt
MichaelS.Wyzga
KatherineS.Zanotti
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Thefollowingsummarizesthemembershipofeachcommittee,aswellastheprimaryrolesandresponsibilitiesofeachcommitteeandthenumberoftimeseachcommitteemetin2019.
AUDITANDFINANCE
COMMITTEE NUMBER OF MEETINGS IN 2019: 7
MEMBERS
» Mr.Wyzga(Chair)
» Mr.Casdin
» Mr.Jacquet
AMONGOTHERTHINGS,OURAUDITANDFINANCECOMMITTEE:
» MaintainsresponsibilityforassistingourBoardofDirectorsinfulfillingitsoversightresponsibilitieswithrespecttofinancialreportsandotherfinancialinformation.
» Reviews,monitorsandreportstoourBoardofDirectorsontheadequacyoftheCompany'sfinancialreportingprocessandsystemofinternalcontrolsoverfinancialreporting.
» Selects,evaluatesandreplacestheindependentauditorandservesasultimateauthoritytowhichindependentauditorsareaccountable.
» OverseestheCompany'sinternalauditdepartment,includingtheappointment,replacementordismissalofthedirectorofinternalauditandtheinternalauditdepartment'sactivities,includingallissuedinternalauditreports,majorfindingsandupdatesonremediationofpastfindings.
» Inconsultationwithmanagement,periodicallyreviewstheadequacyoftheCompany'sdisclosurecontrolsandproceduresandapprovesanysignificantchangesthereto.
» AdvisesandconsultswithmanagementconcerningplansandobjectivesfortheCompany'scapitalization,includingthestructureandamountofdebtandequityrequiredtomeettheCompany'sfinancingneeds.
» Reviewsandevaluatessignificantcapitalexpenditures,mergers,acquisitions,divestitures,jointventuresandothersignificanttransactions.
» Regularlydiscusseswithmanagement,CompanylegalcounselandtheinternalauditdepartmenttheCompany'smajorriskexposures,theirpotentialfinancialimpactontheCompany,andthestepstakentomonitorandcontrolthoserisks,andreviewswithmanagementannuallyasummaryoflegalandregulatorycompliancemattersandriskmanagementactivities.
» ProvidestheAuditandFinanceCommitteereportforinclusioninourproxystatementforourannualmeetingofstockholders.
» Recommends,establishesandmonitorsproceduresforthereceipt,retentionandtreatmentofcomplaintsrelatingtoaccounting,internalaccountingcontrolsorauditingmattersandthereceiptofconfidential,anonymoussubmissionsbyemployeesofconcernsregardingquestionableaccountingorauditingmatters.
OurBoardofDirectorshasdeterminedthateachmemberofourAuditandFinanceCommitteeisindependentwiththemeaningoftheNASDAQdirectorindependencestandardsandapplicablerulesoftheSECforauditcommitteemembers.OurBoardofDirectorshasalsodeterminedthateachofMr.CasdinandMr.Wyzgaqualifiesasan"auditcommitteefinancialexpert"undertherulesoftheSEC.
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COMPENSATIONANDMANAGEMENTDEVELOPMENTCOMMITTEE
NUMBER OF MEETINGS IN 2019: 6
MEMBERS
» Ms.Zanotti(Chair)
» Mr.Doyle
» Mr.Levangie
AMONGOTHERTHINGS,OURCOMPENSATIONANDMANAGEMENTDEVELOPMENTCOMMITTEE:
» DischargestheresponsibilitiesofourBoardofDirectorsrelatingtothecompensationofourexecutiveofficers.
» EvaluatesandrecommendstoourBoardofDirectorsappropriatecompensationfortheCompany'sindependentdirectors.
» OverseestheCompany'sproceduresforconsiderationanddeterminationofexecutiveanddirectorcompensation.
» Reviewsandapprovesallexecutivecompensation.
» AdministersandimplementstheCompany'sincentivecompensationplansandequity-basedplans.
» Reviews,monitorsandoverseestheCompany'semployeebenefitplans.
» Overseessuccessionplanningforexecutivemanagementandreviewstheperformance,potential,developmentandretentionofcurrentandfutureexecutivemanagementandtheorganizationalcapabilitytomeetshort-andlong-termstrategicobjectives.
» ReviewsandrecommendstheCompensationDiscussion&Analysisforinclusioninourproxystatementforourannualmeetingofstockholders.
» ProvidesourCompensationandManagementDevelopmentCommitteeReportforinclusioninourproxystatementforourannualmeetingofstockholders.
EachmemberofourCompensationandManagementDevelopmentCommitteeisanon-employeedirectorasdefinedinRule16b-3oftheExchangeAct.OurBoardofDirectorshasdeterminedthateachmemberofourCompensationandManagementDevelopmentCommitteeisalsoanindependentdirectorwithinthemeaningofNASDAQ'sdirectorindependencestandardsandapplicableSECrules.
CORPORATEGOVERNANCEAND
NOMINATINGCOMMITTEE
NUMBER OF MEETINGS IN 2019: 6
MEMBERS
» Mr.Carey(Chair)
» Mr.Doyle
» Ms.Sebelius
AMONGOTHERTHINGS,OURCORPORATEGOVERNANCEANDNOMINATINGCOMMITTEE:
» RecommendstoourBoardofDirectorspersonstoserveasmembersofourBoardofDirectorsandasmembersofandchairpersonsforthecommitteesofourBoardofDirectors.
» Considerstherecommendationsofcandidatestoserveasdirectorssubmittedfromourstockholders.
» AssistsourBoardofDirectorsinevaluatingtheperformanceofourBoardofDirectorsandourBoardcommittees.
» AdvisesourBoardofDirectorsregardingtheappropriateboardleadershipstructurefortheCompany.
» ReviewsandmakesrecommendationstoourBoardofDirectorsoncorporategovernancematters.
» ReviewsthesizeandcompositionofourBoardofDirectorsandrecommendstoourBoardofDirectorsanychangesitdeemsadvisable.
OurBoardofDirectorshasdeterminedthateachmemberofourCorporateGovernanceandNominatingCommitteeisanindependentdirectorwithinthemeaningoftheNASDAQdirectorindependencestandardsandapplicablerulesoftheSEC.
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CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION
INNOVATION,TECHNOLOGYANDPIPELINECOMMITTEE
NUMBER OF MEETINGS IN 2019: 3
MEMBERS
» Mr.Levangie(Chair)
» Mr.Casdin
» Mr.Jacquet
» Ms.Sebelius
AMONGOTHERTHINGS,OURINNOVATION,TECHNOLOGYANDPIPELINECOMMITTEE:
» InteractswithmanagementandexternaladvisorstodevelopinsightsandrecommendationsregardingtheCompany'sapproachtopipelinedevelopmentandtechnicalandcommercialinnovation,including:
» MaintainingalignmentbetweenstrategiccommercialobjectivesandtheCompany'sproductdevelopmentpipeline;
» Assistingmanagementinidentification,evaluationandoversightofappropriatepipeline,technologyandproductdevelopmentinvestments;
» WorkingwithmanagementtoprioritizemedicalandclinicaltechnologyneedsthatcaneffectivelybeaddressedbytheCompany;
» Development,oversightandreviewofkeyproductdevelopmentandothertechnicalpersonnel;and
» Assessmentofnewandexistingintellectualpropertyassetsandrisks.
» Supportstherecruitmentanddevelopmentof,andinteractionwith,theCompany'sscientificadvisoryboard.
» Providesanearlyassessmentof,andactsasasoundingboardtomanagementwithregardto,mergerandacquisitionopportunitiesthatwouldexpandtheCompany'spipelineorproduct/serviceofferings.
» ProvidesfeedbackandinputregardingtheCompany'sdevelopmentofinnovativenewbusinessmodels,strategiesandtactics.
OurBoardofDirectorshasdeterminedthateachmemberofourInnovation,TechnologyandPipelineCommitteeisanindependentdirectorwithinthemeaningoftheNASDAQdirectorindependencestandardsandapplicablerulesoftheSEC.
Compensation and Management Development Committee Interlocks and Insider Participation
JamesE.Doyle,DanielJ.Levangie,KatherineS.ZanottiandEliCasdinservedonourCompensationandManagementDevelopmentCommitteein2019.NoneofthedirectorswhoservedonourCompensationandManagementDevelopmentCommitteein2019haseverservedasoneofouremployeesorofficers.During2019,noneofourexecutiveofficersservedasadirectorormemberofacompensationcommittee(orothercommitteeperformingsimilarfunctions)ofanyotherentityofwhichanexecutiveofficerservedonourBoardofDirectorsorCompensationandManagementDevelopmentCommittee.
Role of our Board of Directors in Risk Oversight
OurBoardofDirectorsadministersitsriskoversightfunctiondirectlyandthroughourAuditandFinanceCommitteeandourCompensationandManagementDevelopmentCommittee.OurAuditandFinanceCommitteeregularlydiscusseswithmanagement,CompanylegalcounselandtheinternalauditdepartmenttheCompany'smajorriskexposures,theirpotentialfinancialimpactontheCompany,andthestepstakentomonitorandcontrolthoserisksandreviewswithmanagementannuallyasummaryoflegalandregulatorycompliancemattersandriskmanagementactivities,includinganinsurancereview,areviewofmanagement'sprecautionaryplansfordisasterprotection,andareviewoftheCompany'spoliciesandprocedureswithrespecttocybersecuritythreatsandrelatedissues.Additionally,ourAuditandFinanceCommitteeoverseestheprocessbywhichtheBoardisinformedregardingthelegalandregulatorycompliancerisksfacingtheCompanyandcoordinateswiththeCompany'slegalcounseltoensuretheBoardreceivesregularlegalandregulatorycomplianceupdatesfrommanagement.OurAuditandFinanceCommitteealsoreviewsregulatoryinvestigations(includingfindingsthereof)aswellasanyallegedsignificantviolationsoflaws,regulationsorCompanypolicies,includingtheCompany'sCodeofBusinessConductandEthicsandtheCompany'sCodeofConductonInteractionwithHealthCareProfessionals,andreportssuchfindingstotheBoardasneeded.OurCompensationandManagementDevelopmentCommittee,togetherwithmanagement,hasreviewedtheCompany'scompensationpoliciesandpracticesandconcludedthatsuchpoliciesandpracticesdonotcreaterisksthatarereasonablylikelytohaveamaterialadverseeffectontheCompany.
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CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION
Cybersecurity and Data Protection Risk Management
Protectingtheprivacyofourpatients'andemployees'informationandthesecurityofoursystemsandnetworkshaslongbeenandwillcontinuetobeapriorityforExactSciencesandourBoardofDirectors.Wehavetechnical,administrativeandphysicalsafeguardsinplacetohelpprotectagainstunauthorizedaccessto,useordisclosureofpatientandemployeeinformationanddatawecollectandstore.Inaddition,ourcomprehensiveinformationsecurityprogramincludes,amongotheraspects,vulnerabilitymanagement,antivirusandmalwareprotection,fileintegritymonitoring,encryptionandaccesscontrol.
ConsistentwithourBoardofDirectors'riskmanagementandoversightstructure,ourAuditandFinanceCommitteehasprimaryresponsibilityforoverseeingourriskmanagementpractices,programs,policiesandproceduresrelatedtodataprivacy,dataprotectionandnetworksecurity.ManagementprovidesourAuditandFinanceCommitteeandourBoardofDirectorswithupdatesaboutcybersecuritypractices,programs,policiesandproceduresandthestatusofprojectsdesignedtostrengtheninternalcybersecurityanddataprotection.OurBoardofDirectorsandourAuditandFinanceCommitteealsodiscusspotentialcybersecurityanddataprotectionthreats.
Director Compensation
Compensation Policy for Non-Employee Directors
Wemaintainacompensationpolicyforournon-employeedirectors(the"DirectorCompensationPolicy")thatisintendedtoenableustoattractandretain,onalonger-termbasis,high-qualifiednon-employeedirectors.TheDirectorCompensationPolicyissupportedbyanannualbenchmarkingexerciseconductedbyRadford,anAonConsultingCompany("Radford"),theCompany'sindependentexecutivecompensationconsultant,whichpositionsthecashandequitycompensationpaidtoournon-employeedirectorsatthemarketmedianofapeergroupthatisreviewedannually.Forinformationregardingthepeergroup,whichisthesamepeergroupusedinconnectionwiththedeterminationofexecutivecompensation,see"Compensation And OtherInformation Concerning Named Executive Officers"beginningonpage29.
UndertheDirectorCompensationPolicy,onthedateofthe2019annualstockholdersmeeting,eachnon-employeedirectorwhocontinuedtoserveasadirectorfollowingsuchmeetingwaspaidanannualcashretainerasfollows:
Inlieuofcash,eachnon-employeedirectormayelecttoreceivesharesofCompanycommonstockhavinganequivalentdollarvalue.
InApril2020,inresponsetotherapidlyevolvingimpactoftheCOVID-19pandemic,theBoardofDirectorsamendedtheDirectorCompensationPolicytoprovidethattheannualcashretainerforBoardservicewouldnotbepaidfortheserviceperiodcommencingonthedateofthe2020AnnualMeeting.
Inaddition,non-employeedirectorsarepaidcashcompensationof$1,500permeetinginatypicalcircumstanceswhen(1)ourBoardofDirectorsoranycommitteehasmetmorethan10timesperyearor(2)ourBoardofDirectorscreatesaspecialcommittee.Further,membersofourInnovation,Technology&PipelineCommitteereceiveanadditionalcashpaymentof$5,000perfull-day,on-site,specialworkingmeeting(ofwhichitisanticipatedthattwosuchmeetingsperyearwilltakeplace).
UndertheDirectorCompensationPolicy,onthedateofeachannualstockholdersmeeting,eachnon-employeedirectorwhoiscontinuingtoserveasadirectorfollowingsuchmeetingisalsograntedrestrictedstockordeferredstockunitshavingavalueof$250,000withthenumberofsharesofrestrictedstockordeferredstockunitstobeissuedbeingdeterminedbasedontheclosingpriceoftheCompany'scommonstockonthegrantdate.Inaddition,iftheBoardchairisindependentandsuchBoardchairwillcontinueasBoardchairfollowingthedateoftheannualmeeting,suchBoardchairwillbegrantedanadditionalannualrestrictedstockordeferredstockunitawardhavingavalueof$15,000.Theseannualequitygrantsarescheduledtovestupontheearlierofthefirstanniversaryofthegrantdateorthedateofthenextannualstockholders
BOARD MEMBER COMPENSATION ANNUAL RETAINER ($) LeadIndependentDirector 75,000Director 50,000
COMMITTEE CHAIRPERSON COMPENSATION ANNUAL RETAINER ($) AuditandFinanceCommittee 25,000CompensationandManagementDevelopmentCommittee 20,000CorporateGovernanceandNominatingCommittee 13,000Innovation,Technology&PipelineCommittee 13,000
COMMITTEE MEMBER COMPENSATION ANNUAL RETAINER ($) AuditandFinanceCommittee 12,500CompensationandManagementDevelopmentCommittee 10,000CorporateGovernanceandNominatingCommittee 6,500Innovation,Technology&PipelineCommittee 6,500
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meeting;provideduponthedeathofadirector,suchdirector'sawardsvestinfull;uponadirector'sceasingtoserveforanyotherreason,suchdirector'sawardsvestproratabasedonthenumberofdayssincethegrantdate;anduponachangeofcontrol,allawardsvestinfull.
UndertheDirectorCompensationPolicy,ifadirectoriselectedorappointedtoourBoardofDirectorsotherthanonthedateoftheCompany'sannualmeetingofstockholders,suchdirector'sannualcashandequitycompensationasdescribedabove,fortheperiodbetweenthedateofsuchelectionorappointmentandthedateoftheCompany'snextannualmeetingofstockholders,willbegrantedinaprorataamountonthedateofsuchannualmeetingtoreflectthedateofsuchdirector'selectionorappointmentandthedateoftheCompany'sfollowingannualmeetingofstockholders.ThenumberofsharesofrestrictedstockordeferredstockunitstobeissuedtothedirectorbasedontheforegoingproratacompensationisdeterminedbasedontheclosingpriceoftheCompany'scommonstockonthedateofsuchdirector'sappointment,andsuchsharesofrestrictedstockordeferredstockunitsarefullyvestedupongrant.
UponhisorherinitialelectiontoourBoardofDirectors,anewdirectorreceivessharesofrestrictedstockordeferredstockunitshavingavalueequalto$375,000basedontheclosingsalepriceofourcommonstockonthedateofgrant.Suchsharesofrestrictedstockordeferredstockunitsvestinthreeequalannualinstallments.
TheExactSciencesCorporation2019OmnibusLong-TermIncentivePlan(the"2019Plan")establisheslimitsontheawardsissuabletoournon-employeedirectors.Underthe2019Plan,themaximumvalueofallawardsgrantedtoanon-employeedirector,takentogetherwithallcashfeespaidtosuchnon-employeedirectorunderanyotherequitycompensationplanoftheCompanyoranaffiliateinagivencalendaryear,maynotexceed$600,000(calculatingthevalueofanyequitycompensationplanawardsbasedonthegrantdatefairmarketvalueforfinancialreportingpurposes).However,awardsgrantedtonon-employeedirectorsupontheirinitialelectiontotheBoardofDirectorsortheboardofdirectorsofanaffiliatewillnotbecountedtowardsthislimit,andcertainotherlimitedexceptionsmayapply.
Theforegoingcompensationisinadditiontoreimbursementofallout-of-pocketexpensesincurredbydirectorsinattendingmeetingsofourBoardofDirectors.
PriortohisappointmenttotheBoardofDirectorsinJuly2019,theCompanywaspartytoaconsultingagreementwithAndrewSlavittpursuanttowhichheprovidedcertainadvisoryservices.Inaccordancewiththeagreement,Mr.Slavittwaspaidconsultingfeestotaling$105,000in2019.
Non-Employee Director Compensation in 2019
Thefollowingtableprovidescompensationinformationfortheone-yearperiodendedDecember31,2019foreachnon-employeememberofourBoardofDirectors.NomemberofourBoardemployedbyusreceivesseparatecompensationforservicesrenderedasamemberofourBoard.FredaLewis-HalldidnotjoinourBoardofDirectorsuntilApril22,2020andthusreceivednocompensationintheone-yearperiodendedDecember31,2019.
NAME
FEES EARNED OR PAID IN CASH
($)
STOCK AWARDS
($)
ALL OTHER COMPENSATION
($) TOTAL
($) ThomasD.Carey 69,000 250,023 — 319,023EliCasdin 75,000 250,023 — 325,023JamesE.Doyle 97,500 250,023 — 347,523PierreJacquet 69,000 625,000 — 694,000DanielJ.Levangie 79,000 250,023 — 329,023KathleenSebelius 87,855 723,638 — 811,493AndrewSlavitt 50,000 625,000 105,000 780,000MichaelS.Wyzga 81,000 250,023 — 331,023KatherineS.Zanotti 76,000 250,023 — 326,023
(1)(2)
(2) (3)(2)(2)(4) (5)
(3) (6)(2)
Theamountsshowninthiscolumnindicatethegrantdatefairvalueofstockoroptionawards,respectively,computedinaccordancewithFASBASCTopic718.Generally,thegrantdatefairvalueistheamountthatwewouldexpenseinourfinancialstatementsovertheaward'svestingschedule.Foradditionalinformationregardingtheassumptionsmadeincalculatingtheseamounts,seetheNotestoouraudited,consolidatedfinancialstatementsincludedinourAnnualReportonForm10-Kfor2019.Theseamountsreflectouraccountingexpensefortheseawardsanddonotcorrespondtotheactualvaluethatwillberecognizedbythedirectors.
(1)
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CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION
AsofDecember31,2019,thenon-employeemembersofourBoardofDirectorsheldunexercisedstockoptionsandunvestedsharesofrestrictedstock,RSUsanddeferredstockunitsasfollows:
NAME
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS
UNVESTED SHARES OF
RESTRICTED STOCK,RESTRICTED STOCK UNITS
AND DEFERRED STOCK UNITS
ThomasD.Carey 15,620 2,155EliCasdin 10,100 2,155JamesE.Doyle 18,477 2,155PierreJacquet — 5,387DanielJ.Levangie 9,865 2,155KathleenSebelius — 6,374AndrewSlavitt — 5,387MichaelS.Wyzga 10,108 2,155KatherineS.Zanotti 25,637 2,155
PertheelectionofthedirectorandinaccordancewiththeDirectorCompensationPolicy,100%oftheannualcashretainerwaspaidinsharesofCompanycommonstockhavinganequivalentdollarvalue.
Includes$374,976.64ofstockawardsissuedtotherecipientupontherecipient'sinitialelectiontotheBoardofDirectorsatthetimeofthe2019AnnualMeeting,issuedinaccordancewiththeDirectorCompensationPolicy
Includes$24,854.79incashfeesearnedfortheperiodbetweenthedateofMs.Sebelius'appointmenttotheBoardofDirectorsandthe2019AnnualMeetingofStockholders,paidinaccordancewiththeDirectorCompensationPolicy.
Includes(i)$374,984.72ofstockawardsissuedtoMs.SebeliusuponMs.Sebelius'appointmenttotheBoardofDirectorsinMarch2019,issuedinaccordancewiththeDirectorCompensationPolicyand(ii)$98,630.14ofstockawardsearnedfortheperiodbetweenthedateofMs.Sebelius'appointmenttotheBoardofDirectorsandthe2019AnnualMeetingofStockholders,paidinaccordancewiththeDirectorCompensationPolicy.
RepresentsconsultingfeesthatMr.SlavittreceivedpursuanttoaconsultingagreementpriortohisappointmenttotheBoardofDirectorsinJuly2019.
(2)
(3)
(4)
(5)
(6)
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PROPOSAL 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PROPOSAL 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM
WHAT YOU ARE VOTING ON:WeareaskingourstockholderstoratifytheappointmentofPricewaterhouseCoopers,LLPasourindependentregisteredpublicaccountingfirmfor2020.
