def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
NxSTAGE MEDICAL, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing. |
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Date Filed: |
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NxSTAGE MEDICAL, INC.
439 South Union Street,
5th Floor
Lawrence, Massachusetts 01843
NOTICE OF 2007 ANNUAL MEETING
OF STOCKHOLDERS
To Be Held on May 30,
2007
To our stockholders:
We invite you to our 2007 Annual Meeting of Stockholders, which
will be held at the offices of WilmerHale, 60 State Street,
Boston, Massachusetts 02109, on Wednesday, May 30, 2007 at
10:00 a.m., local time. At the annual meeting, stockholders
will consider and act upon the following matters:
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1.
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the election of seven members to our board of directors;
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an amendment to our 2005 Employee Stock Purchase Plan to
increase the number of shares of our common stock which may be
issued pursuant to the plan by an additional 50,000 shares;
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3.
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the ratification of the selection by our Audit Committee of
Ernst & Young LLP as our independent registered public
accounting firm for the 2007 fiscal year; and
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4.
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the transaction of such other business as may properly come
before the meeting or any adjournment thereof.
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Stockholders of record at the close of business on April 9,
2007, the record date for the annual meeting, are entitled to
notice of, and to vote at, the annual meeting. Your vote is
important regardless of the number of shares you own. Whether or
not you expect to attend the annual meeting, we hope you will
take the time to vote your shares. If you are a stockholder of
record, you may vote over the Internet, by telephone or by
completing and mailing the enclosed proxy card in the envelope
provided. If your shares are held in street name,
that is, held for your account by a broker or other nominee, you
will receive instructions from the holder of record that you
must follow for your shares to be voted at the annual meeting.
Our stock transfer books will remain open for the purchase and
sale of our common stock.
By Order of the Board of Directors,
Winifred L. Swan
Secretary
Lawrence, Massachusetts
April 30, 2007
TABLE OF
CONTENTS
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NxSTAGE MEDICAL, INC.
439 South Union Street,
5th Floor
Lawrence, Massachusetts 01843
Proxy Statement for the 2007
Annual Meeting of Stockholders
To Be Held on May 30,
2007
This proxy statement contains information about the 2007 Annual
Meeting of Stockholders of NxStage Medical, Inc., including
postponements and adjournments of the meeting. We are holding
the annual meeting at the offices of WilmerHale, 60 State
Street, Boston, Massachusetts 02109 on Wednesday, May 30,
2007 at 10:00 a.m., local time.
We are sending you this proxy statement in connection with the
solicitation of proxies by our Board of Directors for use at the
annual meeting.
We are mailing our Annual Report to Stockholders for the year
ended December 31, 2006 with these proxy materials on or
about May 2, 2007.
You can find our Annual Report on
Form 10-K
for the year ended December 31, 2006 on our website at
www.nxstage.com or through the Securities and Exchange
Commissions electronic data system, called EDGAR, at
www.sec.gov. You may also obtain a printed copy of our
Annual Report on
Form 10-K,
free of charge, from us by sending a written request to:
Investor Relations, NxStage Medical, Inc., 439 South Union
Street, 5th Floor, Lawrence, Massachusetts 01843. Exhibits
will be provided upon written request and payment of appropriate
processing fees.
IMPORTANT
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
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Q.
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Who can vote at the annual
meeting?
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A.
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To be able to vote, you must have
been a stockholder of record at the close of business on
April 9, 2007, the record date for our annual meeting. The
number of outstanding shares entitled to vote at the annual
meeting is 29,923,238 shares of our common stock.
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If you were a stockholder of
record on that date, you will be entitled to vote all of the
shares that you held on that date at the annual meeting, or any
postponements or adjournments of the annual meeting.
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Q.
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What are the voting rights of
the holders of common stock?
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Each outstanding share of our
common stock will be entitled to one vote on each matter
considered at the annual meeting.
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Q.
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How do I vote?
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A.
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If you are a record holder,
meaning your shares are registered in your name, you may vote:
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(1) Over the
Internet: Go to the website of our tabulator,
Computershare Investor Services, at www.investorvote.com.
Use the vote control number printed on your enclosed proxy card
to access your account and vote your shares. You must specify
how you want your shares voted or your Internet vote cannot be
completed and you will receive an error message. Your shares
will be voted according to your instructions.
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(2) By
Telephone: Call
1-800-652-VOTE
(8683) toll free from the U.S., Canada and Puerto Rico, and
follow the instructions on your enclosed proxy card. You must
specify how you want your shares voted and confirm your vote at
the end of the call or your telephone vote cannot be completed.
Your shares will be voted according to your instructions.
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(3) By
Mail: Complete and sign your enclosed proxy card
and mail it in the enclosed postage prepaid envelope to
Computershare Investor Services. Your shares will be voted
according to your instructions. If you do not specify how you
want your shares voted, they will be voted as recommended by our
Board of Directors.
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(4) In Person at the
Meeting: If you attend the meeting, you may
deliver your completed proxy card in person or you may vote by
completing a ballot, which we will provide to you at the meeting.
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If your shares are held in
street name, meaning they are held for your account
by a broker or other nominee, you may vote:
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(1) Over the Internet or
by Telephone: You will receive instructions from
your broker or other nominee if they permit Internet or
telephone voting. You should follow those instructions.
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(2) By
Mail: You will receive instructions from your
broker or other nominee explaining how you can vote your shares
by mail. You should follow those instructions.
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(3) In Person at the
Meeting: Contact your broker or other nominee who
holds your shares to obtain a brokers proxy card and bring
it with you to the meeting. A brokers proxy is not the
form of proxy card enclosed with this proxy statement. You
will not be able to vote in person at the meeting unless you
have a proxy from your broker issued in your name giving you the
right to vote your shares.
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Q.
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Can I change my vote?
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Yes. You may revoke your proxy and
change your vote at any time before the annual meeting. To do
so, you must do one of the following:
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(1) Vote over the Internet or
by telephone as instructed above. Only your latest Internet or
telephone vote is counted.
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(2) Sign a new proxy and
submit it as instructed above. Only your latest dated proxy will
be counted.
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(3) Attend the annual
meeting, request that your proxy be revoked and vote in person
as instructed above. Attending the annual meeting will not
revoke your proxy unless you specifically request it.
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Q.
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Will my shares be voted if I
dont return my proxy?
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A.
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If your shares are registered
directly in your name, your shares will not be voted if you do
not vote over the Internet, by telephone, by returning your
proxy or voting by ballot at the meeting. If your shares are
held in street name, your brokerage firm may, under
certain circumstances, vote your shares if you do not return
your proxy. Brokerage firms can vote customers unvoted
shares on routine matters. If you do not return a proxy to your
brokerage firm to vote your shares, your brokerage firm may, on
routine matters, either vote your shares or leave your shares
unvoted. Your brokerage firm cannot vote your shares on any
matter that is not considered routine.
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Proposal 1, election of
directors, and Proposal 3, ratification of the selection of
our independent registered public accounting firm, are both
considered routine matters. Proposal 2, approving an
amendment to our 2005 Employee Stock Purchase Plan, is a
non-routine matter. Your brokerage firm cannot vote your shares
with respect to Proposal 2 unless it receives your voting
instructions. We encourage you to provide voting instructions to
your brokerage firm by giving your proxy to them. This ensures
that your shares will be voted at the annual meeting according
to your instructions. You should receive directions from your
brokerage firm about how to submit your proxy to them at the
time you receive this proxy statement.
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Q.
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How many shares must be present
to hold the annual meeting?
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A.
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A majority of our outstanding
shares of our common stock must be present at the annual meeting
to hold the meeting and conduct business. This is called a
quorum. For purposes of determining whether a quorum exists, we
count as present any shares that are voted over the Internet, by
telephone or by completing and submitting a proxy or that
are represented in person at the meeting. Further, for purposes
of establishing a quorum, we will count as present shares that a
stockholder holds even if the stockholder votes to abstain or
votes on at least one of the matters to be voted upon.
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If a quorum is not present, we
expect to adjourn the meeting until we obtain a quorum.
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Q.
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What vote is required to
approve each matter and how are votes counted?
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Proposal 1
Election of Directors
The nominees for
directors who receive the highest number of votes FOR
election will be elected as directors. This is called a
plurality. Abstentions are not counted for purposes of electing
directors. If your shares are held by your broker in
street name, and you do not vote your shares, your
brokerage firm may vote your unvoted shares on Proposal 1.
You may:
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vote FOR any or
all of the nominees; or
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WITHHOLD your vote
from any or all of the nominees.
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Votes that are withheld will not
be included in the vote tally for the election of the directors
and will not affect the results of the vote.
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Proposal 2
Approval of an amendment to our 2005 Employee Stock Purchase
Plan.
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To approve Proposal 2,
stockholders holding a majority of the shares of our common
stock present or represented by proxy at the meeting and voting
on the matter must vote FOR the proposal. If your shares
are held by your broker in street name and if you do
not vote your shares, your brokerage firm does not have the
authority to vote your unvoted shares held by the firm on
Proposal 2, and there will be no effect on the vote because
these broker non-votes are not considered present or
represented at the meeting and voting on the matter. If you vote
to ABSTAIN on Proposal 2, your shares will not be voted in
favor of the proposal, will not be counted as votes cast or
shares voting on the proposal and will have no effect on the
vote.
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3
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Proposal 3
Ratification of Selection of Independent Registered Public
Accounting Firm
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To approve Proposal 3,
stockholders holding a majority of the votes cast on the matter
must vote FOR the proposal. If your shares are held by your
broker in street name, and you do not vote your
shares, your brokerage firm may vote your unvoted shares on
Proposal 3. If you vote to ABSTAIN on Proposal 3, your
shares will not be voted in favor of or against the proposal and
will also not be counted as votes cast or shares voting on the
proposal. As a result, voting to ABSTAIN will have no effect on
the voting on the proposal.
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Although stockholder approval of
our Audit Committees selection of Ernst & Young
LLP as our independent registered public accounting firm is not
required, we believe that it is advisable to give stockholders
an opportunity to ratify this selection. If this proposal is not
approved at the annual meeting, our Audit Committee will
reconsider its selection of Ernst & Young LLP.
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Q:
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Are there other matters to be
voted on at the annual meeting?
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A.
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We do not know of any other
matters that may come before the meeting other than the election
of directors, approval of the amendment to our 2005 Employee
Stock Purchase Plan and the ratification of the selection of our
independent registered public accounting firm. If any other
matters are properly presented to the meeting, the persons named
in the accompanying proxy intend to vote, or otherwise act, in
accordance with their judgment on the matter.
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Q.
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Where can I find the voting
results?
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A.
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We will report the voting results
in our Quarterly Report on
Form 10-Q
for the second quarter ending June 30, 2007.
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Q.
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Who will bear the costs of
soliciting proxies?
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A.
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We will bear the cost of
soliciting proxies. In addition to these proxy materials, our
directors, officers and employees may solicit proxies by
telephone,
e-mail,
facsimile and in person, without additional compensation. Upon
request, we will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable
out-of-pocket
expenses for distributing proxy materials.
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4
STOCK
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of
February 15, 2007, or such earlier date as indicated below,
with respect to the beneficial ownership of our common stock by:
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each person whom we know beneficially owns more than 5% of the
outstanding shares of our common stock;
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each of our directors, all of whom are nominees for election as
directors at the annual meeting;
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our principal executive officer, our principal financial
officer, our former principal financial officer and our three
other most highly compensated executive officers who were
serving as executive officers on December 31, 2006, whom we
refer to collectively as our named executive
officers; and
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all of our directors and executive officers as a group.
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The number of shares of our common stock owned by each person is
determined under the rules of the Securities and Exchange
Commission, or SEC, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under
these rules, beneficial ownership includes any shares as to
which the individual has sole or shared voting power or
investment power and also any shares which the individual has
the right to acquire within 60 days after February 15,
2007, or April 16, 2007, through the exercise of any stock
option or other right. Unless otherwise indicated, each person
has sole investment and voting power, or shares such power with
his or her spouse, with respect to the shares set forth in the
following table. The inclusion in this table of any shares
deemed beneficially owned does not constitute an admission of
beneficial ownership of those shares.
Percentage of common stock outstanding is based on
29,884,283 shares of our common stock outstanding as of
February 15, 2007. Shares of common stock subject to stock
options currently exercisable, or exercisable within
60 days, are deemed outstanding for the percentage
ownership of the person holding such stock options but are not
deemed outstanding for any other person.
Unless otherwise indicated below, the address for each person is
to the care of NxStage Medical, Inc., 439 South Union Street,
5th Floor, Lawrence, Massachusetts 01843.
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Shares of
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Common
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Percentage
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Stock Beneficially
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of Common
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Name and Address
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Owned
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Stock Outstanding
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5% Stockholders
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Credit Suisse (Sprout Entities)
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6,185,874
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(1)
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20.7
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%
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Eleven Madison Avenue
New York, New York 10010
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Atlas Venture entities
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2,592,126
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(2)
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8.7
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%
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890 Winter Street,
Suite 320
Waltham, Massachusetts 02451
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Federated Investors, Inc.
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2,526,500
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(3)
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8.5
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Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222
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T. Rowe Price Associates,
Inc.
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2,206,403
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(4)
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7.4
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%
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100 E. Pratt Street
Baltimore, Maryland 21202
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David S. Utterberg
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2,005,867
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(5)
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6.7
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DaVita Inc.
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2,000,000
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(6)
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6.7
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%
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601 Hawaii Street
El Segundo, California 90245
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5
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Shares of
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Common
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Percentage
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Stock Beneficially
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of Common
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Name and Address
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Owned
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Stock Outstanding
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Directors(7)
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Jeffrey H. Burbank
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798,534
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(8)
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2.6
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%
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Philippe O. Chambon
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5,930,391
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(8)(9)
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19.8
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%
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Daniel A. Giannini
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29,000
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(8)
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*
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Reid S. Perper
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1,305,042
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(8)(10)
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4.4
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%
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Peter P. Phildius
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85,555
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(8)
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*
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Craig W. Moore
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48,650
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(8)
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*
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Other Executive
Officers
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Robert S. Brown
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|
|
|
|
David N. Gill
|
|
|
32,422
|
(8)
|
|
|
*
|
|
Winifred L. Swan
|
|
|
102,411
|
(8)
|
|
|
*
|
|
Philip R. Licari
|
|
|
208,962
|
(8)
|
|
|
*
|
|
Joseph E. Turk, Jr.
|
|
|
191,782
|
(8)
|
|
|
*
|
|
All directors and executive
officers as a group (12 persons)
|
|
|
10,738,616
|
(11)
|
|
|
34.8
|
%
|
|
|
|
* |
|
Represents holdings of less than one percent. |
|
(1) |
|
This information is taken from a Schedule 13D/A filed on
June 22, 2006 by Credit Suisse jointly with its affiliates,
the Sprout Entities and is as of June 9, 2006. As of
June 22, 2006, the Sprout Entities may be deemed to
beneficially own an aggregate of 6,185,874 shares of common
stock, consisting of (i) 2,359,547 shares of common
stock held directly by Sprout Capital IX, L.P.,
(ii) 2,108,034 shares of common stock held directly by
Sprout Capital VIII, L.P., (iii) 830,437 shares of
common stock held directly by Sprout Capital VII, L.P.,
(iv) 9,666 shares of common stock held directly by
Sprout CEO Fund, L.P., (v) 9,402 shares of common
stock held directly by Sprout Entrepreneurs Fund, L.P.,
(vi) 112,061 shares of common stock held directly by
Sprout IX Plan Investors, L.P., (vii) 47,203 shares of
common stock held directly by Sprout Plan Investors, L.P.,
(viii) 126,517 shares of common stock held directly by
Sprout Venture Capital, L.P., (ix) 135,480 shares of
common stock held directly by DLJ ESC II, L.P.,
(x) 174,845 shares of common stock held directly by
DLJ Capital Corporation, or DLJCC, (xi) 272,582 shares
of common stock held directly by CSFB
Fund Co-Investment
Program, L.P. and (xii) 100 shares held directly by CS
SEC USA LLC. |
|
(2) |
|
This information is taken from a Schedule 13G filed on
February 12, 2007 by Atlas Venture jointly with its
affiliates and is as of December 31, 2006. Consists of
(i) 1,502,723 shares of common stock held by Atlas
Venture Fund V, L.P., (ii) 373,324 shares of
common stock held by Atlas Venture
Fund V-A
C.V., (iii) 25,011 shares of common stock held by
Atlas Venture Entrepreneurs Fund V, L.P.,
(iv) 676,366 shares of common stock held by Atlas
Venture Fund III, L.P. and (v) 14,702 shares of
common stock held by Atlas Venture Entrepreneurs
Fund III, L.P. As general partner of certain of the
foregoing funds, and by virtue of such funds relationship
as affiliated limited partnerships, each of Atlas Venture
Associates III, L.P., or AVA III LP, and Atlas Venture
Associates V, L.P., or AVA V LP, may also be deemed to
beneficially own the foregoing shares of common stock. As the
general partner of AVA III LP and AVA V LP, respectively,
Atlas Venture Associates III, Inc., or AVA III Inc.,
and Atlas Venture Associates V, Inc., or AVA V Inc., may
also be deemed to beneficially own the foregoing shares.
AVA III LP, AVA V LP, AVA III Inc. and AVA V Inc.
disclaim beneficial ownership of the shares except to the extent
of their pecuniary interest therein. In their capacities as
directors of AVA III Inc. and AVA V Inc., each of
Messrs. Axel Bichara, Jean-Francois Formela and Christopher
Spray may be deemed to beneficially own the shares. Each of
Messrs. Bichara, Formela and Spray disclaim beneficial
ownership of the shares except to the extent of his pecuniary
interest therein. |
|
(3) |
|
This information is taken from a Schedule 13G filed on
February 13, 2007 by Federated Investors, Inc. and is as of
December 31, 2006. Federated Investors, Inc. reports sole
voting power and sole dispositive |
6
|
|
|
|
|
power as to all 2,526,500 shares. Federated Investors, Inc.
is the parent holding company of Federated Equity Management
Company and Federated Global Investment Management Corp., each
of which acts as investment advisers to registered investment
companies and separate accounts that own shares of our common
stock. Each of these entities is a wholly-owned subsidiary of
FII Holdings, Inc., which is a wholly-owned subsidiary of
Federated Investors, Inc. The shares held by Federated
Investors, Inc. are held in a Voting Shares Irrevocable
Trust, for which John F. Donahue, Rhodora J. Donahue and J.
