CPHD » Topics » General

This excerpt taken from the CPHD DEF 14A filed Mar 20, 2009.


The following is a summary of the principal provisions of the ESPP. The only change proposed is to increase the number of shares authorized for issuance by 1,500,000. The annual “evergreen” provision will remain in effect. This summary is qualified in its entirety by reference to the full text of the amended and restated ESPP, which is attached as Appendix A to this proxy statement. To the extent that there is a conflict between this summary and the actual terms of the ESPP, the terms of the ESPP will govern.

The ESPP, including the right of participants to make purchases under the ESPP, is intended to qualify as an “Employee Stock Purchase Plan” under the provisions of Section 421 and 423 of the Internal Revenue Code (the “Code”). The provisions of the ESPP shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of those sections of the Code. The ESPP is not a qualified deferred compensation plan under Section 401(a) of the Code, and is not subject to the provisions of ERISA.

This excerpt taken from the CPHD DEF 14A filed Mar 25, 2008.
We are asking shareholders to amend the Cepheid 2006 Equity Incentive Plan (the “EIP”) for the following purposes:
  •  To increase the number of shares of common stock reserved for issuance under the EIP by 1,800,000.
  •  To increase the ratio from 1.6 to 1.75 by which any awards other than options or stock appreciation rights decrease the number of available shares.
  •  To provide that stock appreciation rights may only be granted under the EIP with an exercise price that is at or above the fair market value of our common stock on the date of grant.


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  •  To clarify the requirement of shareholder approval for certain actions related to repricing of awards outstanding under the EIP.
The EIP is intended to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of Cepheid, by offering them an opportunity to participate in the company’s future performance. The following summary of certain major features of the EIP is subject to the specific provisions contained in the full text of the EIP, as proposed to be amended, set forth in Attachment A.
Approval of amendment of the EIP (the “Amendment”) is intended to ensure that Cepheid is able to continue offering stock-based incentive compensation to its eligible employees and non-employee directors. As of the record date, the total number of shares that remained available for issuance and were not subject to awards already outstanding was 1,342,576. Without stock options or other forms of equity incentives, Cepheid would be forced to consider cash replacement alternatives to provide a market-competitive total compensation package necessary to attract, retain and motivate the employee talent critical to the future successes of the company. These cash replacement alternatives would, among other things, potentially reduce the cash available for investment in growth and development of new and existing products.
This excerpt taken from the CPHD DEF 14A filed Mar 26, 2007.
Our executive compensation program is designed to attract, as needed, individuals with the skills necessary for us to achieve our business plan, to reward those individuals fairly over time, to retain those individuals who continue to perform at or above the levels that we expect and to closely align the compensation of those individuals with the performance of our company on both a short-term and long-term basis.
Our executive officers’ compensation currently has three primary components — base compensation or salary, annual cash bonuses, and stock option awards or stock awards. In addition, we provide our executive officers a variety of benefits that are available generally to all salaried employees. We fix executive officer base compensation at a level we believe enables us to hire and retain individuals in a competitive environment and to reward satisfactory individual performance and a satisfactory level of contribution to our overall business goals.
We also take into account the compensation that is payable by companies that we believe to be our competitors and by other companies with which we believe we generally compete for executives. To this end, our Compensation Committee works with management and an outside compensation consultant to define the specific criteria used to identify appropriate market comparators for establishing compensation levels and the mix of salary, incentives and long-term compensation, in order to best align executive compensation with our business priorities and pay philosophy. When determining our peer companies, we focus on identifying companies with whom Cepheid competes directly for customers and employees; we also review the broader local market of biotechnology and instrument companies in the San Francisco Bay/Silicon Valley Area, as we find that we compete with these companies for qualified personnel. The committee, when determining peer companies, considers such additional elements as the size and complexity of the business as measured by market capitalization, revenue, net income and research and development investments. These metrics are then used to identify appropriate market reference points for gathering compensation data. The Compensation Committee approves the peer group as part of the regular assessment of the compensation programs for the company. We have generally set compensation for executives at approximately the 60th percentile of compensation paid to similarly situated executives of the companies comprising the peer group. Variations from this objective may occur based on experience level or other market factors. This objective recognizes that over the long-term, we will generate greater shareholder returns with a management team that is superior to its peer group. We designed our executive bonus plan to focus our management on achieving key corporate financial objectives, to motivate certain desired individual behaviors and to reward substantial


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achievement of these company financial objectives and individual goals. We utilize salary as the base amount necessary to match our competitors for executive talent and we have utilized cash bonuses for certain executives to reward performance achievements with a time horizon of one year or less. We utilize stock based awards to reward long-term performance, with excellent corporate performance and extended officer tenure producing potentially significant value for the officer if, and only if, value is created for all shareholders.
We view these components of compensation as related but distinct. Although our Compensation Committee does review total compensation, we do not believe that significant compensation derived from one component of compensation should negate or reduce compensation from other components. We determine the appropriate level for each compensation component based in part, but not exclusively, on competitive benchmarking consistent with our recruiting and retention goals, our view of internal equity and consistency, individual performance of the executive, both individually and relative to other considerations we deem relevant, such as rewarding extraordinary performance. We believe that, as is common in the biotechnology and instrument sector, stock-based awards are a significant compensation-related motivator in attracting and retaining employees along with salary and bonus levels. Except as described below, our Compensation Committee has not adopted any formal or informal policies or guidelines for allocating compensation between long-term and currently paid out compensation, between cash and non-cash compensation, or among different forms of non-cash compensation.
Our Compensation Committee’s current intent is to perform on a regular basis a strategic review of our executive officers’ overall compensation packages to determine whether they provide adequate incentives and motivation and whether they adequately compensate our executive officers relative to comparable officers in other peer group companies. The Compensation Committee has engaged an independent, compensation consultancy to conduct the assessment. Our Compensation Committee’s most recent overall compensation review occurred in December 2006. Compensation Committee meetings typically have included, for all or a portion of each meeting, not only the committee members but also our Chief Executive Officer and our Chairman of the Board of Directors. For compensation decisions relating to executive officers other than to our Chief Executive Officer, including decisions regarding the grant of equity compensation, the Compensation Committee typically considers the performance evaluations of such officers by our Chief Executive Officer as well as his recommendations regarding such decisions.
We account for equity compensation paid to our employees under SFAS 123R, which requires us to estimate and record an expense over the service period of the award. Our cash compensation is recorded as an expense at the time the obligation is accrued. We structure cash bonus compensation so that it is taxable to our executives at the time it becomes available to them. We currently intend that all cash compensation paid will be tax deductible for us. However, with respect to equity compensation awards, while any gain recognized by employees from nonqualified options granted at fair market value should be deductible, to the extent that an option constitutes an incentive stock option, gain recognized by the optionee will not be deductible if there is no disqualifying disposition by the optionee. In addition, if we grant restricted stock or restricted stock unit awards that are not subject to performance vesting, they may not be fully deductible by us at the time the award is otherwise taxable to employees.
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