TheAuditandFinanceCommitteeoftheBoardofDirectorshasappointedPricewaterhouseCoopers("PWC")asourindependentregisteredpublicaccountingfirmforthefiscalyearendingDecember31,2020.PWCwasselectedasourindependentregisteredpublicaccountingfirmforthefiscalyearendingDecember31,2020followingcompletionofacompetitiveprocesstoselectafirmconductedbytheAuditandFinanceCommittee.Asaresultofthisprocess,onMarch4,2020theAuditandFinanceCommitteedismissedBDOUSA,LLP("BDO")astheCompany'sindependentregisteredpublicaccountingfirmeffectiveimmediately.PWCwasengagedastheCompany'sindependentregisteredpublicaccountingfirmonMarch4,2020.
ThereportsofBDOonthefinancialstatementsoftheCompanyforthepasttwofiscalyearscontainednoadverseopinionordisclaimerofopinionandwerenotqualifiedormodifiedastouncertainty,auditscopeoraccountingprinciples.Duringthetwomostrecentfiscalyears,therewere:(1)nodisagreementsbetweentheCompanyandBDOonanymatterofaccountingprinciplesorpractices,financialstatementdisclosureorauditingscopeorprocedure,whichdisagreements,ifnotresolvedtothesatisfactionofBDO,wouldhavecausedBDOtomakereferencetothesubjectmatterofthedisagreementintheirreportsonthefinancialstatementsforsuchyears,and(2)no"reportableevents"asthattermisdefinedinItem304(a)(1)(v)ofRegulationS-K.ArepresentativeofBDOisnotexpectedtobepresentatthe2020AnnualMeeting.
During2018and2019,theCompanydidnotconsultwithPWCregarding(1)theapplicationofaccountingprinciplestoaspecifiedtransactionortransactions,eithercompletedorproposed,orthetypeofauditopinionPWCmightrenderontheCompany'sfinancialstatementsor(2)anymatterthatwaseitherthesubjectofadisagreement,asthattermisdefinedinItem304(a)(1)(iv)ofRegulationS-KandtherelatedinstructionstothatItem,ora"reportableevent"asthattermisdefinedinItem304(a)(1)(v)ofRegulationS-K.
ArepresentativeofPWCisexpectedtobepresentatthe2020AnnualMeeting.Inadditiontohavingtheopportunitytomakeastatement,thePWCrepresentativewillbeavailabletorespondtoanyappropriatequestions.
Vote Required for Approval
Ratificationoftheappointmentofourindependentregisteredpublicaccountingfirmrequirestheaffirmativevoteofamajorityofthesharespresentorrepresentedatthe2020AnnualMeeting,inpersonorbyproxy,andvotingonsuchratification.IfourstockholdersfailtoratifytheselectionofPWCastheindependentregisteredpublicaccountingfirmfor2020,ourAuditandFinanceCommitteewillreconsiderwhethertoretainthatfirm.Eveniftheselectionisratified,ourAuditandFinanceCommitteemay,initsdiscretion,directtheappointmentofadifferentindependentregisteredpublicaccountingfirmatanytimeduringtheyear.
Board Recommendation
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSOtherthanasdescribedbelowandcompensationagreementsandotherarrangementswhicharedescribedin"Compensation And Other Information Concerning Named Executive Officers"beginningonpage29,in2019therewasnot,andthereisnotcurrentlyproposed,anytransactionorseriesofsimilartransactionstowhichwewereorwillbeapartyinwhichtheamountinvolvedexceededorwillexceed$120,000inwhichanydirector,executiveofficer,holderoffivepercentormoreofanyclassofourcapitalstockoranymemberoftheirimmediatefamilyhadorwillhaveadirectorindirectmaterialinterest.
Atvarioustimes,includingin2019,theCompanyhasengagedPerspectiveGroupLLC,anexecutivesearchfirminwhichThomasCarey,amemberofourBoardofDirectors,ismajorityowner,toperformcertainexecutivesearches.Underthetermsoftheengagement,theCompanypaidPerspectiveGroupapproximately$100,000offeesduringtheyearendedDecember31,2019,whichwaslessthan5%ofthePerspectiveGroup'saggregaterevenuefortheyearendedDecember31,2019.Pursuanttothisengagement,theCompanyexpectstopayPerspectiveGroupapproximately$190,000offeesduringtheyearendedDecember31,2020.
PierreJacquet,amemberofourBoardofDirectors,isViceChairman,GlobalHealthcareandManagingDirectorofL.E.K.Consulting,LLC.Atvarioustimes,includingin2019,theCompanyhasengagedL.E.K.toperformstrategicconsultingservices.UnderthetermsoftheCompany'sengagementswithL.E.K.,theCompanypaidL.E.K.approximately$1,811,000offeesduringtheyearendedDecember31,2019,whichwaslessthan5%ofL.E.K.'saggregaterevenuefortheyearendedDecember31,2019.Pursuanttothisengagement,theCompanyexpectstopayL.E.K.approximately$525,000offeesduringtheyearendedDecember31,2020.
OurBoardofDirectorshasadoptedawrittenpolicywithregardtorelatedpersontransactions,whichsetsforthourproceduresandstandardsforthereview,approvalorratificationofanytransactionrequiredtobereportedinourfilingswiththeSECorinwhichoneofourexecutiveofficersordirectorshasadirectorindirectmaterialfinancialinterest,withlimitedexceptions.OurpolicyisthatourAuditandFinanceCommitteeshallreviewthematerialfactsofallrelatedpersontransactions(asdefinedintherelatedpersontransactionapprovalpolicy)andeitherapproveordisapproveoftheentryintoanyrelatedpersontransaction.IntheeventthatobtainingtheadvanceapprovalofourAuditandFinanceCommitteeisnotfeasible,ourAuditandFinanceCommitteeshallconsidertherelatedpersontransactionand,ifourAuditandFinanceCommitteedeterminesittobeappropriate,mayratifytherelatedpersontransaction.Indeterminingwhethertoapproveorratifyarelatedpersontransaction,ourAuditandFinanceCommitteewilltakeintoaccount,amongotherfactorsitdeemsappropriate,whethertherelatedpersontransactionisontermscomparabletothoseavailablefromanunaffiliatedthird-partyunderthesameorsimilarcircumstancesandtheextentoftherelatedperson'sinterestinthetransaction.
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThefollowingtablesetsforththeaggregatefeesbilledorexpectedtobebilledbyBDOfor2019and2018forauditandnon-auditservices,including"out-of-pocket"expensesincurredinrenderingtheseservices.Thenatureoftheservicesprovidedforeachcategoryisdescribedfollowingthetable.
Pre-Approval Policies and ProceduresOurAuditandFinanceCommitteehasadoptedapolicythatrequiresthatallservicestobeprovidedbytheCompany'sindependentpublicaccountingfirm,includingauditservicesandpermittednon-auditservices,tobepre-approvedbyourAuditandFinanceCommittee.OurAuditandFinanceCommitteepre-approvedallauditandpermittednon-auditservicesprovidedbyBDOduring2019pursuanttothispolicy.
Fee Category 2019 2018 AuditFees $ 2,008,111 $ 841,722Audit-RelatedFees 27,540 21,828TaxFees — —AllOtherFees 22,917 —Total $ 2,058,568 $ 863,550
(1)
(2)
(3)
Auditfeesincludefeesforprofessionalservicesrenderedfortheauditofourconsolidatedannualstatements,quarterlyreviews,consentsandassistancewithandreviewofdocumentsfiledwiththeSEC.AuditfeesalsoincludefeesforprofessionalservicesrenderedforstatutoryauditsperformedbyBDO'sinternationalaffiliates.
Audit-relatedfeesincludefeesforprofessionalservicesrenderedfortheauditofour401(k)Plan.
AllotherfeesincludefeesforprofessionalservicesrenderedinconnectionwithcertainconsultingprojectsundertakenbytheCompany.
(1)
(2)
(3)
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REPORT OF THE AUDIT AND FINANCE COMMITTEE
REPORT OF THE AUDIT AND FINANCE COMMITTEETheAuditandFinanceCommitteeiscomprisedofEliCasdin,PierreJacquetandMichaelS.Wyzga.NoneofthemembersoftheAuditandFinanceCommitteeisanofficeroremployeeoftheCompany,andtheBoardofDirectorshasdeterminedthateachmemberoftheAuditandFinanceCommitteemeetstheindependencerequirementspromulgatedbyTheNASDAQStockMarketandtheSEC,includingRule10A-3(b)(1)undertheExchangeAct.
TheAuditandFinanceCommitteeoverseestheCompany'sfinancialreportingprocessonbehalfoftheBoardofDirectors.Managementhastheprimaryresponsibilityforthefinancialstatementsandthereportingprocess,includingthesystemsofinternalcontrolsandthecertificationoftheintegrityandreliabilityoftheCompany'sinternalcontrolsprocedures.Infulfillingitsoversightresponsibilities,theAuditandFinanceCommitteehasreviewedtheCompany'sauditedconsolidatedbalancesheetsatDecember31,2019and2018andtherelatedconsolidatedstatementsofoperations,comprehensiveloss,stockholders'equityandcashflowsforeachofthethreeyearsintheperiodendedDecember31,2019,andhasdiscussedthemwithbothmanagementandBDOUSA,LLP("BDO"),theCompany'sformerindependentregisteredpublicaccountingfirm.TheAuditandFinanceCommitteehasalsodiscussedwiththeindependentregisteredpublicaccountingfirmthemattersrequiredtobediscussedbytheAuditingStandardNo.1301,Communications with Audit Committees,asadoptedbythePublicCompanyAccountingOversightBoard.TheAuditandFinanceCommitteehasreviewedpermittedservicesunderrulesoftheSECascurrentlyineffectanddiscussedwithBDOtheirindependencefrommanagementandtheCompany,includingthemattersinthewrittendisclosuresandtheletterfromtheindependentregisteredpublicaccountingfirmrequiredbytheapplicablerequirementsofthePublicCompanyAccountingOversightBoardregardingtheindependentaccountant'scommunicationswiththeAuditandFinanceCommitteeconcerningindependence.TheAuditandFinanceCommitteehasalsoconsideredanddiscussedthecompatibilityofnon-auditservicesprovidedbyBDOwiththatfirm'sindependence.
Basedonitsreviewoftheconsolidatedfinancialstatementsandtheaforementioneddiscussions,theAuditandFinanceCommitteeconcludedthatitwouldbereasonabletorecommend,andonthatbasisdidrecommend,totheBoardofDirectorsthattheauditedconsolidatedfinancialstatementsbeincludedintheCompany'sAnnualReportonForm10-KforthefiscalyearendedDecember31,2019.
RespectfullysubmittedbytheAuditandFinanceCommittee.
TheAuditandFinanceCommittee:MichaelS.Wyzga,ChairpersonEliCasdinPierreJacquet
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PROPOSAL 3—ADVISORY VOTE ON EXECUTIVE COMPENSATION
PROPOSAL 3—ADVISORY VOTE ON EXECUTIVE COMPENSATION
WHAT YOU ARE VOTING ON:Atthe2020AnnualMeeting,stockholdersarebeingaskedtoapprovethecompensationofourNEOs
asdisclosedinthisProxyStatement.
ThisProposal3enablesourstockholderstocastanon-binding,advisoryvotetoapprovethecompensationofournamedexecutiveofficersasdisclosedinthisProxyStatement.
Asdescribedindetailundertheheading"Compensation and Other Information Concerning Named Executive Officers—Compensation Discussion and Analysis"beginningonpage29,ourexecutivecompensationprogramisdesignedtoattract,motivateandretainourexecutiveofficers,whoarecriticaltooursuccess.Pleasereadthe"Compensation and Other InformationConcerning Named Executive Officers"sectionbeginningonpage29foradditionaldetailsaboutourexecutivecompensationprograms,includinginformationaboutthe2019compensationofournamedexecutiveofficers.
WeareaskingourstockholderstoindicatetheirsupportforourexecutivecompensationprogramsasdescribedinthisProxyStatement.Thisvoteisnotintendedtoaddressanyspecifictermofcompensation,butrathertheoverallcompensationofournamedexecutiveofficersandthephilosophy,policiesandpracticesdescribedinthisProxyStatement.Accordingly,weareaskingourstockholderstovoteFORthefollowingresolutionattheannualmeeting:
"RESOLVED,thatthecompensationpaidtotheCompany'snamedexecutiveofficers,asdisclosedpursuanttotheSEC'scompensationdisclosurerules,includingthe"CompensationDiscussion and Analysis",thecompensationtablesandanyrelatedmaterialdisclosedintheproxystatementfortheCompany's2020annualmeeting,isherebyAPPROVED."
AlthoughthevoteonthisProposal3regardingthecompensationofournamedexecutiveofficersisnotbindingonourBoardofDirectors,wevaluetheopinionsofourstockholdersandwillconsidertheresultofthevotewhendeterminingfutureexecutivecompensationarrangements.
Vote Required for Approval
Theforegoingresolutionwillbeapprovedifholdersofamajorityofthesharespresentorrepresentedatthe2020AnnualMeeting,inpersonorbyproxy,andvotingonProposal3voteinfavorofsuchresolution.
Board Recommendation
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COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS
Compensation Discussion and AnalysisThisCompensation Discussion and Analysisexplainsourexecutivecompensationprogramasitrelatestoournamedexecutiveofficers("NEOs")determinedinaccordancewithSECrules,whosecompensationinformationispresentedinthefollowingtablesanddiscussioninaccordancewithSECrules:
Ourexecutivecompensationprogramisdesignedtofocusexecutivebehavioronachievementofbothourannualandlong-termobjectivesandstrategyaswellasaligntheinterestsofmanagementwiththoseofourstockholders.Tothatend,executivecompensationgenerallyconsistsofthreeprimaryelements:salary,long-termequityinterestsandanannualcashbonusopportunitybasedoncorporateperformance.
Objectives and Philosophy of Our Executive Compensation ProgramOurcompensationprogramforourexecutiveofficersisintendedtoachievethefollowingobjectives:
» Focusexecutivebehavioronachievementofourannualandlong-termobjectivesandstrategy;
» Provideacompetitivecompensationpackagethatenablesustoattractandretainqualifiedexecutives;
» ProvideatotalcompensationstructurethatourCompensationandManagementDevelopmentCommitteebelievesiscomparabletosimilarlysizedcompaniesinthelifesciencesindustrywithwhichwemaycompetefortalentandwhichconsistsofamixofbasesalary,equityandcashincentives;and
» Aligntheinterestsofmanagementandstockholdersbyprovidingmanagementwithlong-termincentivesthroughequityownership.
Elements of Executive CompensationOurexecutivecompensationprogramgenerallyconsistsofthreeprimaryelements:salary,long-termequityinterestsandanannualcashbonusopportunitybasedoncorporateperformance.Pursuanttohisemploymentagreement,Mr.Conroyparticipatesinalong-termincentiveplanthatprovidesforcertaincashpaymentsuponcertainchangesofcontroloftheCompany.Pursuanttotheiremploymentagreementsandourequityplans,certainofourexecutiveofficersarealsoeligibleforseverancepaymentsandbenefitsundercertaincircumstances.Inaddition,effectiveasofJanuary1,2019,wemaintainanexecutivedeferredcompensationplan,whichprovidesatax-advantagedmethodforoureligibleemployees,includingtheNEOs,tosaveforretirement,andwhichhelpsusprovideacompetitivecompensationpackagethatenablesustoattractandretainqualifiedexecutives.Ourexecutiveofficersarealsoeligibleforcertainbenefitsofferedtoemployeesgenerally,including,life,health,disability,dentalandvisioninsurance,aswellasparticipationinour401(k)planand2010EmployeeStockPurchasePlan.Wedonotcurrentlybelieveitisnecessaryfortheattractionorretentionofmanagementtalenttoprovideexecutiveofficerswithcompensationintheformofperquisites(otherthanhousingandrelocationbenefitsfromtimetotime).
Determining Executive CompensationItistheresponsibilityofourCompensationandManagementDevelopmentCommitteetoadministerourcompensationpractices,toensurethattheyarecompetitiveandfinanciallyprudentandthattheyincludeincentivesthataredesignedtoappropriatelydriveperformance.Toachievetheseobjectives,ourCompensationandManagementDevelopmentCommitteeperiodicallyreviewscommercially-available,industry-specificcompensationdataforcompaniesofgenerallysimilarstageofdevelopment,headcount,revenueandmarketcapitalizationinthediagnostic,biotechnologyandmedicaldeviceindustriesasageneralguideforestablishingourpayandequitypracticesandstructures.OurCompensationandManagementDevelopmentCommittee,alongwithourBoardofDirectors,alsoreviewsandapprovescorporateandfinancial
NAME POSITION
Kevin T. Conroy Chairman,PresidentandChiefExecutiveOfficer
Jeffrey T. Elliott ChiefFinancialOfficer
Mark Stenhouse GeneralManager,Screening
D. Scott Coward SeniorVicePresident,GeneralCounsel,ChiefAdministrativeOfficerandSecretary
G. Bradley Cole FormerGeneralManager,PrecisionOncology
Jacob Orville GeneralManager,Pipeline
Ana Hooker SeniorVicePresident,Operations
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objectivesusedinourexecutivecompensationprogramtoconfirmthatappropriategoalshavebeenestablishedandtracksperformanceagainstthem.Onanannualbasis,ourCompensationandManagementDevelopmentCommitteereviewstallysheetsreflectingeachexecutiveofficer'scompensationhistorywithrespecttoeachelementofcompensation,aswellasprojectedpayoutsthatwouldcomedueinconnectionwithaterminationorchangeofcontrol.
OurCompensationandManagementDevelopmentCommitteeconductsanannualreviewofperformanceandcompensationduringthefirstquarterofeachyearforthepurposeofdeterminingthecompensationofexecutiveofficersotherthantheChiefExecutiveOfficer.Aspartofthisreview,theChiefExecutiveOfficersubmitsrecommendationstoourCompensationandManagementDevelopmentCommitteerelatingtothecompensationoftheseofficers.Followingareviewoftheserecommendations,ourCompensationandManagementDevelopmentCommitteeapprovesthecompensationoftheseofficers,withsuchmodificationstotheChiefExecutiveOfficer'srecommendationsasourCompensationandManagementDevelopmentCommitteeconsidersappropriate.
OurCompensationandManagementDevelopmentCommittee'sreviewoftheChiefExecutiveOfficer'scompensationissubjecttoadditionalprocedures.Withinputfromtheindependentdirectors,theLeadIndependentDirector,alongwithourCompensationandManagementDevelopmentCommittee,evaluatestheChiefExecutiveOfficer'sperformanceandreviewstheevaluationwithhim.Basedonthatevaluationandreviewandconsultationwithitsindependentcompensationconsultant,ourCompensationandManagementDevelopmentCommitteethendeterminestheChiefExecutiveOfficer'scompensation.TheChiefExecutiveOfficerdoesnotattendtheportionsofmeetingsofourCompensationandManagementDevelopmentCommitteewheretheCommitteevotesordeliberatesonhiscompensation.
OurCompensationandManagementDevelopmentCommitteehasengagedRadfordasitsindependentexecutivecompensationconsultant.OurCompensationandManagementDevelopmentCommitteehasassessedtheindependenceofRadfordpursuanttoSECandlistingexchangerulesandconcludedthatnoconflictofinterestexiststhatwouldpreventRadfordfromservingasanindependentconsultanttoourCompensationandManagementDevelopmentCommittee.
Use of Peer Group DataInearly2019,withtheguidanceofRadford,ourCompensationandManagementDevelopmentCommitteeconductedanannualreviewofthecompetitivenessofourexecutivecompensationprogram,includingthecompetitivenessofourbasesalaries,targettotalcashcompensation,long-termincentivesandtargettotaldirectcompensation.
Radfordanalyzedthecomponentsofourexecutivecompensationprogramagainstinformationblendedfrom(1)proxystatementdatafromapeergroupofcompaniesthatconsistedofpublicly-tradeddiagnostic,biotechnologyandmedicaldevicecompaniesthatweresimilartotheCompanyintermsofheadcount,revenueandmarketcapitalizationand(2)surveydatafromabroadergroupofcommercialstagepublicdiagnostics,biotechnologyandmedicaldevicecompanieswithrevenuebetween$175millionand$1.75billionandmarketcapitalizationbetween$3.0billionand$28.0billion.
OurCompensationandManagementDevelopmentCommitteeseekstoidentifyanexecutivecompensationpeergroupofapproximately20companiesinthediagnostic,biotechnologyandmedicaldeviceindustriesatasimilarstageofdevelopmentandcomparablefinancialprofilethatmaycompetewiththeCompanyforexecutivetalent.InOctober2018,basedonRadford'sreviewandrecommendationsregardingtheCompany'sexecutivecompensationpeergroup,ourCompensationandManagementDevelopmentCommitteeapprovedanewpeergroupfor2019.Initsreview,Radfordfocusedoncreatingapeergroupthat:
» Representedcompaniesoperatinginthediagnostics,medicaldeviceandbiotechnologyindustries;
» Comprisedcompanieswithatleastonecommercializedproduct;and
» Capturedcomparablecompaniesintermsofheadcount,revenueandmarketcapitalization.
BasedonRadford'srecommendations,ourCompensationandManagementDevelopmentCommittee(1)removedfivecompaniesfromtheprioryear'speergroupeitherbecausetheywereacquiredorwerenolongercomparablebasedonfinancialmetricsand(2)addedsevencompaniestotheprioryear'speergroup(AlignTechnology,GuardantHealth,Incyte,MeritMedicalSystems,Neogen,ResMedandSeattleGenetics)thatmetthestatedcriteria.
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Thecompaniesinourpeergroupfor2019were:
Radfordalsoprovideduswithanassessmentofourannualequityawardburnrateandtheexpectedretentivevalueofequityawardsheldbyourexecutives,aswellasananalysisofthealignmentofCompanyperformanceandCEOcompensation.
