HOLOGIC, INC. (NASDAQ:HOLX) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersItem 5.02
On November1, 2017, the independent members of the Board of Directors of Hologic, Inc. (the “Company” or “Hologic”) unanimously approved a special performance-based retention equity grant to Stephen P. MacMillan, the Company’s Chairman, President and Chief Executive Officer.
Mr.MacMillan has led a dramatic turnaround of Hologic since joining in December 2013. The Company’s performance has increased significantly under his leadership and he personally has recruited a large number of leaders to the Company. In light of his long track record of success, other larger medical device companies have expressed interest over time in retaining him to serve as Chief Executive Officer. Mr.MacMillan recently received such an offer from a large medical device company. The independent members of the Company’s Board of Directors considered the potential for disruption to Hologic and its business should Mr.MacMillan leave, and determined that it was in the best interests of Hologic and its stockholders to retain him as Chairman, President and Chief Executive Officer. Accordingly, the independent members of the Board, after careful consideration and discussions with Mr.MacMillan and the Compensation Committee’s compensation consultant, awarded him a special retention equity grant, all of which is performance-based. He has formally declined the other more substantial offer, reaffirmed his full commitment to Hologic, and will remain as Chairman, President and Chief Executive Officer of Hologic.
The special retention equity grant will have an effective date of December1, 2017, the same effective date as the Company’s annual equity grants for fiscal 2018. The grant consists of:
| • | $20 million in the form of performance share units (“PSUs”): |
| • | 50% of which will be subject to return on invested capital performance metrics (the “ROIC PSUs); and |
| • | 50% of which will be subject to relative total shareholder return performance metrics (the “TSR PSUs); and |
| • | $10 million in the form of options that vest in four equal installments over four years. |
The PSUs and options will be subject to the same terms and conditions, including targets, as the Company’s annual equity grants for fiscal 2018. The option agreement evidencing this award will be in the same form as the option agreement adopted in fiscal 2017, filed on November9, 2017 on Form 8-K. The forms of PSU agreements evidencing this award, as well as the fiscal 2018 PSU grants, will be filed on a Current Report on Form 8-K following the Compensation Committee’s approval of the fiscal 2018 PSU performance scales.
The dollar values above will be converted into the applicable awards based on: (i)the closing price, per share of the Company’s common stock on the NASDAQ Stock Market on December1, 2017, in the case of the ROIC PSUs, (ii)the per share fair value as of December1, 2017, determined by application of a Monte Carlo valuation analysis, in the case of the TSR PSUs, and (iii)a binomial model to determine fair value, derived using the closing price per share of the Company’s common stock on the NASDAQ Stock Market on December1, 2017, in the case of the options.
The ROIC PSUs would vest only if the Company achieves a pre-determined average ROIC threshold at the end of a three-year performance period. If the Company fails to achieve the minimum three-year average ROIC threshold, none of the ROIC PSUs will vest, and all will be forfeited. If the target three-year average ROIC goal is achieved, 50% of the ROIC PSUs granted will vest. The maximum payout for ROIC PSUs is limited to 200% of the target number of ROIC PSUs granted and is earned only if the Company achieves the maximum three-year average ROIC goal.
The TSR PSUs would vest only if the Company achieves a pre-determined minimum three-year relative TSR rank for the three-year performance period. If the Company fails to achieve the minimum three-year relative TSR rank, none of the TSR PSUs will vest, and all will be forfeited. If the target three-year average relative TSR rank is achieved, 50% of the TSR PSUs granted will vest. The maximum payout for the TSR PSUs is limited to 200% of the target number of TSR PSUs granted and is earned only if the Company achieves the maximum three-year relative TSR rank.
About HOLOGIC, INC. (NASDAQ:HOLX)
Hologic, Inc. is a developer, manufacturer and supplier of diagnostics products, medical imaging systems and surgical products with an emphasis on women’s health. The Company operates through four segments: Diagnostics, Breast Health, GYN Surgical and Skeletal Health. The diagnostics products include Aptima family of assays, ThinPrep system, the Rapid Fetal Fibronectin Test and Procleix blood screening assays. It offers viral load assays for the quantitation of Hepatitis B Virus (HBV), Hepatitis C Virus (HCV) and Human Immunodeficiency Virus-1 (HIV-1). The Breast Health products include breast imaging and related products and accessories, including digital mammography systems, computer-aided detection (CAD) and breast biopsy guidance systems. The GYN Surgical products include NovaSure Endometrial Ablation System and MyoSure Hysteroscopic Tissue Removal System. The Skeletal Health segment offers Discovery and Horizon X-ray bone densitometers and mini C-arm imaging systems.