Christopher Donahue act as trustees. Each trustee disclaims
beneficial ownership with respect to the shares of our common
stock held by Federated Investors, Inc. |
|
(4) |
|
This information is taken from a Schedule 13G filed by T.
Rowe Price Associates, Inc. on February 14, 2007, and is as
of December 31, 2006. These securities are owned by various
individual and institutional investors for which T. Rowe Price
Associates, Inc. serves as investment advisor with power to
direct investments
and/or sole
power to vote the securities. For purposes of the reporting
requirements of the Securities Exchange Act of 1934, as amended,
T. Rowe Price Associates, Inc. is deemed to be a beneficial
owner of such securities; however, T. Rowe Price Associates,
Inc. expressly disclaims that it is the beneficial owner of such
securities. Of the 2,206,403 shares of our common stock
deemed beneficially owned, T. Rowe Price Associates, Inc.
reports sole voting power as to 138,200 shares and sole
dispositive power as to 2,206,403 shares. |
|
(5) |
|
David Utterberg holds (a) 1,978,370 shares of our
common stock and (b) 27,497 shares of common stock
which Mr. Utterberg has the right to acquire within
60 days of February 15, 2007 upon exercise of
outstanding stock options, representing 6.7% of our common stock
(See Note 8 below). |
|
(6) |
|
This information is taken from a Schedule 13G filed on
February 16, 2007 by DaVita Inc. |
|
(7) |
|
David Utterberg, a 5% stockholder, is also a member of our Board
of Directors. |
|
(8) |
|
The number of shares of our common stock that each person is
deemed to beneficially own includes the number of shares of our
common stock which such person has the right to acquire within
60 days after February 15, 2007 upon exercise of
outstanding stock options as set forth opposite his or her name: |
|
|
|
|
|
|
|
Number
|
|
Name
|
|
of Shares
|
|
|
Jeffrey H. Burbank
|
|
|
360,978
|
|
Philippe O. Chambon
|
|
|
26,000
|
|
Daniel A. Giannini
|
|
|
29,000
|
|
Reid S. Perper
|
|
|
26,000
|
|
Peter P. Phildius
|
|
|
81,913
|
|
David S. Utterberg
|
|
|
27,497
|
|
Craig W. Moore
|
|
|
44,791
|
|
David N. Gill
|
|
|
25,000
|
|
Winifred L. Swan
|
|
|
89,981
|
|
Philip R. Licari
|
|
|
208,962
|
|
Joseph E. Turk, Jr.
|
|
|
90,487
|
|
|
|
|
(9) |
|
Includes 5,900,534 shares held by various Sprout Group
entities. Dr. Chambon is a managing director of New Leaf
Venture Partners, L.L.C, or NLVP, and is a limited partner of
DLJ Associates IX, L.P., which is a general partner of Sprout
Capital IX, L.P. NLVP has entered into a
sub-management
agreement with DLJCC whereby NLVP and its principals, including
Dr. Chambon, provide DLJCC with investment management
services on the investments held by various of the Sprout Group
venture capital funds including (i) 9,666 shares of
our common stock held directly by Sprout CEO Fund, L.P.,
(ii) 162,187 shares of our common stock held directly
by DLJCC, (iii) 135,480 shares of our common stock
held directly by DLJ ESC II, L.P.,
(iv) 830,437 shares of our common stock held directly
by Sprout Capital VII, L.P., (v) 2,108,034 shares of
our common stock held directly by Sprout Capital VIII, L.P.,
(vi) 2,359,547 shares of our common stock held
directly by Sprout Capital IX, L.P.,
(vii) 9,402 shares of our common stock held directly
by Sprout Entrepreneurs Fund, L.P.,
(viii) 112,061 shares of our common stock held
directly |
7
|
|
|
|
|
by Sprout IX Plan Investors, L.P., (ix) 126,517 shares
of our common stock held directly by Sprout Venture Capital,
L.P. and (x) 47,203 shares of our common stock held
directly by Sprout Plan Investors, L.P. Dr. Chambon
expressly disclaims beneficial ownership of these shares except
to the extent of his pecuniary interest therein. |
|
(10) |
|
Includes 1,276,112 shares held by Healthcare Investment
Partners Holdings LLC, of which Mr. Perper is a Managing
Director. Mr. Perper disclaims beneficial ownership of
these shares except to the extent of his proportionate pecuniary
interest in such shares. |
|
(11) |
|
Includes an aggregate of 1,010,609 shares of our common
stock which all executive officers and directors have the right
to acquire within 60 days after February 15, 2007 upon
exercise of outstanding stock options. |
PROPOSAL 1
ELECTION OF DIRECTORS
The board of directors recommends a vote FOR the
election of each of Messrs. Burbank, Chambon, Giannini,
Moore, Perper, Phildius and Utterberg.
Our Board of Directors currently consists of seven members who
serve one-year terms. Our Board of Directors has set the
authorized number of directors at eight, and we are proposing
the election of seven members at the annual meeting. Following
the annual meeting, there will continue to be one vacancy on the
Board of Directors. This vacancy will be filled by the vote of
our Board of Directors following the annual meeting after a
suitable candidate is identified. Our bylaws provide that any
vacancies in our Board of Directors may be filled only by our
Board of Directors, and the authorized number of directors may
be changed only by our Board of Directors. You may not vote your
shares of common stock for a greater number of directors than
the seven individuals nominated for election at the annual
meeting.
The persons named in the enclosed proxy will vote to elect as
directors Jeffrey H. Burbank, Philippe O. Chambon, Daniel A.
Giannini, Craig W. Moore, Reid S. Perper, Peter P. Phildius and
David S. Utterberg, unless you indicate on your proxy that your
shares should be withheld from one or more of these nominees.
All nominees are currently members of our Board of Directors.
If elected, the nominees will hold office until our Annual
Meeting of Stockholders in 2008 and until their successors are
duly elected and qualified. Each of the nominees has indicated
his willingness to serve, if elected; however, if any nominee
should be unable to serve, the shares of our common stock
represented by proxies may be voted for a substitute nominee
designated by our Board of Directors.
Below are the names, ages and certain other information for each
member of the Board of Directors, each of whom is a nominee for
election at the annual meeting. Information with respect to the
number of shares of our common stock beneficially owned by each
director, directly or indirectly, as of February 15, 2007
appears above under the heading Stock Ownership of Certain
Beneficial Owners and Management.
Director
Nominees
Jeffrey H. Burbank, age 44, has been our President
and Chief Executive Officer and a director of NxStage since
1999. Prior to joining NxStage, Mr. Burbank was a founder
and the Chief Executive Officer of Vasca, Inc., a medical device
company that developed and marketed a blood access device for
dialysis patients. Mr. Burbank currently serves on the
board of directors of the National Kidney Foundation. He holds a
B.S. from Lehigh University.
Philippe O. Chambon, M.D., Ph.D.,
age 49, has served as a director of NxStage since 1998, has
been Chairman of our Board of Directors since December 2004 and
currently serves on our Compensation and Nominating and
Corporate Governance Committees. Dr. Chambon is a Managing
Director and founder of New Leaf Venture Partners, a spin-off
from The Sprout Group. He joined Sprout in May 1995 and became a
General Partner in January 1997. He invests broadly in
healthcare technology companies. He is currently on the board of
Auxilium Pharmaceuticals (AUXL), NxStage Medical, Inc. (NXTM)
and PharSight Corporation (PHST), as well as several private
companies. Previously, Dr. Chambon served as Manager in the
Healthcare
8
Practice of The Boston Consulting Group from May 1993 to April
1995. From September 1987 to April 1993, he was an executive
with Sandoz Pharmaceutical, where he led strategic product
development, portfolio management and pre-marketing activities
in his capacity as Executive Director of New Product Management.
Dr. Chambon did graduate research in molecular immunology
at The Pasteur Institute and earned a MD, Ph.D. from the
University of Paris. He also has an MBA from Columbia University
in New York.
Daniel A. Giannini, age 57, has served as a director
of NxStage since October 2005 and currently serves as chair of
our Audit Committee and a member of our Nominating and Corporate
Governance Committee. Mr. Giannini is currently an
executive advisor at the Advanced Technology Development Center
of the Georgia Institute of Technology. He retired in June 2005,
after a more than
30-year
career, as a Certified Public Accountant with
PricewaterhouseCoopers LLP. During his last five years at
PricewaterhouseCoopers LLP, Mr. Giannini served as an audit
partner and led the firms Atlanta offices
Technology, Information, Communications and Entertainment
practice. Mr. Giannini received a B.S. degree in Business
Administration from LaSalle University.
Craig W. Moore, age 62, has served as a director of
NxStage since 2002 and currently serves as chair of our
Compensation Committee and a member of our Audit Committee. From
1986 to 2001, Mr. Moore was chairman of the board of
directors and chief executive officer at Everest Healthcare
Services Corporation, a provider of dialysis to patients with
renal failure. Since 2001, Mr. Moore has acted as a
consultant to various companies in the healthcare services
industry. From 1986 through 2001, Mr. Moore was President
of Continental Health Care, Ltd., an extracorporeal services and
supply company and, from 1990 through 2004, he was President of
New York Dialysis Management, a dialysis management business.
Mr. Moore serves as a director on several private company
boards.
Reid S. Perper, age 47, has served as a director of
NxStage since September 2005 and currently serves as a member of
our Audit Committee. Since January 2004, Mr. Perper has
been a Managing Director of Healthcare Investment Partners LLC.
From November 2000 through June 2003, Mr. Perper was a
Managing Director and Co-Head of Europe for CSFB Private Equity.
Prior to joining CSFB, Mr. Perper was a Managing Director
of DLJ Merchant Banking Partners. Mr. Perper joined
Donaldson, Lufkin & Jenrette in 1988. Mr. Perper
also served as an investment professional for Caxton Europe
Asset Management Ltd. from July 2001 through July 2005.
Peter P. Phildius, age 77, has served as a director
of NxStage since 1998 and served as Chairman of our Board of
Directors from 1998 until December 2004 and currently serves as
the chair of our Nominating and Corporate Governance Committee
and as a member of our Compensation Committee. Since 1986,
Mr. Phildius has been the Chairman and Chief Executive
Officer of Avitar, Inc., which develops, manufactures and
markets products for the oral fluid diagnostic and clinical
testing markets, as well as customized polyurethane applications
used in wound dressings. Since 1985, Mr. Phildius has been
a partner in PKS Consulting Services. Mr. Phildius also
previously served as the President and Chief Operating Officer
of National Medical Care, Inc. (now Fresenius Medical Care) and
Vice President and President of the Parenteral, Artificial
Organs and Fenwal Divisions of Baxter Laboratories, the
predecessor of Baxter Healthcare Corp.
David S. Utterberg, age 61, has served as a director
of NxStage since 1998. Since 1981, Mr. Utterberg has been
the Chief Executive Officer, President and the sole stockholder
of Medisystems Corporation, which supplies the completed
disposable cartridges used with our NxStage System One, and
since 1996, he has been the President and sole stockholder of
DSU Medical Corporation. Medisystems Corporation is a designer,
manufacturer and supplier of disposable medical devices for the
extracorporeal blood therapy market and DSU Medical Corporation
holds and licenses over 90 U.S. and foreign patents and other
intellectual property in medical technology focused on
extracorporeal therapy devices. Mr. Utterberg was also a
director of Vasca, Inc., a medical device company that developed
and marketed a blood access device for dialysis patients.
9
CORPORATE
GOVERNANCE
General
Our Board of Directors believes that good corporate governance
is important to ensure that NxStage is managed for the long-term
benefit of our stockholders. This section describes key
corporate governance guidelines and practices that we have
adopted. Complete copies of our Corporate Governance Guidelines,
committee charters and Code of Business Conduct and Ethics
described below are available under the investor information
section of our website at www.nxstage.com. Alternatively,
you can request a copy of any of these documents by writing to:
Investor Relations, NxStage Medical, Inc., 439 South Union
Street, 5th Floor, Lawrence, Massachusetts 01843.
Corporate
Governance Guidelines
Our Board of Directors has adopted corporate governance
guidelines to assist it in the exercise of its duties and
responsibilities and to serve the best interests of NxStage and
our stockholders. The Board of Directors periodically reviews
these guidelines, and modifies them, as appropriate. These
guidelines, which provide a framework for the conduct of our
Board of Directors, provide that:
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|
|
the principal responsibility of our directors is to oversee our
management;
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|
|
|
a majority of the members of our Board of Directors shall be
independent directors;
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|
|
|
independent directors meet periodically in executive session;
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|
|
|
directors have full and free access to management and, as
necessary and appropriate, independent advisors; and
|
|
|
|
at least annually our Board of Directors and its committees will
seek to conduct a self-evaluation to determine whether they are
functioning effectively.
|
Most recently, the Board of Directors amended the corporate
governance guidelines to also provide that:
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|
|
|
the offices of Chairman of our Board of Directors and Chief
Executive Officer must be separate;
|
|
|
|
directors may not serve on more than five public company boards,
including our Board; and
|
|
|
|
directors who reach the age of 72 must retire from our Board of
Directors at the end of his or her then-current term.
|
In determining the nominees for this annual meeting, the Board
of Directors determined to exempt Peter Phildius from the new
retirement age requirement and to nominate him for re-election
at this annual meeting.
Board
Determination of Independence
Under applicable NASDAQ rules, a director will only qualify as
an independent director if, in the opinion of our
Board of Directors, that person does not have a relationship
which would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director. Our Board of
Directors has determined that Dr. Chambon and
Messrs. Giannini, Perper, Phildius and Moore each do not
have a relationship which would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director and that each of these directors is an
independent director as defined under
Rule 4200(a)(15) of the NASDAQ Stock Market, Inc.
Marketplace Rules. In determining the independence of the
directors listed above, our Board of Directors considered the
transaction discussed in Certain Relationships and Related
Transactions.
Communicating
with the Independent Directors
Our Board of Directors will give appropriate attention to
written communications that are submitted by stockholders and
other interested parties, and will respond if, and as,
appropriate. Dr. Chambon, the Chairman
10
of our Board of Directors, with the assistance of our General
Counsel, is primarily responsible for monitoring communications
from stockholders and for providing copies or summaries to the
other directors.
Under procedures approved by a majority of the independent
directors, communications will be forwarded to all directors if
they relate to important substantive matters and include
suggestions or comments that the Chairman of our Board of
Directors considers to be important for the directors to know.
In general, communications relating to corporate governance and
corporate strategy are more likely to be forwarded than
communications relating to ordinary business affairs, personal
grievances and matters as to which we may in the future receive
repetitive or duplicative communications.
Stockholders who wish to send communications on any topic to our
Board of Directors should address such communications to Board
of Directors, c/o Winifred L. Swan, Esq., Senior Vice
President and General Counsel, NxStage Medical, Inc., 439 South
Union Street, 5th Floor, Lawrence, Massachusetts 01843.
Director
Nomination Process
The process followed by our Nominating and Corporate Governance
Committee to identify and evaluate candidates includes requests
to members of our Board of Directors and others for
recommendations, meetings from time to time to evaluate
biographical information and background material relating to
potential candidates and interviews of selected candidates by
members of the Nominating and Corporate Governance Committee and
our Board of Directors.
In considering whether to recommend any candidate for inclusion
in the Board of Directors slate of recommended director
nominees, including candidates recommended by stockholders, the
Nominating and Corporate Governance Committee applies the
criteria that are set forth in our Corporate Governance
Guidelines. These criteria include the candidates
integrity, business acumen, knowledge of our business and
industry, experience, diligence, conflicts of interest and the
ability to act in the interests of all stockholders. In
addition, the committee will consider the candidates age as it
relates to our mandatory retirement policy for directors. The
Nominating and Corporate Governance Committee does not assign
specific weights to particular criteria and no particular
criterion is a prerequisite for each nominee. We believe that
the backgrounds and qualifications of the directors, considered
as a group, should provide a significant composite mix of
experience, knowledge and abilities that will allow our Board of
Directors to fulfill its responsibilities.
Stockholders may recommend individuals to the Nominating and
Corporate Governance Committee for consideration as potential
director candidates by submitting their names, together with
appropriate biographical information and background materials
and a statement as to whether the stockholder or group of
stockholders making the recommendation has beneficially owned
more than 5% of our common stock for at least a year as of the
date such recommendation is made, to the Nominating and
Corporate Governance Committee,
c/o Winifred
L. Swan, Senior Vice President and General Counsel, NxStage
Medical, Inc., 439 South Union Street, 5th Floor,
Lawrence, Massachusetts 01843. Assuming that appropriate
biographical and background material has been provided on a
timely basis, the Nominating and Corporate Governance Committee
will evaluate stockholder-recommended candidates by following
substantially the same process, and applying substantially the
same criteria, as it follows for candidates submitted by others.
Our stockholders also have the right to nominate director
candidates themselves, without any prior review or
recommendation by the Nominating and Corporate Governance
Committee or our Board of Directors, by following the procedures
set forth under the heading Other Matters
Stockholder Proposals for the 2008 Annual Meeting.
At the annual meeting, stockholders will be asked to consider
the election of Jeffrey H. Burbank, Philippe O.
Chambon, Daniel A. Giannini, Craig W. Moore,
Reid S. Perper, Peter P. Phildius and David S.
Utterberg, each of whom is being nominated for re-election to
our Board of Directors.
11
Board
Meetings and Attendance
Our Board of Directors met 13 times, either in person or by
teleconference, during the year ended December 31, 2006, or
fiscal 2006. During fiscal 2006, each of our directors attended
at least 75% of the number of Board meetings and meetings held
by all committees on which he then served.
Director
Attendance at Annual Meeting of Stockholders
Our Corporate Governance Guidelines provide that directors are
expected to attend the annual meeting. All but one of our
directors attended the 2006 Annual Meeting of Stockholders, and
we expect substantially all of our directors to attend the 2007
annual meeting.
Board
Committees
Our Board of Directors has established three standing
committees Audit, Compensation and Nominating and
Corporate Governance each of which operates under a
charter that has been approved by our Board of Directors.