BasedonRadford'sanalysis,wereachedthefollowingconclusionsandtookthefollowingactionswithrespecttoourNEOs(excludingMr.ColeandMr.Orville,whobothjoinedtheCompanyin2019)regardingourexecutivecompensationprogramrelativetoourpeergroup:
» InthecaseofMr.Conroy,whosetotalcashcompensation(basesalaryplusannualtargetcashbonusopportunity)hadfallenbelowthe25thpercentile,andMr.ElliottandMs.Hookerwhosetotalcashcompensationhadfallenbelowthe50thpercentile,basesalarywasincreasedbyapproximately15%,15%and10%,respectively,whiletheotherNEOsreceived3%meritsalaryincreases.
» Mr.Conroy'stargetbonusopportunitywasincreasedfrom100%to125%tobringhistotaltargetcashcompensationleveltoapproximatelythe50thpercentilewhiletheotherNEOstargetbonuslevelswereleftunchanged.
» Duetoeachnamedexecutiveofficer'sperformancein2018,grantedannualequityawardsconsistingofstockoptionsandrestrictedstockunits(RSUs)withtime-basedvestingtermstoMr.Conroyasdescribedbelow,toMr.ElliottandMs.Hookerabovethemarket60thpercentile,andtoMr.StenhouseandMr.Cowardatthemarket60thpercentile,asshowninthetablesbelow.
» Grantedequityawardswithperformance-basedvestingtermstiedtorevenuesandspecifiedscientificmilestonesconsistingofperformanceshareunits("PSUs")toMr.Elliott,Mr.Stenhouse,Mr.CowardandMs.Hookercovering(i)thethresholdamounts,(ii)targetamountsand(iii)maximumamountsasshowninthetablebelow,whichareintendedtocoverperformanceoverathree-yearperiodandissuedtocoverthedifferencebetweenthemarket50thpercentileandthemarket65thpercentileoverthreeyears.
» Mr.Conroyalsoreceivedannualequityawardsconsistingofstockoptionsandrestrictedstockunits(RSUs)withtime-basedvestingtermsandPSUsasshowninthebelowtablewhichweredeterminedinthefollowingmanner:
o TheCommitteeinitiallyconsideredannualequitygrantsatthe60thpercentileandaPSUgranttobridgethegapbetweenthe50thand65thpercentiles;
o TheCommitteedesiredtograntadditionalequityintheformofPSUstoMr.Conroyinlightofthefactthathistotaltargetcashcompensationapproximatedthe50thpercentilewhichtheCommitteeconsideredwaswellbelowwhatMr.Conroycouldcommandintheopenmarketgivenhisexperiencelevelandhisverystrongperformance;and
o TheCommitteealsodesiredtoensurethat50%ofMr.Conroy'stotalequitygrantsweresubjecttoperformance-basedvestingconditions.
COMPANY INDUSTRY ABIOMED HealthCareEquipmentAlign Technology HealthCareSuppliesDexCom HealthCareEquipmentGenomic Health BiotechnologyGuardant Health HealthCareEquipmentHalozyme Therapeutics BiotechnologyHologic HealthCareEquipmentIncyte BiotechnologyInsulet HealthCareEquipmentIonis Pharmaceuticals BiotechnologyIronwood Pharmaceuticals BiotechnologyMasimo HealthCareEquipmentMerit Medical Systems HealthCareSuppliesMyriad Genetics BiotechnologyNektar Therapeutics PharmaceuticalsNeogen HealthCareSuppliesOpko Health BiotechnologyQuidel HealthCareSuppliesResMed HealthCareEquipmentSeattle Genetics Biotechnology
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BasedonRadford'sanalysisandourassessmentoftheperformanceoftheexecutivesandourcompensationphilosophyasdescribedinthisCompensation Discussion and Analysis,inearly2019ourCompensationandManagementDevelopmentCommitteesetsalariesandtargetbonusopportunitiesasfollows:
Asdescribedaboveandindicatedinthetablesbelow,equityawardsgrantedin2019generallyconsistedoftime-basedstockoptionsandRSUs,aswellasperformance-basedPSUs,asfollows:
2020 Salary Reductions
InlateMarch2020,inresponsetotherapidlyevolvingimpactoftheCOVID-19pandemiconthecurrentbusinessenvironmentandatthesuggestionofMr.Conroyandtheexecutiveleadershipteam,theCompensationandManagementDevelopmentCommitteetemporarilyreducedMr.Conroy'sbasesalarytotheamountnecessarytocoverthehisportionofcontributions,andrelatedtaxes,undertheCompanybenefitplansinwhichheparticipates,andtemporarilyreducedthebasesalariesoftheotherNEOsby15%.
NAME 2018 BASE SALARY ($)
2019 BASE SALARY ($)
KevinT.Conroy 695,800 800,200JeffreyT.Elliott 400,000 460,000MarkStenhouse 500,000 515,000D.ScottCoward 470,000 484,100AnaHooker 371,700 410,000
NAME 2018 TARGET
BONUS % 2019 TARGET
BONUS % KevinT.Conroy 100% 125%JeffreyT.Elliott 50% 50%MarkStenhouse 50% 50%D.ScottCoward 50% 50%AnaHooker 50% 50%
NAME 2018 OPTIONS 2019 OPTIONS KevinT.Conroy 68,300 34,110JeffreyT.Elliott 16,700 11,361MarkStenhouse 0 10,786D.ScottCoward 16,700 10,786AnaHooker 11,700 7,790
NAME 2018 RSUS 2019 RSUS KevinT.Conroy 82,300 37,248JeffreyT.Elliott 20,100 13,747MarkStenhouse 75,000 13,051D.ScottCoward 20,100 13,051AnaHooker 14,100 9,426
(1)
Mr.StenhousereceivedanRSUawardcovering75,000sharesuponhishiringinApril2018.(1)
NAME
2019 PSUs (at threshold achievement)
2019 PSUs (at target
achievement)
2019 PSUs (at maximum achievement)
KevinT.Conroy 31,041 62,082 124,164JeffreyT.Elliott 6,747 13,494 26,988MarkStenhouse 6,747 13,494 26,988D.ScottCoward 6,747 13,494 26,988AnaHooker 5,398 10,794 21,589
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2019 Bonus Plan
OurCompensationandManagementDevelopmentCommitteebelievesthatameaningfulportionofourexecutives'compensationshouldbe"atrisk"—inotherwords,contingentuponsuccessfulimplementationofourstrategyandgoals.Accordingly,onecomponentofourexecutivecompensationprogramisanannualcashbonusopportunityunderwhicheachofourexecutiveofficersiseligibletoearnanannualcashbonuswithaspecifiedtargetamountequaltoapercentageofbasesalary,withtheactualbonusawardedtobebasedupontheachievementofcorporategoalsdeterminedbyourCompensationandManagementDevelopmentCommitteeinitsdiscretion.InJanuary2019,ourCompensationandManagementDevelopmentCommitteeapprovedmetricstobeusedtodetermine2019bonuses,whichincluded(1)powerthepartnership,(2)enhanceCologuardand(3)advanceliquidbiopsy.OurNEOswereeligibletoearnbonusesfor2019performanceequaltoupto150%oftheirtargetbonuses,whichweretargetbonusesof125%ofbasesalaryforMr.Conroyand50%ofbasesalaryforeachofMr.Elliott,Mr.Stenhouse,Mr.Coward,Mr.OrvilleandMs.Hooker.BecauseMr.ColejoinedtheCompanyinNovember2019,hedidnotparticipateinthe2019annualbonusplan.OurCompensationandManagementDevelopmentCommitteedeterminedactualbonuspaymentsaftertheendof2019basedontheCommittee'sassessmentoftheperformanceoftheCompanyrelativetothebusinessgoalsandweightingsasdescribedinthechartbelow.
PerformanceagainsttheapplicablegoalsisexpectedtobeusedbyourCompensationandManagementDevelopmentCommitteeindeterminingannualbonuspayments.However,indeterminingactualbonuspaymentsourCompensationandManagementDevelopmentCommitteeultimatelyreliesonitsjudgmentafteracomprehensivereviewofCompanyperformance,aswellasconsiderationofqualitativeandotherfactors,withoutbeingtiedtoanyformulasorpre-establishedweightings.OurCompensationandManagementDevelopmentCommitteehasultimatediscretiontomodifythemetricsandmayperiodicallyrevisitgoalsandweightingsascircumstanceschange.OtherthananApril2019refinementinoneofthebonusplan'snineperformancemeasurestoreflectanupdatedregulatorystrategyfortheliverprogram,theCompensationandManagementDevelopmentCommitteedidnotmakeanysuchmodificationswithrespecttothe2019bonusplan.
Indetermining2019bonusawards,ourCompensationandManagementDevelopmentCommitteeconsideredtheexecutiveteam'sachievementofavarietyofbusinessplangoals,asfollows:
Inaddition,ourCompensationandManagementDevelopmentCommitteeestablishedcertainadditionalgoalsbasedonemployeeengagement,asmeasuredbycertainemployeesurveysatisfactionresults,andimprovementsinorganizationalinclusivenessanddiversity,whichwereexpectedtobeusedtoadjustbonuspaymentsbyuptoplusorminus15%oftarget.Basedonpartialachievementofthesegoals,bonuspayoutsfortheNEOswerereducedby5%oftarget.
Afterconsideringtheexecutiveteam'sactualachievementofperformancemeasures,ourCompensationandManagementDevelopmentCommitteedeterminedtoawardcashbonusesfor2019performanceat100%oftarget.Accordingly,Mr.Conroy,Mr.Elliott,Mr.Stenhouse,Mr.Coward,Mr.OrvilleandMs.Hookerreceivedcashbonusesof$1,000,250,$230,000,$257,500,$242,050,$170,137and$203,636respectively.
Annual Equity Awards
Webelievesuccessfullong-termCompanyperformanceiscriticaltoenhancingstockholdervalueandaligningtheinterestsofourexecutiveofficerswiththoseofourstockholders.OurCompensationandManagementDevelopmentCommitteebelievesthatannualequityawardsprovideexecutiveofficerswiththeopportunitytoacquirelong-termstockownershippositions,whichmotivatesthemtofocusonlong-termstockholdervalue,withtheperformanceofeachNEOprimarilygoverningtheCompensationandManagementDevelopmentCommittee'sconsiderationsindetermininglong-termequityawardstoeachofthem.TheseawardsarealsointendedtomotivatetheretentionofourNEOsandprovideourNEOswithamarketcompetitivelong-termequityincentiveopportunity.Asdescribedabove,equityawardsgrantedin2019generallyconsistedoftime-basedstockoptionsandRSUs,aswellasperformance-basedPSUs.
InJanuary2019,ourCompensationandManagementDevelopmentCommitteeapprovedannualequityawardstoourthen-NEOsconsistingoftime-vestingRSUsandstockoptions,aswellasperformance-vestingPSUs,includingtheapprovalofthenumberofsharesofourcommonstocksubjecttoeachaward.TheseawardswereissuedonFebruary26,2019inaccordancewithourStatementofPolicywithrespecttoEquityAwardApprovals.Inconnectionwiththeseannualequityawards,Mr.Conroy,Mr.Elliott,Mr.Stenhouse,Mr.Coward,andMs.Hookerreceivedstockoptionscovering34,110,11,361,10,786,10,786and7,790shares,respectively.Thesharesunderlyingtheseoptionsvestandbecomeexercisableinfourequalannualinstallmentsbeginningonthefirstanniversaryofthegrantdate.Mr.Conroy,Mr.Elliott,Mr.Stenhouse,Mr.CowardandMs.HookerreceivedRSUscovering37,248,13,747,13,051,13,051and9,426shares,respectively.TheseRSUsvestinfourequalannualinstallmentsbeginningonthefirstanniversaryofthegrantdate.Inaddition,Mr.Conroy,Mr.Elliott,Mr.Stenhouse,Mr.Cowardand
GOAL PERFORMANCE MEASURES TARGET WEIGHTING ACTUAL
ACHIEVEMENT Power the partnership » Revenue
» Scalelabcapacity
» ImplementcoreITinfrastructure
60.0% 60.0%
Enhance Cologuard » Cologuardpublications
» ExpandCologuardlabelforage45-49,averageriskpopulation
» EstablishproofofconceptforenhancedCologuardtest
25.0% 27.5%
Advance liquid biopsy » Advanceliverprogram
» Identifynewmarkersforcoloncancerbloodtest
» Markerselectionandbusinessplanforonenewtest
15.0% 17.5%
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Ms.HookerreceivedPSUstied70%torevenuesand30%tospecifiedscientificmilestones,including,amongotherthings,labelexpansionforCologuard,launchofaversionofCologuardwithenhancedperformancecharacteristicsandlaunchingofnewdiagnosticproducts.ThesePSUscovered(i)atthresholdamounts,31,041,6,747,6,747,6,747and5,398shares,respectively,(ii)attargetamounts,62,082,13,494,13,494,13,494and10,794shares,respectively,and(iii)uponachievementofallperformance-basedvestingtermscontainedtherein,124,164,26,988,26,988,26,988and21,589shares,respectively.Mr.ColeandMr.Orvilleeachjoinedusin2019aftertheforegoingawardswereissued.InconnectionwiththeircommencementofemploymentwiththeCompanyin2019,Mr.ColeandMr.OrvillereceivedRSUscovering9,620and14,595shares,respectively,andMr.OrvillereceivedPSUscovering,(i)atthreshold,5,398shares,(ii)attarget,10,794shares,and(iii)uponachievementofallperformance-basedvestingtermscontainedtherein,21,589shares.Mr.Cole'sRSUawardvestonDecember31,2020,andMr.Orville'sRSUawardvestsinfourequalannualinstallmentsbeginningonFebruary18,2020.
2010 Plan and 2019 Plan
TheCompanymaintainstheExactSciencesCorporation2010OmnibusLong-TermIncentivePlan(AsAmendedandRestatedEffectiveJuly27,2017)(asamended,the"2010Plan"),underwhich,priortotheadoptionofthe2019Planasdescribedbelow,wewereabletograntcashandequityincentiveawardstoeligibleserviceprovidersinordertoattract,motivateandretainthetalentforwhichwecompete.TheCompanyalsomaintainstheExactSciencesCorporation2019OmnibusLong-TermIncentivePlan(the"2019Plan").The2019Plan,likethe2010Plan,providesforthegrantofincentivestockoptions,nonstatutorystockoptions,stockappreciationrights,restrictedstockawards,restrictedstockunitsandotherstock-basedawards.Incentivestockoptionsmaybegrantedonlytoemployees,andallotherawardsmaybegrantedtoourandouraffiliates'employees,non-employeedirectors,consultantsandotherserviceproviders.The2019PlanisadministeredbyourBoardofDirectorsoracommitteeofourBoardofDirectorsdesignatedbyourBoardofDirectorstoadministerthe2019Plan.OurBoardofDirectorshasdesignatedtheCompensationandManagementDevelopmentCommitteetoadministerthe2019Plan.
Company Clawback Policy
IfanyoftheCompany'sfinancialstatementsarerequiredtoberestated,theCompanymaybeentitledtorecoveralloraportionofanyawardmadeunderthe2010Planor2019PlanwithrespecttoanyfiscalyearoftheCompanythefinancialresultsofwhicharenegativelyaffectedbytherestatement.Theamounttoberecoveredwillbetheamountbywhichtheaffectedawardexceedstheamountthatwouldhavebeenpayablehadthefinancialstatementsbeeninitiallyfiledasrestated.Moreover,anyaward,amountorbenefitreceivedunderthe2010Planor2019Plan,asapplicable,willbesubjecttopotentialcancellation,recoupment,rescission,paybackorotheractioninaccordancewiththetermsofanyapplicableCompanyclawbackpolicyoranyapplicablelaw,asmaybeineffectfromtimetotime,whetheradoptedpriortoorfollowingthedateoftheaward.
Deferred Compensation Plan
Wemaintainanexecutivenon-qualifieddeferredcompensationplanpursuanttowhichcertainserviceproviders,includingournamedexecutiveofficers,maydeferupto90%oftheircashcompensationotherthanbonusesand100%oftheircashbonuses,andpursuanttowhichwemaymakematchingandothercontributionsinourdiscretion.Anymatchingcontributionsmadebyusgenerallywouldbesubjecttocontinuedserviceforoneyear,subjecttoearliervestingupondeath,disability,achangeincontrolofusortheparticipantbecomingeligibleforretirementundertheplan.Aparticipantgenerallymayelecttoreceivehisorheraccountbalanceundertheplanuponattaininganagespecifiedbytheparticipantorupontheparticipant'sretirement,ineithercaseinlump-sumorinannualinstallmentsasspecifiedintheplan,providedthattheparticipant'sremainingaccountbalancegenerallywouldbepaidtotheparticipantinlump-sumintheeventoftheparticipant'sseparationfromservicewithuspriortoretirementorintheeventofdeathordisability.
Other Compensation
Wepermitexecutiveofficerstopurchasecommonstockatadiscountthroughour2010EmployeeStockPurchasePlanonthesametermsandconditionsasourotheremployees.Executiveofficersmayalsoparticipateinour401(k)Plan,whichallowsfortheinvestmentofaportionofplanassetsinsharesofourcommonstock.OurCompensationandManagementDevelopmentCommitteeapprovedadiscretionarymatchingCompanycontributiontoour401(k)Planfor2019.ThematchingcontributionwasmadeusingCompanystockinanamountequalto100%ofanemployee'stotaldeferralsintotheplanuptoalimitof6%oftheemployee'stotalcompensation(subjecttoIRSlimits).
Role of Stockholder Say-on-Pay Votes
Weprovideourstockholderswiththeopportunitytocastanannualadvisoryvoteonexecutivecompensation(a"say-on-payproposal").AttheCompany'sannualmeetingofstockholdersheldinJuly2019,approximately89%ofthevotescastonthesay-on-payproposalatthemeetingwerevotedinfavoroftheproposal.OurCompensationandManagementDevelopmentCommitteebelievesthisvoteaffirmsourstockholders'supportoftheCompany'sapproachtoexecutivecompensationanddidnotmakespecificchangestoourexecutivecompensationprograminresponsetothevote.However,ourCompensationandManagementDevelopmentCommitteecontinuestoreviewandrefinethedesignandadministrationofourexecutivepaypractices.OurCompensationandManagementDevelopmentCommitteealsowillcontinuetoconsidertheoutcomeoftheCompany'ssay-on-payvoteswhenmakingfuturecompensationdecisionsforourNEOs.
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Stock Ownership Guidelines
WemaintainStockOwnershipGuidelinestoencourageownershipofsharesoftheCompany'scommonstockbyourdirectorsandexecutiveofficers,tofurtheraligntheirinterestswiththelong-terminterestsofourstockholdersandtofurtherpromotetheCompany'scommitmenttosoundcorporategovernance.Undertheseguidelines,directorsandexecutiveofficershaveuntilthreeyearsfromthedatethedirectororexecutiveofficerbecomessubjecttotheguidelines,toachieveanownershiptargetequaltothelower ofthe"BaseSalaryTarget"andthe"FixedShareTarget"determinedasfollows:
"AnnualRetainer"or"BaseSalary"forpurposesofboththeBaseSalaryTargetandFixedShareTargetisthedirector'sannualretainerortheexecutive'sbasesalary,asapplicable,onJune30ofeachfiscalyear.
"StockValue"forpurposesoftheBaseSalaryTargetiscalculatedannuallyattheendofeachfiscalyearbasedontheaverageoftheclosingpricesofourcommonstockforthelast30tradingdaysofthefiscalyear.
"StockValue"forpurposesoftheFixedShareTargetiscalculatedasofthelaterof(1)January1,2012,and(2)thedatethedirectororexecutiveofficeroriginallybecomessubjecttotheStockOwnershipGuidelines,asthecasemaybe,basedontheaverageoftheclosingpricesofourcommonstockforthe30daysleadingupto,andinclusiveof,theapplicabledate.
EachdirectorandexecutiveofficerisexpectedtocontinuouslyownsufficientsharestosatisfyeithertheBaseSalaryTargetortheFixedShareTargetownershiptargetonceattainedforaslongasheorsheremainssubjecttotheStockOwnershipGuidelines.Vested"inthemoney"stockoptionscountasownedsharesforthispurposebutunvestedstockoptions,restrictedshares,restrictedstockunits,anddeferredstockunitsandvested"outofthemoney"stockoptionsdonot.Ifanindividual'sownershiptargetincreasesbecauseofachangeinpositionorcompensation,theindividualwillhaveathree-yearperiodtoachievetheincrementalamountofsharesbeginningontheeffectivedateofthechangeinpositionorcompensation.
Followingtheinitialthree-yearperiodthatthedirectororexecutiveofficerisaffordedtoachievehisorherindividualownershiptargetundertheStockOwnershipGuidelines,untiladirectororexecutiveofficerhassatisfiedtheapplicableownershiptarget,thedirectororexecutiveofficerisrequiredtoretainanamountequalto50%ofthenetsharesreceivedastheresultoftheexercise,vestingorpaymentunderanyCompanyequityawardsgrantedtothedirectororexecutive.Thisamountiscalculatedusingtheclosingpriceofourcommonstockonthetradingdayimmediatelyprecedingthedateofexercise,vestingorpaymentundertheequityaward.Onceadirectororexecutiveofficerachieveshisorherindividualownershiptarget,theretentionrequirementsasdescribedabovenolongerwillapplytosuchdirectororexecutiveofficerunlessadispositionbysuchdirectororexecutiveofficerwouldcausesuchindividual'sstockownershiptofallbelowhisorherownershiptarget.
AsofApril17,2020,eachofourdirectorsandexecutiveofficerswasincompliancewiththeStockOwnershipGuidelines.