Current copies of each committees charter are posted on
the Corporate Governance section of our website,
www.nxstage.com.
The Board of Directors has determined that all of the members of
each of our three standing Board committees are independent as
defined under NASDAQ rules, including, in the case of all
members of the Audit Committee, the independence requirements
contemplated by
Rule 10A-3
under the Securities Exchange Act of 1934, or the Exchange Act.
Audit
Committee
The Audit Committees responsibilities include:
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appointing, approving the compensation of, and assessing the
independence of our registered public accounting firm;
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overseeing the work of our registered public accounting firm,
including through the receipt and consideration of reports from
the such firm;
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reviewing and discussing with management and the registered
public accounting firm our annual and quarterly financial
statements and related disclosures;
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monitoring our internal controls over financial reporting,
disclosure controls and procedures and code of business conduct
and ethics;
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overseeing our internal audit function;
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discussing our risk management policies;
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establishing policies regarding hiring employees from the
registered public accounting firm and procedures for the receipt
and retention of accounting related complaints and concerns;
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meeting independently with our internal auditing staff,
registered public accounting firm and management;
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reviewing and approving or ratifying any related person
transactions; and
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|
preparing the audit committee report required by SEC rules,
which is included on page 14 of this proxy statement.
|
The members of the Audit Committee are Messrs. Giannini
(Chair), Moore and Perper. The Board of Directors has determined
that each of these members is independent, as that term is
defined by applicable NASDAQ and SEC rules and that
Mr. Giannini is an audit committee financial
expert as defined in Item 401(h) of
Regulation S-K
under the Exchange Act. The Audit Committee met eight times
during fiscal 2006.
12
The Audit Committee currently acts under a charter that was
amended and restated on April 26, 2007. Our policies and
procedures for the review and approval of related person
transactions are summarized beginning on page 15 of this
proxy statement.
Compensation
Committee
Our Compensation Committee, among other things, provides
recommendations to the Board of Directors regarding our
compensation programs, and has the following principal duties:
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annually reviewing and approving, or making recommendations to
our Board of Directors, with respect to, the compensation of our
Chief Executive Officer, or CEO, and our other executive
officers;
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reviewing and making recommendations to our Board of Directors
with respect to management succession planning;
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overseeing and administering our cash and equity incentive plans;
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reviewing and making recommendations to our Board of Directors
with respect to director compensation;
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reviewing and discussing annually with management our
Compensation Discussion and Analysis, which is
included beginning on page 16 of this proxy
statement; and
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|
preparing the compensation committee report required by SEC
rules, which is included on page 23 of this proxy statement.
|
The members of the Compensation Committee are Messrs. Moore
(Chair) and Phildius and Dr. Chambon. The Board of
Directors has determined that each of these members is
independent, as that term is defined by applicable NASDAQ rules.
The Compensation Committee met seven times during fiscal 2006.
Nominating
and Corporate Governance Committee
Our Nominating and Corporate Governance Committee has the
following principal responsibilities:
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identifying individuals qualified to become members of our Board
of Directors;
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recommending to our Board of Directors the persons to be
nominated for election as directors and to each of the
committees;
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developing and recommending to our Board of Directors corporate
governance principles; and
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overseeing an annual evaluation of our Board of Directors.
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The processes and procedures followed by the Nominating and
Corporate Governance Committee in identifying and evaluating
director candidates are described above under the heading
Director Nomination Process.
The members of the Nominating and Corporate Governance Committee
are currently Messrs. Phildius (Chair), Giannini and
Dr. Chambon. The Board of Directors has determined that
each of these members is independent, as that term is defined by
applicable NASDAQ rules. The Nominating and Corporate Governance
Committee met three times during fiscal 2006.
Code of
Business Conduct and Ethics
We have adopted a written Code of Business Conduct and Ethics
that applies to our directors, officers and employees, including
our principal executive officer, principal financial officer,
principal accounting officer and controller, or persons
performing similar functions. We have posted a copy of the code
on our website, www.nxstage.com. In addition, we intend
to post on our website all disclosures that are required by law
or NASDAQ Global Select market listing standards concerning any
amendments to, or waivers of, our code.
13
Audit
Committee Report
The purpose of the Audit Committee is to assist the Board of
Directors oversight of NxStages accounting and
reporting processes and the audits of NxStages
consolidated financial statements. The Audit Committee is
composed of three members and acts under a written charter first
adopted and approved on September 7, 2005 and subsequently
amended and restated on April 26, 2007. A copy of the
Amended and Restated Audit Committee Charter is available on
NxStages website (www.nxstage.com).
The Audit Committee has reviewed NxStages audited
financial statements for the fiscal year ended December 31,
2006 and has discussed these financial statements with
NxStages management and independent registered public
accounting firm.
The Audit Committee has also received from, and discussed with,
Ernst & Young LLP, NxStages independent
registered public accounting firm, various communications that
NxStages independent registered public accounting firm is
required to provide to the Audit Committee under Statement on
Auditing Standards No. 61 (as amended), as adopted by the
Public Company Accounting Oversight Board in Rule 3200T,
other standards of the Public Company Accounting Oversight
Board, the rules and regulations of the Securities and Exchange
Commission, and other applicable regulations.
NxStages independent registered public accounting firm
also provided the Audit Committee with the written disclosures
and the letter required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), as
adopted by the Public Company Accounting Oversight Board in
Rule 3600T. The Audit Committee has discussed with the
independent registered public accounting firm the matters
discussed in this letter, including their provision of tax and
other non-audit related services, and their independence from
NxStage.
Based on its discussions with management and the independent
registered public accounting firm, and its review of the
representations and information provided by management and the
independent registered public accounting firm, the Audit
Committee recommended to NxStages Board of Directors that
the audited financial statements be included in its Annual
Report on
Form 10-K
for the year ended December 31, 2006.
By the Audit Committee of the Board of Directors
Daniel A. Giannini (Chair)
Craig W. Moore
Reid S. Perper
Fees of
Independent Registered Public Accounting Firm
The following table summarizes the fees of Ernst &
Young LLP, our independent registered public accounting firm,
billed to us for each of the last two fiscal years.
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Fee Category
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Fiscal 2006
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Fiscal 2005
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Audit Fees(1)
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$
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555,000
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$
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652,600
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Audit-Related Fees(2)
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21,400
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Tax Fees(3)
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78,000
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75,000
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All Other Fees(4)
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3,000
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3,000
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Total Fees
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$
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636,000
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$
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752,000
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(1) |
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The audit fees for fiscal 2006 consisted of fees for the audit
of our consolidated financial statements, the review of the
interim financial statements included in our quarterly reports
on
Form 10-Q,
other professional services provided in connection with
statutory and regulatory filings or engagements and fees in an
aggregate amount of $110,000 for services relating to our
follow-on public offering completed in June 2006. The audit fees
for fiscal 2005 consisted of fees for the audit of our
consolidated financial statements, the review of the interim
financial statements included in our quarterly reports on
Form 10-Q,
other |
14
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professional services provided in connection with statutory and
regulatory filings or engagements and fees in an aggregate
amount of $437,600 for services relating to our initial public
offering. |
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Audit-related fees for fiscal 2005 consisted of fees for
assurance and related services that are reasonably related to
the performance of the audit and the review of our consolidated
financial statements and which are not reported under
Audit Fees. |
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Tax fees consist of fees for tax compliance and tax advice. Tax
compliance services, which relate to the preparation of federal
and state tax returns and quarterly estimated tax payments,
accounted for $58,000 of the total tax fees billed in fiscal
2006 and $55,000 of the total tax fees billed in fiscal 2005.
Tax advice services amounted to $20,000 in fiscal 2006 and 2005
and related to tax considerations regarding shareholder equity
compensation, review of net operating loss utilization and the
incorporation of our subsidiary in Germany. |
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(4) |
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Other fees for fiscal 2006 and fiscal 2005 consist of fees for
using the on-line accounting research tools of Ernst &
Young LLP. |
Pre-Approval
Policies and Procedures
The Audit Committee has adopted policies and procedures relating
to the approval of all audit and non-audit services that are to
be performed by our independent registered public accounting
firm. This policy generally provides that we will not engage our
independent registered public accounting firm to render audit or
non-audit services unless the service is specifically approved
in advance by the Audit Committee or the engagement is entered
into pursuant to the pre-approval procedures described below.
From time to time, the Audit Committee may pre-approve specific
services to be provided by our independent registered public
accounting firm. At the time of such pre-approval, the type of
services to be provided, and the fees relating to those
services, are detailed.
Before the commencement of any audit, tax or other services, our
management obtains an engagement letter from our independent
registered public accounting firm that is signed by both our
Chief Financial Officer and the Chairperson of the Audit
Committee. Our Chief Financial Officer has the ability, without
obtaining prior Audit Committee approval, to engage our
independent registered public accounting firm to perform general
pre-approved services on projects, up to a maximum of $50,000
annually. The Audit Committee reviews with management all
services provided by our independent registered public
accounting firm, whether or not the services were pre-approved,
and all related fees charged on a quarterly and annual basis.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Our
Relationship with Medisystems Corporation
Medisystems Corporation supplies the completed disposable
cartridges used with our NxStage System One. The chief executive
officer and sole stockholder of Medisystems, David S. Utterberg,
is a member of our Board of Directors and owns approximately
6.7% of our outstanding common stock. We purchased approximately
$4.1 million of goods and services during fiscal 2006 from
Medisystems. In January 2007, we entered into a seven-year
agreement with Medisystems pursuant to which Medisystems will
supply to NxStage no less than 90% of NxStages North
American requirements for disposable cartridges for use with the
System One. The agreement may be terminated upon a material
breach, generally following a
120-day cure
period.
Policies
and Procedures Regarding Review, Approval and Ratification of
Related Person Transactions
Our Board of Directors has adopted written policies and
procedures for the review of any transaction, arrangement or
relationship in which we are a participant, the amount involved
exceeds $120,000, and one of our executive officers, directors,
director nominees or 5% stockholders (or their immediate family
members), each of whom we refer to as a related
person, has a direct or indirect material interest.
15
If a related person proposes to enter into such a transaction,
arrangement or relationship, which we refer to as a
related person transaction, the related person must
report the proposed related person transaction to our General
Counsel. The policy calls for the proposed related person
transaction to be reviewed and, if deemed appropriate, approved
by our Audit Committee. Any related person transactions that are
ongoing in nature will be reviewed annually.
A related person transaction reviewed under the policy will be
considered approved or ratified if it is authorized by the Audit
Committee after full disclosure of the related persons
interest in the transaction. As appropriate for the
circumstances, the Audit Committee will review and consider:
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the related persons interest in the related person
transaction;
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the approximate dollar value of the amount involved in the
related person transaction;
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the approximate dollar value of the amount of the related
persons interest in the transaction without regard to the
amount of any profit or loss;
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whether the transaction was undertaken in the ordinary course of
our business;
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whether the terms of the transaction are no less favorable to us
than terms that could have been reached with an unrelated third
party;
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the purpose of, and the potential benefits to us of, the
transaction; and
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any other information regarding the related person transaction
or the related person in the context of the proposed transaction
that would be material to investors in light of the
circumstances of the particular transaction.
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The Audit Committee may approve or ratify the transaction only
if the Audit Committee determines that, under all of the
circumstances, the transaction is in our best interests. The
Audit Committee may impose any conditions on the related person
transaction that it deems appropriate.
In addition to the transactions that are excluded by the
instructions to the SECs related person transaction
disclosure rule, our Board of Directors has determined that the
following transactions do not create a material direct or
indirect interest on behalf of related persons and, therefore,
are not related person transactions for purposes of this policy:
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interests arising solely from the related persons position
as an executive officer of another entity (whether or not the
person is also a director of such entity), that is a participant
in the transaction, where (a) the related person and all
other related persons own in the aggregate less than a 1% equity
interest in such entity, (b) the related person and his or
her immediate family members are not involved in the negotiation
of the terms of the transaction and do not receive any special
benefits as a result of the transaction, and (c) the amount
involved in the transaction equals less than the greater of
$1,000,000 or 2% of the annual gross revenues of the company
receiving payment under the transaction; and
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a transaction that is specifically contemplated by provisions of
our charter or bylaws.
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The policy provides that transactions involving compensation of
executive officers shall be reviewed and approved by the
Compensation Committee in the manner specified in its charter.
INFORMATION
ABOUT EXECUTIVE AND DIRECTOR COMPENSATION
Compensation
Discussion and Analysis
Our
Executive Compensation Philosophy and Objectives
Our executive compensation philosophy is to provide our
executives with appropriate and competitive individual pay
opportunities, with total compensation significantly influenced
by the attainment of corporate
16
and individual performance objectives and the creation of
shareholder value. The primary objectives of our executive
compensation program are to:
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attract, retain and reward executives who can help us to achieve
our business objectives;
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promote the achievement of key strategic and financial
performance measures by linking short- and long-term cash and
equity incentives to the achievement of measurable corporate and
individual performance goals; and
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align executives long-term incentives with the interests
of our stockholders.
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To achieve these objectives, the Compensation Committee
evaluates our executive compensation program with the goal of
setting compensation at levels the Committee believes are
competitive with those of other companies in our industry and
our region that compete with us for executive talent. In
addition, our executive compensation program ties a significant
portion of each executives overall compensation to key
strategic, financial and operational goals such as growth in our
customer base, new product development initiatives,
implementation of appropriate financing strategies, and
achievement of our sales and operating goals, as measured by
metrics such as revenue and net loss. We also provide a portion
of our executive compensation in the form of stock option and
restricted stock grants that vest over time, which we believe
helps to retain our executives and aligns their interests with
those of our stockholders by allowing them to participate in the
longer-term success of NxStage as reflected in stock price
appreciation.
How
Executive Compensation is Determined
Our Compensation Committee has primary responsibility for
reviewing, setting and approving the compensation of our named
executive officers. Information about our Compensation Committee
and its composition and responsibilities can be found on
page 13 of this proxy statement, under the heading
Compensation Committee. In fulfilling this
responsibility, the Compensation Committee relies on three key
elements: market referencing, performance considerations, and
CEO and Compensation Committee judgment.
Market Referencing Against a Peer Group. We
base our compensation decisions on market considerations, by
benchmarking our executive compensation against compensation
paid to employees in comparable roles at peer companies. We
engaged the services of the Hay Group prior to our initial
public offering to help us collect this market information, and
establish the group of companies originally included in our peer
compensation group, which we refer to as our Peer Group. The
Compensation Committee expects to periodically review and update
this Peer Group, to ensure that those included are generally
comparable to our company and are representative of those
companies against which we compete for executive talent. An
update of the Hay Groups Peer Group analysis was not
performed in 2006. The Compensation Committee expects to engage
a compensation consultant to review and update the Hay
Groups Peer Group analysis later this year.
We generally target base salaries and executive benefits at the
50th percentile, incentive performance awards at the
75th percentile and the grant value of equity awards at the
75th percentile of the Peer Group. These are overall
guidelines, and variations to these general targets may occur as
dictated by the experience level of the individual and market
factors.
Performance Considerations. In addition to
considering market rates for executive compensation, we award
our executives compensation in recognition of their performance
as a team in achieving our business objectives, as well as their
individual performance. To assist our evaluation of executive
performance, we conduct an annual Performance Review. The
Performance Review process is designed to guide performance
discussions, establish performance objectives and communicate
annual achievements. Our CEO conducts each named executive
officers Performance Review, in consultation with the
Audit Committee for the Chief Financial Officer, and the
Compensation Committee conducts the Performance Review for the
CEO.
CEO and Compensation Committee Judgment. Our
total compensation program operates not only based on the
application of market referencing and corporate and individual
performance considerations, but also through the application of
CEO and Compensation Committee judgment. We do not employ a
purely formulaic approach to any of our compensation plans.
There are guidelines in place, but there are also individual
17
performance factors and executive retention considerations that
permit discretion to increase or decrease cash and equity awards
based on those considerations.
In making its compensation determinations, the Compensation
Committee reviews the total of all elements of compensation for
each of our executive officers. In addition, the Compensation
Committee considers the economic value as well as the retentive
value of prior equity grants received by our named executives in
determining current and future compensation, and considers each
executives compensation compared to the compensation of
other executives and other employees generally. In determining
the reasonableness of our executives total compensation,
the Compensation Committee reviews not only individual and
corporate performance compared to plan, but also the nature of
each element of executive compensation provided, including
salary, bonus, long-term incentive compensation, and accumulated
realized and unrealized stock option grants, as well as the
terms of executive severance and change of control arrangements.
In addition, while the Compensation Committee is solely
responsible for setting the targets and approving the awards,
the Compensation Committee relies on the judgment of the CEO
regarding evaluating the actual performance of each executive
(other than the CEO) against those through the Performance
Review process and recommending appropriate salary and incentive
awards. The CEO participates in Compensation Committee meetings,
at the request of the Committee, in order to provide background
information and explanations supporting his recommendations.
Components
of our Executive Compensation Program
Overview of Compensation. Our executive
compensation program consists of fixed compensation elements,
such as base salary and benefits, and variable performance-based
elements, such as annual and long-term incentives. Our fixed
compensation elements are designed to provide a stable source of
income and financial security to our executives. Our variable
performance-based compensation elements are designed to reward
performance at three levels: individual performance, actual
corporate performance compared to annual business goals, and
corporate performance in terms of long-term shareholder value
creation. Through these performance incentive awards, we reward
the achievement of short-term goals, such as annual growth in
our chronic patient numbers or our critical care business,
annual reductions in cost of goods, and completion of key
business agreements, and long-term goals, such as business
growth, product innovation and stock price appreciation.
We compensate our executives primarily through base salary,
performance based annual cash incentive bonuses and equity
awards. This three-part compensation approach enables us to
remain competitive with our industry peers and Peer Group while
ensuring that executives are appropriately incentivized to
deliver short-term results while creating long-term shareholder
value.
We do not have any formal or informal policy or target for
allocating compensation between long-term and short-term
compensation, between cash and non-cash compensation or among
the different forms of non-cash compensation. Instead, the
Compensation Committee, after reviewing publicly available
information regarding the executive compensation of the Peer
Group, determines subjectively what it believes to be the
appropriate level and mix of the various compensation
components. The Compensation Committee has chosen to put a
significant percentage of each executives pay at risk,
contingent upon the achievement of certain goals within our
strategic plan and overall corporate achievement.