Restrictions on Hedging and Pledging of Company Securities
OurInsiderTradingPolicyprohibitsshortsalesofoursecurities,includinga"saleagainstthebox,"byourdirectorsandexecutives.OurInsiderTradingPolicyalsoprohibitsdirectorsandemployeesfromengaginginhedgingormonetizationtransactions,suchaszero-costcollarsandforwardsalecontracts,astheyinvolvetheestablishmentofashortpositioninoursecurities.OurInsiderTradingPolicyalsoprohibitsdirectorsandexecutivesfromholdingoursecuritiesinamarginaccountorpledgingsuchsecuritiesascollateralforaloan.
Section 162(m)
Section162(m)oftheInternalRevenueCodegenerallylimitsourannualcorporatetaxdeductionforcompensationpaidtoeachofour"coveredemployees"to$1million."Coveredemployees"includeanyonewhoservedaschiefexecutiveofficerorchieffinancialofficerduringanypartofayearandthenextthreemosthighlycompensatednamedexecutiveofficersforthatyear.Inaddition,onceapersonisconsidereda"coveredemployee,"thatpersonremainsacoveredemployeeinallsubsequentyears(includingafterthepersonleavesourserviceorchangesroles).Consequently,wegenerallywillnotbeentitledtoaU.S.taxdeductionforcompensationpaidinanyyeartoournamedexecutiveofficersandourother"coveredemployees"inexcessof$1million.Whileconsideringtaxdeductibilityasonlyoneofseveralconsiderationsindeterminingcompensation,webelievethatthetaxdeductionlimitationshouldnotcompromiseourabilitytostructurecompensationprogramsthatprovidebenefitstotheCompanythatoutweighthepotentialbenefitofataxdeductionand,therefore,mayapprovecompensationthatisnotdeductiblefortaxpurposes.
POSITION BASE SALARY / FIXED SHARE TARGET
CEO
NumberofshareswithaStockValueequaltoorgreaterthan6timesBaseSalary
Executive Officrs
NumberofshareswithaStockValueequaltoorgreaterthan2timesBaseSalary
Board of Directors
NumberofshareswithaStockValueequaltoorgreaterthan3timesAnnualRetainer
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Our NEOs
InApril2009,KevinT.ConroyjoinedusasourPresident&ChiefExecutiveOfficer.InNovember2016,JeffreyT.ElliottbecameourChiefFinancialOfficer.InJanuary2015,D.ScottCowardjoinedusasSeniorVicePresident,GeneralCounsel&Secretary.InJuly2018,Mr.CowardwasappointedChiefAdministrativeOfficerinadditiontohistitlesofSeniorVicePresident,GeneralCounselandSecretary.InApril2018,MarkStenhousejoinedusasPresident,CologuardandwasnamedGeneralManager,ScreeninginNovember2019.Mr.ColejoinedusGeneralManager,PrecisionOncologyfollowingtheCompany'sacquisitionofGenomicHealthinNovember2019.Mr.OrvillejoinedusasSeniorVicePresident,PipelineinFebruary2019andwasnamedGeneralManager,PipelineinNovember2019.Ms.Hookerjoinedusin2013tostartourclinicallaboratorypendingFDAapprovalofCologuardandhasservedasourSeniorVicePresident,Operationssince2015.
Employment Agreements with our NEOs
WehaveenteredintoagreementswithourNEOsunderwhichwehaveagreedtocertaincompensationarrangementsandseveranceandchangeofcontrolbenefits.InconnectionwithhiscommencementofemploymentwiththeCompanyinNovember2019,weenteredintoaletteragreementwithMr.Cole,underwhichwehaveagreedtocertainretentionarrangements,asdescribedbelow.
EachofthesepackageswasdeterminedbasedonnegotiationswiththeapplicableNEOandtakingintoaccounthisorherbackgroundandqualificationsandthenatureofhisorherposition.Webelievethatthesecompensationpackagesareappropriateinlightofthecompetitionfortopexecutivesinthebiotechnologyfieldandamongsimilarly-situatedcompanies,andthatthetermsofthesearrangementsareconsistentwithourexecutivecompensationgoals,includingthebalancingofshort-termandlong-termcompensationtoproperlymotivateourNEOs.
Conroy Employment Agreement
Mr.Conroy'semploymentagreement,datedMarch18,2009,providesforaminimumbasesalaryandforaminimumtargetbonusopportunityequaltoatleast50%ofhisbasesalary,withtheexactamountofanysuchbonustobebasedupontheachievementofcorporateandindividualperformancegoalstobedeterminedbyourCompensationandManagementDevelopmentCommittee.Attheendof2019,Mr.Conroy'sbasesalarywas$800,200andhistargetbonusopportunitywas125%ofhisbasesalary.
Underhisagreement,Mr.Conroywouldbeentitledtocertainpaymentsandbenefitsinconnectionwithcertainterminationeventsorachangeofcontrolasdescribedunder"Potential Benefitsupon Termination or Change of Control"beginningonpage37below.TheagreementalsoprohibitsMr.Conroyfromengagingincertainactivitiesinvolvingcompetitionwithusandfromsolicitingouremployeesforan18-monthperiodfollowingterminationofhisemploymentwiththeCompany.
Elliott Employment Agreement
Mr.Elliott'semploymentagreement,datedNovember8,2016,providesforaminimumbasesalaryandforaminimumtargetbonusopportunityequalto40%ofhisbasesalary,withtheexactamountofanysuchbonustobebasedupontheachievementofcertaingoals,includingcorporateandindividualgoals,tobedeterminedbytheChiefExecutiveOfficerandourCompensationandManagementDevelopmentCommittee.Attheendof2019,Mr.Elliott'sbasesalarywas$460,000andhistargetbonusopportunitywas50%ofhisbasesalary.
Underhisagreement,Mr.Elliottwouldbeentitledtocertainpaymentsandbenefitsinconnectionwithcertainterminationeventsorachangeofcontrolasdescribedunder"Potential Benefitsupon Termination or Change of Control"beginningonpage37below.TheagreementalsoprohibitsMr.Elliottfromengagingincertainactivitiesinvolvingcompetitionwithusandfromsolicitingouremployeesorcertainofourcustomersfora12-monthperiodfollowingterminationofhisemploymentwiththeCompany.
Stenhouse Employment Agreement
Mr.Stenhouse'semploymentagreement,datedApril2,2018,providesforaminimumbasesalaryandforaminimumtargetbonusopportunityequalto50%ofhisbasesalary,withtheexactamountofanysuchbonustobebasedupontheachievementofcertaingoals,includingcorporateandindividualgoals,tobedeterminedbytheChiefExecutiveOfficerandourCompensationandManagementDevelopmentCommittee.Attheendof2019,Mr.Stenhouse'sbasesalarywas$515,000andhistargetbonusopportunitywas50%ofhisbasesalary.
Underhisagreement,Mr.Stenhousewouldbeentitledtocertainpaymentsandbenefitsinconnectionwithcertainterminationeventsorachangeofcontrolasdescribedunder"PotentialBenefits upon Termination or Change of Control"beginningonpage37below.TheagreementalsoprohibitsMr.Stenhousefromengagingincertainactivitiesinvolvingcompetitionwithusandfromsolicitingouremployeesorcertainofourcustomersfora12-monthperiodfollowingterminationofhisemploymentwiththeCompany.
Coward Employment Agreement
Mr.Coward'semploymentagreement,datedOctober30,2014,providesforaminimumbasesalaryandforaminimumtargetbonusopportunityequalto40%ofhisbasesalary,withtheexactamountofanysuchbonustobebasedupontheachievementofcertaingoals,includingcorporateandindividualgoals,tobedeterminedbytheChiefExecutiveOfficerandourCompensationandManagementDevelopmentCommittee.Attheendof2019,Mr.Coward'sbasesalarywas$484,100,andhistargetbonusopportunitywas50%ofthisbasesalary.
Underhisagreement,Mr.Cowardwouldbeentitledtocertainpaymentsandbenefitsinconnectionwithcertainterminationeventsorachangeofcontrolasdescribedunder"Potential Benefitsupon Termination or Change of Control"beginningonpage37below.TheagreementalsoprohibitsMr.Cowardfromsolicitingourcustomersfora12-monthperiodfollowingterminationofhisemploymentwiththeCompany.
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Cole Letter Agreement
OnNovember15,2019,theCompanyenteredintoaletteragreementwithMr.ColesettingforththetermsandconditionsofaretentionarrangementfollowingtheCompany'sacquisitionofGenomicHealth.Theletteragreementprovidesforacashretentionbonusof$550,000,subjecttoMr.Cole'scontinuedemploymentthroughDecember31,2020,afurthercashretentionbonusof$450,000,subjecttoMr.Cole'scontinuedemploymentthroughMay8,2021,andaretentionRSUawardwithatargetvalueof$800,000,vestingonDecember31,2020,subjecttoMr.Cole'scontinuedemploymentthroughsuchdate.Attheendof2019,Mr.Cole'sbasesalarywas$557,293,andhistargetbonusopportunitywas55%ofthisbasesalary.
Orville Employment Agreement
Mr.Orville'semploymentagreement,datedFebruary18,2019,providesforaminimumbasesalaryandforaminimumtargetbonusopportunityequalto50%ofhisbasesalary,withtheexactamountofanysuchbonustobebasedupontheachievementofcertaingoals,includingcorporateandindividualgoals,tobedeterminedbytheChiefExecutiveOfficerandourCompensationandManagementDevelopmentCommittee.Attheendof2019,Mr.Orville'sbasesalarywas$375,000andhistargetbonusopportunitywas50%ofhisbasesalary.Mr.OrvillealsoreceivedaRSUgrant(describedabove),asigningbonusintheamountof$200,000,andaone-timerelocationpaymentintheamountof$325,000inconnectionwithhisemploymentagreement.
Underhisagreement,Mr.Orvillewouldbeentitledtocertainpaymentsandbenefitsinconnectionwithcertainterminationeventsorachangeofcontrolasdescribedunder"Potential Benefitsupon Termination or Change of Control"beginningonpage37below.TheagreementalsoprohibitsMr.Orvillefromengagingincertainactivitiesinvolvingcompetitionwithusandfromsolicitingouremployeesorcertainofourcustomersfora12-monthperiodfollowingterminationofhisemploymentwiththeCompany.
Hooker Employment Agreement
Ms.Hooker'semploymentagreement,datedAugust28,2017,providesforaminimumbasesalaryandforaminimumtargetbonusopportunity,withtheexactamountofanysuchbonustobebasedupontheachievementofcertaingoals,includingcorporateandindividualgoals,tobedeterminedbytheChiefExecutiveOfficerandourCompensationandManagementDevelopmentCommittee.Attheendof2019,Ms.Hooker'sbasesalarywas$371,700andhertargetbonusopportunitywas50%ofherbasesalary.
Underheragreement,Ms.Hookerwouldbeentitledtocertainpaymentsandbenefitsinconnectionwithcertainterminationeventsorachangeofcontrolasdescribedunder"Potential Benefitsupon Termination or Change of Control"beginningonpage37below.TheagreementalsoprohibitsMs.Hookerfromengagingincertainactivitiesinvolvingcompetitionwithusandfromsolicitingouremployeesorcertainofourcustomersfora12-monthperiodfollowingterminationofheremploymentwiththeCompany.
Potential Benefits upon Termination or Change of ControlWebelievethatprovidingexecutiveswithseveranceandchangeofcontrolprotectionisimportantforthefollowingreasons:
» toallowexecutivestovaluetheforwardlookingelementsoftheircompensationpackages,andthereforelimitretentionrisk;and
» toprovidecompensationassuranceswhicharecompetitivewiththoseofothersimilarly-situatedcompanies.
Accordingly,theCompany'semploymentagreementsandequityawardsgenerallyprovideforsalarycontinuationintheeventofcertainemploymentterminationsbeyondthecontroloftheexecutive,aswellasvaryingdegreesofacceleratedvestingofequityawardsintheeventofachangeofcontroloftheCompany.
This"PotentialBenefitsuponTerminationorChangeofControl"sectionshouldbereadinconjunctionwiththe"PotentialPaymentsuponTerminationorChangeofControl"sectionbeginningonpage46below,whichprovidesatablethatquantifiesthebenefitsdescribedinthissection.
Severance and Change of Control Arrangements in General
Wehaveenteredintoemploymentagreementsandmaintaincertainplansthatwillrequireustoprovidecompensationandotherbenefitstoourexecutiveofficersinconnectionwithcertaineventsrelatedtoaterminationofemploymentorchangeofcontrol.
Conroy Employment Agreement
Underhisemploymentagreement,Mr.Conroywould,uponterminationwithout"cause,"resignationfor"goodreason"orcertain"changeofcontrol"events(ineachcaseasdefinedinMr.Conroy'sagreement),beentitledtoreceivecertainbenefits,asdescribedbelow.
UnderMr.Conroy'semploymentagreement,uponterminationwithoutcauseorresignationforgoodreason,Mr.Conroywouldbecomeentitledtoreceivethefollowing:
» Salarycontinuationforaperiodof18monthsathisthencurrentbasesalary;
» Anyaccruedbutunpaidbonus,includinganyperformance-basedbonus,asoftheterminationdate,onthesametermsandatthesametimesaswouldhaveappliedhadMr.Conroy'semploymentnotterminated;
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» Theprorataportionofatargetbonusoranyotherperformance-basedbonus,providedthatsuchbonusispaidtootherseniorexecutivesoftheCompanyattheendoftheapplicableperiodwithinwhichMr.Conroy'semploymentwasterminated;
» IfMr.ConroyelectsCOBRAcoverageforhealthand/ordentalinsurance,Company-paidmonthlypremiumpaymentsforsuchcoverageuntiltheearliestof:(1)12monthsfromtheterminationdate;(2)thedateMr.Conroyobtainsemploymentofferinghealthand/ordentalcoveragecomparabletothatofferedbytheCompany;or(3)thedateCOBRAcoveragewouldotherwiseterminate;
» Apaymentof$10,000towardsthecostofanoutplacementconsultingpackagewithin30daysoftermination;
» ThevestingofthethenunvestedequityawardsgrantedtoMr.Conroy(whetherstockoptions,restrictedstockorstockpurchaserightsundertheCompany'sequitycompensationplan,orotherequityawards)willimmediatelyacceleratebyaperiodof12months;and
» Achangeintheexerciseperiodforvestedequityawardssuchthatvestedequityawardsbecomeexercisableuntiltheearlierof(1)twoyearsfromthedateofterminationofemploymentand(2)thelatestdateonwhichthoseequityawardsexpireorareeligibletobeexercisedunderthegrantagreements,determinedwithoutregardtosuchterminationorresignation.
UnderMr.Conroy'semploymentagreement,inconnectionwithachangeofcontrol,Mr.Conroywouldbecomeentitledtoreceivethefollowing:
» IntheeventofterminationbytheCompanywithoutcauseorbyMr.Conroyforgoodreason,within12monthsbefore,orifMr.ConroyremainsemployedwiththeCompanyontheeffectivedateof,achangeofcontrol,alump-sumpaymentequalto24monthsofbasesalaryandhisproratatargetbonusthroughtheeffectivedateofthechangeofcontrol;provided,thatanypaymentspreviouslymadetoMr.ConroyinconnectionwiththeterminationofhisemploymentbytheCompanywithoutcauseorbyMr.Conroywithgoodreasonwithinthe12monthsprecedingachangeofcontrolwouldbecreditedagainstanysuchlump-sumpayment;
» Acceleratedvestingofalloutstandingunvestedequityawards(whetherstockoptions,restrictedstockorstockpurchaserightsundertheCompany'sequitycompensationplans,orotherequityawards),subjecttoMr.Conroy'sagreementtoremainemployedbytheCompanyoranysuccessor,ifrequested,foraperiodofatleastsixmonthsfollowingthechangeofcontrolathisthencurrentbasesalary;
» IntheeventMr.Conroy'semploymentisterminatedbytheCompanywithoutcauseorbyMr.ConroyforgoodreasoninanticipationorcontemplationofapendingorpotentialchangeofcontrolorwhileapotentialchangeofcontrolisunderconsiderationorbeingnegotiatedbytheCompany'sBoardofDirectors,Mr.Conroywillbedeemedtoremainanemployeeforpurposesoftheincentiveplantowhichheisentitledtoparticipateunderhisemploymentagreement(the"LongTermIncentivePlan",describedbelow)asoftheeffectivedateofthechangeofcontrolandwillreceiveafullpayoutundertheLongTermIncentivePlanasdescribedinhisemploymentagreementasthoughheremainedanemployeeoftheCompanyasoftheeffectivedateofsuchchangeofcontrol;and
» Ataxgross-uppaymentinanamountsufficienttocausethenetamountretainedbyhim,afterdeductionofanyparachutepaymentexcisetaxes,toequaltheamountspayableasdescribedabove.Atthistime,ourBoardofDirectorsdoesnotintendtoprovideanyadditionaltaxgross-uppaymentstoemployeesitmayhireinthefuture.
Elliott, Stenhouse, Coward, Orville and Hooker Employment Agreements
Undertheiremploymentagreements,Mr.Elliott,Mr.Stenhouse,Mr.Coward,Mr.OrvilleandMs.Hookerwould,uponterminationwithout"cause,"resignationfor"goodreason"orcertain"changeofcontrol"events(ineachcaseasdefinedintheirrespectiveagreements),receivecertainbenefits,asdescribedbelow.
Undertheiremploymentagreements,uponterminationwithoutcauseorresignationforgoodreason,Mr.Elliott,Mr.Stenhouse,Mr.Coward,Mr.OrvilleandMs.Hookerwouldbecomeentitledtoreceivethefollowing:
» Salarycontinuationforaperiodof12monthsattheexecutive'sthencurrentbasesalary;
» Anyaccruedbutunpaidbonus,includinganyperformance-basedbonus,asoftheterminationdate,onthesametermsandatthesametimesaswouldhaveappliedhadtheexecutive'semploymentnotterminated;
» IftheexecutiveelectsCOBRAcoverageforhealthand/ordentalinsurance,Company-paidmonthlypremiumpaymentsforsuchcoverageuntiltheearliestof:(1)12monthsfromtheterminationdate;(2)thedatetheexecutiveobtainsemploymentofferinghealthand/ordentalcoveragecomparabletothatofferedbytheCompany;or(3)thedateCOBRAcoveragewouldotherwiseterminate;
» Apaymentof$10,000towardsthecostofanoutplacementconsultingpackagewithin30daysoftermination;
» Thevestingofthethenunvestedequityawardsgrantedtotheexecutive(whetherstockoptions,restrictedstockorstockpurchaserightsundertheCompany'sequitycompensationplan,orotherequityawards)willimmediatelyacceleratebyaperiodof12months;provided,that,solelyinrespectofMr.Stenhouse,Mr.OrvilleandMs.Hooker,forpurposesofPerformanceAwards(asdefinedintheiremploymentagreements),theywillbetreatedashavingremainedinserviceforanadditional12monthsfollowingactualSeparationfromService(asdefinedintheiremploymentagreements),providedthatsuchPerformanceAwardswillnotbecomeearnedandvestedsolelyasaresultofsuchtreatment,andthevestingandearningofallPerformanceAwardswillremainsubjecttotheattainmentofallapplicableperformancegoals,andsuchPerformanceAwards,ifandtotheextenttheybecomeearnedandvested,willbepayableatthesametimeasundertheapplicableawardagreement;and
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» Achangeintheexerciseperiodforvestedequityawardssuchthatvestedequityawardsbecomeexercisableuntiltheearlierof(1)twoyearsfromthedateofterminationofemploymentand(2)thelatestdateonwhichthoseequityawardsexpireorareeligibletobeexercisedunderthegrantagreements,determinedwithoutregardtosuchterminationorresignation.
UnderouremploymentagreementswithMr.Elliott,Mr.Stenhouse,Mr.Coward,Mr.OrvilleandMs.Hooker,allsuchexecutiveswouldbecomeentitledtoacceleratedvestingofalloutstandingunvestedequityawards(whetherstockoptions,restrictedstock,RSUsorstockpurchaserightsundertheCompany'sequitycompensationplans,orotherequityawards)if(1)within12monthsafterachangeofcontrol,theexecutiveisterminatedbytheCompany(oranysuccessor)withoutcauseortheexecutiveterminatestheexecutive'semploymentforgoodreason,(2)achangeofcontrolhappenswithinfourmonthsaftertheCompanyterminatestheexecutivewithoutcauseortheexecutiveterminatestheexecutive'semploymentforgoodreasonor(3)solelywithrespecttoMr.ElliottandMr.Coward,heremainsemployedbytheCompany(oranysuccessor)foratleastsixmonthsfollowingachangeofcontrol.SolelywithrespecttoMr.Stenhouse,Mr.OrvilleandMs.Hooker,anyPerformanceAwardsheldbythemasofsuchchangeofcontrolwillbedeemedtohavebeenfullyvestedandearnedbaseduponthegreaterof(A)anassumedachievementofallrelevantperformancegoalsatthe"target"levelor(B)the"actual"levelofachievementofallrelevantperformancegoalsasofthechangeofcontrol.
Conditions to Receipt of Severance and Change of Control Benefits
UnderMr.Conroy'semploymentagreement,theCompany'sobligationstoprovideMr.Conroywiththeseverancebenefitsdescribedabovearecontingenton:
» Mr.Conroy'sresignationfromourBoardofDirectorsintheeventofanyterminationofMr.Conroy'semploymentwiththeCompanyorupontherequestofourBoardofDirectorsinconnectionwithanychangeofcontrol;
» Mr.Conroy'sdeliveryandnon-revocationofasignedwaiverandreleaseinaformreasonablysatisfactorytotheCompanyofallclaimshemayhaveagainsttheCompany;
» Mr.Conroy'scompliancewithhisEmployeeConfidentialityandAssignmentAgreementwiththeCompany;
» Mr.Conroy'scompliancewiththe18-monthnon-competitioncovenantinhisemploymentagreement;and
» Mr.Conroy'scompliancewiththe18-monthnon-solicitationcovenantinhisemploymentagreement.
UnderMr.Elliott's,Mr.Stenhouse's,Mr.Coward's,Mr.Orville'sandMs.Hooker'semploymentagreements,theCompany'sobligationstoprovidetheseverancebenefitsdescribedabovearecontingenton:
» Theexecutive'sdeliveryandnon-revocationofasignedwaiverandreleaseinaformreasonablysatisfactorytotheCompanyofallclaimshemayhaveagainsttheCompany;
» Theexecutive'scompliancewiththetermsoftheexecutive'sEmployeeConfidentialityandAssignmentAgreementwiththeCompany;
» Theexecutive'scompliancewiththe12-monthnon-competitioncovenanttotheextentsetforthintheexecutive'semploymentagreement;and
» Theexecutive'scompliancewiththe12-monthnon-solicitationcovenantsetforthintheexecutive'semploymentagreement.
Death or Disability
InaccordancewitheachNEO'semploymentagreement,intheeventofthedeathordisabilityoftheexecutiveduringtheexecutive'semploymentterm,thefollowingwilloccur:
» Theexecutive'semploymentandtheexecutive'semploymentagreementwillimmediatelyandautomaticallyterminate;and
» Allequityawardsgrantedtotheexecutive,whetherstockoptionsorstockpurchaserightsundertheCompany'sequitycompensationplans,orotherequityawards,thatareunvestedatthetimeofterminationwillimmediatelybecomefullyvestedandexercisableuponsuchtermination.
Cole Letter Agreement
Mr.Cole'sletteragreementprovidesthatifhisemploymentisterminatedbytheCompanyoranaffiliateoftheCompanywithoutcause(asdefinedintheletteragreement),hewouldbecomeentitledtopaymentofanyunvestedcashretentionbonusthereunder,subjecttohisexecutionofareleaseofclaimsinfavoroftheCompanyanditsaffiliates.TheletteragreementalsoprovidesthatifMr.Cole'semploymentterminatesforanyreasonotherthancauseduringcalendaryear2020,hewillreceiveapro-rataportionofthe2020annualbonushewouldotherwisehavereceivedhadhisemploymentcontinuedthroughDecember31,2020.Further,theletteragreementprovidesthatifMr.Cole'semploymentterminatesforanyreasonotherthancausebetweenJanuary1,2021andMay8,2021,hewillreceiveapro-rataportionofthe2021annualbonushewouldhaveotherwisereceivedhadhisemploymentcontinuedthroughDecember31,2021.Finally,theletteragreementprovidesthatifMr.Cole'semploymentisterminatedbytheCompanyoranaffiliateoftheCompanywithoutcause,theunvestedportionoftheretentionRSUawardgrantedtohimundertheletteragreementwillvestinfull.
ExactSciences2020ProxyStatement 39
TableofContents
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS
Change in Control Benefits under 2010 Plan and 2019 Plan
Underboththe2010Planand2019Plan,exceptasotherwisespecificallyprovidedintheapplicableawardagreementorinanexecutive'semploymentagreement,upontheconsummationofachangeincontrol(asdefinedineachofthe2010Planand2019Plan):alloutstandingawardswillremaintheobligationoftheCompanyorbeassumedbythesurvivingoracquiringentity,andtherewillbeautomaticallysubstitutedforthesharesofourcommonstockthensubjecttotheawardstheconsiderationpayablewithrespectoftheoutstandingsharesofourcommonstockinconnectionwiththechangeincontrol,thetimevestingandexercisabilityofalloutstandingawardswillimmediatelyacceleratebyaperiodoftwelvemonths,providedthat,withrespecttoPerformanceAwards(asdefinedineachofthe2010Planand2019Plan),suchaccelerationwillapplytoPerformanceAwardssuchthatiftheapplicableperformanceperiodisscheduledtoendwithin12monthsfollowingtheChangeinControl,thePerformanceAwardwillbedeemedtohavebeenfullyvestedandearnedasoftheChangeinControlbaseduponthegreaterof(A)anassumedachievementofallrelevantperformancegoalsatthe"target"levelor(B)theactuallevelofachievementofallrelevantperformancegoalsasoftheChangeinControl.Inadditiontotheforegoing,withrespecttoawardsgrantedpriortotheconsummationofthechangeincontrol,intheeventthatanygranteewhoremainsanemployeeoftheCompanyortheacquiringorsurvivingentityimmediatelyfollowingtheconsummationofthechangeincontrolisterminatedwithoutcause(asdefinedineachofthe2010Planand2019Plan)orterminateshisorherownemploymentforgoodreason(asdefinedineachofthe2010Planand2019Plan)priortothefirstanniversaryoftheconsummationofthechangeincontrol:(1)alloptionsandSARsoutstandingonthedatethegrantee'semploymentisterminated,willbecomeimmediatelyexercisableinfullandwillterminate,totheextentunexercised,ontheirscheduledexpirationdate,andifthesharesofourcommonstocksubjecttotheoptionsaresubjecttorepurchaseprovisionsthentherepurchaserestrictionswillimmediatelylapse;(2)allrestrictedstockawardsoutstandingonthedatethegrantee'semploymentisterminated,willbecomevestedinfullandfreeofallrepurchaseprovisions;(3)allrestrictedstockunitsthatarenotPerformanceAwardsoutstandingonthedatethegrantee'semploymentisterminatedwillbecomevestedinfull,andifthesharesofcommonstocksubjecttosuchRestrictedStockUnitsaresubjecttorepurchaseprovisionsthensuchrepurchaseprovisionswillimmediatelylapse;(4)allotherstock-basedawards(asdefinedineachofthe2010Planand2019Plan)thatarenotPerformanceAwardswillbecomeexercisable,realizableorvestedinfull,andwillbefreeofallrepurchaseprovisions,asthecasemaybe;and(5)allrestrictedstockawards,restrictedstockunitsandotherstock-basedawardsthatarePerformanceAwardswillbecomefullyvestedandearnedbaseduponthegreaterof(A)anassumedachievementofallrelevantperformancegoalsatthe"target"levelor(B)theactuallevelofachievementofallrelevantperformancegoalsasofthechangeincontrol.
ThePSUsgrantedtoourNEOsin2019providethatupontheconsummationofachangeincontrol(asdefinedinthe2019Plan)priortotheNEO'sseparationfromservice(asdefinedinthe2019Plan),oruponaseparationfromserviceinitiatedbytheCompanyoranaffiliateinanticipationofthechangeincontrolandotherthanforcause(asdefinedinthe2019Plan)duringthesix-monthperiodprecedingthechangeincontrol,thePSUswillvestbaseduponthehigherof"target"achievementoractualperformanceachievedthroughthechangeincontrol(orasotherwisedeterminedbytheCompensationandManagementDevelopmentCommittee).
Thesummaryoftheforegoingbenefitsarisingoutofachangeincontrolunderthe2010Planandthe2019Planaresubjecttoandqualifiedbythetermsandconditionsofallapplicableawardagreementsandemploymentagreementstowhichournamedexecutiveofficersareaparty,ineachcase,asdescribedinthisProxyStatement.
Payments under the Executive Deferred Compensation Plan
Participantsinourexecutivedeferredcompensationplan,includingthenamedexecutiveofficers,generallymayelecttoreceivetheiraccountbalancesundertheplanuponattaininganagespecifiedbytheapplicableparticipantorupontheparticipant'sretirement,ineithercaseinlump-sumorinannualinstallmentsasspecifiedintheplan,providedthattheparticipant'sremainingaccountbalancegenerallywouldbepaidtotheparticipantinlump-sumintheeventoftheparticipant'sseparationfromservicewithuspriortoretirementorintheeventofdeathordisability.Inaddition,anyunvestedamountsinaparticipant'saccountwouldvestupontheparticipant'sdeath,disability,achangeincontrolofusortheparticipantbecomingeligibleforretirementundertheplan.
Long Term Incentive Plan
AspartofMr.Conroy'semploymentagreement,weestablishedaLongTermIncentivePlanpursuanttowhichMr.ConroywouldbeentitledtoreceiveacashpaymentuponachangeofcontrolbasedontheequityvalueoftheCompanyasreflectedinthefollowingtable.
LONG TERM INCENTIVE PLAN PORTION OF EQUITY VALUE
NAME FROM $100 MILLION
TO $500 MILLION
EACH INCREMENTAL$50 MILLION FROM $500 MILLION TO
$1 BILLION
EACH INCREMENTAL$50 MILLION FROM
$1 BILLION TO $2 BILLION
ANY AMOUNT OVER $2 BILLION
KevinT.Conroy 1.00% 0.50% 0.25% 0.00%
40 ExactSciences2020ProxyStatement
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REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEETheCompensationandManagementDevelopmentCommitteehasreviewedanddiscussedwithmanagementtheCompensationDiscussionandAnalysis(the"CD&A")fortheyearendedDecember31,2019,ascontainedintheforegoingsectionofthisProxyStatement.Inrelianceonthereviewsanddiscussionsreferredtoabove,theCompensationandManagementDevelopmentCommitteerecommendedtotheBoardofDirectors,andtheBoardofDirectorshasapproved,thattheCD&AbeincludedintheCompany'sAnnualReportonForm10-KfortheyearendedDecember31,2019andinthisProxyStatement.
TheCompensationandManagementDevelopmentCommittee:KatherineS.Zanotti,ChairpersonJamesE.DoyleDanielJ.Levangie
ExactSciences2020ProxyStatement 41
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EXECUTIVE COMPENSATION TABLES
EXECUTIVE COMPENSATION TABLES
Summary Compensation Table for 2019
ThefollowingtablerepresentssummaryinformationregardingthecompensationofeachofourNEOsforthethreeyearsendedDecember31,2019.
NAME AND PRINCIPAL POSITION YEAR SALARY
($) BONUS
($)
STOCK AWARDS
($)
OPTION AWARDS
($)
ALL OTHER COMPENSATION
($) TOTAL
($) Kevin T. Conroy 2019 792,169 1,000,250 14,949,979 1,948,193 25,952 18,716,543Chairman,Presidentand 2018 695,800 794,952 3,651,651 1,833,094 16,500 6,991,997ChiefExecutiveOfficer 2017 632,500 920,920 5,207,789 6,487,680 16,200 13,265,089Jeffrey T. Elliott 2019 455,385 230,000 3,772,876 648,884 16,385 5,123,530ChiefFinancialOfficer 2018 400,000 228,500 891,837 448,209 15,317 1,983,863
2017 350,000 254,800 1,410,996 1,757,080 15,351 3,788,227Mark Stenhouse 2019 513,846 677,500 3,708,412 616,042 29,250 5,545,050GeneralManager,Screening 2018 375,000 285,625 2,910,000 — 291,631 3,862,256D. Scott Coward 2019 483,016 242,050 3,708,412 616,042 16,800 5,066,320SeniorVicePresident,GeneralCounsel, 2018 446,923 268,488 891,837 448,209 29,857 2,085,314ChiefAdministrativeOfficerandSecretary 2017 400,300 364,273 1,949,602 2,027,400 51,949 4,793,525G. Bradley Cole 2019 81,272 389,270 871,861 — 757,468 2,099,871FormerGeneralManager,PrecisionOncology Jacob Orville 2019 57,692 370,137 3,291,960 — 341,800 4,061,589GeneralManager,Pipeline Ana Hooker 2019 407,054 203,636 2,872,609 444,926 16,800 3,945,025SeniorVicePresident,Operations
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TheamountsshowninthiscolumnindicatethegrantdatefairvalueofstockawardscomputedinaccordancewithFASBASCTopic718,includingthegrantdatefairvalueofthePSUawardsgrantedonFebruary26,2019,whichtheCompanyhasaccountedforatthe"maximum"level.Generally,thegrantdatefairvalueistheamountthatwewouldexpenseinourfinancialstatementsovertheaward'svestingschedule.Foradditionalinformationregardingtheassumptionsmadeincalculatingtheseamounts,seetheNotestoouraudited,consolidatedfinancialstatementsincludedinourAnnualReportonForm10-Kfor2019.TheseamountsreflectouraccountingexpensefortheseawardsanddonotcorrespondtotheactualvaluethatmayberecognizedbyourNEOs.
TheamountsshowninthiscolumnindicatethegrantdatefairvalueofoptionawardscomputedinaccordancewithFASBASCTopic718.Generally,thegrantdatefairvalueistheamountthatwewouldexpenseinourfinancialstatementsovertheaward'svestingschedule.Foradditionalinformationregardingtheassumptionsmadeincalculatingtheseamounts,seetheNotestoouraudited,consolidatedfinancialstatementsincludedinourAnnualReportonForm10-Kfor2019.TheseamountsreflectouraccountingexpensefortheseawardsanddonotcorrespondtotheactualvaluethatmayberecognizedbyourNEOs.
Mr.Conroyelectedtodeferpaymentof100%ofthisamountpursuanttotheCompany'sExecutiveDeferredCompensationPlan.
Represents(i)amatchingcontributiontoour401(k)planpaidinsharesofourcommonstockand(ii)$9,152paidbytheCompanytoMr.Conroyfortravel,lodgingandotherexpensesincurredinrespectofMr.Conroy'sspouse'sattendanceataCompanysalesconference.
Representsamatchingcontributiontoour401(k)planpaidinsharesofourcommonstock.
TheamountsreportedintheStockAwardsandOptionAwardscolumnsfor2017representthegrantdatefairvalueoftime-basedoptionandRSUawardsthatwereapprovedbyourCompensationandManagementDevelopmentCommitteeonJanuary31,2017andmadeeffective(forOmnibusPlanpurposes)onFebruary23,2017inaccordancewithourStatementofPolicywithrespecttoEquityAwardApproval(the"2017EquityAwards").Theissuanceofeach2017EquityAwardwassubjecttoandcontingentuponapprovalbyourstockholdersatthe2017annualmeetingoftheFirstAmendmenttothe2010OmnibusLong-TermIncentivePlan(AsAmendedandRestatedEffectiveApril28,2015)(the"2017PlanAmendment"),whichapprovalwasobtainedonJuly27,2017.
PursuanttoandinaccordancewithFASBASCTopic718,thegrantdatefairvalueofeach2017EquityAwardiscalculatedasofJuly27,2017,thedateonwhichthecontingencyofeachsuch2017EquityAwardwassatisfied(which,inthecaseofthetime-basedoptionawardsincludedinthe2017EquityAwards,isbasedonaBlack-ScholesvaluationmodelbasedonthefairmarketvalueofourcommonstockonJuly27,2017).TheclosingpriceofourcommonstockonJuly27,2017was$37.93.
The$37.93closingpriceofourcommonstockonJuly27,2017(theFASBASCTopic718grantdate)wassignificantlyhigherthanthe$21.68closingpriceofourcommonstockonFebruary23,2017,thedateonwhich,pursuanttoourStatementofPolicywithrespecttoEquityAwardApprovals,the2017EquityAwardswouldotherwisehavebeengrantedtoourNEOs,andthedateonwhichtheFASBASCTopic718grantdatefairvaluewouldhavebeendetermined,hadthe2017EquityAwardsnotbeensubjecttothecontingencyofstockholderapprovalofthe2017PlanAmendment.Thus,asaresultofapplicableSECandaccountingrules—andthesignificantincreaseinthepriceofourcommonstockfromFebruary2017toJuly2017—thevaluesreflectedintheSummaryCompensationTableforthe2017EquityAwardsaremeaningfullyhigherthanthevalueswhentheCompensationandManagementDevelopmentCommitteeapprovedtheawards.
Forillustrativepurposesonly,belowisatablesettingforth,withrespecttoeachNEOwhowasanNEOinfiscalyear2017andreceivedanannualequityawardin2017,(i)thegrantdatefairvalueofeach2017EquityAwardasreflectedintheSummaryCompensationTable,(ii)thegrantdatefairvalueofeach2017EquityAwardonFebruary23,2017,calculatedunderFASBASCTopic718,hadsuch2017EquityAwardnotbeensubjecttothecontingencyofstockholderapprovalofthe2017PlanAmendment,(iii)thedifferencesbetweensuchgrantdatefairvaluesand(iv)eachNEO'stotalcompensationfor2017hadthegrantdatefairvaluesofsuchNEO's2017EquityAwardsbeencalculatedasofFebruary23,2017.
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42 ExactSciences2020ProxyStatement
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EXECUTIVE COMPENSATION TABLES
NAME
2017 EQUITY AWARD
NUMBER OF SECURITIES
UNDERLYING OPTIONS
AND UNITS (#)
ASC 718 GRANT DATE
FAIR VALUE AS OF JULY 27, 2017
(AS REFLECTED IN SUMMARY
COMPENSATION TABLE) ($)
ASC 718 GRANT DATE FAIR VALUE
AS OF FEBRUARY 23,
2017 ($)
DIFFERENCEIN GRANT DATE FAIR VALUES ($)
TOTAL 2017 COMPENSATION
IN SUMMARY COMPENSATION
TABLE (WITH FEBRUARY 23,
2017 GRANT DATE FAIR VALUE) ($)
Kevin T.Conroy StockOption 240,000 6,487,680 3,168,000 3,319,680 7,714,284
RestrictedStockUnits 137,300 5,207,789 2,976,664 2,231,125 Jeffrey T. Elliott StockOption 65,000 1,757,080 858,000 899,080 2,284,647
RestrictedStockUnits 37,200 1,410,996 806,496 604,500 D. Scott
Coward StockOption 75,000 2,027,400 990,000 1,037,400 2,920,875 RestrictedStockUnits 51,400 1,949,602 1,114,352 835,250
Mr.StenhousewashiredasPresident,CologuardinApril2018.
Represents(i)$257,500inincentivecompensationbonusand(ii)thepaymentof$420,000inrespectofaportionofasigningbonusowedtoMr.StenhouseinconnectionwithhisappointmentasPresident,CologuardinApril2018,theremainderofwhichwillbepaidinApril2020.
Represents(i)amatchingcontributiontoour401(k)planpaidinsharesofourcommonstockand(ii)$12,450paidbytheCompanytoMr.Stenhousefortravel,lodgingandotherexpensesincurredinrespectofMr.Stenhouse'sspouse'sattendanceataCompanysalesconference.
Represents(i)amatchingcontributiontoour401(k)planpaidinsharesofourcommonstockand(ii)thepaymentcertainrelocationandtravelstipendspaidtoMr.StenhouseinconnectionwithhisappointmentasPresident,CologuardinApril2018.
Represents(i)amatchingcontributiontoour401(k)planpaidinsharesofourcommonstockand(ii)$13,357paidinrespectofacorporateapartmentinMadison,WisconsinusedbyMr.Cowardin2018.
Represents(i)amatchingcontributiontoour401(k)planpaidinsharesofourcommonstockand(ii)$35,749paidinrespectofacorporateapartmentinMadison,WisconsinusedbyMr.Cowardin2017.
Mr.ColebecameourGeneralManager,PrecisionOncologyfollowingtheCompany'sacquisitionofGHIinNovember2019.
OuracquisitionofGHIinNovember2019constituted"goodreason"forpurposesof,andtherebyvested,certainseverancebenefitsunderMr.Cole'sprioremploymentarrangementswithGHI.Theamountreportedrepresentsthevalueofcertainequityawardsacceleratedinconnectionwiththevestingofsuchbenefits.
Mr.OrvillewashiredasSeniorVicePresident,PipelineinFebruary2019.
Represents(i)$170,137inincentivecompensationbonusand(ii)aone-timepaymentof$200,000inrespectofasigningbonusowedtoMr.OrvilleinconnectionwithhisappointmentasSeniorVicePresident,PipelineinFebruary2019.
Represents(i)amatchingcontributiontoour401(k)planpaidinsharesofourcommonstockand(ii)$325,000paidinrespectofcertainrelocationandtravelstipendspaidtoMr.OrvilleinconnectionwithhisappointmentasSeniorVicePresident,PipelineinFebruary2019.
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ExactSciences2020ProxyStatement 43
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EXECUTIVE COMPENSATION TABLES
Grants of Plan-Based Awards in 2019
Thefollowingtablesetsforthallplan-basedawardsmadetoourNEOsin2019.
ALL OTHER STOCK
AWARDS: NUMBER OFSHARES OF STOCK OR UNITS (#)
ALL OTHER OPTION
AWARDS: NUMBER OF SECURITIES UNDERLYINGOPTIONS (#)
ESTIMATED FUTURE PAYOUTSUNDER EQUITY INCENTIVE PLAN
AWARDS
EXERCISEOR
BASE PRICEOF OPTION AWARDS
($/SH)
GRANTDATE
FAIR VALUEOF
STOCK AND OPTION AWARDS
($)
NAME AWARDTYPE
GRANT DATE
THRESHOLD(#)
TARGET (#)
MAXIMUM (#)
Kevin T.Conroy
StockOption 2/26/2019 34,110 92.62 1,948,193
RestrictedStockUnits 2/26/2019 37,248 3,449,910
PerformanceShareUnits 2/26/2019 31,041 62,082 124,164 11,500,070
Jeffrey T.Elliott
StockOption 2/26/2019 11,361 92.62 648,884
RestrictedStockUnits 2/26/2019 13,747 1,273,247
PerformanceShareUnits 2/26/2019 6,747 13,494 26,988 2,499,629
MarkStenhouse
StockOption 2/26/2019 10,786 92.62 616,042
RestrictedStockUnits 2/26/2019 13,051 1,208,784
PerformanceShareUnits 2/26/2019 6,747 13,494 26,988 2,499,629
D. ScottCoward
StockOption 2/26/2019 10,786 92.62 616,042
RestrictedStockUnits 2/26/2019 13,051 1,208,784
PerformanceShareUnits 2/26/2019 6,747 13,494 26,988 2,499,629
G. BradleyCole
RestrictedStockUnits 12/18/2019 9,620 871,861
JacobOrville
RestrictedStockUnits 2/18/2019 14,595 1,292,387
PerformanceShareUnits 2/26/2019 5,398 10,794 21,589 1,999,573
Ana Hooker StockOption 2/26/2019 7,790 92.62 444,926
RestrictedStockUnits 2/26/2019 9,426 873,036
PerformanceShareUnits 2/26/2019 5,398 10,794 21,589 1,999,573
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TheamountsshowninthiscolumnindicatethegrantdatefairvalueofoptionawardsandthegrantdatefairvalueofRSUsandPSUscomputedinaccordancewithFASBASCTopic718.Generally,thegrantdatefairvalueistheamountthatwewouldexpenseinourfinancialstatementsovertheaward'svestingschedule.Foradditionalinformationregardingtheassumptionsmadeincalculatingtheseamounts,seetheNotestoouraudited,consolidatedfinancialstatementsincludedinourAnnualReportonForm10-Kfor2019.TheseamountsreflectouraccountingexpensefortheseawardsanddonotcorrespondtotheactualvaluethatwillberecognizedbyourNEOs.