Base
Salary
Base salary is used to recognize the experience, skills,
knowledge and responsibilities required of all of our employees,
including our executives. When establishing base salaries, the
Compensation Committee considers compensation in the Peer Group,
other available compensation survey data, as well as a variety
of other factors, including the seniority of the individual, the
level of the individuals responsibility, the ability to
replace the individual, the base salary of the individual at his
or her prior place of employment, if applicable, and the number
of well qualified candidates to assume the individuals
role.
18
Base salaries are reviewed at least annually by our Compensation
Committee, and are adjusted from time to time to realign
salaries with market levels after taking into account individual
responsibilities, performance and experience. Effective
January 1, 2006, each of our named executives received
increases in base salary (between 3% and 7%), consistent with
those increases generally reported in compensation surveys we
purchased, including surveys purchased from Top Five Data
Service, Inc. and The Survey Group. In November 2006, we
adjusted the base salary of Winifred L. Swan, our Senior Vice
President and General Counsel, to recognize her increased
responsibilities following our initial public offering and to
adjust her compensation to better reflect rates paid to other
individuals within the region and industry with similar levels
of experience and responsibilities. We also hired Robert S.
Brown, our new Senior Vice President and Chief Financial Officer
in November 2006. In setting his compensation, we looked to his
compensation at his prior company and to the compensation of
other chief financial officers within the region and industry
with similar levels of experience and roles.
Ms. Swans and Mr. Browns compensation was
not adjusted in 2007 as their compensation was adjusted, in the
case of Ms. Swan, and initially established, in the case of
Mr. Brown, in November 2006. Messrs. Burbank, Turk and
Licari received increases in base salary, effective as of
January 1, 2007, in acknowledgement, in the case of
Messrs. Burbank and Turk, of their expanded
responsibilities as we continue to grow, and in the case of
Mr. Burbank, his expanded responsibilities following our
becoming a public company.
Annual
Cash Incentive Bonus
We have an annual cash incentive bonus plan for our executives.
The annual cash incentive bonuses are intended to compensate for
the achievement of both corporate and individual performance
objectives. Amounts payable under the annual cash incentive
bonus plan are calculated as a percentage of the applicable
executives base salary, with higher ranked executives
typically being compensated at a higher percentage of base
salary. The corporate targets and the individual objectives are
given roughly equal weight in the bonus analysis. The corporate
targets generally conform to the financial metrics contained in
the internal business plan adopted by the board of directors.
Individual objectives are necessarily tied to the particular
area of expertise of the employee and their performance in
attaining those objectives relative to external forces, internal
resources utilized and overall individual effort. The
Compensation Committee works with the CEO to develop corporate
and individual goals that they believe can be reasonably
achieved with hard work over the next year.
The Compensation Committee approved our 2006 Corporate Bonus
Plan in March 2006. Awards under the Plan for named executive
officers were based on a comparison of individual performance
against pre-determined individual goals and actual corporate
results against our sales and operating expense budget, as
measured by the following metrics: revenues and operating
expenses.
The target bonus awards, as a percentage of base salary, for
2006 for the named executive officers under the 2006 Corporate
Bonus Plan were: 35% of base salary for all named executives,
other than the CEO, whose target bonus award was 45% of base
salary. Actual awards to named executives for performance in
2006 were approximately 29% for Mr. Turk and Ms. Swan,
23% for Mr. Licari; 35% for Mr. Brown, as agreed to in
his employment agreement with us for 2006, and approximately 38%
for Mr. Burbank. These awards reflected the
Committees assessment of individual executive performance
as well as the fact that, although we exceeded our revenue
target in the 2006 Corporate Bonus Plan, we did not meet our
pre-tax loss target under the Plan. As reflected in the Summary
Compensation Table appearing on page 23 of this proxy
statement, Messrs. Burbank and Turk did not receive payment
of their full awards under the 2006 Corporate Bonus Plan,
pursuant to an earlier Board action requiring that bonuses
earned by such individuals between 2004 and 2006 be offset
against a portion of the tax
gross-up
paid to such individuals in connection with the forgiveness of
all of their indebtedness to NxStage in 2004.
The Compensation Committee approved our 2007 Corporate Bonus
Plan in April 2007. Under this plan, each named executive
officers 2007 bonus payout will be determined based on a
comparison of individual performance against pre-determined
individual goals and actual corporate results against our sales
and operating expense budget, as measured by the following
metrics: chronic patient numbers, critical care sales,
19
cost of goods sold and operating expenses, as well as such other
metrics as may be added within the discretion of the
Compensation Committee as changes within our business
environment may dictate.
The target 2007 bonus awards, as a percentage of salary, for
named executive officers under the 2007 Corporate Bonus Plan
are: 35% of base salary for all named executives other than the
CEO and Senior Vice President of Commercial Operations, whose
target bonus awards are 50% and 45%, respectively.
Special
Recognition Awards
In addition to cash payments under Compensation Committee
approved annual cash incentive bonus plans, we periodically make
special awards in recognition of extraordinary achievements. For
example, in April 2007, we granted special recognition bonuses
to a few employees who were instrumental to the completion of
our recently announced agreements with three dialysis chains.
Recipients included two named executive officers:
Messrs. Burbank and Turk.
Signing
Bonuses
We also occasionally award cash signing bonuses when executives
first join us. Such cash signing bonuses typically must be
repaid in full if the executive voluntarily terminates
employment with us prior to the first anniversary of the date of
hire. Whether a signing bonus is paid and the amount of the
bonus is determined on a
case-by-case
basis under the specific hiring circumstances. For example, we
will consider paying signing bonuses to compensate for amounts
forfeited by an executive upon terminating prior employment, to
assist with relocation expenses or to create additional
incentive for an executive to join us in a position where there
is high market demand. In 2006, we paid an $82,000 signing bonus
to Robert S. Brown, our new Senior Vice President and Chief
Financial Officer, to compensate him for the incentive bonus he
forfeited when he left his prior employer to join NxStage in
November 2006.
The salaries paid and the cash bonuses awarded for 2006 to our
named executive officers are shown in the Summary Compensation
Table on page 23 of this proxy statement.
Stock
Option and Restricted Stock Awards
Our equity award program is the primary vehicle for offering
long-term incentives to our executives. We believe that equity
awards provide our executives with a strong link to our
long-term performance, create an ownership culture and help to
align the interests of our executives and our stockholders. In
addition, the vesting feature of our equity awards should
further our goal of executive retention because this feature
provides an incentive to our executives to remain in our employ
during the vesting period. In determining the size of equity
awards to our executives, our Compensation Committee considers
comparative share ownership of executives in our compensation
Peer Group, our business performance, the applicable
executives performance, the amount of equity previously
awarded to the executive, the vesting of such awards and the
recommendations of management.
We typically make an initial equity award of stock options to
new executives and subsequent equity grants of options or
restricted stock from time to time thereafter as part of our
overall executive compensation program. All grants of options
and restricted stock to our executives are approved by the
Compensation Committee.
We did not make an annual equity award to our named executives
in 2006, but did make the following grants to named executives
in 2006, outside of our annual grant program:
(i) 7,422 shares of restricted common stock were
granted to David N. Gill, our former Senior Vice President and
Chief Financial Officer, as payment in lieu of the cash bonus
that he would have earned during the period of 2006 preceding
his resignation, (ii) 13,027 shares of restricted
common stock were granted to Philip R. Licari, our Senior Vice
President and Chief Operating Officer, in connection with the
amendment of his initial option grant increasing the per share
exercise price of his option from $4.10 to $5.47 in response to
the requirements of Internal Revenue Code Section 409A,
(iii) 10,000 shares of restricted common stock were granted
to Winifred L. Swan, our Senior Vice President and General
Counsel, in recognition of her increased responsibilities
20
following our public offering, and (iv) 250,000 stock
options were granted to Robert S. Brown, our new Senior Vice
President and Chief Financial Officer, as his initial equity
award.
Our equity awards have typically taken the form of stock
options, and in limited circumstances we have also made
restricted stock grants. We typically grant restricted stock
awards at no cost to the executive. Because the shares have a
built-in value at the time the restricted stock awards are
granted, we generally grant significantly fewer shares of
restricted stock than the number of stock options we would grant
for a similar purpose. Typically, the stock options and
restricted stock we grant to our executives vest at a rate of
25% per year over a period of four years. Vesting rights cease
upon termination of employment and stock option exercise rights
cease 90 days following termination of employment, except
in the case of death or disability. Prior to the exercise of an
option, the holder has no rights as a stockholder with respect
to the shares subject to such option, including voting rights
and the right to receive dividends or dividend equivalents. We
set the exercise price of all stock options to equal the closing
price of our common stock on the NASDAQ Global Market on the
date of grant.
Elements
of Indirect Pay
In addition to the direct pay elements described above, we also
provide our executives with indirect pay in the form of
benefits. We maintain broad-based benefits that are provided to
all employees, including health and dental insurance, life and
disability insurance and a 401(k) plan. Executives are eligible
to participate in all of our employee benefit plans, in each
case on the same basis as other employees. We match 100% of the
first 3%, and 50% of the next 2%, of the employees
compensation contributed to the 401(k) plan, subject to
then-current Internal Revenue Service limits on the amount that
may be contributed by employees to such plans. All of our named
executives participate in our 401(k) plan and receive matching
contributions according to this formula.
Severance
and
Change-of-Control
Benefits
Pursuant to employment agreements we have entered into with each
of our named executive officers and our 2005 Stock Incentive
Plan, our executives are entitled to specified benefits in the
event of the termination of their employment under certain
circumstances, including termination following a change of
control of our company. The purpose of these benefits is to
ensure that we remain competitive in attracting and retaining
executives within our industry and Peer Group and that we retain
our key executives during a potentially critical time in the
event of a sale or merger of NxStage. After reviewing the
practices of companies represented in the Peer Group, we believe
that our severance and change of control benefits are generally
in line with severance packages offered to executives in the
Peer Group.
Change-of-control
benefits are structured as double trigger benefits.
In other words, the change of control does not itself trigger
benefits; rather, benefits are paid only if the employment of
the executive is terminated during a specified period after the
change of control. We believe a double trigger
benefit maximizes shareholder value because it prevents an
unintended windfall to executives in the event of a friendly
change of control, while still providing them appropriate
incentives to cooperate in negotiating any change of control in
which they believe they may lose their jobs.
We have provided more detailed information about these benefits,
along with estimates of their value under various circumstances,
under the caption Potential Payments Upon Termination or
Change of Control below.
Tax
Considerations
Section 162(m) of the Internal Revenue Code of 1986, as
amended, generally disallows a tax deduction for compensation in
excess of $1.0 million paid to our CEO and our four other
most highly paid executive officers. Qualifying
performance-based compensation is not subject to the deduction
limitation if specified requirements are met. We periodically
review the potential consequences of Section 162(m) and we
generally intend to structure the performance-based portion of
our executive compensation, where feasible, to comply with
exemptions in Section 162(m) so that the compensation
remains tax deductible to us. However, the
21
Compensation Committee may, in its judgment, authorize
compensation payments that do not comply with the exemptions in
Section 162(m) when it believes that such payments are
appropriate to attract and retain executive talent.
Our
Equity Award Grant Practices
Historical Practices. Since our initial public
offering, all grants have been approved on an individual basis
by our Compensation Committee, with the exception of grants to
new hires below the Vice President level, which since January
2006 have been approved by the CEO, within equity award
guidelines for each job position pre-approved by the
Compensation Committee. New hire grants approved by the CEO are
made on the first Tuesday of each month, or the next succeeding
business day if such Tuesday is not a business day, for
employees below the Vice President level hired during the
preceding month.
All other equity awards have been made pursuant to the following
procedure: for non-executive employees, our CEO made
recommendations regarding equity award grants to the
Compensation Committee, based on input regarding individual
performance he received from appropriate management personnel.
For executive officers (other than the CEO), our CEO made those
recommendations to the Compensation Committee based on his own
assessment of each executives performance. For the CEO,
our Compensation Committee made those recommendations. We have
historically granted equity awards at various times during the
year for a variety of reasons.
Current Practices. With respect to awards
granted during and after 2007, NxStage will grant equity awards
according to the following procedures:
Annual Grants. Annual awards will be granted
at a Compensation Committee meeting occurring between February
and the end of the calendar year. If the timing of this meeting
falls within a trading blackout period, equity awards will be
granted as of the first business day following the expiration of
the trading blackout period.
Promotion, Special Recognition and Retention
Grants. Promotion, special recognition and
retention awards will be granted at the discretion of the
Compensation Committee on the date of the Compensation Committee
meeting at which such awards are approved, unless such date
occurs during a trading blackout period, in which case such
awards shall be granted on the first business day following the
expiration of the trading blackout period.
New Hire Grants. New hire awards for employees
below the Vice President level will continue to be approved by
the CEO (pursuant to applicable equity award guidelines for each
job position) under the authority delegated to him by the
Compensation Committee and are effective upon the CEOs
approval, which shall be made on the first Tuesday of every
month, or the next succeeding business day if such Tuesday is
not a business day, for those employees below the Vice President
level hired during the preceding month. New hire awards for
executive officers and employees at the Vice President level and
above require approval of the Compensation Committee, and shall
be approved at a Compensation Committee meeting and granted on
the first Tuesday of the month, or the next succeeding business
day if such Tuesday is not a business day, following the
Compensation Committees approval of such awards. All stock
option awards are granted with an exercise price equal to the
closing price of the NxStages common stock on the date of
grant.
22
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
section of this proxy statement entitled Compensation
Committee Discussion and Analysis with management. Based
on this review and discussion, the Compensation Committee has
recommended to the Board of Directors that such section be
included in this proxy statement and incorporated by reference
in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2006.
By the Compensation Committee of the Board of Directors
Craig W. Moore (Chair)
Philippe O. Chambon
Peter P. Phildius
Executive
Compensation
The following table sets forth information regarding
compensation earned by our Chief Executive Officer, our former
Chief Financial Officer, our Chief Financial Officer and each of
our three other most highly compensated executive officers
during fiscal 2006. We refer to these executive officers as our
named executive officers elsewhere in this proxy
statement.
SUMMARY
COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock Awards
|
|
|
Option
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position(1)
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)(2)
|
|
|
Awards ($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
($)
|
|
|
Jeffrey H. Burbank
|
|
|
2006
|
|
|
|
298,700
|
|
|
|
|
|
|
|
|
|
|
|
170,516
|
|
|
|
112,505
|
(6)
|
|
|
11,745
|
|
|
|
593,466
|
|
President, Chief Executive
Officer and Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S. Brown
|
|
|
2006
|
|
|
|
24,639
|
(7)
|
|
|
90,650
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75
|
|
|
|
115,319
|
|
Senior Vice President and
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David N. Gill
|
|
|
2006
|
|
|
|
294,120
|
(9)
|
|
|
|
|
|
|
87,802
|
|
|
|
|
|
|
|
|
|
|
|
10,302
|
|
|
|
392,224
|
|
Former Vice President and
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip R. Licari
|
|
|
2006
|
|
|
|
231,750
|
|
|
|
|
|
|
|
|
(10)
|
|
|
187,195
|
|
|
|
54,313
|
|
|
|
125,390
|
(10)
|
|
|
598,648
|
|
Senior Vice President and
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winifred L. Swan
|
|
|
2006
|
|
|
|
214,936
|
(11)
|
|
|
|
|
|
|
1,855
|
|
|
|
53,286
|
|
|
|
63,576
|
|
|
|
9,401
|
|
|
|
343,054
|
|
Senior Vice President, General
Counsel
and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph E. Turk, Jr.
|
|
|
2006
|
|
|
|
223,871
|
|
|
|
|
|
|
|
|
|
|
|
31,972
|
|
|
|
65,583
|
(12)
|
|
|
11,800
|
|
|
|
333,226
|
|
Senior Vice President,
Commercial Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The titles noted in the table are each officers respective
title as of December 31, 2006. Mr. Brown became our
Chief Financial Officer on November 27, 2006. Mr. Gill
served as our Chief Financial Officer through November 22,
2006. |
|
(2) |
|
The amounts in the Stock Awards column reflect the dollar amount
recognized as compensation cost for financial statement
reporting purposes for the fiscal year ended December 31,
2006, in accordance with FAS 123R of restricted stock
awarded under our equity plans and may include amounts from
awards granted in and prior to 2006. There can be no assurance
that the FAS 123R amounts will ever be realized. The
assumptions we used to calculate these amounts are included in
footnote 2 to our audited financial statements for the
fiscal year ended December 31, 2006 included in our Annual
Report on
Form 10-K
filed with the SEC on March 16, 2007. |
23
|
|
|
(3) |
|
The amounts in the Option Awards column reflect the dollar
amount recognized as compensation cost for financial statement
reporting purposes for the fiscal year ended December 31,
2006, in accordance with FAS 123R of stock options granted
under our equity plans and may include amounts from stock
options granted in and prior to 2006. There can be no assurance
that the FAS 123R amounts will ever be realized. The
assumptions we used to calculate these amounts are included in
footnote 2 to our audited financial statements for the
fiscal year ended December 31, 2006 included in our Annual
Report on
Form 10-K
filed with the SEC on March 16, 2007. |
|
(4) |
|
The amounts in the Non-Equity Incentive Plan Compensation column
reflect performance-based bonuses paid pursuant to our 2006
Corporate Bonus Plan, which is discussed further on page 19
of this proxy statement. |
|
(5) |
|
All other compensation reported in this column includes, unless
otherwise indicated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar amount of
|
|
|
|
|
|
|
Life insurance
|
|
|
contributions made
|
|
|
|
|
|
|
premiums paid by
|
|
|
to Executives
|
|
|
Telephone
|
|
Name
|
|
NxStage($)
|
|
|
401(k) Plan ($)
|
|
|
stipend ($)
|
|
|
Jeffrey H. Burbank
|
|
|
545
|
|
|
|
8,800
|
|
|
|
2,400
|
|
Robert S. Brown
|
|
|
|
|
|
|
|
|
|
|
75
|
|
David N. Gill
|
|
|
|
|
|
|
8,102
|
|
|
|
2,200
|
|
Philip R. Licari
|
|
|
|
|
|
|
8,800
|
|
|
|
840
|
|
Winifred L. Swan
|
|
|
|
|
|
|
8,561
|
|
|
|
840
|
|
Joseph E. Turk, Jr.
|
|
|
|
|
|
|
8,800
|
|
|
|
3,000
|
|
|
|
|
(6) |
|
Mr. Burbank earned an aggregate bonus of $112,505. Of this
amount, $23,923 was not paid to Mr. Burbank and was applied
against a portion of a tax
gross-up
payment made in fiscal 2004 to Mr. Burbank. |
|
(7) |
|
Represents the pro-rated portion of Mr. Browns base
salary of $250,000 for fiscal 2006. |
|
(8) |
|
This amount includes an $8,650 bonus that was guaranteed to
Mr. Brown under his employment agreement and an $82,000
signing bonus paid to Mr. Brown on the date that he joined
NxStage. Bonuses awarded pursuant to our 2006 Corporate Bonus
Plan are set forth in the Non-Equity Incentive Plan Compensation
column. |
|
(9) |
|
Represents the pro-rated portion of Mr. Gills base
salary paid through November 22, 2006. |
|
(10) |
|
As a result of Section 409A of the Internal Revenue Code,
we agreed to reprice a stock option originally granted to
Mr. Licari on October 25, 2004 for the purchase of
208,962 shares of our common stock with an exercise price
of $4.10. The repricing resulted in the cancellation and regrant
of an option to purchase 208,962 shares of our common stock
on March 24, 2006 with an exercise price of $5.47. This
option is fully vested and exercisable. In consideration for the
repriced option, we issued 13,027 shares of restricted
common stock to Mr. Licari, at a purchase price of $0.001
per share, of which 2,991 shares vested on January 1,
2007 with the remainder vesting in equal amounts on a monthly
basis commencing on January 25, 2007. Additionally, we paid
Mr. Licari $115,750 in cash on January 1, 2007 in
consideration for the repriced option. |
|
(11) |
|
On November 27, 2006, we increased Ms. Swans
base salary to $260,000, from $210,000. This amount reflects the
pro-rated portion of her $210,000 base salary paid through
November 27, 2006 plus the pro-rated portion of her
increased salary paid through December 31, 2006. |
|
(12) |
|
Mr. Turk earned an aggregate bonus of $65,583. Of this
amount, $33,097 was not paid to Mr. Turk and was applied
against a portion of a tax
gross-up
payment made in fiscal 2004 to Mr. Turk. |
24
The following table sets forth information concerning each grant
of an option or restricted stock award made to a named executive
officer during fiscal 2006 under any plan, contract,
authorization or arrangement pursuant to which cash, securities,
similar instruments or other property may be received.
GRANTS OF
PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Estimated
|
|
|
|
|
|
Option Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Future Payouts
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Non-Equity
|
|
|
Stock Awards:
|
|
|
Securities
|
|
|
Exercise
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
Incentive Plan
|
|
|
Number of
|
|
|
Underlying
|
|
|
Price of
|
|
|
Value of Stock and
|
|
|
|
|
|
|
Awards
|
|
|
Shares of Stock
|
|
|
Options
|
|
|
Option Awards
|
|
|
Option Awards
|
|
Name
|
|
Grant Date
|
|
|
($)(1)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
($)(2)
|
|
|
Jeffrey H. Burbank
|
|
|
3/16/2006
|
|
|
|
134,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S. Brown
|
|
|
11/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(3)
|
|
|
8.92
|
|
|
|
1,220,000
|
|
David N. Gill
|
|
|
3/16/2006
|
|
|
|
87,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/10/2006
|
|
|
|
|
|
|
|
7,422
|
(4)
|
|
|
|
|
|
|
|
|
|
|
87,802
|
|
Philip R. Licari
|
|
|
3/16/2006
|
|
|
|
81,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/2006
|
|
|
|
|
|
|
|
13,027
|
(5)
|
|
|
|
|
|
|
|
|
|
|
170,002
|
|
|
|
|
3/24/2006
|
|
|
|
|
|
|
|
|
|
|
|
208,962
|
(5)
|
|
|
5.47
|
|
|
|
|
|
Winifred L. Swan
|
|
|
3/16/2006
|
|
|
|
78,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/27/2006
|
|
|
|
|
|
|
|
10,000
|
(6)
|
|
|
|
|
|
|
|
|
|
|
89,200
|
|
Joseph E. Turk, Jr.
|
|
|
3/16/2006
|
|
|
|
73,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects the target award amounts under our 2006 Corporate Bonus
Plan. The amounts actually paid to the named executive officers
under the 2006 Corporate Bonus Plan are shown above in the
Summary Compensation Table in the Non-Equity Incentive Plan
Compensation column. |
|
(2) |
|
Grant Date Fair Value computed in accordance with FAS 123R
and represents the FAS 123R value of the stock awarded or
option awarded as of the Grant Date. |
|
(3) |
|
The shares of common stock underlying this option vest as to 25%
of the shares on November 27, 2007 and in 36 equal
monthly installments over the 36 months following
November 27, 2007. |
|
(4) |
|
These shares of restricted stock became fully vested on
July 31, 2006. |
|
(5) |
|
As a result of Section 409A of the Internal Revenue Code,
we agreed to reprice a stock option originally granted to
Mr. Licari on October 25, 2004 for the purchase of
208,962 shares of our common stock with an exercise price
of $4.10. The repricing resulted in the cancellation and regrant
of an option to purchase 208,962 shares of our common stock
on March 24, 2006 with an exercise price of $5.47. This
option is fully vested and exercisable. In consideration for the
repriced option, we issued 13,027 shares of restricted
common stock to Mr. Licari, at a purchase price of
$0.001 per share, of which 2,991 shares vested on
January 1, 2007 with the remainder vesting in equal amounts
on a monthly basis commencing on January 25, 2007.
Additionally, we paid Mr. Licari $115,750 in cash on
January 1, 2007 in consideration for the repriced option. |
|
(6) |
|
The shares of restricted common stock underlying this award vest
in 48 equal monthly installments beginning on November 27,
2006. |
25
Information
Relating to Equity Awards and Holdings
The following table sets forth information concerning restricted
stock that has not vested, stock options that have not been
exercised and equity incentive plan awards for each of the named
executive officers outstanding as of December 31, 2006.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Shares That
|
|
|
Value of Shares
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
That Have
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Not Vested
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(1)
|
|
|
Jeffrey H. Burbank
|
|
|
14,146
|
(2)
|
|
|
|
|
|
|
0.34
|
|
|
|
11/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
54,840
|
(2)
|
|
|
|
|
|
|
3.76
|
|
|
|
1/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
54,840
|
(2)
|
|
|
|
|
|
|
3.76
|
|
|
|
8/22/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
36,560
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
3/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
36,560
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
2/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
44,603
|
(2)
|
|
|
|
|
|
|
5.47
|
|
|
|
2/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
73,120
|
(2)
|
|
|
|
|
|
|
6.84
|
|
|
|
1/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
36,560
|
(3)
|
|
|
109,680
|
|
|
|
8.55
|
|
|
|
9/15/2012
|
|
|
|
|
|
|
|
|
|
Robert S. Brown
|
|
|
|
|
|
|
200,000
|
(4)
|
|
|
8.92
|
|
|
|
11/27/2013
|
|
|
|
|
|
|
|
|
|
David N. Gill
|
|
|
69,463
|
(5)
|
|
|
|
|
|
|
8.55
|
|
|
|
5/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(5)
|
|
|
|
|
|
|
12.59
|
|
|
|
5/21/2007
|
|
|
|
|
|
|
|
|
|
Philip R. Licari
|
|
|
208,962
|
(6)
|
|
|
|
|
|
|
5.47
|
|
|
|
10/24/2014
|
|
|
|
13,027
|
(6)
|
|
|
109,166
|
|
Winifred L. Swan
|
|
|
25,555
|
(2)
|
|
|
|
|
|
|
2.74
|
|
|
|
11/27/2010
|
|
|
|
9,792
|
|
|
|
82,057
|
|
|
|
|
3,656
|
(2)
|
|
|
|
|
|
|
3.76
|
|
|
|
8/22/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
20,839
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
3/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
7,494
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
2/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
6,997
|
(2)
|
|
|
|
|
|
|
5.47
|
|
|
|
2/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
10,968
|
(2)
|
|
|
|
|
|
|
6.84
|
|
|
|
1/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
11,425
|
(7)
|
|
|
25,135
|
|
|
|
8.55
|
|
|
|
9/15/2012
|
|
|
|
|
|
|
|
|
|
Joseph E. Turk, Jr
|
|
|
3,656
|
(2)
|
|
|
|
|
|
|
3.76
|
|
|
|
1/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
7,312
|
(2)
|
|
|
|
|
|
|
3.76
|
|
|
|
8/22/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
12,613
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
3/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
14,989
|
(2)
|
|
|
|
|
|
|
4.10
|
|
|
|
2/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
13,986
|
(2)
|
|
|
|
|
|
|
5.47
|
|
|
|
2/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
29,248
|
(2)
|
|
|
|
|
|
|
6.84
|
|
|
|
1/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
6,855
|
(7)
|
|
|
15,081
|
|
|
|
8.55
|
|
|
|
9/15/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on $8.38 per share, the last sale price of NxStage
common stock on December 29, 2006. |
|
(2) |
|
These options were fully exercisable on the date of grant and,
upon exercise, were subject to a repurchase right in favor of
NxStage. This repurchase right terminated upon the closing of
our initial public offering and all such options are currently
exercisable. |
|
(3) |
|
This option was granted on September 15, 2005. This option
vested as to 20% of the shares on September 15, 2006 and
will vest in equal monthly installments over the next
48 months following September 15, 2006. |
|
(4) |
|
This option was granted on November 27, 2006. This option
will vest as to 25% of the shares on November 27, 2007 and
in equal monthly installments over the next 36 months
following November 27, 2007. |
|
(5) |
|
Pursuant to his employment agreement, Mr. Gill has been
allowed 180 days subsequent to the date his employment was
terminated, November 22, 2006, to exercise his stock
options that had vested as of |
26
|
|
|
|
|
November 22, 2006. At November 22, 2006, he was vested
in 89,463 shares that are exercisable through May 21,
2007. |
|
(6) |
|
As a result of Section 409A of the Internal Revenue Code,
we agreed to reprice a stock option originally granted to
Mr. Licari on October 25, 2004 for the purchase of
208,962 shares of our common stock with an exercise price
of $4.10. The repricing resulted in the cancellation and regrant
of an option to purchase 208,962 shares of our common stock
on March 24, 2006 with an exercise price of $5.47. This
option is fully vested and exercisable. In consideration for the
repriced option, we issued 13,027 shares of restricted
common stock to Mr. Licari, at a purchase price of $0.001
per share, of which 2,991 shares vested on January 1,
2007 with the remainder vesting in equal amounts on a monthly
basis commencing on January 25, 2007. Additionally, we paid
Mr. Licari $115,750 in cash on January 1, 2007 in
consideration for the repriced option. |
|
(7) |
|
These options were granted on September 15, 2005. This
option vested as to 25% of the shares on September 15, 2006
and will vest in equal monthly installments over the
36 months following September 15, 2006. |
The following table sets forth information concerning the
exercise of stock options and the vesting of restricted stock
during fiscal 2006 for each of the named executive officers.
OPTION
EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
Jeffrey H. Burbank
|
|
|
|
|
|
|
|
|
Robert S. Brown
|
|
|
|
|
|
|
|
|
David N. Gill
|
|
|
7,422
|
|
|
|
63,607
|
|
Philip R. Licari
|
|
|
|
|
|
|
|
|
Winifred L. Swan
|
|
|
208
|
|
|
|
1,820
|
|
Joseph E. Turk, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Value realized upon vesting is based on the closing sales price
of our common stock on the applicable vesting date. |
Employment
Agreements with Named Executive Officers
We have entered into employment agreements with each of our
named executive officers, the terms of which are summarized
below.
Jeffrey H. Burbank. Pursuant to the terms of
his employment agreement, Mr. Burbank is entitled to
receive an annual base salary of $290,000. For 2006, we paid
Mr. Burbank an annual base salary of $298,700 and a cash
bonus of $112,505, $23,923 of which was not paid to
Mr. Burbank pursuant to a Board of Directors action
requiring that bonuses earned between 2004 and 2006 be offset
against a portion of the tax
gross-up
paid to Mr. Burbank in connection with the forgiveness of
all of his indebtedness to NxStage in 2004. On April 9,
2007, our compensation committee approved an increase in
Mr. Burbanks annual base salary to $330,000,
effective January 1, 2007, and established a target cash
bonus equal to 50% of his base salary pursuant to our 2007
Corporate Bonus Plan, or 2007 Plan. If, before a change in
control of NxStage, as defined in his employment agreement, we
terminate Mr. Burbanks employment without cause or he
resigns for good reason, each as defined in his employment
agreement, then Mr. Burbank will be entitled to receive:
|
|
|
|
|
severance payments in an amount equal to his then-current base
salary, which will be paid over the 12 months following
termination of his employment;
|
|
|
|
continued medical coverage during the 12 months following
termination of his employment; and
|
27
|
|
|
|
|
continued vesting during the 12 months following
termination of his employment in all stock options and stock
awards he holds at the time his employment is terminated as if
he continued to be employed during such period, and, except as
described below, he will have up to 90 days following the
expiration of such period to exercise such options.
|
If, following a change in control, (i) we terminate
Mr. Burbanks employment, or (ii) we had
terminated Mr. Burbanks employment at any time three
months prior to announcement of the change in control and we
cannot reasonably demonstrate that such termination did not
arise in connection with such change in control, or if
Mr. Burbank resigns for good reason within 12 months
following a change in control, then he will be entitled to:
|
|
|
|
|
a lump sum severance payment equal to two times his then-current
base salary and two times the greater of his annual bonus for
the fiscal year preceding his termination or his target bonus
for the then-current fiscal year;
|
|
|
|
continue to receive medical coverage during the 24 months
following termination of his employment;
|
|
|
|
full vesting and acceleration of stock options and stock awards
he holds at the time his employment is terminated and a period
of 90 days to exercise such stock options; and
|
|
|
|
receive
gross-up
amount on benefits received under this agreement to compensate
for excise taxes and associated penalties imposed by
Section 4999 of the Internal Revenue Code of 1986, as
amended.
|
Robert S. Brown. Pursuant to the terms of his
employment agreement, Mr. Brown is entitled to receive an
annual base salary of $250,000. For 2006, we paid Mr. Brown
the pro-rated portion of his base salary, or $24,639, a cash
bonus of $8,650 and a one-time signing bonus of $82,000.
Additionally, pursuant to his employment agreement, on
November 27, 2006 we granted Mr. Brown an incentive
stock option to purchase 200,000 shares of our common
stock, with an exercise price of $8.92 per share.
Mr. Browns base salary remains unchanged for 2007.
Effective April 9, 2007, our compensation committee
established a target cash bonus equal to 35% of
Mr. Browns base salary pursuant to our 2007 Plan. If,
before a change in control of NxStage, we terminate
Mr. Browns employment without cause or he resigns for
good reason, each as defined in his employment agreement, then
Mr. Brown will be entitled to receive:
|
|
|
|
|
severance payments in an amount equal to 0.5 times his
then-current base salary, which will be paid over the six months
following termination of his employment;
|
|
|
|
continued medical coverage during the six months following
termination of his employment; and
|
|
|
|
continued vesting during the six months following termination of
his employment in all stock options and stock awards he holds at
the time his employment is terminated as if he continued to be
employed during such period, and, except as described below, he
will have up to 90 days following the expiration of such
period to exercise such options.
|
If, following a change in control, (i) we terminate
Mr. Browns employment, or (ii) we have
terminated Mr. Browns employment at any time three
months prior to announcement of the change in control, and we
cannot reasonably demonstrate that such termination did not
arise in connection with such change in control, or if
Mr. Brown resigns for good reason within 12 months
following a change in control, then he will be entitled to:
|
|
|
|
|
a lump severance payment equal to his then-current base salary
and the greater of his annual bonus for the fiscal year
preceding his termination or his target bonus for the
then-current fiscal year;
|
|
|
|
continued medical coverage during the 12 months following
termination of his employment;
|
|
|
|
full vesting and acceleration of stock options and stock awards
he holds at the time his employment is terminated and a period
of 90 days to exercise such stock options; and
|
|
|
|
receive
gross-up
amount on benefits received under this agreement to compensate
for excise taxes and associated penalties imposed by
Section 4999 of the Internal Revenue Code of 1986, as
amended.
|
28
Philip R. Licari. Pursuant to the terms of his
employment agreement, Mr. Licari is entitled to receive an
annual base salary of $225,000. For 2006, we paid
Mr. Licari an annual base salary of $231,750 and a cash
bonus of $54,313. On April 9, 2007, our compensation
committee set Mr. Licaris base salary for 2007 at
$240,000, effective January 1, 2007, and established a
target cash bonus equal to 35% of his base salary pursuant to
our 2007 Plan. If, before a change in control of NxStage, as
defined in his employment agreement, we terminate
Mr. Licaris employment without cause or he resigns
for good reason, each as defined in his employment agreement,
then Mr. Licari will be entitled to receive:
|
|
|
|
|
severance payments in an amount equal to 0.5 times his
then-current base salary, which will be paid over the six months
following termination of his employment;
|
|
|
|
continued medical coverage during the six months following
termination of his employment; and
|
|
|
|
continued vesting during the six months following termination of
his employment in all stock options and stock awards he holds at
the time his employment is terminated as if he continued to be
employed during such period, and, except as described below,
will have up to 90 days following the expiration of such
period to exercise such options.
|
If, following a change in control, (i) we terminate
Mr. Licaris employment, or (ii) we had
terminated Mr. Licaris employment at any time three
months prior to announcement of the change in control and we
cannot reasonably demonstrate that such termination did not
arise in connection with such change in control, or if
Mr. Licari resigns for good reason within 12 months
following a change in control, then he will be entitled to:
|
|
|
|
|
a lump sum severance payment equal to his then-current base
salary and the greater of his annual bonus for the fiscal year
preceding his termination or his target bonus for the
then-current fiscal year;
|
|
|
|
continued medical coverage during the 12 months following
termination of his employment;
|
|
|
|
full vesting and acceleration of stock options and stock awards
he holds at the time his employment is terminated and a period
of 90 days to exercise such stock options; and
|
|
|
|
receive
gross-up
amount on benefits received under this agreement to compensate
for excise taxes and associated penalties imposed by
Section 4999 of the Internal Revenue Code of 1986, as
amended.
|
Joseph E. Turk. Pursuant to the terms of his
employment agreement, Mr. Turk is entitled to receive an
annual base salary of $217,350. For 2006, we paid Mr. Turk
an annual base salary of $223,871 and a cash bonus of $65,583,
$33,097 of which was not paid to Mr. Turk pursuant to a
Board of Directors action requiring that bonuses earned between
2004 and 2006 be offset against a portion of the tax
gross-up
paid to Mr. Turk in connection with the forgiveness of all
of his indebtedness to NxStage in 2004. On April 9, 2007,
our compensation committee set Mr. Turks base salary
for 2007 at $260,000, effective January 1, 2007, and
established a target cash bonus equal to 45% of his base salary
pursuant to our 2007 Plan. If, before a change in control of
NxStage, as defined in his employment agreement, we terminate
Mr. Turks employment without cause or he resigns for
good reason, each as defined in his employment agreement, then
Mr. Turk will be entitled to receive:
|
|
|
|
|
severance payments in an amount equal to 0.5 times his
then-current base salary, which will be paid over the six months
following termination of his employment;
|
|
|
|
continued medical coverage during the six months following
termination of his employment; and
|
|
|
|
continued vesting during the six months following termination of
his employment in all stock options and stock awards he holds at
the time his employment is terminated as if he continued to be
employed during such period, and, except as described below,
will have up to 90 days following the expiration of such
period to exercise such options.
|
If, following a change in control, (i) we terminate
Mr. Turks employment, or (ii) we had terminated
Mr. Turks employment at any time three months prior
to announcement of the change in control and we cannot
reasonably demonstrate that such termination did not arise in
connection with such change in control,
29
or if Mr. Turk resigns for good reason within
12 months following a change in control, then he will be
entitled to:
|
|
|
|
|
a lump sum severance payment equal to his then-current base
salary and the greater of his annual bonus for the fiscal year
preceding his termination or his target bonus for the
then-current fiscal year;
|
|
|
|
continue to receive medical coverage during the 12 months
following termination of his employment;
|
|
|
|
full vesting and acceleration of stock options and stock awards
he holds at the time his employment is terminated and a period
of 90 days to exercise such stock options; and
|
|
|
|
receive
gross-up
amount on benefits received under this agreement to compensate
for excise taxes and associated penalties imposed by
Section 4999 of the Internal Revenue Code of 1986, as
amended.
|
Winifred L Swan. Pursuant to the terms of her
employment agreement, Ms. Swan is entitled to receive an
annual base salary of $203,000. For 2006, we paid Ms. Swan
an annual base salary of $210,000 through November 27,
2006, and we increased her base salary to $260,000 effective
November 27, 2006. For 2006, we paid Ms. Swan a cash
bonus of $63,576. Ms. Swans base salary remains
unchanged for 2007. Effective April 9, 2007, our
compensation committee established a target cash bonus equal to
35% of Ms. Swans base salary pursuant to our 2007
Plan. If, before a change in control of NxStage, as defined in
her employment agreement, we terminate Ms. Swans
employment without cause or she resigns for good reason, each as
defined in her employment agreement, then Ms. Swan will be
entitled to receive:
|
|
|
|
|
severance payments in an amount equal to 0.5 times her
then-current base salary, which will be paid over the six months
following termination of her employment;
|
|
|
|
continued medical coverage during the six months following
termination of her employment; and
|
|
|
|
continued vesting during the six months following termination of
her employment in all stock options and stock awards she holds
at the time her employment is terminated as if she continued to
be employed during such period, and, except as described below,
will have up to 90 days following the expiration of such
period to exercise such options.
|
If, following a change in control, (i) we terminate
Ms. Swans employment, or (ii) we had terminated
Ms. Swans employment at any time three months prior
to announcement of the change in control and we cannot
reasonably demonstrate that such termination did not arise in
connection with such change in control, or if Ms. Swan
resigns for good reason within 12 months following a change
in control, then she will be entitled to:
|
|
|
|
|
a lump sum severance payment equal to 1.25 times her
then-current base salary and 1.25 times the greater of her
annual bonus for the fiscal year preceding her termination or
her target bonus for the then-current fiscal year;
|
|
|
|
continue to receive medical coverage during the 15 months
following termination of her employment; and
|
|
|
|
full vesting and acceleration of stock options and stock awards
she holds at the time her employment is terminated and a period
of 90 days to exercise such stock options.
|
In addition to the terms set forth above, the executive
officers employment agreements also provide that each
executive officer is entitled to:
|
|
|
|
|
participate in short-term and long-term incentive programs,
which incentive compensation will be subject to the terms of the
applicable plans and paid on the basis of the executive
officers individual performance, as determined by our
Board of Directors or Compensation Committee.
|
|
|
|
receive retirement and welfare benefits that we make available
from time to time to our senior level executives;
|
|
|
|
receive a
gross-up
amount on benefits received under this agreement to compensate
for excise taxes and associated penalties imposed by
Section 4999 of the Internal Revenue Code of 1986, as
amended.
|
30
If the executive officer terminates employment with NxStage
voluntarily, other than for good reason, if we terminate the
executive officers employment as a result of physical or
mental disability or for cause, each as defined in the
agreement, or if the executive officer dies, the executive
officer will receive compensation and benefits through the last
day of employment.
David N. Gill. Mr. Gill resigned as our
Vice President, Chief Financial Officer, Principal Financial
Officer and Principal Accounting Officer on November 22,
2006. Pursuant to his employment agreement with us, we paid
Mr. Gill a pro-rated base salary of $294,120 through the
date of his resignation. No additional amounts were paid to
Mr. Gill pursuant to his employment agreement during fiscal
2006, and no severance or separation payments were paid (and are
not owed) to Mr. Gill following his resignation. Pursuant
to his employment agreement, Mr. Gills vested stock
options as of November 22, 2006 will remain exercisable
through May 21, 2007.
Each of Messrs. Burbank, Brown, Gill, Licari, Turk and
Ms. Swan have signed agreements providing for the
protection of our confidential information and the transfer of
ownership rights to intellectual property developed by such
executive officer while he or she was employed by us. If the
executive officer fails to comply with the provisions of the
proprietary information agreement between NxStage and the
executive officer, the payments and benefits described above
will cease.
31
Potential
Termination and Change in Control Payments
The following table describes the potential payments, benefits
and acceleration of vesting applicable to stock options and
restricted stock awards pursuant to employment agreements with
each of Messrs. Burbank, Brown, Licari and Turk and
Ms. Swan. The amounts shown below assume that the
termination of each executive is effective as of
December 31, 2006. Actual amounts payable to each executive
listed below upon his termination can only be determined
definitively at the time of each executives actual
departure. In addition to the amounts shown in the table below,
each executive would receive payments for amounts of base salary
and vacation time accrued through the date of termination. For
information relating to compensation earned by each of our named
executive officers, see Executive Compensation
Summary Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
Three Months Prior to
|
|
|
|
|
|
|
|
|
Change in Control;
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
at Any Time After a
|
|
|
|
|
|
|
|
|
Change in Control;
|
|
|
|
|
|
|
|
|
Resignation for
|
|
|
|
|
|
Termination
|
|
|
Good Reason
|
|
|
|
|
|
Without Cause
|
|
|
During the 12 Months
|
|
|
|
|
|
or Resignation
|
|
|
Following a Change
|
|
|
|
|
|
for Good Reason
|
|
|
in Control
|
|
Name
|
|
Benefit
|
|
($)
|
|
|
($)
|
|
|
Jeffrey H. Burbank
|
|
Severance Benefits
|
|
|
|
|
|
|
|
|
|
|
Severance Payments
|
|
|
298,700
|
(3)
|
|
|
822,410
|
(6)
|
|
|
Healthcare Benefits(1)
|
|
|
11,903
|
(4)
|
|
|
23,806
|
(7)
|
|
|
Market Value of Stock Vesting on
Termination(2)
|
|
|
|
(5)
|
|
|
|
(8)
|
|
|
Tax Gross Up
|
|
|
N/A
|
|
|
|
114,613
|
|
|
|
Total
|
|
|
310,603
|
|
|
|
960,829
|
|
Robert S. Brown
|
|
Severance Benefits
|
|
|
|
|
|
|
|
|
|
|
Severance Payments
|
|
|
125,000
|
(9)
|
|
|
258,650
|
(12)
|
|
|
Healthcare Benefits(1)
|
|
|
5,951
|
(10)
|
|
|
11,903
|
(13)
|
|
|
Market Value of Stock Vesting on
Termination(2)
|
|
|
|
(11)
|
|
|
|
(8)
|
|
|
Tax Gross Up
|
|
|
N/A
|
|
|
|
49,183
|
|
|
|
Total
|
|
|
130,951
|
|
|
|
319,736
|
|
Philip R. Licari
|
|
Severance Benefits
|
|
|
|
|
|
|
|
|
|
|
Severance Payments
|
|
|
115,875
|
(9)
|
|
|
286,063
|
(12)
|
|
|
Healthcare Benefits(1)
|
|
|
5,951
|
(10)
|
|
|
11,903
|
(13)
|
|
|
Market Value of Stock Vesting on
Termination(2)
|
|
|
16,677
|
(11)
|
|
|
109,166
|
(8)
|
|
|
Tax Gross Up
|
|
|
N/A
|
|
|
|
48,188
|
|
|
|
Total
|
|
|
138,503
|
|
|
|
455,320
|
|
Joseph E. Turk
|
|
Severance Benefits
|
|
|
|
|
|
|
|
|
|
|
Severance Payments
|
|
|
111,936
|
(9)
|
|
|
289,454
|
(12)
|
|
|
Healthcare Benefits(1)
|
|
|
5,951
|
(10)
|
|
|
11,903
|
(13)
|
|
|
Market Value of Stock Vesting on
Termination(2)
|
|
|
|
(11)
|
|
|
|
(8)
|
|
|
Tax Gross Up
|
|
|
N/A
|
|
|
|
17,129
|
|
|
|
Total
|
|
|
117,887
|
|
|
|
318,486
|
|
Winifred L. Swan
|
|
Severance Benefits
|
|
|
|
|
|
|
|
|
|
|
Severance Payments
|
|
|
130,000
|
(9)
|
|
|
404,470
|
(14)
|
|
|
Healthcare Benefits(1)
|
|
|
5,472
|
(10)
|
|
|
13,681
|
(15)
|
|
|
Market Value of Stock Vesting on
Termination(2)
|
|
|
|
(11)
|
|
|
|
(8)
|
|
|
Tax Gross Up
|
|
|
N/A
|
|
|
|
43,847
|
|
|
|
Total
|
|
|
135,472
|
|
|
|
461,998
|
|
|
|
|
(1) |
|
This value is based upon the type of insurance coverage we
carried for each executive officer as of December 31, 2006
and is valued at the premiums in effect on December 31,
2006. |
|
(2) |
|
Based on the last sale price of NxStage common stock on
December 29, 2006, or $8.38 per share. |
|
(3) |
|
Represents aggregate severance payments equal to
Mr. Burbanks base salary at the time of his
termination, payable over the
12-month
period following his termination. |
32
|
|
|
(4) |
|
Represents amounts payable over 12 months for continuation
of coverage under medical and dental plans for Mr. Burbank,
his spouse and his dependents. |
|
(5) |
|
Represents continued vesting of Mr. Burbanks stock
options and stock awards through December 31, 2007. |
|
(6) |
|
Represents a lump sum payment equal to two times
Mr. Burbanks base salary at the time of his
termination plus an amount equal to two times the annual bonus
paid to Mr. Burbank during fiscal 2006. |
|
(7) |
|
Represents amounts payable over 24 months for continuation
of coverage under medical and dental plans for Mr. Burbank. |
|
(8) |
|
Represents immediate vesting of all unvested stock options and
other stock awards held by the executive as of December 31,
2006. |
|
(9) |
|
Represents aggregate severance payments in an amount equal to
0.5 times the executives then current base salary at the
time of his or her termination, payable over the following six
months. |
|
(10) |
|
Represents amounts payable over six months for continuation of
coverage under medical and dental plans for the executive. |
|
(11) |
|
Represents continued vesting of the executives stock
options and stock awards for six months following termination. |
|
(12) |
|
Represents a lump sum payment equal to the executives then
current base salary at the time of his or her termination plus
an amount equal to the annual bonus paid to the executive during
fiscal 2006. |
|
(13) |
|
Represents amounts payable over 12 months for continuation
of coverage under medical and dental plans for the executive. |
|
(14) |
|
Represents a lump sum payment equal to 1.25 times
Ms. Swans then current base salary at the time of her
termination plus an amount equal to 1.25 times the annual bonus
paid to Ms. Swan during fiscal 2006. |
|
(15) |
|
Represents amounts payable over 15 months for continuation
of coverage under medical and dental plans for Ms. Swan. |
Securities
Authorized for Issuance Under Our Equity Compensation
Plan
The following table provides information about the securities
authorized for issuance under our equity compensation plans as
of December 31, 2006.
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
securities
|
|
|
|
|
|
|
|
|
|
remaining available
|
|
|
|
|
|
|
|
|
|
for future issuance
|
|
|
|
|
|
|
|
|
|
under equity
|
|
|
|
Number of
|
|
|
|
|
|
compensation plans
|
|
|
|
securities to be
|
|
|
|
|
|
(excluding
|
|
|
|
issued upon
|
|
|
Weighted-average
|
|
|
securities
|
|
|
|
exercise of
|
|
|
exercise price of
|
|
|
reflected in column
|
|
|
|
outstanding options
|
|
|
outstanding options
|
|
|
(a))
|
|
Plan Category
|
|
(a)(1)
|
|
|
(b)
|
|
|
(c)(1)
|
|
|
Equity compensation plans approved
by security holders
|
|
|
3,141,890
|
|
|
$
|
7.03
|
|
|
|
132,363
|
|
|
|
|
(1) |
|
Includes information regarding the following
stockholder-approved equity compensation plans: (i) 2005
stock incentive plan and (ii) 2005 employee stock purchase
plan. The number of shares available for grant under the 2005
Stock Incentive Plan increased annually beginning in 2007 and
ending on the second day of fiscal year 2015 by an amount equal
to the lesser of (i) 600,000 shares, (ii) 3% of
the then outstanding shares of our common stock or (iii) a
number determined by the Board of Directors. NxStage has no
equity compensation plans that are not approved by security
holders. |
33
Director
Compensation
Under our non-employee director compensation policy, last
amended in March 2006, our non-employee directors receive:
|
|
|
|
|
a $15,000 annual retainer for their service as directors, to be
paid quarterly in advance;
|
|
|
|
$2,500 for each Board meeting attended by the director in
person, $1,000 for each Board meeting attended by telephone and
$1,000 for each committee meeting attended where the committee
meeting is scheduled on a date other than a Board meeting;
|
|
|
|
if he or she is a member of the Audit Committee, an additional
annual retainer of $6,000 (or $10,000 for the Audit Committee
Chair), paid quarterly in advance;
|
|
|
|
if he or she is a member of any committee other than the Audit
Committee, an additional annual retainer of $4,000 for each
other committee, paid quarterly in advance;
|
|
|
|
expense reimbursement for attending Board of Directors and
committee meetings; and
|
|
|
|
on the date of our annual meeting of stockholders at which a
non-employee director is elected, a fully vested stock option to
purchase 14,000 shares of our common stock with an exercise
price equal to the then fair market value of our common stock,
as determined by the closing price of our common stock on the
date of the annual meeting. For a director elected or otherwise
appointed to the Board of Directors on a date other than the
date of an annual meeting of stockholders, such director will
receive a fully vested stock option to purchase
14,000 shares of our common stock pro-rated for the period
between the date he or she is first elected to the Board and
May 31 of the year in which such director is elected or
appointed to our Board of Directors.
|
No director shall receive more than $50,000 in any calendar year
for Board fees, without the prior approval of the Compensation
Committee.
In March 2006, our Board of Directors amended our non-employee
director compensation policy so that directors may elect to
receive shares of our common stock in lieu of the cash
compensation described above. A director must make his election
to receive equity in lieu of cash compensation on the date of
the annual meeting of stockholders at which such director is
elected. A directors election to receive equity in lieu of
cash compensation will apply to all compensation to be paid
after the date of election and will remain in effect until the
next annual meeting of stockholders. If a non-employee director
elects to receive equity in lieu of cash, we will issue the
director shares of our common stock on the last business day of
each calendar quarter in an amount equal to the quotient of the
total cash consideration due as of the last business day of each
calendar quarter and the closing price of our common stock on
the last trading day of that quarter. Each of Dr. Chambon
and Messrs. Perper, Utterberg and Moore has elected to
receive shares of common stock in lieu of cash compensation for
their service on our Board of Directors. All shares of our
common stock issued to our directors in lieu of cash are issued
under our 2005 Stock Incentive Plan.
We do not compensate directors who are also employees for their
services as directors.
34
The following table sets forth information concerning the
compensation of our directors who are not also named executive
officers for the fiscal year ended December 31, 2006.
Director
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
Stock
|
|
|
|
|
|
|
Paid in Cash
|
|
Awards
|
|
Option Awards
|
|
Total
|
Name
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)(4)
|
|
($)
|
|
Philippe O. Chambon
|
|
|
|
|
|
|
33,000
|
|
|
|
60,678
|
|
|
|
93,678
|
|
Daniel A. Giannini
|
|
|
60,750
|
|
|
|
|
|
|
|
60,678
|
|
|
|
121,428
|
|
Reid S. Perper
|
|
|
7,000
|
|
|
|
25,000
|
|
|
|
60,678
|
|
|
|
92,678
|
|
David S. Utterberg
|
|
|
19,750
|
|
|
|
20,000
|
|
|
|
60,678
|
|
|
|
100,428
|
|
Peter P. Phildius
|
|
|
58,250
|
|
|
|
|
|
|
|
60,678
|
|
|
|
118,928
|
|
Craig W. Moore
|
|
|
35,250
|
|
|
|
33,000
|
|
|
|
60,678
|
|
|
|
128,928
|
|
|
|
|
(1) |
|
The fees earned by our non-employee directors in fiscal 2006
consist of the following: (i) an annual retainer,
(ii) $2,500 for each Board meeting attended by the director
in person, $1,000 for each Board meeting attended by telephone
and $1,000 for each committee meeting attended where the
committee meeting is scheduled on a date other than a Board
meeting date, and (iii) an annual fee for chairing and
being a member of each of the audit, compensation and nominating
and corporate governance committees. See footnote 2 below
for shares of common stock issued in lieu of this cash
compensation to certain of our directors. |
|
(2) |
|
The amounts in the Stock Awards column reflect the dollar amount
recognized as compensation cost for financial statement
reporting purposes for the fiscal year ended December 31,
2006 in accordance with FAS 123R. These shares were issued
pursuant to our non-employee director compensation policy, as
amended in March 2006, in connection with the election by each
of Messrs. Chambon, Perper, Utterberg and Moore to receive
shares of our common stock in lieu of cash compensation during
fiscal 2006. Accordingly, we issued shares of our common stock
to each of these directors as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash
|
|
Closing
|
|
|
|
|
|
|
|
|
Consideration
|
|
Price of
|
|
|
|
Total Shares of
|
|
|
|
|
Due as of
|
|
Common Stock
|
|
|
|
Common Stock
|
|
|
|
|
Last Business
|
|
on Last Trading
|
|
|
|
Issued In Lieu of
|
|
|
|
|
Day of Quarter
|
|
Day of Quarter
|
|
Equity
|
|
Cash Consideration
|
Name
|
|
Quarter Ending
|
|
($)
|
|
($)
|
|
Issuance Date
|
|
(#)
|
|
Philippe O. Chambon
|
|
|
6/30/2006
|
|
|
|
3,500
|
|
|
|
8.73
|
|
|
|
6/30/2006
|
|
|
|
400
|
|
|
|
|
9/30/2006
|
|
|
|
11,750
|
|
|
|
8.77
|
|
|
|
9/30/2006
|
|
|
|
1,339
|
|
|
|
|
12/31/2006
|
|
|
|
17,750
|
|
|
|
8.38
|
|
|
|
12/29/2006
|
|
|
|
2,118
|
|
Reid S. Perper
|
|
|
6/30/2006
|
|
|
|
1,000
|
|
|
|
8.73
|
|
|
|
6/30/2006
|
|
|
|
114
|
|
|
|
|
9/30/2006
|
|
|
|
8,750
|
|
|
|
8.77
|
|
|
|
9/30/2006
|
|
|
|
997
|
|
|
|
|
12/31/2006
|
|
|
|
15,250
|
|
|
|
8.38
|
|
|
|
12/29/2006
|
|
|
|
1,819
|
|
David S. Utterberg
|
|
|
6/30/2006
|
|
|
|
|
|
|
|
8.73
|
|
|
|
6/30/2006
|
|
|
|
|
|
|
|
|
9/30/2006
|
|
|
|
8,750
|
|
|
|
8.77
|
|
|
|
9/30/2006
|
|
|
|
997
|
|
|
|
|
12/31/2006
|
|
|
|
11,250
|
|
|
|
8.38
|
|
|
|
12/29/2006
|
|
|
|
1,342
|
|
Craig W. Moore
|
|
|
6/30/2006
|
|
|
|
2,500
|
|
|
|
8.73
|
|
|
|
6/30/2006
|
|
|
|
286
|
|
|
|
|
9/30/2006
|
|
|
|
12,250
|
|
|
|
8.77
|
|
|
|
9/30/2006
|
|
|
|
1,396
|
|
|
|
|
12/31/2006
|
|
|
|
18,250
|
|
|
|
8.38
|
|
|
|
12/29/2006
|
|
|
|
2,177
|
|
|
|
|
(3) |
|
The amounts in the Option Awards column reflect the dollar
amount recognized as compensation cost for financial statement
reporting purposes for the fiscal year ended December 31,
2006, in accordance with FAS 123R of stock options granted
under our equity plans and may include amounts from stock
options granted in and prior to 2006. There can be no assurance
that the FAS 123R amounts will ever be realized. The
assumptions we used to calculate these amounts are included in
footnote 2 to our audited financial statements for the
fiscal year ended December 31, 2006 included in our Annual
Report on
Form 10-K
filed with the SEC on March 16, 2007. |
35
|
|
|
(4) |
|
On May 30, 2006, the day of our 2006 annual meeting of
stockholders, we granted each of our non-employee directors an
option to purchase 14,000 shares of our common stock, each
with an exercise price equal to $10.83 per share, the closing
price of our common stock on the date of the 2006 annual
meeting. All such options were immediately exercisable on the
date of grant. |
Compensation
Committee Interlocks and Insider Participation
The current members of the Compensation Committee are
Messrs. Phildius and Moore and Dr. Chambon. No member
of the Compensation Committee was at any time during fiscal
2006, or formerly, an officer or employee of ours or any
subsidiary of ours, nor has any member of the Compensation
Committee had any relationship with us requiring disclosure
under Item 404 of
Regulation S-K
under the Exchange Act.
No executive officer of NxStage has served as a director or
member of the compensation committee (or other committee serving
an equivalent function) of any other entity, one of whose
executive officers served as a director of or member of our
Compensation Committee.
PROPOSAL 2
AMENDMENT OF OUR 2005 EMPLOYEE STOCK PURCHASE PLAN
Our Board of Directors believes that the proposed increase in
the number of shares of our common stock available for issuance
under the 2005 Employee Stock Purchase Plan is in the best
interests of NxStage and the best interests of our stockholders
and recommends a vote FOR this proposal.
We are asking stockholders to approve an amendment to our 2005
Employee Stock Purchase Plan, or 2005 purchase plan, to increase
the number of shares of our common stock which may be issued
under the 2005 purchase plan by an additional
50,000 shares. Our Board of Directors approved this
amendment on April 26, 2007, subject to stockholder
approval. The 2005 purchase plan allows our employees to
purchase our common stock at a discount from market price twice
each year from us through one or more offerings. The 2005
purchase plan is intended to qualify as an employee stock
purchase plan under Section 423 of the Internal Revenue
Code of 1986. If the plan is qualified under Section 423,
our employees who participate in the plan may enjoy certain tax
advantages, as described below. Stockholder approval is required
for the plan to be qualified under Section 423. To approve
this amendment, stockholders holding a majority of the shares
present or represented at the annual meeting and voting on the
matter must vote FOR proposal 2.
Reasons
for the Proposal
We believe that the 2005 purchase plan is an important benefit
which helps us attract and retain employees, as well as to
encourage our employees participation in and commitment to
our business and financial success through ownership of our
stock. Employee participation in this plan has been strong to
date, with nearly forty percent (40%) of all employees
participating in the 2005 purchase plan. Based on current
employee participation levels, we anticipate that we will be
unable to continue to offer shares under our 2005 purchase plan
following the expiration of our third plan offering period on
June 30, 2007. On January 1, 2007, there were
21,697 shares of common stock available for issuance under
the 2005 purchase plan, and at June 30, 2007, we anticipate
that there will be less than 4,000 shares remaining, unless
the proposed increase is approved.
Summary
of the 2005 Employee Stock Purchase Plan
The following is a summary of the material terms of our 2005
purchase plan.
Administration. The 2005 purchase plan is
administered by our Compensation Committee. Our Compensation
Committee interprets and construes all provisions of the 2005
purchase plan and any rules and regulations adopted for the
administration of the plan.
Offerings. We may make one or more offerings
to employees to purchase our common stock under the plan, as
determined by the Compensation Committee. Unless otherwise
specified by our Compensation Committee, offerings will begin
each January 1 and July 1, or the first business day
thereafter. Each offering
36
commencement date will begin a six-month plan period
during which payroll deductions will be made and held for the
purchase of common stock at the end of the plan period.
Eligibility. All employees of NxStage or any
NxStage subsidiary designated by the Compensation Committee are
eligible to participate in the 2005 purchase plan if:
|
|
|
|
|
they are customarily employed by NxStage or a designated
subsidiary for more than 20 hours per week and for more
than three months in a calendar year;
|
|
|
|
they have been employed by NxStage or a designated subsidiary
for at least three months prior to enrolling in the
plan; and
|
|
|
|
they are employed by NxStage or a designated subsidiary on the
first day of the applicable plan period.
|
An employee may not participate in the 2005 purchase plan if,
immediately after the grant, the employee would own stock,
and/or hold
outstanding options to purchase stock, equal to five percent
(5%) or more of the total combined voting power or value of all
classes of our stock. As of December 31, 2006, 165
employees were eligible to participate in the 2005 purchase
plan. Non-employee directors are not eligible to participate in
this plan.
Since its inception, our Chief Executive Officer, our current
and former Chief Financial Officers and each of our three other
most highly compensated executive officers, have not
participated in the 2005 purchase plan.
Shares Available. 50,000 shares of
our common stock have previously been approved for issuance
under the 2005 purchase plan. During 2006, 28,303 shares
were issued pursuant to the plan and currently
21,697 shares of common stock are available for issuance.
At June 30, 2007, it is anticipated that less than
4,000 shares will be available for issuance under the Plan
unless the proposed increase is approved.
Payroll Deductions. An employee may authorize
a payroll deduction under the 2005 purchase plan equal in any
dollar amount up to a maximum of 10% of the compensation he or
she received during the applicable plan period. Payroll
deductions may be at the rate of 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%,
9% or 10% of compensation. Our Compensation Committee may
establish a minimum payroll deduction amount for any plan period.
Limitations. No employee may purchase in any
one calendar year under the 2005 Purchase Plan (and any other
employer stock purchase plan that we may establish)
shares of our common stock having an aggregate fair market value
in excess of $25,000, determined, as to shares purchased during
each plan period in such calendar year, as of the first trading
day of such plan period.
Purchase Price. On the commencement date of
each offering, we will grant each participant in the 2005
purchase plan an option to purchase on the last day of the plan
period the largest number of full shares of our common stock
that does not exceed the participants accumulated payroll
deductions as of the exercise date divided by the option price
for the plan period. Our Compensation Committee will determine
the option price for each plan period. The option price may be
based on the lesser of the closing price of our common stock on
(i) the first business day of the plan period or
(ii) the exercise date, or may be based solely on the
closing price of our common stock on the exercise date;
provided, however, that such option price for each share
purchased will be at least 85% of the applicable closing price.
In the absence of a determination by our Compensation Committee,
the option price will be 95% of the closing price of our common
stock the date of exercise.
Amendment. Our Compensation Committee may at
any time amend the 2005 purchase plan in any respect, except
that if the approval of our stockholders is required under
Section 423 of the Internal Revenue Code, the amendment
will not be effected without their approval, and in no event may
any amendment be made which would cause the plan to fail to
comply with Section 423 of the Internal Revenue Code.
Adjustments for Changes in Capitalization and Reorganization
Events. Appropriate adjustments will be made to
the number of shares available under the 2005 purchase plan,
applicable option prices and applicable purchase limitations in
the event of a stock split, dividend or similar changes in our
capitalization. In the event
37
of a merger, consolidation or other reorganization event, our
Compensation Committee is authorized to take any one or more of
the following actions as to outstanding options under the 2005
purchase plan:
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provide that options will be assumed, or substantially
equivalent options will be substituted, by the acquiring or
succeeding corporation;
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provide that all outstanding options will be terminated as of
the effective date of the merger, consolidation or other
reorganization event, and that all such outstanding options will
become exercisable to the extent of accumulated payroll
deductions as of a date specified by the Compensation Committee;
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provide that all outstanding options will be cancelled as of a
date prior to the effective date of the merger, consolidation or
other reorganization event and that all accumulated payroll
deductions will be returned to participants on such
date; and
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upon the occurrence of certain reorganization events, provide
that participants will receive a cash payment equal to the
acquisition price times the number of shares of common stock
subject to the participants option minus the aggregate
option price of such option, in exchange for the termination of
such option.
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Federal
Income Tax Consequences
The following is a summary of the federal income tax
consequences that generally apply to U.S. employees who
participate in the 2005 purchase plan as well as the tax
consequences to us. Changes to the tax laws could alter the tax
consequences described below. This summary assumes that all
awards are exempt from, or comply with, section 409A of the
Code relating to nonqualified deferred compensation.
Tax Consequences to the Employee. Generally,
U.S. employees will not have income when they enroll in the
2005 purchase plan or when they purchase shares of common stock
at the end of an offering. Employees may have both ordinary
compensation income and a capital gain or loss when they sell
stock acquired under the plan. The amount and type of income and
loss will depend on when the employee sells his or her shares.
If shares of stock are sold at a profit (the sales proceeds
exceed the purchase price) more than two years after the
commencement of the offering during which the employee purchased
the stock and more than one year after the date that the
employee purchased the stock, then the employee will have
compensation income equal to the lesser of:
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5% of the value of the stock on the exercise date; and
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the employees profit.
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Any excess profit will be long-term capital
gain. If the employee sells the stock at a loss
after satisfying these waiting periods, then the loss will be a
long-term capital loss.
If the employee sells the stock prior to satisfying these
waiting periods, then the employee will have engaged in a
disqualifying disposition. Upon a disqualifying disposition, the
employee will have compensation income equal to the value of the
stock on the day he or she purchased the stock less the purchase
price. The employee also will have a capital gain or loss equal
to the difference between his or her sales proceeds and the
value of the stock on the day he or she purchased the stock.
This capital gain or loss will be long-term if the employee has
held the stock for more than one year and otherwise will be
short-term.
Withholding. The amount that an employee
elects to have deducted from his or her base pay for the
purchase of stock under the 2005 purchase plan constitutes
compensation income and is subject to withholding for income,
medicare and social security taxes, as applicable. There is no
withholding of income, medicare or social security taxes upon
the purchase of stock under the 2005 purchase plan or upon the
sale of stock acquired under the plan.
Tax Consequences to NxStage. There will be no
tax consequences to us except that we will be entitled to a
deduction when an employee has compensation income upon a
disqualifying disposition. Any such deduction will be subject to
the limitations of Section 162(m) of the Code.
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PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors believes that the selection of
Ernst & Young LLP as our independent registered public
accounting firm is in the best interest of NxStage and our
stockholders and therefore recommends a vote FOR this
proposal.
Our Audit Committee has selected the firm of Ernst &
Young LLP as our independent registered public accounting firm
for the current fiscal year. Ernst & Young LLP has
served as our independent registered public accounting firm
since 2002. Although stockholder approval of the selection of
Ernst & Young LLP is not required by law, the Board of
Directors believes that it is advisable to give stockholders an
opportunity to ratify this selection. If this proposal is not
approved at our annual meeting, our Audit Committee will
reconsider its selection of Ernst & Young LLP.
Representatives of Ernst & Young LLP are expected to be
present at the annual meeting and will have the opportunity to
make a statement if they desire to do so and will also be
available to respond to appropriate questions from stockholders.
OTHER
MATTERS
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors,
executive officers and holders of more than 10% of our common
stock to file with the SEC initial reports of ownership and
reports of changes in ownership of common stock and other of our
equity securities. Based solely on our review of copies of
Section 16(a) reports furnished to us and representations
made to us, we believe that, except as otherwise set forth in
the following sentence, during 2006 our officers, directors and
holders of more than 10% of our common stock complied with all
Section 16(a) filing requirements. On May 15, 2006,
Mr. Gill filed a Form 4 reporting the grant of
restricted common stock on May 10, 2006.
Delivery
of Security Holder Documents
Some banks, brokers and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
our proxy statement and Annual Report to Stockholders may have
been sent to multiple stockholders in your household. We will
promptly deliver a separate copy of either document to you if
you call or write us at the following address: 439 South Union
Street, 5th Floor, Lawrence, Massachusetts 01843,
Attention: Investor Relations. If you want to receive separate
copies of the proxy statement or Annual Report to Stockholders
in the future, or if you are receiving multiple copies and would
like to receive only one copy for your household, you should
contact your bank, broker or other nominee record holder, or you
may contact us at the above address.
Stockholder
Proposals for the 2008 Annual Meeting
Proposals of stockholders intended to be presented at the 2008
Annual Meeting of Stockholders must be received by us at our
principal office in Lawrence, Massachusetts not later than
January 1, 2008 for inclusion in the proxy statement for
that meeting.
In addition, our bylaws require that we be given advance notice
of stockholder nominations for election to our Board of
Directors and of other matters which stockholders wish to
present for action at an annual meeting of stockholders, other
than matters included in our proxy statement in accordance with
Rule 14a-8.
The required notice must be in writing and received by our
Corporate Secretary, Winifred L. Swan, at our principal offices
not later than 90 days nor more than 120 days prior to
the first anniversary of our 2007 Annual Meeting of
Stockholders. However, if the 2008 Annual Meeting of
Stockholders is advanced by more than 20 days, or delayed
by more than 60 days, from the first anniversary of the
2007 Annual Meeting of Stockholders, notice must be received not
earlier than the 120th day prior to such annual meeting and
not later than the close of business on the later of
(1) the 90th day prior to such annual meeting and
(2) the 10th day following the date on which notice of
the date of such annual meeting was mailed or public disclosure
of the
39
date of such annual meeting was made, whichever occurs first.
Our bylaws also specify requirements relating to the content of
the notice which stockholders must provide, including a
stockholder nomination for election to the Board of Directors,
to be properly presented at the 2008 Annual Meeting of
Stockholders.
By Order of the Board of Directors,
WINIFRED L. SWAN
Secretary
April 30, 2007
OUR BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL GREATLY FACILITATE
ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED.
40
Appendix A
NxSTAGE
MEDICAL, INC.
2005 EMPLOYEE STOCK PURCHASE PLAN
The purpose of this Plan is to provide eligible employees of
NxStage Medical, Inc. (the Company) and certain of
its subsidiaries with opportunities to purchase shares of the
Companys common stock, $.001 par value (the
Common Stock), commencing January 1, 2006 (the
Commencement Date). An aggregate of
50,000 shares of Common Stock have been approved for this
purpose. This Plan is intended to qualify as an employee
stock purchase plan as defined in Section 423 of the
Internal Revenue Code of 1986, as amended (the
Code), and the regulations promulgated thereunder,
and shall be interpreted consistent therewith.
1. Administration. The Plan will
be administered by the Companys Board of Directors (the
Board) or by a Committee appointed by the Board (the
Committee). The Board or the Committee has authority
to make rules and regulations for the administration of the Plan
and its interpretation and decisions with regard thereto shall
be final and conclusive.
2. Eligibility. All employees of
the Company, including Directors who are employees, and all
employees of any subsidiary of the Company (as defined in
Section 424(f) of the Code) designated by the Board or the
Committee from time to time (a Designated
Subsidiary), are eligible to participate in any one or
more of the offerings of Options (as defined in
Section 9) to purchase Common Stock under the Plan
provided that:
(a) they are customarily employed by the Company or a
Designated Subsidiary for more than 20 hours a week and for
more than three months in a calendar year; and
(b) they have been employed by the Company or a Designated
Subsidiary for at least three months prior to enrolling in the
Plan; and
(c) they are employees of the Company or a Designated
Subsidiary on the first day of the applicable Plan Period (as
defined below).
No employee may be granted an option hereunder if such employee,
immediately after the option is granted, owns 5% or more of the
total combined voting power or value of the stock of the Company
or any subsidiary. For purposes of the preceding sentence, the
attribution rules of Section 424(d) of the Code shall apply
in determining the stock ownership of an employee, and all stock
which the employee has a contractual right to purchase shall be
treated as stock owned by the employee.
3. Offerings. The Company will
make one or more offerings (Offerings) to employees
to purchase stock under this Plan. Offerings will begin each
January 1 and July 1, or the first business day thereafter
(the Offering Commencement Dates). Each Offering
Commencement Date will begin a six-month period (a Plan
Period) during which payroll deductions will be made and
held for the purchase of Common Stock at the end of the Plan
Period. The Board or the Committee may, at its discretion,
choose a different Plan Period of twelve (12) months or
less for subsequent Offerings.
4. Participation. An employee
eligible on the Offering Commencement Date of any Offering may
participate in such Offering by completing and forwarding a
payroll deduction authorization form to the employees
appropriate payroll office at least five business days prior to
the applicable Offering Commencement Date. The form will
authorize a regular payroll deduction from the Compensation
received by the employee during the Plan Period. Unless an
employee files a new form or withdraws from the Plan, his
deductions and purchases will continue at the same rate for
future Offerings under the Plan as long as the Plan remains in
effect. The term Compensation means the amount of
money reportable on the employees Federal Income Tax
Withholding Statement, excluding overtime, shift premium,
incentive or bonus awards, allowances and reimbursements for
expenses such as relocation allowances for travel expenses,
income or gains on the exercise of Company stock options or
stock appreciation rights, and similar items, whether or not
shown on the employees Federal Income Tax Withholding
Statement, but including, in the case of salespersons, sales
commissions to the extent determined by the Board or the
Committee.
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5. Deductions. The Company will
maintain payroll deduction accounts for all participating
employees. With respect to any Offering made under this Plan, an
employee may authorize a payroll deduction in any dollar amount
up to a maximum of 10% of the Compensation he or she receives
during the Plan Period or such shorter period during which
deductions from payroll are made. Payroll deductions may be at
the rate of 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9% or 10% of
Compensation with any change in compensation during the Plan
Period to result in an automatic corresponding change in the
dollar amount withheld. The minimum payroll deduction is such
percentage of compensation as may be established from time to
time by the Board or the Committee.
6. Deduction Changes. An employee
may decrease or discontinue his payroll deduction once during
any Plan Period, by filing a new payroll deduction authorization
form. However, an employee may not increase his payroll
deduction during a Plan Period. If an employee elects to
discontinue his payroll deductions during a Plan Period, but
does not elect to withdraw his funds pursuant to Section 8
hereof, funds deducted prior to his election to discontinue will
be applied to the purchase of Common Stock on the Exercise Date
(as defined below).
7. Interest. Interest will not be
paid on any employee accounts, except to the extent that the
Board or the Committee, in its sole discretion, elects to credit
employee accounts with interest at such per annum rate as it may
from time to time determine.
8. Withdrawal of Funds. An
employee may at any time prior to the close of business on the
last business day in a Plan Period and for any reason
permanently draw out the balance accumulated in the
employees account and thereby withdraw from participation
in an Offering. Partial withdrawals are not permitted. The
employee may not begin participation again during the remainder
of the Plan Period. The employee may participate in any
subsequent Offering in accordance with terms and conditions
established by the Board or the Committee.
9. Purchase of Shares.
(a) Number of Shares. On the
Offering Commencement Date of each Plan Period, the Company will
grant to each eligible employee who is then a participant in the
Plan an option (Option) to purchase on the last
business day of such Plan Period (the Exercise Date)
at the applicable purchase price (the Option Price)
the largest number of whole shares of Common Stock of the
Company as does not exceed the employees accumulated
payroll deductions as of the Exercise Date divided by the Option
Price for such Plan Period; provided, however, that no employee
may be granted an Option which permits his rights to purchase
Common Stock under this Plan and any other employee stock
purchase plan (as defined in Section 423(b) of the Code) of
the Company and its subsidiaries, to accrue at a rate which
exceeds $25,000 of the fair market value of such Common Stock
for each calendar year in which the Option is outstanding at any
time.
(b) Option Price. The Board or the
Committee shall determine the Option Price for each Plan Period,
including whether such Option Price shall be determined based on
the lesser of (i) the closing price of the Common Stock on
the first business day of the Plan Period or (ii) the
Exercise Date, or shall be based solely on the closing price of
the Common Stock on the Exercise Date; provided, however, that
such Option Price shall be at least 85% of the applicable
closing price. In the absence of a determination by the Board or
the Committee, the Option Price will be 95% of the closing price
of the Common Stock on the Exercise Date. The closing price
shall be (x) the closing price on any national securities
exchange on which the Common Stock is listed, (y) the
closing price of the Common Stock on the Nasdaq National Market
or (z) the average of the closing bid and asked prices in
the
over-the-counter-market,
whichever is applicable, as published in The Wall Street
Journal. If no sales of Common Stock were made on such a day,
the price of the Common Stock for purposes of
clauses (x) and (y) above shall be the reported
price for the next preceding day on which sales were made.
(c) Exercise of Option. Each
employee who continues to be a participant in the Plan on the
Exercise Date shall be deemed to have exercised his Option at
the Option Price on such date and shall be deemed to have
purchased from the Company the number of whole shares of Common
Stock reserved for
A-2
the purpose of the Plan that his accumulated payroll deductions
on such date will pay for, but not in excess of the maximum
number determined in the manner set forth above.
(d) Return of Unused Payroll
Deductions. Any balance remaining in an
employees payroll deduction account at the end of a Plan
Period will be automatically refunded to the employee, except
that any balance which is less than the purchase price of one
share of Common Stock will be carried forward into the
employees payroll deduction account for the following
Offering, unless the employee elects not to participate in the
following Offering under the Plan, in which case the balance in
the employees account shall be refunded.
10. Issuance of
Certificates. Certificates representing
shares of Common Stock purchased under the Plan may be issued
only in the name of the employee, in the name of the employee
and another person of legal age as joint tenants with rights of
survivorship, or (in the Companys sole discretion) in the
name of a brokerage firm, bank or other nominee holder
designated by the employee. The Company may, in its sole
discretion and in compliance with applicable laws, authorize the
use of book entry registration of shares in lieu of issuing
stock certificates.
11. Rights on Retirement, Death or Termination of
Employment. In the event of a participating
employees termination of employment prior to the last
business day of a Plan Period, no payroll deduction shall be
taken from any pay due and owing to an employee and the balance
in the employees account shall be paid to the employee or,
in the event of the employees death, (a) to a
beneficiary previously designated in a revocable notice signed
by the employee (with any spousal consent required under state
law) or (b) in the absence of such a designated
beneficiary, to the executor or administrator of the
employees estate or (c) if no such executor or
administrator has been appointed to the knowledge of the
Company, to such other person(s) as the Company may, in its
discretion, designate. If, prior to the last business day of the
Plan Period, the Designated Subsidiary by which an employee is
employed shall cease to be a subsidiary of the Company, or if
the employee is transferred to a subsidiary of the Company that
is not a Designated Subsidiary, the employee shall be deemed to
have terminated employment for the purposes of this Plan.
12. Optionees Not
Stockholders. Neither the granting of an
Option to an employee nor the deductions from his pay shall
constitute such employee a stockholder of the shares of Common
Stock covered by an Option under this Plan until such shares
have been purchased by and issued to him.
13. Rights Not
Transferable. Rights under this Plan are not
transferable by a participating employee other than by will or
the laws of descent and distribution, and are exercisable during
the employees lifetime only by the employee.
14. Application of Funds. All
funds received or held by the Company under this Plan may be
combined with other corporate funds and may be used for any
corporate purpose.
15. Adjustment for Changes in Common Stock and
Certain Other Events.
(a) Changes in Capitalization. In
the event of any stock split, reverse stock split, stock
dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in
capitalization or event, or any distribution to holders of
Common Stock other than an ordinary cash dividend, (i) the
number and class of securities available under this Plan,
(ii) the share limitations set forth in Section 9, and
(iii) the Option Price shall be appropriately adjusted to
the extent determined by the Board or the Committee.
(b) Reorganization Events.
(1) Definition. A
Reorganization Event shall mean: (a) any merger
or consolidation of the Company with or into another entity as a
result of which all of the Common Stock of the Company is
converted into or exchanged for the right to receive cash,
securities or other property or is cancelled, (b) any
exchange of all of the Common Stock of the Company for cash,
securities or other property pursuant to a share exchange
transaction or (c) any liquidation or dissolution of the
Company.
A-3
(2) Consequences of a Reorganization Event on
Options. In connection with a Reorganization
Event, the Board or the Committee shall take any one or more of
the following actions as to outstanding Options on such terms as
the Board or the Committee determines: (i) provide that
Options shall be assumed, or substantially equivalent Options
shall be substituted, by the acquiring or succeeding corporation
(or an affiliate thereof), (ii) upon written notice to
employees, provide that all outstanding Options will be
terminated as of the effective date of the Reorganization Event
and that all such outstanding Options will become exercisable to
the extent of accumulated payroll deductions as of a date
specified by the Board or the Committee in such notice, which
date shall not be less than ten (10) days preceding the
effective date of the Reorganization Event, (iii) upon
written notice to employees, provide that all outstanding
Options will be cancelled as of a date prior to the effective
date of the Reorganization Event and that all accumulated
payroll deductions will be returned to participating employees
on such date, (iv) in the event of a Reorganization Event
under the terms of which holders of Common Stock will receive
upon consummation thereof a cash payment for each share
surrendered in the Reorganization Event (the Acquisition
Price), make or provide for a cash payment to an employee
equal to (A) the Acquisition Price times the number of
shares of Common Stock subject to the employees Option (to
the extent the Option Price does not exceed the Acquisition
Price) minus (B) the aggregate Option Price of such Option,
in exchange for the termination of such Option, (v) provide
that, in connection with a liquidation or dissolution of the
Company, Options shall convert into the right to receive
liquidation proceeds (net of the Option Price thereof) and
(vi) any combination of the foregoing.
For purposes of clause (i) above, an Option shall be
considered assumed if, following consummation of the
Reorganization Event, the Option confers the right to purchase,
for each share of Common Stock subject to the Option immediately
prior to the consummation of the Reorganization Event, the
consideration (whether cash, securities or other property)
received as a result of the Reorganization Event by holders of
Common Stock for each share of Common Stock held immediately
prior to the consummation of the Reorganization Event (and if
holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if
the consideration received as a result of the Reorganization
Event is not solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for
the consideration to be received upon the exercise of Options to
consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in value (as
determined by the Board) to the per share consideration received
by holders of outstanding shares of Common Stock as a result of
the Reorganization Event.
16. Amendment of the Plan. The
Board may at any time, and from time to time, amend this Plan in
any respect, except that (a) if the approval of any such
amendment by the shareholders of the Company is required by
Section 423 of the Code, such amendment shall not be
effected without such approval, and (b) in no event may any
amendment be made which would cause the Plan to fail to comply
with Section 423 of the Code.
17. Insufficient Shares. In the
event that the total number of shares of Common Stock specified
in elections to be purchased under any Offering plus the number
of shares purchased under previous Offerings under this Plan
exceeds the maximum number of shares issuable under this Plan,
the Board or the Committee will allot the shares then available
on a pro rata basis.
18. Termination of the Plan. This
Plan may be terminated at any time by the Board. Upon
termination of this Plan all amounts in the accounts of
participating employees shall be promptly refunded.
19. Governmental Regulations. The
Companys obligation to sell and deliver Common Stock under
this Plan is subject to listing on a national stock exchange or
quotation on the Nasdaq National Market (to the extent the
Common Stock is then so listed or quoted) and the approval of
all governmental authorities required in connection with the
authorization, issuance or sale of such stock.
20. Governing Law. The Plan shall
be governed by Delaware law except to the extent that such law
is preempted by federal law.
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21. Issuance of Shares. Shares may
be issued upon exercise of an Option from authorized but
unissued Common Stock, from shares held in the treasury of the
Company, or from any other proper source.
22. Notification upon Sale of
Shares. Each employee agrees, by entering the
Plan, to promptly give the Company notice of any disposition of
shares purchased under the Plan where such disposition occurs
within two years after the date of grant of the Option pursuant
to which such shares were purchased.
23. Withholding. Each employee
shall, no later than the date of the event creating the tax
liability, make provision satisfactory to the Board for payment
of any taxes required by law to be withheld in connection with
any transaction related to Options granted to or shares acquired
by such employee pursuant to the Plan. The Company may, to the
extent permitted by law, deduct any such taxes from any payment
of any kind otherwise due to an employee.
24. Effective Date and Approval of
Shareholders. The Plan shall take effect on
the Commencement Date subject to approval by the shareholders of
the Company as required by Section 423 of the Code, which
approval must occur within twelve months of the adoption of the
Plan by the Board.
Adopted by the Board of Directors
on September 7, 2005
Approved by the stockholders on
October 14, 2005
A-5
AMENDMENT
NO. 1 TO
2005 EMPLOYEE STOCK PURCHASE
OF
NxSTAGE MEDICAL, INC.
The 2005 Employee Stock Purchase Plan (the Plan) of
NxStage Medical, Inc. be, and hereby is, amended such that the
second sentence of the first paragraph of the Plan is deleted in
its entirety and the following sentence is substituted in its
place: An aggregate of 100,000 shares of Common Stock
have been approved for this purpose.
Except as set forth above, the remainder of the Plan remains in
full force and effect.
Adopted by the Board of Directors on April 26, 2007.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NXSTAGE MEDICAL, INC.
2007 ANNUAL MEETING OF STOCKHOLDERS
MAY 30, 2007
Those signing on the reverse side, revoking any prior proxies, hereby appoint(s) Robert S.
Brown and Winifred L. Swan, or each of them, with full power of substitution, as proxies for those
signing on the reverse side to act and vote at the 2007 Annual Meeting of Stockholders of NxStage
Medical, Inc. and at any adjournments thereof as indicated upon all matters referred to on the
reverse side and described in the proxy statement for the annual meeting, and, in their discretion,
upon any other matters which may properly come before the Annual Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED STOCKHOLDER.
IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON
THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR PROPOSAL NUMBERS 2 AND 3.
Please sign this proxy exactly as your name appears hereon. Joint owners should each sign
personally. Trustees and other fiduciaries should indicate the capacity in which they sign. If a
corporation or partnership, this signature should be that of an authorized officer who should state
his or her title.
UNLESS YOU INTEND TO VOTE YOUR SHARES BY INTERNET OR
TELEPHONE, PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD
PROMPTLY IN ENCLOSED REPLY ENVELOPE
ADDRESS CHANGES/COMMENTS?
(If you noted any address changes/comments above, please mark corresponding box on other side)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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NXSTAGE
439 SOUTH UNION ST., 5th FLR
LAWRENCE, MA 01843
ATTN:
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VOTE BY
INTERNETwww.investorvote.com. Use the Internet to
transmit your voting instructions and for electronic delivery of information up
until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you access the website and follow the instructions
to obtain your records and to create an electronic voting instruction form. |
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VOTE BY PHONE 1-800-652-VOTE (8683)
Use any touch-tone telephone to
transmit your voting instructions
up until 11:59 p.m. Eastern Time
the day before the cut-off date or
meeting date. Have your proxy
card in hand when you call and
then follow the instructions. |
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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 NxStage
Medical, Inc., c/o Computershare Investor Services, PO Box 43010,
Providence, RI 02940-3010 |
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TO VOTE, MARK BLOCKS IN BLUE OR BLACK
INK AS FOLLOWS
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KEEP THIS PORTION FOR
YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
A VOTE FOR THE DIRECTOR NOMINEE AND FOR PROPOSALS NUMBERED 2 AND 3 IS
RECOMMENDED BY THE BOARD OF DIRECTORS
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For |
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Withhold |
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For All Except |
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1.
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Election of Directors
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To withhold authority to vote, mark For All Except and write the nominees number on the line below. The shares will be voted for the remaining nominee(s).
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NOMINEES |
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(01) Jeffrey H. Burbank |
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(02) Philippe O. Chambon |
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(03) Daniel A. Giannini |
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(04) Craig W. Moore |
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(05) Reid S. Perper |
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(06) Peter P. Phildius |
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(07) David S. Utterberg |
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FOR |
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AGAINST |
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ABSTAIN |
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2.
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To amend our 2005 Employee Stock Purchase
Plan to increase the number of shares of our
common stock which may be issued pursuant to
the plan by an additional 50,000 shares.
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FOR |
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AGAINST |
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ABSTAIN |
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3.
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To ratify the selection of Ernst & Young
LLP as our independent registered public
accounting firm for 2007.
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4.
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To transact such other business as may
properly come before the meeting or any
adjournment thereof.
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For address changes/comments, please check this box and write them on the back where indicated |
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Signature: |
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Date: |
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Signature: |
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Date: |
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