ThesharesunderlyingthisoptionvestandbecomeexercisableinfourequalannualinstallmentsbeginningonFebruary26,2020.
RepresentsRSUswhichvestinfourequalannualinstallmentsbeginningonFebruary26,2020.
RepresentsaPSUaward.Forfurtherinformation,see"Annual Equity Awards"above.
RepresentsRSUswhichvestonDecember31,2020.
RepresentsRSUswhichvestinfourequalannualinstallmentsbeginningonFebruary18,2020.
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44 ExactSciences2020ProxyStatement
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EXECUTIVE COMPENSATION TABLES
Outstanding Equity Awards at December 31, 2019
ThefollowingtablepresentsinformationaboutinformationaboutunexercisedoptionsandunvestedRSUsandPSUsthatwereheldbyourNEOsasofDecember31,2019.
OPTION AWARDS STOCK AWARDS
NAME
NUMBER OF SECURITIES
UNDERLYING UNEXERCISEDOPTIONS (#)
EXERCISABLE
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS (#) UNEXERCISABLE
OPTION EXERCISE
PRICE ($)
OPTION EXPIRATION
DATE
NUMBER OF SHARES OR
UNITS OFSTOCK
THAT HAVE NOT VESTED
(#)
MARKETVALUE
OF SHARES OR UNITS OF STOCK
THAT HAVE NOT VESTED
($)
EQUITY INCENTIVE
PLAN AWARDS: NUMBER
OF UNEARNEDSHARES, UNITS OR
OTHER RIGHTS
THAT HAVENOT
VESTED (#)(2)
EQUITY INCENTIVE
PLAN AWARDS: MARKET
OR PAYOUT
VALUE OF UNEARNEDSHARES, UNITS OR
OTHER RIGHTS
THAT HAVENOT
VESTED ($)(1)
KevinT.Conroy 94,425 — 9.07 02/27/22 187,648 17,353,687 31,041 2,870,672
96,758 — 10.82 02/22/23 102,837 — 13.96 02/24/24 66,723 — 23.38 03/09/25 185,475 61,825 5.70 02/26/26 120,000 120,000 21.68 02/23/27 17,075 51,225 44.37 02/27/28 — 34,110 92.62 02/26/29
JeffreyT.Elliott 32,500 32,500 21.68 02/23/27 66,172 6,119,587 6,747 623,963
4,175 12,525 44.37 02/27/28 — 11,361 92.62 02/26/29
MarkStenhouse — 10,786 92.62 02/26/29 63,051 5,830,956 6,747 623,963
D.ScottCoward — 13,750 5.70 02/26/26 75,226 6,956,900 6,747 623,963
— 37,500 21.68 02/23/27 — 12,525 44.37 02/27/28 — 10,786 92.62 02/26/29
G.BradleyCole 3,934 — 35.28 02/16/26 9,620 889,658 — —
13,422 — 35.91 01/31/27 22,527 — 43.40 01/31/28 21,230 — 94.76 01/29/29
JacobOrville 14,595 1,349,746 5,398 499,207
AnaHooker 15,000 — 23.38 03/09/25 43,876 4,057,652 5,398 499,207 10,150 5,050 5.03 02/28/26 15,000 15,000 21.68 02/23/27 2,925 8,775 44.37 02/27/28 — 7,790 92.62 02/26/29
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ThemarketvalueofunvestedandunearnedRSUsandPSUsisbasedontheclosingpriceofourcommonstockonDecember31,2019($92.48).
RepresentstheunearnedportionofcertainPSUs,whichvestbasedupontheachievementof(i)milestonesrelatedtorevenueforthetwelvemonthsendedDecember31,2021and(ii)certainscientificandotherstrategicmilestonesonorbeforeDecember31,2021.InaccordancewithSECrules,theamountsrepresentthethresholdamountspayableinconnectionwithsuchPSUawards.
RepresentstheunvestedportionsofcertainRSUsthatvestasfollows:(1)20,025sharesthatvestedonFebruary26,2020;(2)68,650sharesthatvestintwoequalannualinstallmentsbeginningonFebruary23,2020;(3)61,725sharesthatvestinthreeequalannualinstallmentsbeginningonFebruary27,2020and(4)37,248sharesthatvestinfourequalannualinstallmentsbeginningonFebruary26,2020.
RepresentstheunvestedportionofanoptiongrantthatvestedonFebruary26,2020.
RepresentstheunvestedportionofanoptiongrantthatvestsintwoequalannualinstallmentsbeginningonFebruary23,2020.
RepresentstheunvestedportionofanoptiongrantthatvestsinthreeequalannualinstallmentsbeginningonFebruary27,2020.
RepresentstheunvestedportionofanoptiongrantthatvestsinfourequalannualinstallmentsbeginningonFebruary26,2020.
RepresentstheunvestedportionofcertainRSUsthatvestasfollows:(1)18,750sharesthatvestonJuly28,2020;(2)18,600sharesthatvestintwoequalannualinstallmentsbeginningonFebruary23,2020;(3)15,075sharesthatvestinthreeequalannualinstallmentsbeginningonFebruary27,2020and(4)13,747sharesthatvestinfourequalannualinstallmentsbeginningonFebruary26,2020.
RepresentstheunvestedportionofcertainRSUsthatvestasfollows:(1)50,000sharesthatvestinthreeequalannualinstallmentsbeginningonApril2,2020and(2)13,051sharesthatvestinfourequalannualinstallmentsbeginningonFebruary26,2020.
RepresentstheunvestedportionofcertainRSUsthatvestasfollows:(1)21,400sharesthatvestedonFebruary26,2020;(2)25,700sharesthatvestintwoequalannualinstallmentsbeginningonFebruary23,2020;(3)15,075sharesthatvestinthreeequalannualinstallmentsbeginningonFebruary27,2020and(4)13,051sharesthatvestinfourequalannualinstallmentsbeginningonFebruary26,2020.
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ExactSciences2020ProxyStatement 45
TableofContents
EXECUTIVE COMPENSATION TABLES
2019 Option Exercises and Stock Vested Table
ThefollowingtablesetsforthinformationforeachofourNEOsregardingstockoptionexercisesandvestingofstockawardsduring2019.
2019 Nonqualified Deferred Compensation
Wemaintainanexecutivenon-qualifieddeferredcompensationplanpursuanttowhichcertainemployees,includingournamedexecutiveofficers,maydeferupto90%oftheircashcompensationotherthanbonusesand100%oftheircashbonuses,andpursuanttowhichwemaymakematchingandothercontributionsinourdiscretion.Anymatchingcontributionsmadebyusgenerallywouldbesubjecttocontinuedserviceforoneyear,subjecttoearliervestingupondeath,disability,achangeincontrolofusortheparticipantbecomingeligibleforretirementundertheplan.Aparticipantgenerallymayelecttoreceivehisorheraccountbalanceundertheplanuponattaininganagespecifiedbytheparticipantorupontheparticipant'sretirement,ineithercaseinlump-sumorinannualinstallmentsasspecifiedintheplan,providedthattheparticipant'sremainingaccountbalancegenerallywouldbepaidtotheparticipantinlump-sumintheeventoftheparticipant'sseparationfromservicewithuspriortoretirementorintheeventofdeathordisability.Amountsinaparticipant'saccountaretreatedasinvestedininvestmentsselectedbytheparticipantfromamenuofinvestmentoptionsdesignatedbyus.
Potential Payments upon Termination or Change of Control
Thefollowingtablesetsforththeestimatedpost-employmentcompensationandbenefitsthatwouldhavebeenpayabletoourNEOsundertheiremploymentagreements,assumingthateachcoveredcircumstanceoccurredonDecember31,2019.
RepresentstheunvestedportionofcertainRSUsthatvestonDecember31,2020.
RepresentstheunvestedportionofcertainRSUsthatvestinfourequalannualinstallmentsbeginningonFebruary18,2020.
RepresentstheunvestedportionofcertainRSUsthatvestasfollows:(1)12,500sharesthatvestedonFebruary26,2020;(2)2,775sharesthatvestedonFebruary29,2020;(3)8,600sharesthatvestintwoequalannualinstallmentsbeginningonFebruary23,2020;(4)10,575sharesthatvestinthreeequalannualinstallmentsbeginningonFebruary27,2020and(5)9,426sharesthatvestinfourequalannualinstallmentsbeginningonFebruary26,2020.
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OPTION AWARDS STOCK AWARDS
NAME
NUMBER OF SHARES ACQUIRED ON
EXERCISE (#)
VALUE REALIZEDON
EXERCISE ($)
NUMBER OF SHARES ACQUIRED ON VESTING
(#)
VALUE REALIZEDON
VESTING ($)
KevinT.Conroy 11,440 845,395 99,325 9,082,504JeffreyT.Elliott — — 33,075 3,551,885MarkStenhouse — — 25,000 2,296,500D.ScottCoward 100,425 6,597,352 45,300 4,164,049G.BradleyCole — — — —JacobOrville — — — —AnaHooker — — 25,600 2,359,635
(1) (2)
Valuerealizediscalculatedbasedonthedifferencebetweentheclosingpriceofourcommonstockonthedateofexerciseandtheexercisepriceofthestockoption.
Valuerealizediscalculatedbasedontheclosingpriceofourcommonstockonthedateofvesting.
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NAME
EXECUTIVE CONTRIBUTIONS
IN LAST FY
($)
REGISTRANT CONTRIBUTIONS
IN LAST FY
($)
AGGREGATE EARNINGS IN
LAST FY ($)
AGGREGATE WITHDRAWALS/DISTRIBUTIONS
($)
AGGREGATEBALANCE
AT LAST FYE ($)
KevinT.Conroy 1,000,250 — — — 1,000,250JeffreyT.Elliott — — — — —MarkStenhouse — — — — —D.ScottCoward — — — — —G.BradleyCole — — — — —JacobOrville — — — — —AnaHooker — — — — —
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Theamountsshowninthiscolumnarereportedascompensationin2019intheSummaryCompensationTable.
$1,000,250hasbeenreportedascompensationin2019intheSummaryCompensationTable.
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EXECUTIVE COMPENSATION TABLES
Forfurtherinformationregardingthefollowingtable,seethe"PotentialBenefitsuponTerminationorChangeofControl"sectionoftheCompensationDiscussion&AnalysisinthisProxyStatement.
NAME AND BENEFIT
SEVERANCEELIGIBLE
TERMINATION* ($)
CHANGE OF CONTROL($)
DEATH ORDISABILITY
($) Kevin T. Conroy CashSeverance 1,200,300 — —Bonus 1,000,250 — —OptionsandRestrictedStock 18,224,890 39,420,639 39,420,639Long-TermIncentivePlan 10,000,000 COBRABenefits 20,226 — —OutplacementConsulting 10,000 — —TotalEstimatedValue 20,455,666 49,420,639 39,420,639Jeffrey T. Elliott CashSeverance 460,000 — —Bonus 230,000 — —OptionsandRestrictedStock 4,727,989 10,271,089 10,271,089COBRABenefits 20,226 — —OutplacementConsulting 10,000 — —TotalEstimatedValue 5,448,215 10,271,089 10,271,089Mark Stenhouse CashSeverance 515,000 — —Bonus 257,500 — —OptionsandRestrictedStock 2,613,762 2,613,762 7,078,881COBRABenefits 18,393 — —OutplacementConsulting 10,000 — —TotalEstimatedValue 3,414,655 2,613,762 7,078,881D. Scott Coward CashSeverance 484,100 — —Bonus 242,050 — —OptionsandRestrictedStock 6,655,498 12,655,628 12,655,628COBRABenefits 20,226 — —OutplacementConsulting 10,000 — —TotalEstimatedValue 7,411,874 12,655,628 12,655,628G. Bradley Cole CashSeverance — — —Bonus — — —OptionsandRestrictedStock — — —COBRABenefits — — —OutplacementConsulting — — —TotalEstimatedValue — —
— Jacob Orville CashSeverance 400,000 — —Bonus 170,137 — —OptionsandRestrictedStock 337,460 337,460 2,347,975COBRABenefits 20,226 — —OutplacementConsulting 10,000 — —TotalEstimatedValue 937,823 337,460 2,347,975Ana Hooker CashSeverance 410,000 — —Bonus 203,636 — —OptionsandRestrictedStock 3,467,608 3,467,608 6,981,670COBRABenefits 15,113 — OutplacementConsulting 10,000 — —TotalEstimatedValue 4,106,357 3,467,608 6,981,670
(1)(2)(3) (4) (5)
(6)(7)
(8)(2)(3) (4) (5)(7)
(8)(2)(9) (10) (5)(7)
(8)(2)(3) (4) (5)(7)
(8)(2)(11) (10) (5)(7)
(8)(2)(12) (10) (5)(7)
* "SeveranceEligibleTermination"meanstheexecutive'sterminationbytheCompanywithoutcauseorbytheexecutiveforgoodreason.
Represents18months'severancepayableuponaSeveranceEligibleTerminationanddoesnotincludeanadditional$400,100,representinganadditionalsixmonths'severance,thatwouldbepayableifsuchSeveranceEligibleTerminationoccurswithin12monthsbeforeaChangeofControl(asdefinedinMr.Conroy'semploymentagreement).
Represents2019bonusaward.
RepresentsthevalueofunvestedoptionsandRSUsheldonDecember31,2019thatwerescheduledtovestwithin12monthsofsuchdate,assumingsuchaccelerationinconnectionwithaSeveranceEligibleTermination,basedupontheclosingmarketpriceofthecommonstockonDecember31,2019($92.48).
Representsthevalueofunvestedoptions,RSUsandPSUsheldonDecember31,2019,basedupontheclosingmarketpriceonDecember31,2019($92.48).TheseoptionsandRSUswouldvestinfulluponaChangeofControl(asdefinedintheNEO'semploymentagreement)ifsuchNEO(x)remainsemployedbytheCompany(oritssuccessor)atleastsixmonthsfollowingsuchChangeofControlor(y)isterminatedwithoutCauseorresignsforGoodReason(eachas
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EXECUTIVE COMPENSATION TABLES
definedintheNEO'semploymentagreement)(1)withinfourmonthspriortotheconsummationofsuchChangeofControlor(2)within12monthsfollowingsuchChangeofControl.InaccordancewiththetermsofsuchNEO'semploymentagreementandtheawardagreementgoverningsuchNEO'sPSUaward,thisamountreflectstheaccelerationofsuchPSUsbasedupontheachievementoftheperformancemetricstowhichsuchPSUsaresubjectatthe"target"level.
Representsthevalueofunvestedoptions,RSUsandPSUsheldonDecember31,2019,basedupontheclosingmarketpriceonDecember31,2019($92.48).TheseoptionsandRSUswouldvestinfullupontheNEO'sdeathorDisability(asdefinedintheNEO'semploymentagreement).InaccordancewiththetermsofsuchNEO'semploymentagreementandtheawardagreementgoverningsuchNEO'sPSUaward,thisamountreflectstheaccelerationofsuchPSUsbasedupontheachievementoftheperformancemetricstowhichsuchPSUsaresubjectatthe"target"level.
AmountrepresentspaymentdueundertheLongTermIncentivePlanassumingachangeofcontroltransactionatanequityvalueequaltotheCompany'stotalmarketcapitalizationasofDecember31,2019.
Representstheestimatedcostofpayingforpremiumsforhealthand/ordentalinsuranceforthemaximumof12months.
Represents12months'severance.
RepresentsthevalueofunvestedoptionsandRSUsheldonDecember31,2019thatwerescheduledtovestwithin12monthsofsuchdate,assumingsuchaccelerationinconnectionwithaSeveranceEligibleTerminationanddoesnotincludeanadditional$4,465,119representingtheincrementalvalueoftheremainderofMr.Stenhouse'sunvestedoptions,RSUsandPSUsheldonDecember31,2019,allofwhichwouldvestinfullifsuchSeveranceEligibleTerminationoccurredwithin4monthsbeforeor12monthsafteraChangeofControl(asdefinedinMr.Stenhouse'semploymentagreement).InaccordancewiththetermsofMr.Stenhouse'semploymentagreementandtheawardagreementgoverningMr.Stenhouse'sPSUaward,theamountreflectedintheimmediatelyprecedingsentencereflectstheaccelerationofsuchPSUsbasedupontheachievementoftheperformancemetricstowhichsuchPSUsaresubjectatthe"target"level.TheforegoingvaluesarecalculatedbasedupontheclosingmarketpriceofthecommonstockonDecember31,2019($92.48).
RepresentsthevalueofunvestedoptionsandRSUsheldonDecember31,2019thatwerescheduledtovestwithin12monthsofsuchdate,assumingsuchaccelerationinconnectionwithaChangeofControl(asdefinedintheNEO'semploymentagreement),basedupontheclosingmarketpriceofthecommonstockonDecember31,2019($92.48).BecausetheperformanceperiodunderthePSUsheldbytheNEOisnotscheduledtoendwithintwelvemonthsfollowingaChangeofControlasofDecember31,2019,suchPSUsarenotsubjecttoaccelerationundersuchNEO'semploymentagreement,andthisamountdoesnotincludeanyaccelerationofsuchPSUs.
RepresentsthevalueofunvestedoptionsandRSUsheldonDecember31,2019thatwerescheduledtovestwithin12monthsofsuchdate,assumingsuchaccelerationinconnectionwithaSeveranceEligibleTerminationanddoesnotincludeanadditional$2,010,515representingtheincrementalvalueoftheremainderofMr.Orville'sunvestedoptions,RSUsandPSUsheldonDecember31,2019,allofwhichwouldvestinfullifsuchSeveranceEligibleTerminationoccurredwithin4monthsbeforeor12monthsafteraChangeofControl(asdefinedinMr.Orville'semploymentagreement).InaccordancewiththetermsofMr.Orville'semploymentagreementandtheawardagreementgoverningMr.Orville'sPSUaward,theamountreflectedintheimmediatelyprecedingsentencereflectstheaccelerationofsuchPSUsbasedupontheachievementoftheperformancemetricstowhichsuchPSUsaresubjectatthe"target"level.TheforegoingvaluesarecalculatedbasedupontheclosingmarketpriceofthecommonstockonDecember31,2019($92.48).
RepresentsthevalueofunvestedoptionsandRSUsheldonDecember31,2019thatwerescheduledtovestwithin12monthsofsuchdate,assumingsuchaccelerationinconnectionwithaSeveranceEligibleTerminationanddoesnotincludeanadditional$3,514,062representingtheincrementalvalueoftheremainderofMs.Hooker'sunvestedoptions,RSUsandPSUsheldonDecember31,2019,allofwhichwouldvestinfullifsuchSeveranceEligibleTerminationoccurredwithin4monthsbeforeor12monthsafteraChangeofControl(asdefinedinMs.Hooker'semploymentagreement).InaccordancewiththetermsofMs.Hooker'semploymentagreementandtheawardagreementgoverningMs.Hooker'sPSUaward,theamountreflectedintheimmediatelyprecedingsentencereflectstheaccelerationofsuchPSUsbasedupontheachievementoftheperformancemetricstowhichsuchPSUsaresubjectatthe"target"level.TheforegoingvaluesarecalculatedbasedupontheclosingmarketpriceofthecommonstockonDecember31,2019($92.48).
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EQUITY COMPENSATION PLAN INFORMATION
EQUITY COMPENSATION PLAN INFORMATIONWemaintainthefollowingequitycompensationplansunderwhichourequitysecuritiesthathavebeenissuedorareauthorizedforissuancetoouremployeesand/ordirectors,ineachcase,asamended:the2000StockOptionandIncentivePlan,the2010OmnibusLong-TermIncentivePlan,the2010EmployeeStockPurchasePlan,the2016InducementAwardPlanandthe2019OmnibusLong-TermIncentivePlan.ThefollowingtablepresentsinformationabouttheseplansasofDecember31,2019.
PLAN CATEGORY
NUMBER OF SECURITIESTO BE ISSUED UPON
EXERCISE OFOUTSTANDING
OPTIONS, WARRANTS AND RIGHTS
WEIGHTED AVERAGE EXERCISE PRICE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE
UNDER EQUITYCOMPENSATION PLANS
(EXCLUDING SECURITIES OUTSTANDING)
Equitycompensationplansapprovedbysecurityholders 5,549,490(2) $25.76(3) 14,851,832(4)
Equitycompensationplansnotapprovedbysecurityholders 360,744(5) N/A 1,640,063(6)
Total 5,910,234 $25.76 16,491,895
(1)
Tabledoesnotinclude(a)466,944sharesofcommonstockissuablepursuanttooutstandingrestrictedstockunitsor(b)650,405sharesofcommonstockissuablepursuanttooutstandingstockoptions(whichhadaweightedaverageexercisepriceof$60.02pershareasofDecember31,2019),ineachcasegrantedunderGHI'sequitycompensationplan(the"GHIPlan"),whichtheCompanyassumedinconnectionwiththeacquisitionofGHIin2019.NofurtherawardsmaybegrantedundertheGHIPlan.
Includes3,729,293outstandingRSUs.
DoesnotreflectRSUsincludedinthefirstcolumnthatdonothaveanexerciseprice.
Consistsof13,791,753sharesofcommonstockavailableforfutureissuanceunderour2019OmnibusLong-TermIncentivePlanand1,060,079sharesofcommonstockavailableforfutureissuanceunderour2010EmployeeStockPurchasePlan.
Includes229,691RSUsissuedunderour2016InducementAwardPlangrantedto423Companyemployeesinconnectionwiththeirhiring.TheseinducementRSUawardsconvertintocommonstockonaone-for-onebasisuponvestingandvestinfourequalannualinstallmentsbeginningonthefirstanniversaryoftheapplicablegrantdate.Alsoincludes131,053RSUsgrantedpursuanttoNasdaqRule5635(c)underthe2019OmnibusLong-TermIncentivePlanbasedonthesharesthatwereavailableforgrantundertheGHIPlanatthetimetheCompanyacquiredGHI.NoneoftheseRSUsweregrantedtoindividualsemployedbytheCompanyimmediatelypriortotheacquisitionofGHI.
ReflectssharesofcommonstockthattheCompanymaygrantpursuanttoNasdaqRule5635(c)underthe2019OmnibusLong-TermIncentivePlanbasedonthesharesthatwereavailableforgrantundertheGHIPlanatthetimetheCompanyacquiredGHI.ThesesharesmayonlybegrantedtopersonswhowerenotemployedbytheCompanyimmediatelypriortotheacquisitionofGHI.
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CEO PAY RATIO
CEO PAY RATIOAsrequiredbySECrules,weareprovidingthefollowinginformationabouttherelationshipoftheannualtotalcompensationfor2019ofouremployeesandourCEO,Mr.Conroy.ThepayratioprovidedbelowisareasonableestimatecalculatedinaccordancewithSECrulesandmethodsfordisclosure.
For2019,themedianoftheannualtotalcompensationofallouremployees(otherthanourCEO)was$113,869;andtheannualtotalcompensationofourCEO,forpurposesofthispayratiodisclosure(asdiscussedbelow),was$18,729,996.Asaresult,theratiooftheannualtotalcompensationofourCEOtothemedianoftheannualtotalcompensationofallouremployeeswasapproximately164to1.Asdiscussedfurtherbeginningonpage33,during2019Mr.Conroywasgrantedone-timeperformance-contingentPerformanceStockUnitsintendedtoprovideperformanceincentivesoverathree-yearperiod.InordertoprovideamoreaccurateassessmentofMr.Conroy'scompensationfor2019relativetoourmedianemployee,andinordertoaccountforthelong-termintentofthataward,asasupplementalratiowededucted2/3ofthevalueofthataward,whichwouldresultinasupplementalpayratioof97:1.
Consistentwithprioryears'disclosure,weidentifiedourmedianemployeeby(A)aggregatingforeachofouremployees(otherthanourCEO)asofDecember13,2019(ourmedianemployeedeterminationdate):(1)forpermanentsalariedemployees,annualbasesalary,andsolelyforhourlyemployees,hourlyratemultipliedbyexpectedannualworkschedule,includingovertime(adjustedfortheportionoftheyearactuallyworkedfornon-permanentemployees),(2)targetbonusfor2019,and(3)estimatedgrantdatefairvalueofequityawardsgrantedduring2019,and(B)rankingouremployeesfromlowesttohighestusingthiscompensationmeasure.AmountspaidincurrenciesotherthanUSDollarswereconvertedbasedontheaverageannualexchangerateasofthedeterminationdate.
Fortheannualtotalcompensationofourmedianemployee,weidentifiedandcalculatedtheelementsofthatemployee'scompensationfor2019inaccordancewiththerequirementsofItem402(c)(2)(x),andthenaddedtheCompany'sannualshareofthecostofmedical,dental,disability,andlifeinsurancefortheemployee,resultinginannualtotalcompensationof$113,869.FortheannualtotalcompensationofourCEO,weusedtheamountreportedinthe"Total"columnofour2019SummaryCompensationTable,adjustedasfollows:tomaintainconsistencybetweentheannualtotalcompensationofourCEOandourmedianemployee,weaddedtheCompany'sannualshareofthecostofmedical,dental,disability,andlifeinsuranceforourCEO(estimatedat$13,453)totheamountreportedintheSummaryCompensationTable.ThisresultedinannualtotalcompensationforpurposesofdeterminingtheCEOpayratioof$18,729,996,whichexceededtheamountreportedforourCEOintheSummaryCompensationTable.
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PROPOSAL 4—APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
PROPOSAL 4—APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
WHAT YOU ARE VOTING ON:Atthe2020AnnualMeeting,stockholdersarebeingaskedtoapproveanamendmenttoourCertificateofIncorporationtoincreasethenumberofauthorized
sharesofcommonstockfrom200,000,000sharesto400,000,000shares.
OurBoardisseekingstockholderapprovalofanamendmenttoourCertificateofIncorporationthatwouldincreasethenumberofauthorizedsharesofcommonstockfrom200,000,000to400,000,000.TheproposedCertificateofAmendmenttotheCertificateofIncorporation(the"CertificateofAmendment")isattachedheretoasAppendixA.
Thenewlyauthorizedsharesofcommonstockwouldhavethesamerightsasthecurrentlyoutstandingsharesofourcommonstock.AsofMarch31,2020,149,443,103sharesofourcommonstockwereissuedandoutstanding,4,767,961sharesweresubjecttooutstandingrestrictedstockunitawards,2,840,592optionstopurchasesharesofourcommonstockwereissuedandoutstandingunderourequitycompensationplans,13,360,645sharesofourcommonstockwerereservedforfutureissuanceunderourequitycompensationplans,and26,291,240shareswerereservedforissuanceupontheconversionofouroutstandingconvertiblenotes.Accordingly,196,703,541ofthe200,000,000authorizedsharesofourcommonstockarecurrentlyissuedorreservedwhile3,296,459oftheauthorizedsharesofourcommonstockremainavailableforfutureissuance.
Reasons for the Increase in Authorized Shares
OurBoardbelievesitwouldbeprudentandadvisabletohavetheadditionalsharesavailabletoprovideadditionalflexibilityregardingthepotentialuseofsharesofcommonstockforbusinessandfinancialpurposesinthefuture.Havinganincreasednumberofauthorizedbutunissuedsharesofcommonstockwouldallowustotakepromptactionwithrespecttocorporateopportunitiesthatdevelop,withoutthedelayandexpenseofconveningaspecialmeetingofstockholdersforthepurposeofapprovinganincreaseinourauthorizedshares.Theadditionalsharescouldbeusedforvariouspurposeswithoutfurtherstockholderapproval.Thesepurposesmayinclude:(i)raisingcapital,ifwehaveanappropriateopportunity,throughofferingsofcommonstockorsecuritiesthatareconvertibleintocommonstock;(ii)expandingourbusinessthroughpotentialstrategictransactions,includingmergers,acquisitions,andotherbusinesscombinationsoracquisitionsofnewtechnologiesorproducts;(iii)establishingstrategicrelationshipswithothercompanies;(iv)exchangesofcommonstockorsecuritiesthatareconvertibleintocommonstockforotheroutstandingsecurities;(v)providingequityincentivestoattractandretainemployees,officersordirectors;and(vi)otherpurposes.
Potential Effects of the Proposed Amendment
Iftheproposedamendmentisapprovedbyourstockholders,theadditionalauthorizedsharesofcommonstockwouldhaverightsidenticaltoourcurrentlyoutstandingcommonstock.OurCertificateofIncorporationalsocurrentlyauthorizestheissuanceof5,000,000sharesofpreferredstock,noneofwhichareissuedoroutstanding.
TheproposedamendmenttotheCertificateofIncorporationwouldnotchangetheauthorizednumberofsharesofpreferredstock.Futureissuancesofsharesofcommonstockorsecuritiesconvertibleintosharesofcommonstockcouldhaveadilutiveeffectonourearningspershare,bookvaluepershareandthevotinginterestandpowerofcurrentstockholderssinceholdersofcommonstockarenotentitledtopreemptiverights.
SECrulesrequiredisclosureofthepossibleanti-takeovereffectsofanincreaseinauthorizedcapitalstockandothercharterandbylawprovisionsthatcouldhaveananti-takeovereffect.AlthoughwehavenotproposedtheincreaseinthenumberofauthorizedsharesofcommonstockwiththeintentofusingtheadditionalsharestopreventordiscourageanyactualorthreatenedtakeoveroftheCompany,undercertaincircumstances,suchsharescouldhaveananti-takeovereffect.TheadditionalsharescouldbeissuedtodilutethestockownershiporvotingrightsofpersonsseekingtoobtaincontroloftheCompanyorcouldbeissuedtopersonsalliedwiththeBoardofDirectorsormanagementandtherebyhavetheeffectofmakingitmoredifficulttoremovedirectorsormembersofmanagementbydilutingthestockownershiporvotingrightsofpersonsseekingtoeffectsucharemoval.Accordingly,iftheproposedamendmentisapproved,theadditionalsharesofauthorizedcommonstockmayrendermoredifficultordiscourageamerger,tenderofferorproxycontest,theassumptionofcontrolbyaholderofalargeblockofcommonstock,orthereplacementorremovalofmembersoftheBoardofDirectorsormanagement.
Implementation of the Authorized Share Increase
Followingstockholderapprovalofthisproposal,theauthorizedshareincreasewouldbeimplementedbyourfilingtheCertificateofAmendmentwiththeSecretaryofStateoftheStateofDelaware.However,atanytimepriortotheeffectivenessofthefilingoftheCertificateofAmendmentwiththeSecretaryofStateoftheStateofDelaware,theBoardofDirectorsreservestherighttoabandonthisproposalandtonotfiletheCertificateofAmendment,evenifapprovedbythestockholdersoftheCorporation,iftheBoardofDirectors,initsdiscretion,determinesthatsuchamendmentisnolongerinthebestinterestsoftheCorporationoritsstockholders.
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PROPOSAL 4—APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
Vote Required for Approval
TheamendmenttoourCertificateofIncorporationwillbeapprovedifholdersofamajorityoftheissuedandoutstandingsharesofcommonstockasoftherecorddatevoteinfavoroftheproposal.
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SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThefollowingtablesetsforthcertaininformationregardingbeneficialownershipofourcommonstockasofApril27,2020by:
» eachpersonorgroupofaffiliatedpersonsknownbyustobethebeneficialownerofmorethan5%ofourcommonstock;
» eachexecutiveofficerincludedintheSummaryCompensationTableabove;
» eachofourdirectors;
» eachpersonnominatedtobecomeadirector;and
» allexecutiveofficers,directorsandnomineesasagroup.
Unlessotherwisenotedbelow,theaddressofeachpersonlistedonthetableisc/oExactSciencesCorporationat441CharmanyDrive,Madison,Wisconsin53719.Toourknowledge,eachpersonlistedbelowhassolevotingandinvestmentpoweroverthesharesshownasbeneficiallyownedexcepttotheextentjointlyownedwithspousesorotherwisenotedbelow.
BeneficialownershipisdeterminedinaccordancewiththerulesoftheSEC.Theinformationdoesnotnecessarilyindicateownershipforanyotherpurpose.Undertheserules,sharesofcommonstockissuablebyustoapersonpursuanttorestrictedstockunitawardsexpectedtovestwithin60daysofApril27,2020andoptionswhichmaybeexercisedwithin60daysafterApril27,2020aredeemedtobebeneficiallyownedandoutstandingforpurposesofcalculatingthenumberofsharesandthepercentagebeneficiallyownedbythatperson.However,thesesharesarenotdeemedtobebeneficiallyownedandoutstandingforpurposesofcomputingthepercentagebeneficiallyownedbyanyotherperson.TheapplicablepercentageofcommonstockoutstandingasofApril27,2020isbasedupon149,564,305sharesoutstandingonthatdate.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
NAME AND ADDRESS OF BENEFICIAL OWNER
NUMBER OFISSUED SHARES
NUMBER OFSHARES
ISSUABLE
TOTAL SHARESBENEFICIALLY
OWNED
PERCENTAGE OF COMMON STOCK
OUTSTANDINGDirectors and Executive Officers Thomas D. Carey 34,181 18,850 53,031 *Eli Casdin 6,712 8,888 15,600 *G. Bradley Cole 10,194 43,757 53,951 *Kevin T. Conroy 1,019,268 830,721 1,849,989 1.3%D. Scott Coward 54,313 2,697 57,010 *James E. Doyle 32,440 18,477 50,917 *Jeffrey T. Elliott 60,015 59,940 119,955 *Ana Hooker 208,687 60,498 269,185 *Pierre Jacquet 5,982 — 5,982 *Daniel J. Levangie 12,458 16,545 29,003 *Freda Lewis-Hall 5,064 — 5,064 *Jacob Orville 2,688 — 2,688 *Kathleen Sebelius 8,200 — 8,200 *Andrew Slavitt 6,887 — 6,887 *Mark Stenhouse 29,926 2,697 32,623 *Michael S. Wyzga 8,913 26,595 35,508 *Katherine S. Zanotti 77,513 25,637 103,150 *All directors and executive officers as a group (18 persons) 1,589,355 1,118,912 2,708,267 1.8%Stockholders BlackRock, Inc. 7,784,507 — 7,784,507 5.3%T. Rowe Price 18,698,591 — 18,698,591 12.6%The Vanguard Group 13,428,104 — 13,428,104 9.1%
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* Lessthanonepercent.
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SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Representssharesofourcommonstockissuablepursuanttooption,restrictedstockunitanddeferredstockunitawardsexercisableorissuablewithin60daysofApril17,2020.Doesnotincludesharesofstockissuablepursuanttooption,restrictedstockunitanddeferredstockunitawardsnotexercisableorissuablewithin60daysofApril17,2020.
Includes450sharesofcommonstockheldincustodialaccounts,forthebenefitofcertainofMr.Casdin'sfamilymembers,overwhichMr.Casdinservesascustodian(the"CasdinCustodialAccounts").Mr.CasdinmaybedeemedtohavesharedvotingandinvestmentpowerwithrespecttothesharesofcommonstockheldbytheCasdinCustodialAccounts.Mr.CasdinexpresslydisclaimsbeneficialownershipofanysuchsecuritiesheldbytheCasdinCustodialAccounts,excepttotheextentofhispecuniaryinteresttherein,ifany.
Includes26,305sharesheldthroughour401(k)plan.
DoesnotincludesharesofcommonstockissuableonMay1,2020uponpurchasepursuanttotheCompany's2010EmployeeStockPurchasePlan.ThenumberofsharestobepurchasedonMay1,2020wasindeterminableasofApril17,2020.
Includes4,074sharesheldthroughour401(k)plan.
Includes1,147sharesheldthroughour401(k)plan.
Includes1,551sharesheldthroughour401(k)plan.
Includes192sharesheldthroughour401(k)plan.
Includes355sharesheldthroughour401(k)plan.
Includes37,000sharesheldinagrantorretainedannuitytrustinrespectofwhichMrs.Zanottiisthetrusteeandholdssolevotingandinvestmentpower.
AmountincludessharesofcommonstockbeneficiallyownedbyTorstenHoof,ourGeneralManager,International,whobecameanexecutiveofficeronNovember11,2019followingthecompletionofouracquisitionofGenomicHealth.AsofApril17,2020,Mr.Hoofbeneficiallyowned5,914sharesandoptionstopurchase3,610shareswhichmaybeexercisedwithin60daysafterApril17,2020.AsofApril17,2020,Mr.Hoofdidnotholdanysharesofcommonstockissuablebyuspursuanttorestrictedstockunitawardsexpectedtovestwithin60daysofApril17,2020.
BlackRock,Inc.,aDelawarecorporation("BlackRock"),beneficiallyownsthesesharesthroughitssubsidiaries,BlackRockLifeLimited,BlackRockInternationalLimited,BlackRockAdvisors,LLC,BlackRock(Netherlands)B.V.,BlackRockInstitutionalTrustCompany,NationalAssociation,BlackRockAssetManagementIrelandLimited,BlackRockFinanicalManagement,Inc.,BlackRockJapanCo.,Ltd.,BlackRockAssetManagement,LLC,BlackRockInvestmentManagement(UK)Limited,BlackRockAssetManagementCanadaLimited,BlackRock(Luxembourg)S.A.,BlackRockInvestmentManagement(Australia)Limited,BlackRockAdvisors(UK)Limited,BlackRockFundAdvisors,BlackRockAssetManagementNorthAsiaLimited,BlackRock(Singapore)LimitedandBlackRockFundManagersLtd.,andhasthesolepowertovoteortodirectthevoteof6,816,920sharesandhasthesolepowertodisposeortodirectthedispositionof7,784,507shares.TheprincipaladdressofBlackRockis55East52ndStreet,NewYork,NewYork10055.ThisinformationhasbeenobtainedfromSchedule13GfiledbyBlackRockwiththeSEConFebruary10,2020.
T.RowePriceAssociates,Inc.,aMarylandcorporation("T.RowePrice"),hasthesolepowertovoteortodirectthevoteof5,311,294sharesandthesolepowertodisposeortodirectthedispositionof18,698,591shares.AsdisclosedbyT.RowePrice,thesesecuritiesareownedbyvariousindividualandinstitutionalinvestorsforwhichT.RowePriceservesasaninvestmentadvisor.ForpurposesofreportingrequirementsoftheExchangeAct,T.RowePriceisdeemedtobethebeneficialownerofsuchsecurities.TheprincipaladdressofT.RowePriceis100E.PrattStreet,Baltimore,MD21202.ThisinformationhasbeenobtainedfromAmendmentNo.2toSchedule13GfiledbyT.RowePricewiththeSEConFebruary14,2020.
TheVanguardGroup,Inc.,aPennsylvaniacorporation("Vanguard"),beneficiallyownsthesesharesdirectlyandthroughitssubsidiaries,VanguardFiduciaryTrustCompanyandVanguardInvestmentsAustralia,Ltd.Vanguardhasthesolepowertovoteortodirectthevoteof115,578shares,thesharedpowertovoteortodirectthevoteof37,980shares,thesolepowertodisposeortodirectthedispositionof13,289,134sharesandsharedpowertodisposeortodirectthedispositionof138,970shares.VanguardFiduciaryTrustCompany,awholly-ownedsubsidiaryofVanguard,isthebeneficialownerof62,530shares,andVanguardInvestmentsAustralia,Ltd.,awholly-ownedsubsidiaryofVanguard,isthebeneficialownerof127,145shares.TheprincipaladdressofVanguardis100VanguardBlvd.,Malvern,Pennsylvania19355.ThisinformationhasbeenobtainedfromAmendmentNo.7toSchedule13GfiledbyVanguardwiththeSEConFebruary12,2020.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESection16(a)oftheExchangeActrequiresourdirectors,executiveofficersandpersonswhoownmorethantenpercentofaregisteredclassofourequitysecuritiestofilereportsofownershipandchangesinownershipwiththeSEC.SuchpersonsarerequiredbySECregulationstofurnishuswithcopiesofallsuchfilings.Basedsolelyonourreviewofcopiesofsuchfilings,webelievethatallreportingpersonscompliedonatimelybasiswithallSection16(a)filingrequirementsduringtheyearendedDecember31,2019,exceptthatEliCasdinfiledonelateForm4withrespecttosharesofcommonstockMr.CasdinreceivedinexchangeforsharesofGenomicHealthheheldindirectlypriortotheCompany'sacquisitionofGenomicHealth.
OTHER BUSINESSOurBoardofDirectorsknowsofnobusinessthatwillbepresentedforconsiderationatthe2020AnnualMeetingotherthanthoseitemsstatedabove.Ifanyotherbusinessshouldcomebeforethe2020AnnualMeeting,votesmaybecastpursuanttoproxiesinrespecttoanysuchbusinessinthebestjudgmentofthepersonorpersonsactingundertheproxies.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERMEETING TO BE HELD ON JULY 23, 2020Theproxystatementandannualreporttostockholdersareavailableatwww.proxvote.com.
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QUESTIONS AND ANSWERSWhy did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
UnderrulesadoptedbytheSEC,wearefurnishingproxymaterialstoourstockholdersprimarilyviatheInternet,insteadofmailingprintedcopiesofthosematerialstoeachstockholder.OnoraboutJune11,2020,wewillmailtoourstockholdersofrecordasofJune1,2020(otherthanthosewhopreviouslyrequestedelectronicorpaperdeliveryonanongoingbasis)aNoticeofMeetingandImportantNoticeRegardingtheAvailabilityofProxyMaterials(the"Notice")containinginstructionsonhowtoaccessourproxymaterials,includingourproxystatementandour2020AnnualReport,whichincludesourAnnualReportonForm10-KfortheyearendedDecember31,2019.AllstockholderswillhavetheabilitytoaccessourproxymaterialsonthewebsitereferredtointheNoticeorrequestaprintedsetoftheproxymaterials.InstructionsonhowtoaccessourproxymaterialsontheInternetortorequestprintedversionsareprovidedintheNotice.TheNoticealsoinstructsyouonhowtoaccessyourproxycardtovotethroughtheInternetorbytelephone.Inaddition,stockholdersmayrequesttoreceiveproxymaterialsinprintedformbymailorelectronicallybyemailonanongoingbasis.Ifyouhavepreviouslyelectedtoreceiveourproxymaterialselectronically,youwillcontinuetoreceivethesematerialsviaemailuntilyouelectotherwise.
What does it mean if I receive more than one Notice or more than one set of proxy materials?
Itmeansthatyoursharesareheldinmorethanoneaccountatthetransferagentand/orwithbanksorbrokers.Pleasevoteallofyourshares.Toensurethatallofyoursharesarevoted,foreachNoticeorsetofproxymaterials,pleasesubmityourproxybyphone,viatheInternet,or,ifyoureceivedprintedcopiesoftheproxymaterials,bysigning,datingandreturningtheenclosedproxycardintheenclosedenvelope.
How do I receive a paper copy of the materials?
Ifyouprefertoreceivepapercopiesoftheproxymaterials,youcanstilldoso.YoumayrequestapapercopybyfollowingtheinstructionsprovidedintheNotice.TheNoticealsoprovidesyouwithinstructionsonhowtorequestpapercopiesoftheproxymaterialsonanongoingbasis.Thereisnochargetoreceivethematerialsbymail.YoumayrequestprintedcopiesofthematerialsuntiloneyearafterthedateoftheAnnualMeeting.Ifyouhavepreviouslyelectedtoreceiveprintedproxymaterials,youwillcontinuetoreceivethesematerialsinpaperformatuntilyouelectotherwise.
What is a proxy?
OurBoardofDirectorsisaskingforyourproxy.Thismeansyouauthorizepersonsselectedbyustovoteyoursharesattheannualmeetinginthewaythatyouinstruct.Allsharesrepresentedbyvalidproxiesreceivedbeforetheannualmeetingwillbevotedinaccordancewiththestockholder'sspecificvotinginstructions.
What items will be voted on at the Annual Meeting?
Therearefourproposalsscheduledtobevotedonattheannualmeeting:
» ToelectthefournomineestoourBoardofDirectorsnominatedbyourBoardofDirectorstoserveforathreeyeartermasClassIIdirectors.
» ToratifytheappointmentofPricewaterhouseCoopers,LLPasourindependentregisteredpublicaccountingfirmfor2020.
» Toholdanadvisoryvoteonexecutivecompensation.
» ToapproveanamendmenttoourCertificateofIncorporationincreasingthenumberofauthorizedsharesofcommonstockfrom200,000,000sharesto400,000,000shares.
OurBoardofDirectorsisnotawareofanyothermatterstobebroughtbeforethemeeting.Ifothermattersareproperlyraisedatthemeeting,theproxyholdersmayvoteanysharesrepresentedbyproxyintheirdiscretion.
What are our Board of Directors' voting recommendations?
OurBoardofDirectorsrecommendsthatyouvoteyourshares:
» FORthefournomineestoourBoardofDirectorsnominatedbyourBoardofDirectorstoserveforathreeyeartermasClassIIdirectors;
» FORtheratificationoftheappointmentofPricewaterhouseCoopers,LLPasourindependentregisteredpublicaccountingfirmfor2020;
» FORtheapprovaloftheadvisoryvoteonexecutivecompensation;and
» FORtheapprovaloftheamendmenttoourCertificateofIncorporationincreasingthenumberofauthorizedsharesofcommonstockfrom200,000,000sharesto400,000,000shares.
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QUESTIONS AND ANSWERS
When is the record date and who is entitled to vote?
OurBoardofDirectorssetJune1,2020astherecorddate.HoldersofrecordofsharesofourcommonstockasofthecloseofbusinessontherecorddatewillbeentitledtonoticeofandtovoteattheAnnualMeetingandanycontinuation,postponementoradjournmentthereof.Atthecloseofbusinessontherecorddate,thereweresharesofourcommonstockissuedandoutstandingandentitledtovote.EachshareofourcommonstockisentitledtoonevoteonanymatterpresentedtostockholdersattheAnnualMeeting.YouwillneedtoobtainyourownInternetaccessifyouchoosetoattendtheAnnualMeetingonlineand/orvoteovertheInternet.
ToattendandparticipateintheAnnualMeeting,youwillneedthe16-digitcontrolnumberincludedinyourNotice,onyourproxycardorontheinstructionsthataccompaniedyourproxymaterials.Ifyoursharesareheldin"streetname,"youshouldcontactyourbankorbrokertoobtainyour16-digitcontrolnumberorotherwisevotethroughthebankorbroker.Themeetingwebcastwillbeginpromptlyat10:00a.m.CentralTime.Weencourageyoutoaccessthemeetingpriortothestarttime.Onlinecheck-inwillbeginshortlybeforethemeetingonJuly23,2020.
Why hold a virtual meeting?
Virtualmeetingtechnologyprovidesexpandedaccess,improvedcommunicationandcostsavingsforourstockholdersandtheCompanywhileprovidingstockholdersthesamerightsandopportunitiestoparticipateastheywouldhaveatanin-personmeeting.AvirtualmeetingenablesstockholderparticipationfromanylocationaroundtheworldwithInternetaccess.Furthermore,aspartofourefforttomaintainthehealthandsafetyofourdirectors,membersofmanagement,employeesandstockholderswhowishtoattendtheAnnualMeeting,inlightofthenovelcoronavirusdisease,COVID-19,webelievethathostingavirtualmeetingisinthebestinterestoftheCompanyanditsstockholders.
What is a stockholder of record?
AstockholderofrecordorregisteredstockholderisastockholderwhoseownershipofExactSciencesstockisreflecteddirectlyonthebooksandrecordsofourtransferagent,AmericanStockTransferandTrustCompany,LLC.Ifyouholdstockthroughanaccountwithabank,brokerorsimilarorganization,youareconsideredthebeneficialownerofsharesheldin"streetname"andarenotastockholderofrecord.Forsharesheldinstreetname,thestockholderofrecordisyourbank,brokerorsimilarorganization.Weonlyhaveaccesstoownershiprecordsfortheregisteredshares.Ifyouarenotastockholderofrecord,wewillrequireadditionaldocumentationtoevidenceyourstockownershipasoftherecorddate,suchasacopyofyourbrokerageaccountstatement,aletterfromyourbroker,bankorothernomineeoracopyofyournoticeorvotinginstructioncard.Asdescribedbelow,ifyouarenotastockholderofrecord,youwillnotbeabletovoteyoursharesunlessyouhaveaproxyfromthestockholderofrecordauthorizingyoutovoteyourshares.
How do I vote my shares without attending the Annual Meeting?
WerecommendthatstockholdersvotebyproxyeveniftheyplantoattendtheAnnualMeetingandvoteelectronically.Ifyouareastockholderofrecord,therearethreewaystovotebyproxy:
» By telephone.Youcanvotebycalling1-800-690-6903withthecontrolnumberincludedontheNoticeorproxycard.
» By Internet.YoucanvoteovertheInternetatwww.proxyvote.combyfollowingtheinstructionsontheNoticeorproxycard.
» By mail.Youcanvotebymailbysigning,datingandmailingtheproxycard,whichyoumayhavereceivedbymail.
TelephoneandInternetvotingfacilitiesforstockholdersofrecordwillbeavailable24hoursadayandwillcloseat11:59p.m.,EasternTime,onJuly22,2020.
Ifyoursharesareheldinthenameofabank,brokerorotherholderofrecord,youwillreceiveinstructionsonhowtovotefromthebank,brokerorholderofrecord.Youmustfollowtheinstructionsofsuchbank,brokerorholderofrecordinorderforyoursharestobevoted.
How can I attend and vote at the Annual Meeting?
WewillbehostingtheAnnualMeetingliveviaaudiowebcast.AnystockholdercanattendtheAnnualMeetingliveonlineathttps://www.virtualshareholdermeeting.com/EXAS2020.Ifyouwereastockholderasoftherecorddate,oryouholdavalidproxyfortheAnnualMeeting,youcanvoteattheAnnualMeeting.AsummaryoftheinformationyouneedtoattendtheAnnualMeetingonlineisprovidedbelow:
» InstructionsonhowtoattendandparticipateviatheInternet,includinghowtodemonstrateproofofstockownership,arepostedathttps://www.virtualshareholdermeeting.com/EXAS2020.
» AssistancewithquestionsregardinghowtoattendandparticipateviatheInternetwillbeprovidedathttps://www.virtualshareholdermeeting.com/EXAS2020onthedayoftheAnnualMeeting.
» Webcaststartsat10:00a.m.CentralTime.
» Youwillneedyour16-DigitControlNumbertoentertheAnnualMeeting.
» StockholdersmaysubmitquestionswhileattendingtheAnnualMeetingviatheInternet.
» WebcastreplayoftheAnnualMeetingwillbeavailableuntilJuly23,2021.
ToattendandparticipateintheAnnualMeeting,youwillneedthe16-digitcontrolnumberincludedinyourNotice,onyourproxycardorontheinstructionsthataccompaniedyourproxymaterials.Ifyoursharesareheldin"streetname,"youshouldcontactyourbankorbrokertoobtainyour16-digitcontrolnumberorotherwisevotethroughthebankorbroker.
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What if during the check-in time or during the Annual Meeting I have technical difficulties or trouble accessing the virtual meeting website?
Wewillhavetechniciansreadytoassistyouwithanytechnicaldifficultiesyoumayhaveaccessingthevirtualmeetingwebsite.Ifyouencounteranydifficultiesaccessingthevirtualmeetingwebsiteduringthecheck-inormeetingtime,pleasecallthetechnicalsupportnumberthatwillbepostedontheAnnualMeetingloginpage.
How can I change or revoke my vote?
Youmaychangeorrevokeyourvoteasfollows:
» Stockholders of record.YoumaychangeorrevokeyourvotebysubmittingawrittennoticeofrevocationtoExactSciencesCorporationc/oSecretaryat441CharmanyDrive,Madison,Wisconsin53719orbysubmittinganothervoteonorbeforeJuly22,2020.YoumayalsochangeyourvotebyvotingagainbyInternetortelephoneatalatertimebeforetheclosingofthosevotingfacilitiesat11:59p.m.,EasternTime,onJuly22,2020orbyattendingtheAnnualMeeting,revokingyourproxyandvotingagain.
» Beneficial owners of shares held in "street name."Youmaychangeorrevokeyourvotinginstructionsbyfollowingthespecificdirectionsprovidedtoyoubyyourbankorbroker.
YourmostrecentproxycardortelephoneorInternetproxyistheonethatiscounted.YourattendanceattheAnnualMeetingbyitselfwillnotrevokeyourproxyunlessyougivewrittennoticeofrevocationtotheCompanybeforeyourproxyisvotedoryouvoteattheAnnualMeeting.
What happens if I do not give specific voting instructions?
Stockholders of record.IfyouareastockholderofrecordandyousignandreturnaproxycardwithoutgivingspecificvotinginstructionsthentheproxyholderswillvoteyoursharesinthemannerrecommendedbyourBoardofDirectorsonallmatterspresentedinthisproxystatementandastheproxyholdersmaydetermineintheirdiscretionforanyothermattersproperlypresentedforavoteatthemeeting.
Beneficial owners of shares held in "street name."Ifyouareabeneficialownerofsharesheldinstreetnameanddonotprovidetheorganizationthatholdsyourshareswithspecificvotinginstructions,theorganizationthatholdsyoursharesmaygenerallyvoteonroutinemattersbutcannotvoteonnon-routinematters.Iftheorganizationthatholdsyoursharesdoesnotreceiveinstructionsfromyouonhowtovoteyoursharesonanon-routinematter,theorganizationthatholdsyourshareswillinformtheinspectorofelectionthatitdoesnothavetheauthoritytovoteonthismatterwithrespecttoyourshares.Thisisreferredtoasa"brokernon-vote."
What ballot measures are considered "routine" or "non-routine?"
Theelectionofdirectors("Proposal1")andtheadvisoryvoteonthecompensationpaidtoourexecutiveofficers("Proposal3")areconsideredtobenon-routinemattersunderapplicablerules.Abrokerorothernomineecannotvotewithoutinstructionsonnon-routinematters,andthereforetheremaybebrokernon-votesonProposals1and3.
TheratificationoftheappointmentofPWCasourindependentregisteredpublicaccountingfirmfor2020("Proposal2")andtheapprovaloftheamendmenttoourCertificateofIncorporationincreasingthenumberofauthorizedsharesofcommonstockfrom200,000,000sharesto400,000,000shares("Proposal4")areconsideredtoberoutinemattersunderapplicablerules.Abrokerorothernomineemaygenerallyvoteonroutinematters,andwedonotexpecttheretobeanybrokernon-voteswithrespecttoProposals2or4.
What is the quorum for the annual meeting?
Thepresence,inpersonorbyproxy,oftheholdersofamajorityofthesharesentitledtovoteisnecessaryforthetransactionofbusinessattheannualmeeting.Thisiscalledaquorum.
What is the voting requirement to approve each of the proposals?
Thefollowingarethevotingrequirementsforeachproposal:
» Proposal 1, Election of Directors.ThenomineesreceivingthehighestnumberofvoteswillbeelectedasClassIIdirectorstoserveuntilthe2023annualmeetingofstockholders.UnderthemajorityvotingpolicycontainedinourCorporateGovernanceGuidelines,anynomineefordirectorinanuncontestedelectionwhoreceivesagreaternumberofvotes"withheld"fromhisorherelectionthanvotes"for"suchelectionmustofferhisorherresignationasadirectortoourCorporateGovernanceandNominatingCommitteeofourBoardofDirectors.Uponreceiptofthisofferofresignation,ourCorporateGovernanceandNominatingCommitteewillconsidertheofferofresignationandrecommendtoourBoardofDirectorsactiontobetakenwithrespecttotheofferofresignation,includingwhetherornottoacceptsuchofferofresignation.OurBoardofDirectorswillthenactuponsuchrecommendationandpromptlydiscloseitsdecision,togetherwithanexplanationofthereasonsbehindsuchdecision.
» Proposal 2, Ratification of Appointment of Independent Registered Public Accounting Firm.TheratificationofourAuditandFinanceCommittee'sappointmentofPWCasourindependentregisteredpublicaccountingfirmfor2020willbeapprovedifamajorityofthevotesofstockholderspresentorrepresented,inpersonorbyproxy,andvotingonthismatterarecastinfavoroftheproposal.
» Proposal 3, Advisory Vote on Executive Compensation.Thecompensationpaidtoournamedexecutiveofficerswillbeconsideredapprovedifamajorityofthevotesofstockholderspresentorrepresented,inpersonorbyproxy,andvotingonthismatter,arecastinfavoroftheproposal.
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» Proposal 4, Approval of an Amendment to our Certificate of Incorporation.TheamendmenttoourCertificateofIncorporationtoincreasethenumberofauthorizedsharesofourcommonstockfrom200,000,000sharesto400,000,000shareswillbeapprovedifholdersofamajorityoftheissuedandoutstandingsharesofcommonstockasoftherecorddatevoteinfavoroftheproposal.
How are abstentions and broker non-votes treated?
Brokernon-votesandabstentionsarecountedforpurposesofdeterminingwhetheraquorumispresent.Brokernon-votesandabstentionsarenotcountedasvotescastonanyproposalconsideredattheannualmeetingand,therefore,willhavenoeffectontheproposalsregardingtheelectionofdirectorsandtheadvisoryvoteonthecompensationofournamedexecutiveofficers.Weexpectnobrokernon-votesontheproposalsregardingtheappointmentofPWCasourindependentregisteredpublicaccountingfirmfor2020andtheamendmenttoourCertificateofIncorporationtoincreasethenumberofauthorizedshares.AbstentionswillhavenoeffectontheproposalratifyingtheappointmentofPWCasourindependentregisteredpublicaccountingfirmfor2020.Abstentionswillhavethesameeffectas"no"votesontheproposalapprovingtheamendmenttotheCertificateofIncorporation.
Who pays for solicitation of proxies?
Wearepayingthecostofsolicitingproxies.Wewillreimbursebrokeragefirmsandothercustodians,nomineesandfiduciariesfortheirreasonableout-of-pocketexpensesforsendingproxymaterialstostockholdersandobtainingtheirvotes.Inadditiontosolicitingtheproxiesbymail,certainofourdirectors,officersandregularemployees,withoutcompensation,maysolicitproxiespersonallyorbytelephone,facsimileandemail.
Where can I find the voting results of the annual meeting?
WewillannouncepreliminaryorfinalvotingresultsattheannualmeetingandpublishfinalresultsinaForm8-KfiledwiththeSECwithinfourbusinessdaysfollowingthemeeting.
What is the deadline to propose actions for consideration or to nominate individuals to serve as directors at the 2021 annual meeting of stockholders?
Requirements for Stockholder Proposals to Be Considered for Inclusion in the Company's Proxy Materials.Stockholderproposalstobeconsideredforinclusionintheproxystatementandformofproxyrelatingtothe2021annualmeetingofstockholdersmustbereceivednolaterthanFebruary11,2021.Inaddition,allproposalswillneedtocomplywithRule14a-8oftheSecuritiesExchangeActof1934,asamended(the"ExchangeAct"),whichliststherequirementsfortheinclusionofstockholderproposalsincompany-sponsoredproxymaterials.StockholderproposalsmustbedeliveredtotheCompany'sSecretaryat441CharmanyDrive,Madison,Wisconsin53719.
Requirements for Stockholder Nominations or Proposals to Be Brought Before the 2021 Annual Meeting of Stockholders.Noticeofanydirectornominationorotherproposalthatyouintendtopresentatthe2021annualmeetingofstockholders,butdonotintendtohaveincludedintheproxystatementandformofproxyrelatingtothe2021annualmeetingofstockholders,mustbedeliveredtotheCompany'sSecretaryat441CharmanyDrive,Madison,Wisconsin53719notearlierthanthecloseofbusinessonMarch25,2021andnotlaterthanthecloseofbusinessonApril24,2021.Inaddition,yournoticemustsetforththeinformationrequiredbyourby-lawswithrespecttoeachdirectornominationorotherproposalthatyouintendtopresentatthe2021annualmeetingofstockholders.
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ANNEX A CERTIFICATE OF AMENDMENT TO SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF EXACT SCIENCESCORPORATION
ANNEX A CERTIFICATE OF AMENDMENT TO SIXTH AMENDED AND RESTATED CERTIFICATE OFINCORPORATION OF EXACT SCIENCES CORPORATION
ANNEX A CERTIFICATE OF AMENDMENT
TO SIXTH AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF EXACT SCIENCES CORPORATION
EXACTSCIENCESCORPORATION,acorporationorganizedandexistingunderthelawsoftheStateofDelaware(the"Corporation"),herebycertifiesthat:
FIRST:ThisCertificateofAmendmentamendstheprovisionsoftheCorporation'sSixthAmendedandRestatedCertificateofIncorporation(the"CertificateofIncorporation").
SECOND:PursuanttotheSection242oftheDelawareGeneralCorporationLaw,thisCertificateofAmendmentherebyamendstheprovisionsoftheCorporation'sCertificateofIncorporationbydeletingthefirstparagraphofArticle"FOURTH"andsubstitutingthereforanewfirstparagraphtoreadinitsentiretyasfollows:
"FOURTHThetotalnumberofsharesofallclassesofcapitalstockwhichtheCorporationshallhaveauthoritytoissueis405,000,000shares,consistingof400,000,000sharesofCommonStockwithaparvalueof$0.01pershare(the"CommonStock")and5,000,000sharesofPreferredStockwithaparvalueof$0.01pershare(the"PreferredStock")."
THIRD:ThisCertificateofAmendmenthasbeendulyadoptedbythestockholdersoftheCorporationinaccordancewiththeprovisionsofSection242oftheDelawareGeneralCorporationLaw.
INWITNESSWHEREOF,theCorporationhascausedthisCertificateofAmendmenttobesignedbyitsofficerthereuntodulyauthorizedthisdayof2020.
EXACTSCIENCESCORPORATION
By:
Name: Title:
60 ExactSciences2020ProxyStatement
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on July 22, 2020 for shares held directly and by 11:59 p.m. Eastern Time on July 21, 2020 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. EXACT SCIENCES CORPORATION 441 CHARMANY DRIVE MADISON, WI 53719 ATTN: LEGAL DEPARTMENT During The Meeting - Go to www.virtualshareholdermeeting.com/EXAS2020 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on July 22, 2020 for shares held directly and by 11:59 p.m. Eastern Time on July 21, 2020 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. 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 Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D14223-P40404 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. EXACT SCIENCES CORPORATION For Withhold For All AllAllExcept To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES FOR DIRECTOR AND "FOR" PROPOSALS 2, 3 AND 4. ! ! ! 1. To elect four members of the board of directors to serve for three-year terms as Class II Directors. NOMINEES: 01) Eli Casdin 02) James E. Doyle 03) Freda Lewis-Hall 04) Kathleen Sebelius For Against Abstain ! ! ! ! ! ! ! ! ! 2. To ratify the appointment of PricewaterhouseCoopers, LLP as the Company's
independent registered public accounting firm for 2020. 3. To approve on an advisory basis the compensation of the Company's named executive officers. 4. To approve an amendment to the Company's Certificate of Incorporation increasing the number of authorized shares of common stock from 200,000,000 shares to 400,000,000 shares. 5. To transact such other business as may properly come before the Annual Meeting and any adjournment thereof. ! For address changes and/or comments, please check this box and write them on the back where indicated. Note: Please sign exactly as your name or names appear(s) on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
2020 Annual Meeting of the Stockholders EXACT SCIENCES CORPORATION www.virtualshareholdermeeting.com/EXAS2020 Date: July 23, 2020 Time: 10:00 a.m. Central Time IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JULY 23, 2020. THE PROXY STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS ARE AVAILABLE AT www.proxyvote.com. Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. D14224-P40404 EXACT SCIENCES CORPORATION Proxy for Annual Meeting of Stockholders July 23, 2020 SOLICITED BY THE BOARD OF DIRECTORS The undersigned hereby appoint(s) Kevin T. Conroy and Jeffrey T. Elliott together, and each of them singly, proxies, with full power of substitution to vote all shares of stock of Exact Sciences Corporation (the "Company") which the undersigned is/are entitled to vote at the Annual Meeting of Stockholders of Exact Sciences Corporation to be held on Thursday, July 23, 2020, at 10:00 a.m. Central Time, and at any adjournments or postponements thereof, upon matters set forth in the Notice of Annual Meeting of Stockholders and Proxy Statement. THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ELECTION OF ALL NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2, 3 AND 4. PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) CONTINUED AND TO BE SIGNED ON REVERSE SIDE Address Changes/Comments: