def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
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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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Soliciting Material Pursuant to §240.14a-12 |
Genomic Health, Inc.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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offsetting fee was paid previously. Identify the previous filing
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Genomic
Health, Inc.
301 Penobscot Drive
Redwood City, California 94063
(650) 556-9300
April 30,
2009
Dear Stockholder:
You are cordially invited to attend the 2009 Annual Meeting of
Stockholders of Genomic Health, Inc. The meeting will be held at
10:00 a.m., Pacific Time, on Monday, June 8, 2009, at
Seaport Center, 459 Seaport Court, Redwood City, California
94063.
The formal notice of the Annual Meeting and the Proxy Statement
has been made a part of this invitation.
Whether or not you attend the Annual Meeting, it is important
that your shares be represented and voted at the Annual Meeting.
After reading the Proxy Statement, please promptly vote and
submit your proxy by dating, signing and returning the enclosed
proxy card in the enclosed postage-prepaid envelope. Your
shares cannot be voted unless you sign, date and return the
enclosed proxy, submit your proxy by telephone or the Internet,
or attend the Annual Meeting in person.
We have also enclosed a copy of our 2008 Annual Report to
Stockholders.
We look forward to seeing you at the meeting.
Sincerely,
Kimberly J. Popovits
President and Chief Executive Officer
Genomic
Health, Inc.
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Monday, June 8, 2009
To our Stockholders:
Genomic Health, Inc. will hold its Annual Meeting of
Stockholders at 10:00 a.m., Pacific Time, on Monday,
June 8, 2009 at Seaport Center, 459 Seaport Court, Redwood
City, California 94063.
We are holding this Annual Meeting:
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to elect nine directors to serve until the 2010 Annual Meeting
or until their successors are duly elected and qualified;
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to vote on the approval of the Amended and Restated Genomic
Health, Inc. 2005 Stock Incentive Plan;
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to ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for 2009; and
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to transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement of the Annual
Meeting.
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Stockholders of record at the close of business on
April 17, 2009, are entitled to notice of and to vote at
this meeting and any adjournment or postponement of the Annual
Meeting. For ten days prior to the meeting, a complete list of
stockholders entitled to vote at the Annual Meeting will be
available at the Secretarys office, 301 Penobscot Drive,
Redwood City, California 94063.
It is important that your shares be represented at this
meeting. Even if you plan to attend the meeting, we hope that
you will vote promptly. Please review the instructions on
page 2 of the attached Proxy Statement regarding your
voting options. Voting now will not limit your right to attend
or vote at the meeting.
By Order of the Board of Directors
G. Bradley Cole
Chief Operating Officer,
Chief Financial Officer and Secretary
Redwood City, California
April 30, 2009
Important
Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be held on June 8,
2009.
The Proxy
Statement and Annual Report are available at
www.proxydocs.com/ghdx
TABLE
OF CONTENTS
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Genomic
Health, Inc.
301 Penobscot Drive
Redwood City, California 94063
PROXY STATEMENT
Information
Concerning Voting and Solicitation
This Proxy Statement is being furnished to you in connection
with the solicitation by the board of directors of Genomic
Health, Inc., a Delaware corporation (we,
us, our, Genomic Health or
the Company), of proxies in the accompanying form to
be used at the Annual Meeting of Stockholders of the Company to
be held at Seaport Center, 459 Seaport Court, Redwood City,
California 94063 on Monday, June 8, 2009, at
10:00 a.m., Pacific Time, and any postponement or
adjournment thereof (the Annual Meeting).
This Proxy Statement and the accompanying form of proxy are
being mailed to stockholders on or about April 30, 2009.
Questions
and Answers About
the Proxy Materials and the Annual Meeting
What
proposals will be voted on at the Annual Meeting?
Three proposals will be voted on at the Annual Meeting:
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The election of directors;
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The approval of the Amended and Restated 2005 Stock Incentive
Plan; and
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The ratification of the appointment of the independent
registered public accounting firm for 2009.
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What are
the Boards recommendations?
Our board recommends that you vote:
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FOR election of each of the nominated directors;
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FOR approval of the Amended and Restated 2005 Stock
Incentive Plan; and
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FOR ratification of the appointment of the
independent registered public accounting firm for 2009.
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Will
there be any other items of business on the agenda?
We do not expect any other items of business because the
deadline for stockholder proposals and nominations has already
passed. Nonetheless, in case there is an unforeseen need, the
accompanying proxy gives discretionary authority to the persons
named on the proxy with respect to any other matters that might
be brought before the meeting. Those persons intend to vote that
proxy in accordance with their best judgment.
Who is
entitled to vote?
Stockholders of record at the close of business on
April 17, 2009 (the Record Date) may vote at
the Annual Meeting. Each stockholder is entitled to one vote for
each share of the Companys common stock held as of the
Record Date.
What is
the difference between holding shares as a stockholder of record
and as a beneficial owner?
Stockholder of Record. If your shares are
registered directly in your name with Genomic Healths
transfer agent, Computershare Trust Company, Inc., you are
considered, with respect to those shares, the stockholder of
record. The Proxy Statement, Annual Report and proxy card have
been sent directly to you by Genomic Health.
Beneficial Owner. If your shares are held in a
brokerage account or by a bank or other nominee, you are
considered the beneficial owner of shares held in street name.
The Proxy Statement and Annual Report have been forwarded to you
by your broker, bank or nominee who is considered, with respect
to those shares, the stockholder of record. As the beneficial
owner, you have the right to direct your broker, bank or nominee
how to vote your shares by using the voting instruction form
included in the mailing.
How do I
vote?
Stockholder
of Record
If you are a stockholder of record, you may vote in person at
the Annual Meeting, vote by proxy using the enclosed proxy card,
vote by proxy over the telephone, or vote by proxy on the
Internet. Whether or not you plan to attend the Annual Meeting,
we urge you to vote by proxy to ensure your vote is counted. You
may still attend the Annual Meeting and vote in person even if
you have already voted by proxy.
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To vote in person, come to the Annual Meeting and we will give
you a ballot when you arrive.
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To vote using the proxy card, complete, sign and date the
enclosed proxy card and return it promptly in the
postage-prepaid envelope provided. If you return your signed
proxy card to us before the Annual Meeting, we will vote your
shares as you direct.
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To vote over the telephone, follow the telephone voting
instructions on the enclosed proxy card. You will be asked to
provide the company number and control number from the proxy
card. Your vote must be received by 11:59 p.m. Eastern Time
on June 7, 2009 to be counted.
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To vote on the Internet, follow the Internet voting instructions
on the enclosed proxy card. You will be asked to provide the
company number and control number from the proxy card. Your vote
must be received by 11:59 p.m. Eastern Time on
June 7, 2009 to be counted.
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Beneficial
Owner
If you are a beneficial owner of shares registered in the name
of your broker, bank, or other agent, you should have received a
proxy card and voting instructions with these proxy materials
from that organization rather than from the Company. Complete
and mail the proxy card to ensure that your vote is counted.
Alternatively, you may vote by telephone or over the Internet as
instructed by your broker or bank. To vote in person at the
Annual Meeting, you must obtain a valid proxy from your broker,
bank, or other agent. Follow the instructions from your broker,
bank or other agent included with these proxy materials, or
contact your broker, bank or other agent to request a proxy form.
We provide Internet proxy voting to allow you to vote your
shares online. However, please be aware that you must bear any
costs associated with your Internet access, such as usage
charges from Internet access providers and telephone
companies.
Can I
change my vote or revoke my proxy?
You may change your vote or revoke your proxy at any time prior
to the vote at the Annual Meeting. If you submitted your proxy
by mail, you must file with the Secretary of the Company a
written notice of revocation or deliver, prior to the vote at
the Annual Meeting, a valid, later-dated proxy. If you submitted
your proxy by telephone or the Internet, you may change your
vote or revoke your proxy with a later telephone or Internet
proxy, as the case may be. Attendance at the Annual Meeting will
not have the effect of revoking a proxy unless you give written
notice of revocation to the Secretary before the proxy is
exercised or you vote by written ballot at the Annual Meeting.
2
How are
votes counted?
In the election of directors, you may vote FOR all
of the nominees or your vote may be WITHHELD with
respect to one or more of the nominees. For the other items of
business, you may vote FOR, vote AGAINST
or ABSTAIN. If you ABSTAIN, the
abstention has the same effect as a vote AGAINST. If
you provide specific instructions, your shares will be voted as
you instruct. If you sign your proxy card or voting instruction
form with no instructions, your shares will be voted in
accordance with the recommendations of the board
(FOR all of the nominees to the board,
FOR approval of the Amended and Restated 2005 Stock
Incentive Plan, and FOR ratification of the
independent registered public accounting firm) and in the
discretion of the proxy holders on any other matters that
properly come before the meeting.
What vote
is required to approve each item?
In the election of directors, the nine persons receiving the
highest number of FOR votes at the Annual Meeting
will be elected. All other proposals require the affirmative
FOR vote of a majority of the shares present and
voting at the Annual Meeting in person or by proxy. If you hold
shares beneficially in street name and do not provide your
broker or nominee with voting instructions, your shares may
constitute broker non-votes. Generally, broker
non-votes occur on a matter when a broker is not permitted to
vote on that matter without instructions from the beneficial
owner and instructions are not given. In tabulating the voting
result for any particular proposal, shares that constitute
broker non-votes are not considered entitled to vote on that
proposal. Thus, broker non-votes will not affect the outcome of
any matter being voted on at the Annual Meeting, assuming that a
quorum is obtained. Abstentions have the same effect as votes
against the matter.
Is
cumulative voting permitted for the election of
directors?
Stockholders may not cumulate votes in the election of
directors, which means that each stockholder may vote no more
than the number of shares he or she owns for a single director
candidate.
What
constitutes a quorum?
The presence at the Annual Meeting, in person or by proxy, of
the holders of a majority of common stock outstanding on the
Record Date will constitute a quorum. As of the close of
business on the Record Date, there were 28,530,988 shares of our
common stock outstanding. Both abstentions and broker non-votes
are counted for the purpose of determining the presence of a
quorum.
How are
proxies solicited?
Our employees, officers and directors may solicit proxies. We
will bear the cost of soliciting proxies and will reimburse
brokerage houses and other custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses for forwarding proxy
and solicitation material to the owners of common stock.
IMPORTANT
Please promptly vote by signing, dating and returning the
enclosed proxy card in the postage-prepaid return envelope
provided, or by submitting your proxy by telephone or the
Internet, so that your shares can be voted. Voting now will not
limit your right to attend or vote at the Annual Meeting.
3
Proposal 1
Election
of Directors
Directors
and Nominees
At the Annual Meeting, nine persons will be elected as members
of your board of directors, each for a one-year term or until
their successors are elected and qualified. The Nominating and
Corporate Governance Committee of the board of directors has
recommended, and the board of directors has designated, the nine
persons listed below for election at the Annual Meeting. The
proxies given to the proxy holders will be voted or not voted as
directed and, if no direction is given, will be voted FOR each
of the nominees. Your board of directors knows of no reason why
any of these nominees should be unable or unwilling to serve.
However, if for any reason any nominee should be unable or
unwilling to serve, the proxies will be voted for any nominee
designated to fill the vacancy by your board of directors,
taking into account the recommendations of the Nominating and
Corporate Governance Committee.
The names of the board of directors nominees, their ages
as of March 15, 2009, and certain biographical information
about the nominees are set forth below.
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Director
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Name
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Age
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Position with Company
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Since
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Randal W. Scott, Ph.D.
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Executive Chairman of the Board
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2000
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Kimberly J. Popovits
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President, Chief Executive Officer and Director
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2002
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Julian C. Baker
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Director
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2001
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Brook H. Byers
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Director
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2001
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Fred E. Cohen, M.D., D.Phil.
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Director
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2002
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Samuel D. Colella
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Director
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2001
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Ginger L. Graham
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Director
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2008
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Randall S. Livingston
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Director
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2004
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Woodrow A. Myers, Jr., M.D.
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Director
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2006
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Randal W. Scott, Ph.D. has served as our Executive
Chairman of the Board since January 2009, Chairman of the Board
and Chief Executive Officer from our inception in August 2000 to
December 2008, President from August 2000 to February 2002,
Chief Financial Officer from December 2000 to April 2004, and
Secretary from August 2000 to December 2000 and from May 2003 to
February 2005. Dr. Scott was a founder of Incyte
Corporation, which at the time was a genomic information
company, and served Incyte in various roles, including Chairman
of the Board from August 2000 to December 2001, President from
January 1997 to August 2000, and Chief Scientific Officer from
March 1995 to August 2000. Dr. Scott holds a B.S. in
Chemistry from Emporia State University and a Ph.D. in
Biochemistry from the University of Kansas.
Kimberly J. Popovits has served as our President and
Chief Executive Officer since January 2009 and as President and
Chief Operating Officer from February 2002 to December 2008.
From November 1987 to February 2002, Ms. Popovits served in
various roles at Genentech, Inc., a biotechnology company, most
recently serving as Senior Vice President, Marketing and Sales
from February 2001 to February 2002, and as Vice President,
Sales from October 1994 to February 2001. Prior to joining
Genentech, she served as Division Manager, Southeast
Region, for American Critical Care, a Division of American
Hospital Supply, a supplier of healthcare products to hospitals.
Ms. Popovits holds a B.A. in Business from Michigan State
University.
Julian C. Baker is a Managing Member of Baker Bros.
Advisors, LLC, which he and his brother, Felix
Baker, Ph.D., founded in 2000. Mr. Bakers firm
manages Baker Brothers Investments, a family of long-term
investment funds for major university endowments and
foundations, which are focused on publicly traded life sciences
companies. Mr. Bakers career as a fund-manager began
in 1994 when he co-founded a biotechnology investing partnership
with the Tisch Family. Previously, Mr. Baker was employed
from 1988 to 1993 by the private equity investment arm of Credit
Suisse First Boston. He is also a director of Incyte
Corporation, Neurogen Corporation and Trimeris, Inc.
Mr. Baker holds an A.B. in Social Studies from Harvard
University.
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Brook H. Byers is a general partner of Kleiner Perkins
Caufield & Byers, a venture capital firm which he
joined in 1977. Mr. Byers currently serves as a director of
a number of privately held technology, healthcare and
biotechnology companies. Mr. Byers holds a B.S. in
Electrical Engineering from the Georgia Institute of Technology
and an M.B.A. from the Stanford Graduate School of Business.
Fred E. Cohen, M.D., D.Phil. is a partner at TPG, a
private equity firm he joined in 2001, and serves as co-head of
TPGs biotechnology group. Dr. Cohen is also a
Professor of Cellular and Molecular Pharmacology at the
University of California, San Francisco, where he has
taught since 1988. Dr. Cohen is a director of Matrix
Laboratories Limited, Quintiles Transnational and a number of
privately held companies. Dr. Cohen holds a B.S. in
Molecular Biophysics and Biochemistry from Yale University, a
D.Phil. in Molecular Biophysics from Oxford University and an
M.D. from Stanford University.
Samuel D. Colella co-founded Versant Ventures, a
healthcare and biotechnology venture capital firm, in 1999.
Mr. Colella is also a general partner of Institutional
Venture Partners, a venture capital firm he joined in 1984.
Mr. Colella currently serves as a director of Alexza
Pharmaceuticals, Inc., Jazz Pharmaceuticals, Inc. and a number
of privately held technology and biotechnology companies.
Mr. Colella has a B.S. in Business and Engineering from the
University of Pittsburgh and an M.B.A. from the Stanford
Graduate School of Business.
Ginger L. Graham has served as the President and Chief
Executive Officer of Two Trees Consulting, a healthcare and
executive leadership consulting firm, since November 2007. From
September 2003 to March 2007, Ms. Graham was the Chief
Executive Officer of Amylin Pharmaceuticals, Inc., a
biopharmaceutical company, and she served as Amylins
President from September 2003 to June 2006. Prior to joining
Amylin, Ms. Graham held various positions with Guidant
Corporation, including Group Chairman, Office of the President,
President of the Vascular Intervention Group, and Vice
President. Ms. Graham held various positions with Eli Lilly
and Company from 1979 to 1992, including sales, marketing,
finance and strategic planning positions. She currently serves
as a director of Amylin Pharmaceuticals, Inc. and a number of
privately held companies. Ms. Graham holds a B.S. in
Agricultural Economics from University of Arkansas and an M.B.A.
from Harvard University.
Randall S. Livingston has served as Vice President for
Business Affairs and Chief Financial Officer of Stanford
University since 2001. From 1999 to 2001, Mr. Livingston
served as Executive Vice President and Chief Financial Officer
of OpenTV Corp., a provider of interactive television services.
From 1996 until 1999, Mr. Livingston served as a consultant
and part-time executive for several Silicon Valley technology
companies. Prior to 1996, Mr. Livingston worked for
Heartport, Inc., Taligent, Apple Computer, Ingres Corporation
and McKinsey & Company. Mr. Livingston currently
serves as a director of eHealth, Inc. Mr. Livingston holds
a B.S. in Mechanical Engineering from Stanford University and an
M.B.A. from the Stanford Graduate School of Business.
Woodrow A. Myers, Jr., M.D. has served as
Managing Director of Myers Ventures LLC, which concentrates on
opportunities in healthcare and education, since December 2005.
He was the Executive Vice President and Chief Medical Officer of
WellPoint, Inc., a commercial health benefits company, from
September 2000 to January 2005. Dr. Myers currently serves
on the board of directors of CardioNet, Inc., Express Scripts,
Inc. and ThermoGenesis Corp. Dr. Myers holds a B.S. in
Biological Sciences from Stanford University, an M.D. from
Harvard Medical School and an M.B.A. from the Stanford
University Graduate School of Business.
Vote
Required
The nine nominees for director receiving the highest number of
affirmative votes will be elected as directors. Unless marked to
the contrary, proxies received will be voted FOR the
nominees.
Your board of directors recommends a vote FOR the election of
the nominees set forth above as directors of Genomic Health.
Director
Independence
Our board of directors has determined that, except for
Dr. Scott and Ms. Popovits, each individual who
currently serves as a member of the board is, and each
individual who served as a member of the board in 2008 was,
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an independent director within the meaning of
Rule 4200 of The NASDAQ Stock Market. Dr. Scott and
Ms. Popovits are not independent because they are employed
by the Company. All of the nominees are members of the board
standing for reelection as directors. For Messrs. Byers,
Colella, Goldberg and Livingston, Drs. Cohen and Myers and
Ms. Graham, the board of directors considered their
relationship and transactions with the Company as directors and
securityholders of the Company. For Mr. Baker, the board of
directors considered Mr. Bakers status as a director
and securityholder, and ordinary course transactions between the
Company and another company for which Mr. Baker serves as a
director.
Board
Meetings
Our board of directors held seven meetings in 2008. Each
director attended at least 75% of the aggregate number of
meetings of the board of directors held during the period for
which such director served on our board of directors and of the
committees on which such director served. The independent
directors meet in regularly scheduled executive sessions at
in-person meetings of the board of directors without the
participation of the President and Chief Executive Officer or
the other members of management. We do not have a policy that
requires the attendance of directors at the Annual Meeting.
Three board members attended our 2008 annual meeting.
Committees
of the Board of Directors
Below is a description of each committee of the board of
directors. The board of directors has determined that each
director who serves on the Audit, Compensation, and Nominating
and Corporate Governance Committees is independent,
as that term is defined by applicable listing standards of The
NASDAQ Stock Market and rules of the Securities and Exchange
Commission, or SEC, and has adopted written charters for these
committees. These charters are available on the investor section
of our website (www.genomichealth.com).
Audit
Committee
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Number of Members: |
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3 |
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Current Members: |
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Randall S. Livingston (Chair and Audit Committee Financial
Expert) Fred E. Cohen, M.D., D.Phil.
Samuel D. Colella |
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Number of Meetings in 2008: |
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6 |
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Functions: |
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The Audit Committee provides assistance to the board of
directors in fulfilling its oversight responsibilities relating
to the Companys financial statements, system of internal
control over financial reporting, and auditing, accounting and
financial reporting processes. Other specific duties and
responsibilities of the Audit Committee are to appoint,
compensate, evaluate and, when appropriate, replace the
Companys independent registered public accounting firm;
review and pre-approve audit and permissible non-audit services;
review the scope of the annual audit; monitor the independent
registered public accounting firms relationship with the
Company; and meet with the independent registered public
accounting firm and management to discuss and review the
Companys financial statements, internal control over
financial reporting, and auditing, accounting and financial
reporting processes. |
Compensation
Committee
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Number of Members: |
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3 |
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Current Members: |
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Brook H. Byers (Chair)
Julian C. Baker
Woodrow A. Myers, Jr., M.D. |
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Number of Meetings in 2008: |
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5 |
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Functions: |
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The Compensation Committees primary functions are to
assist the board of directors in meeting its responsibilities
with regard to oversight and determination of executive
compensation and to review and make recommendations with respect
to major compensation plans, policies and programs of the
Company. Other specific duties and responsibilities of the
Compensation Committee are to review, and make recommendations
for approval by the independent members of the board of
directors regarding compensation of our President and Chief
Executive Officer and other executive officers, and administer
our stock plans and other equity-based compensation plans. |
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The board of directors has established a Non-Management Stock
Option Committee, the members of which are Randal W. Scott and
Kimberly J. Popovits. The Committee has been delegated the
authority to grant options to new employees, other than to any
member of our board of directors, individuals designated by our
board directors as Section 16 officers, and
employees who hold the title of Vice President of above. This
Committee may not make any awards or grants to any new employee
that total more than 50,000 shares of common stock. |
Nominating
and Corporate Governance Committee
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Number of Members: |
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4 |
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Current Members: |
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Julian C. Baker (Chair)
Brook H. Byers
Samuel D. Colella
Woodrow A. Myers, Jr., M.D. |
|
Number of Meetings in 2008: |
|
3 |
|
Functions: |
|
The Nominating and Corporate Governance Committees primary
functions are to identify qualified individuals to become
members of the board of directors, determine the composition of
the board and its committees, and monitor a process to assess
board effectiveness. Other specific duties and responsibilities
of the Nominating and Corporate Governance Committee are to
recommend nominees to fill vacancies on the board of directors,
review and make recommendations to the board of directors with
respect to candidates for director proposed by stockholders, and
review on an annual basis the functioning and effectiveness of
the board and its committees. |
Director
Nominations
The board of directors nominates directors for election at each
annual meeting of stockholders and elects new directors to fill
vacancies when they arise. The Nominating and Corporate
Governance Committee has the responsibility to identify,
evaluate, recruit and recommend qualified candidates to the
board of directors for nomination or election.
The board of directors has as an objective that its membership
be composed of experienced and dedicated individuals with
diversity of backgrounds, perspectives and skills. The
Nominating and Corporate Governance Committee will select
candidates for director based on their character, judgment,
diversity of experience, business acumen, and ability to act on
behalf of all stockholders. The Nominating and Corporate
Governance Committee believes that nominees for director should
have experience, such as experience in management or accounting
and
7
finance, or industry and technology knowledge, that may be
useful to Genomic Health and the board of directors, high
personal and professional ethics, and the willingness and
ability to devote sufficient time to carry out effectively their
duties as directors. The Nominating and Corporate Governance
Committee believes it appropriate for at least one, and,
preferably, multiple, members of the board of directors to meet
the criteria for an audit committee financial expert
as defined by rules of the SEC, and for a majority of the
members of the board of directors to meet the definition of
independent director under the rules of The NASDAQ
Stock Market. The Nominating and Corporate Governance Committee
also believes it appropriate for key members of our management
to participate as members of the board of directors.
Prior to each annual meeting of stockholders, the Nominating and
Corporate Governance Committee identifies nominees first by
evaluating the current directors whose term will expire at the
annual meeting and who are willing to continue in service. These
candidates are evaluated based on the criteria described above,
including as demonstrated by the candidates prior service
as a director, and the needs of the board of directors with
respect to the particular talents and experience of its
directors. In the event that a director does not wish to
continue in service, the Nominating and Corporate Governance
Committee determines not to re-nominate the director, or a
vacancy is created on the board of directors as a result of a
resignation, an increase in the size of the board or other
event, the Committee will consider various candidates for board
membership, including those suggested by the Committee members,
by other board of directors members, by any executive search
firm engaged by the Committee or by stockholders. The Committee
recommended all of the nominees for election included in this
Proxy Statement.
A stockholder who wishes to suggest a prospective nominee for
the board of directors should notify Genomic Healths
Secretary or any member of the Committee in writing with any
supporting material the stockholder considers appropriate.
In addition, our Bylaws contain provisions that address the
process by which a stockholder may nominate an individual to
stand for election to the board of directors at our annual
meeting of stockholders. In order to nominate a candidate for
director, a stockholder must give timely notice in writing to
Genomic Healths Secretary and otherwise comply with the
provisions of our Bylaws. To be timely, our Bylaws provide that
we must have received the stockholders notice not less
than 90 days nor more than 120 days prior to the first
anniversary date of the preceding years annual meeting;
however, if we have not held an annual meeting in the previous
year or the date of the annual meeting is called for a date that
is more than 30 days before or more than 60 days after
the first anniversary date of the preceding years annual
meeting, we must have received the stockholders notice not
later than the close of business on the later of the
90th day prior to the date of the scheduled annual meeting
or the 7th day following the earlier of the day on which
notice of the annual meeting date was mailed or the day of the
first public announcement of the annual meeting date. An
adjournment or postponement of an annual meeting will not
commence a new time period or extend any time period for the
giving of the stockholders notice described above.
Information required by the Bylaws to be in the notice includes
the name and contact information for the candidate and the
person making the nomination, and other information about the
nominee that must be disclosed in proxy solicitations under
Section 14 of the Securities Exchange Act of 1934 and the
related rules and regulations under that Section.
Stockholder nominations must be made in accordance with the
procedures outlined in, and include the information required by,
our Bylaws and must be addressed to: Secretary, Genomic Health,
Inc., 301 Penobscot Drive, Redwood City, California 94063. You
can obtain a copy of our Bylaws by writing to the Secretary at
this address.
Stockholder
Communications with the Board of Directors
If you wish to communicate with the board of directors, you may
send your communication in writing to: Secretary, Genomic
Health, Inc., 301 Penobscot Drive, Redwood City, California
94063. You must include your name and address in the written
communication and indicate whether you are a stockholder of
Genomic Health. The Secretary will review any communication
received from a stockholder, and all material communications
from stockholders will be forwarded to the appropriate director
or directors or committee of the board of directors based on the
subject matter.
8
Certain
Relationships and Related Transactions
It is our policy that all employees, officers and directors must
avoid any activity that is or has the appearance of conflicting
with the interests of the Company. This policy is included in
our Code of Business Conduct. We conduct a review of all related
party transactions for potential conflict of interest situations
on an ongoing basis and all such transactions relating to
executive officers and directors must be approved by the
independent and disinterested members of our board of directors
or an independent and disinterested committee of the board.
Director
Compensation
The following table sets forth cash amounts and the value of
other compensation paid to our outside directors for their
service in 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or Paid
|
|
|
Option Awards
|
|
|
|
|
Name
|
|
in Cash ($)
|
|
|
($)(3)(4)
|
|
|
Total ($)
|
|
|
Julian C. Baker
|
|
|
20,000
|
|
|
|
88,100
|
|
|
|
108,100
|
|
Brook H. Byers
|
|
|
20,000
|
|
|
|
88,100
|
|
|
|
108,100
|
|
Fred E. Cohen, M.D., D.Phil.
|
|
|
20,000
|
|
|
|
88,100
|
|
|
|
108,100
|
|
Samuel D. Colella
|
|
|
20,000
|
|
|
|
88,100
|
|
|
|
108,100
|
|
Michael D. Goldberg(1)
|
|
|
10,000
|
|
|
|
38,400
|
|
|
|
48,400
|
|
Ginger L. Graham(2)
|
|
|
|
|
|
|
2,800
|
|
|
|
2,800
|
|
Randall S. Livingston
|
|
|
30,000
|
|
|
|
106,200
|
|
|
|
136,200
|
|
Woodrow A. Myers, Jr., M.D.
|
|
|
20,000
|
|
|
|
115,700
|
|
|
|
135,700
|
|
|
|
|
(1) |
|
Mr. Goldberg resigned from our board of directors on
May 21, 2008. |
|
(2) |
|
Ms. Graham joined our board of directors on
December 4, 2008. |
|
(3) |
|
Represents the compensation expense related to outstanding
options that we recognized for the year ended December 31,
2008 under Statement of Financial Accounting Standards
No. 123 (revised 2004), or SFAS 123R, excluding any
estimates for forfeitures, rather than amounts paid to or
realized by the named individual and includes expenses we
recognized in 2008 for option grants in prior periods.
Compensation expense is determined by computing the fair value
of each option on the grant date in accordance with
SFAS 123R and recognizing that amount as expense ratably
over the option vesting term. See Note 10 of Notes to our
Consolidated Financial Statements set forth in our Annual Report
on
Form 10-K
for the year ended December 31, 2008 for the assumptions
made in determining SFAS 123R values. The SFAS 123R
value of an option as of the grant date is spread over the
number of months in which the option is subject to vesting and
includes ratable amounts expensed for option grants in prior
years. There can be no assurance that options will be exercised
(in which case no value will be realized by the individual) or
that the value on exercise will approximate the compensation
expense we recognized. In 2008, Messrs. Baker, Byers,
Colella and Livingston and Drs. Cohen and Myers each
received an option to purchase 8,250 shares of our common
stock with a grant date fair value of $85,400, and
Ms. Graham received an option to purchase
16,500 shares of our common stock with a grant date fair
value of $150,200. |
|
(4) |
|
The following table sets forth the aggregate number of shares of
common stock underlying option awards outstanding at
December 31, 2008: |
|
|
|
|
|
Name
|
|
Number of Shares(1)
|
|
|
Julian C. Baker
|
|
|
24,750
|
|
Brook H. Byers
|
|
|
24,750
|
|
Fred E. Cohen, M.D., D.Phil.
|
|
|
24,750
|
|
Samuel D. Colella
|
|
|
24,750
|
|
Ginger L. Graham
|
|
|
16,500
|
|
Randall S. Livingston
|
|
|
42,087
|
|
Woodrow A. Myers, Jr., M.D.
|
|
|
33,000
|
|
|
|
|
(1) |
|
Options with respect to an aggregate of 173,250 shares
automatically accelerate upon a change of control. |
9
Directors who are our employees do not receive any fees for
their service on our board of directors. During 2008,
Dr. Scott and Ms. Popovits were our only employee
directors.
Our outside directors receive an annual retainer of $20,000 and
Mr. Livingston, as chairman of our Audit Committee,
receives an annual retainer of $30,000. We also reimburse our
non-employee directors for reasonable expenses in connection
with attendance at board of director and committee meetings.
In addition to cash compensation for services as a member of the
board, non-employee directors also are eligible to receive
nondiscretionary, automatic grants of stock options under our
2005 Stock Incentive Plan. An outside director who joins our
board is automatically granted an initial option to purchase
16,500 shares upon first becoming a member of our board of
directors. The initial option vests and becomes exercisable over
four years, with the first 25% of the shares subject to the
initial option vesting on the first anniversary of the date of
grant and the remainder vesting monthly thereafter. On the first
business day following each regularly scheduled annual meeting
of stockholders, each outside director is automatically granted
a nonstatutory option to purchase 8,250 shares of our
common stock, provided the director has served on our board of
directors for at least six months. These options vest and become
exercisable on the first anniversary of the date of grant or
immediately prior to our next annual meeting of stockholders, if
earlier. The options granted to outside directors under our 2005
Stock Incentive Plan have a per share exercise price equal to
100% of the fair market value of the underlying shares on the
date of grant, a term of 10 years, and become fully vested
in the event of a change in control.
Executive
Compensation
Compensation
Discussion and Analysis
Our
Compensation Philosophy and Objectives
We believe that compensation of our executive officers should:
|
|
|
|
|
encourage creation of stockholder value and achievement of
strategic corporate objectives;
|
|
|
|
attract and retain qualified, skilled and dedicated executives
on a long-term basis;
|
|
|
|
reward past performance and provide incentives for future
performance; and
|
|
|
|
provide fair compensation consistent with our internal
compensation programs.
|
Our philosophy is to align the interests of our stockholders and
management by integrating compensation with our annual and
long-term corporate and financial objectives, including through
equity ownership by management. In order to attract and retain
qualified personnel, we strive to offer a total compensation
package competitive with companies in the life sciences
industry, taking into account relative company size, performance
and geographic location as well as individual responsibilities
and performance. Our compensation philosophy with respect to our
executive officers has and continues to focus more on the use of
equity-based compensation rather than cash-based compensation.
Implementing
Our Objectives
The Compensation Committee of our board of directors administers
and interprets our executive compensation and benefits policies,
including our stock option plan, and reviews and makes
recommendations to the independent members of the board of
directors with respect to major compensation plans, policies and
programs. For 2008, the Compensation Committee evaluated the
performance of Randal W. Scott, our Chief Executive Officer, or
CEO, in 2008, and made recommendations to the independent
members of the board regarding the CEOs compensation in
light of the goals and objectives of our compensation program.
Dr. Scott and the Compensation Committee together assessed
the performance of our other executive officers, based on
initial recommendations from Dr. Scott. The
Committees recommendations were then submitted to the
independent members of the board for their consideration and
approval.
The Compensation Committee and the independent members of the
board have a broad range of experience relating to executive
compensation matters for similarly situated companies. In
setting the level of cash and equity
10
compensation for our executive officers, the Compensation
Committee and the independent members of our board consider
various factors, including the performance of the Company and
the individual executive during the year, the uniqueness and
relative importance of the executives skill set to the
Company, the executives historical cash and equity
compensation levels, the executives expected future
contributions to the Company, the percentage of vested versus
unvested options held by the executive, the level of the
executives stock ownership and the Companys
compensation philosophy for all employees.
Market Reference Data. While the Compensation
Committee did not use market benchmarks to determine its
recommendations for executive compensation for 2008, the
Committee reviewed market reference data to evaluate the
competitiveness of our executive officers compensation and
to determine whether the total compensation paid to each of our
named executive officers was reasonable in the aggregate.
However, the Compensation Committee did not limit its decision
to or target any particular range or level of total compensation
paid to executive officers at these companies. In connection
with its analysis, the Committee reviewed information prepared
by Compensia Inc., a compensation consultant, comparing our
executive compensation with data from the Radford Biotechnology
Executive Compensation Survey with respect to companies in the
San Francisco Bay Area with revenues between
$50 million and $200 million and between 150 and
499 employees and a peer group comprised of the following
13 biotechnology and diagnostic companies:
|
|
|
|
|
Abaxis
|
|
Human Genome Sciences
|
|
Myriad Genetics
|
Cepheid
|
|
Incyte Corporation
|
|
Third Wave Technologies
|
Decode Genetics
|
|
Lexicon Pharmaceuticals
|
|
ZymoGenetics
|
Exelixis
|
|
Maxygen
|
|
|
Gen-Probe Incorporated
|
|
Monogram Biosciences
|
|
|
The analysis indicated that 2008 base salary for our executive
officers other than the CEO approximated the
50th percentile, while base salary for our CEO was well
below the 25th percentile. The analysis also indicated that
target total cash compensation (salary plus potential bonus) for
our executive officers other than our CEO approximated the
25th percentile, and that target total cash compensation
for our CEO was well below the 25th percentile. According
to the analysis, total direct compensation approximated the
45th percentile for all executive officers other than our
CEO, and total direct compensation for our CEO was well below
the 25th percentile. Total direct compensation for our
executives equaled target total cash compensation plus the
Black-Scholes value of options awarded in December 2007.
Equity Grant Practices. The Compensation
Committee administers our stock option plan for executive
officers, employees, consultants and outside directors, under
which it grants options to purchase our common stock with an
exercise price equal to the fair market value of a share of our
common stock on the date of grant, which is the closing price on
the date of grant. We do not coordinate the timing of equity
award grants with the release of financial results or other
material announcements by the Company; our annual equity grants
are made at regularly scheduled board and Compensation Committee
meetings.
Each executive officer is initially granted an option when he or
she begins working for us. The amount of the grant is based on
his or her position with us, relevant prior experience and
market conditions. These initial grants generally vest over four
years and no shares vest before the one-year anniversary of the
option grant. We spread the vesting of our options over four
years to compensate executives for their contribution over a
period of time and to provide an incentive to focus on our
longer term goals.
In the future, the Compensation Committee and independent
members of our board of directors may consider awarding
additional or alternative forms of equity incentives, such as
grants of restricted stock, restricted stock units and other
performance-based awards.
Miscellaneous. We do not enter into employment
or severance contracts with our executive officers as we do not
believe these types of arrangements facilitate our compensation
goals and objectives. We do not have a stock ownership or stock
retention policy that requires executive officers to own stock
in Genomic Health or retain options they exercise. We do not
have an employee stock purchase plan. In 2008, we made up to a
$1,000 matching 401(k) plan contribution for all eligible
employee and executive officers, and we expect to make the same
matching contribution in 2009.
11
Tax Deductibility of Compensation. We
generally intend to qualify executive compensation for
deductibility without limitation under section 162(m) of
the Internal Revenue Code of 1986, as amended.
Section 162(m) places a limit of $1,000,000 on the amount
of compensation we may deduct in any one year with respect to
our executive officers other than our Chief Financial Officer.
None of the non-exempt compensation we paid to any of our
executive officers for 2008 as calculated for purposes of
section 162(m) exceeded the $1,000,000 limit.
Elements
of Executive Compensation
Our compensation structure for executive officers consists of a
combination of base salary, bonus and equity-based compensation.
Because of our egalitarian culture, we do not have programs
providing for personal benefit perquisites to officers. The
Compensation Committee makes recommendations with respect to
executive officer compensation, to be approved by the
independent members of the board of directors.
Base Salary. The Compensation Committee
reviews base salaries for executive officers on an annual basis,
adjusting salaries based on individual and Company performance.
In December 2007, the Committee recommended and the independent
members of the board of directors approved increases in base
salaries for 2008 for the named executive officers except for
Dr. Scott ranging from 10% to 15.5%. Pursuant to his
request, Dr. Scotts salary was not increased for
2008. In January 2009, based on the recommendation of the
Committee, the independent members of the board of directors
approved salary increases for our named executive officers
except for Dr. Scott ranging from 7.0% to 10.5%.
Dr. Scotts salary was increased by 3.6%. For both
years, the increases were established after considering job
performance and responsibilities, internal pay alignment and
marketplace competitiveness, among other things. In the case of
Ms. Popovits and Mr. Cole, increases in base salary
for 2009 also reflected the additional management
responsibilities resulting from the appointment in January 2009
of Ms. Popovits as our President and Chief Executive
Officer and Mr. Cole as our Chief Operating Officer and
Chief Financial Officer.
Annual Bonus. We have a bonus pool for our
employees that is tied to corporate and operational goals. Prior
to 2007, we had not paid cash bonuses to our executive officers.
Since 2007, our executive officers have been eligible to
participate in our cash bonus program. For 2008, the eligible
bonus pool for all employees was 10% of the Companys total
salary base, but there were no preset limitations on minimum or
maximum bonus amounts for any employee. While bonuses for
non-executive employees were based in part on achievement of
corporate goals established by our executive officers and board
of directors, bonuses for executive officers were determined by
the Compensation Committee and independent members of our board
of directors at the time of their annual compensation review
based on their assessment of corporate and individual
achievements. For 2008, the Committee determined to award
bonuses to our executive officers that approximated 9.3% of
annual base salaries, primarily because the corporate objectives
for purposes of determining the 2008 bonus pool for
non-executive employees were achieved at the 93% level. In
addition, the Committee believed the executive team should be
treated equally because corporate accomplishments were judged
largely based on team performance and performance within their
respective domains was relatively level among executive team
members. The corporate bonus objectives for the non-executive
employees were approved by the Committee and the board of
directors for the first half and second half of the year, and
included objectives related to driving top line revenue for the
year, progress toward becoming break-even, success in adoption
of our tests, regulatory related matters, organizational
excellence, and pipeline development. Numerical levels and other
specific corporate bonus objectives are not disclosed because we
consider the information to be confidential and believe it would
be competitively harmful if disclosed. In addition, bonus
amounts paid constituted a small percentage of each executive
officers total cash compensation.
For 2009, the eligible bonus pool for all employees will be 10%
of the Companys total salary base, with no preset
limitations on minimum or maximum bonus amounts for any employee
as in prior years. The eligible bonus pool for employees with
titles of director and above, including our executive officers,
will be subject to increase by 5% of the total salary base for
those employees should the Company meet certain financial
objectives and objectives with respect to commercialization of a
colon cancer test. As with prior years, bonuses for executive
officers will be determined by the Compensation Committee and
independent members of our board of directors at the time of
their annual compensation review based on their assessment of
corporate and individual achievements.
12
Equity-Based Compensation. We believe that
providing executive officers who have responsibility for our
management and growth with an opportunity to increase their
stock ownership aligns the interests of the executive officers
with those of our stockholders. Accordingly, the Compensation
Committee considers stock option grants to be an important
aspect in compensating and providing incentives to management.
The Compensation Committee sets annual grants as part of its and
the independent members of the boards annual compensation
review process. The Compensation Committee determined the number
of shares underlying each stock option grant based upon the
executive officers and the Companys performance, the
executive officers role and responsibilities, the
executive officers base salary, comparison with comparable
awards to individuals in similar positions in our industry using
the survey data described above and previously determined stock
grant guidelines for all employees.
In keeping with the objective of weighting compensation more
toward equity-based compensation while considering the increase
in our stock price, in December 2007, the Compensation Committee
granted each named executive officer an option to purchase
30,000 shares of common stock. Option grants to executive
officers in December 2008 ranged from 40,000 to
60,000 shares and were intended to reflect the above
factors as well as increased responsibilities associated with
the management changes in 2009.
Other Compensation. All of our full-time
employees, including our executive officers, may participate in
our health programs, such as medical, dental and vision care
coverage, and our 401(k) and life and disability insurance
programs.
Compensation
Committee Report
The following report of the Compensation Committee shall not
be deemed to be soliciting material or
filed with the SEC or to be incorporated by
reference into any other filing by Genomic Health under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that we specifically incorporate it by
reference into a document filed under those Acts.
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis set forth above with
Genomic Healths management. Based on its review and those
discussions, the Compensation Committee recommended to the board
of directors that the Compensation Discussion and Analysis be
included in our 2008 Annual Report on
Form 10-K
and in this Proxy Statement.
Compensation Committee
Brook H. Byers
Julian C. Baker
Woodrow A. Myers, Jr., M.D.
13
Named
Executive Officers
The tables that follow provide compensation information for our
named executive officers, including Randal W. Scott, Chief
Executive Officer, G. Bradley Cole, Chief Financial Officer, and
our three most highly compensated executive officers who were
serving as executive officers at the end of 2008, which were
Kimberly J. Popovits, Steven Shak and Joffre B. Baker. In
January 2009, Dr. Scott was named Executive Chairman of the
Board, Ms. Popovits was named President and Chief Executive
Officer and Mr. Cole was named Chief Operating Officer,
Chief Financial Officer and Secretary.
2008
Summary Compensation Table
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
Non-Equity
|
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|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
Randal W. Scott, Ph.D.
|
|
|
2008
|
|
|
|
280,000
|
|
|
|
391,800
|
|
|
|
26,000
|
|
|
|
697,800
|
|
Chief Executive Officer and
|
|
|
2007
|
|
|
|
280,000
|
|
|
|
289,800
|
|
|
|
25,000
|
|
|
|
594,800
|
|
Chairman of the Board
|
|
|
2006
|
|
|
|
252,500
|
|
|
|
181,200
|
|
|
|
|
|
|
|
433,700
|
|
G. Bradley Cole
|
|
|
2008
|
|
|
|
330,000
|
|
|
|
401,000
|
|
|
|
30,700
|
|
|
|
761,700
|
|
Chief Financial Officer,
|
|
|
2007
|
|
|
|
286,000
|
|
|
|
361,050
|
|
|
|
25,000
|
|
|
|
672,050
|
|
Executive Vice President,
|
|
|
2006
|
|
|
|
262,000
|
|
|
|
252,900
|
|
|
|
|
|
|
|
514,900
|
|
Operations and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly J. Popovits
|
|
|
2008
|
|
|
|
380,000
|
|
|
|
388,100
|
|
|
|
35,350
|
|
|
|
803,450
|
|
President and Chief Operating Officer
|
|
|
2007
|
|
|
|
340,000
|
|
|
|
282,750
|
|
|
|
25,000
|
|
|
|
647,750
|
|
|
|
|
2006
|
|
|
|
303,000
|
|
|
|
206,700
|
|
|
|
|
|
|
|
509,700
|
|
Steven Shak, M.D.
|
|
|
2008
|
|
|
|
350,000
|
|
|
|
395,550
|
|
|
|
32,550
|
|
|
|
778,100
|
|
Chief Medical Officer
|
|
|
2007
|
|
|
|
315,000
|
|
|
|
293,500
|
|
|
|
25,000
|
|
|
|
633,500
|
|
|
|
|
2006
|
|
|
|
288,000
|
|
|
|
187,400
|
|
|
|
|
|
|
|
475,400
|
|
Joffre B. Baker, Ph.D.
|
|
|
2008
|
|
|
|
341,000
|
|
|
|
395,550
|
|
|
|
31,700
|
|
|
|
768,250
|
|
Chief Scientific Officer
|
|
|
2007
|
|
|
|
310,000
|
|
|
|
293,500
|
|
|
|
25,000
|
|
|
|
628,500
|
|
|
|
|
2006
|
|
|
|
288,000
|
|
|
|
187,400
|
|
|
|
|
|
|
|
475,400
|
|
|
|
|
(1) |
|
Represents the compensation expense related to outstanding
options we recognized for the year ended December 31, 2008,
2007 and 2006, respectively, under SFAS 123R, rather than
amounts paid to or realized by the named individual, and
includes expense we recognized in 2008, 2007 and 2006 for option
grants in prior periods. Compensation expense is determined by
computing the fair value of each option on the grant date in
accordance with SFAS 123R and recognizing that amount as
expense ratably over the option vesting term. See Note 10
of Notes to our Consolidated Financial Statements set forth in
our Annual Report on
Form 10-K
for the year ended December 31, 2008 for the assumptions
made in determining SFAS 123R values. The SFAS 123R
value of an option as of the grant date is spread over the
number of months in which the option is subject to vesting and
includes ratable amounts expensed for option grants in prior
years. There can be no assurance that options will be exercised
(in which case no value will be realized by the individual) or
that the value on exercise will approximate the compensation
expense we recognized. |
14
Grants of
Plan-Based Awards
The following table sets forth information on grants of options
to purchase shares of our common stock in 2008 to our named
executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: Number
|
|
|
Exercise or Base
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
of Securities
|
|
|
Price
|
|
|
Value of Option
|
|
|
|
|
|
|
Underlying Options
|
|
|
of Option Awards
|
|
|
Awards
|
|
Name
|
|
Grant Date
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
|
Randal W. Scott, Ph.D.
|
|
|
12/04/08
|
|
|
|
40,000
|
|
|
|
17.33
|
|
|
|
374,800
|
|
G. Bradley Cole
|
|
|
12/04/08
|
|
|
|
50,000
|
|
|
|
17.33
|
|
|
|
468,500
|
|
Kimberly J. Popovits
|
|
|
12/04/08
|
|
|
|
60,000
|
|
|
|
17.33
|
|
|
|
562,200
|
|
Steven Shak, M.D.
|
|
|
12/04/08
|
|
|
|
40,000
|
|
|
|
17.33
|
|
|
|
374,800
|
|
Joffre B. Baker, Ph.D.
|
|
|
12/04/08
|
|
|
|
40,000
|
|
|
|
17.33
|
|
|
|
374,800
|
|
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable(1)
|
|
|
($)(2)
|
|
|
Date
|
|
|
Randal W. Scott, Ph.D.
|
|
|
37,500
|
|
|
|
12,500
|
|
|
|
10.33
|
|
|
|
12/01/10
|
|
|
|
|
20,833
|
|
|
|
19,167
|
|
|
|
18.89
|
|
|
|
11/30/16
|
|
|
|
|
7,500
|
|
|
|
22,500
|
|
|
|
23.31
|
|
|
|
12/06/17
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
17.33
|
|
|
|
12/04/18
|
|
G. Bradley Cole
|
|
|
136,033
|
|
|
|
|
|
|
|
1.33
|
|
|
|
07/06/14
|
|
|
|
|
17,337
|
|
|
|
|
|
|
|
2.88
|
|
|
|
12/02/14
|
|
|
|
|
37,500
|
|
|
|
12,500
|
|
|
|
9.39
|
|
|
|
12/01/15
|
|
|
|
|
20,833
|
|
|
|
19,167
|
|
|
|
18.89
|
|
|
|
11/30/16
|
|
|
|
|
7,500
|
|
|
|
22,500
|
|
|
|
23.31
|
|
|
|
12/06/17
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
17.33
|
|
|
|
12/04/18
|
|
Kimberly J. Popovits
|
|
|
69,348
|
|
|
|
|
|
|
|
2.88
|
|
|
|
12/02/14
|
|
|
|
|
37,500
|
|
|
|
12,500
|
|
|
|
9.39
|
|
|
|
12/01/15
|
|
|
|
|
20,833
|
|
|
|
19,167
|
|
|
|
18.89
|
|
|
|
11/30/16
|
|
|
|
|
7,500
|
|
|
|
22,500
|
|
|
|
23.31
|
|
|
|
12/06/17
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
17.33
|
|
|
|
12/04/18
|
|
Steven Shak, M.D.
|
|
|
69,348
|
|
|
|
|
|
|
|
2.88
|
|
|
|
12/02/14
|
|
|
|
|
37,500
|
|
|
|
12,500
|
|
|
|
9.39
|
|
|
|
12/01/15
|
|
|
|
|
20,833
|
|
|
|
19,167
|
|
|
|
18.89
|
|
|
|
11/30/16
|
|
|
|
|
7,500
|
|
|
|
22,500
|
|
|
|
23.31
|
|
|
|
12/06/17
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
17.33
|
|
|
|
12/04/18
|
|
Joffre B. Baker, Ph.D.
|
|
|
69,348
|
|
|
|
|
|
|
|
2.88
|
|
|
|
12/02/14
|
|
|
|
|
37,500
|
|
|
|
12,500
|
|
|
|
9.39
|
|
|
|
12/01/15
|
|
|
|
|
20,833
|
|
|
|
19,167
|
|
|
|
18.89
|
|
|
|
11/30/16
|
|
|
|
|
7,500
|
|
|
|
22,500
|
|
|
|
23.31
|
|
|
|
12/06/17
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
17.33
|
|
|
|
12/04/18
|
|
|
|
|
(1) |
|
Options vest over a four year period, becoming exercisable as to
25% of the shares on the first anniversary of the grant date
with the remaining shares vesting monthly thereafter over the
following 36 months. |
|
(2) |
|
Except for the grant to Dr. Scott at $10.33 per share, the
option exercise price is equal to the fair market value of our
common stock on the date of grant. The specified option grant to
Dr. Scott was equal to 110% of the fair market value of our
common stock on the date of grant because he owned more than 10%
of our outstanding common stock at the time the specified grant
was made. |
15
Other than the grant to Dr. Scott noted in footnote
(2) above that has a term of five years, all of the options
have a term of ten years, subject to earlier termination in
specified events related to termination of employment.
Option
Exercises
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
|
Exercise
|
|
|
Exercise
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
Randal W. Scott, Ph.D.
|
|
|
69,348
|
|
|
|
1,092,200
|
|
G. Bradley Cole
|
|
|
20,000
|
|
|
|
406,200
|
|
Kimberly J. Popovits
|
|
|
|
|
|
|
|
|
Steven Shak, M.D.
|
|
|
|
|
|
|
|
|
Joffre B. Baker, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Value realized is based on the fair market value of our common
stock on the date of exercise minus the exercise price and does
not necessarily reflect proceeds actually received by the
individual. |
Equity
Compensation Plan Information
The following table gives information about our common stock
that may be issued upon the exercise of options and rights under
all of our existing equity compensation plans as of
December 31, 2008, including the 2005 Stock Incentive Plan,
or 2005 Plan, and the 2001 Stock Incentive Plan, or 2001 Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
Number of
|
|
|
|
|
|
Available for Future
|
|
|
|
Securities to be
|
|
|
Weighted-Average
|
|
|
Issuance
|
|
|
|
Issued Upon Exercise
|
|
|
Exercise Price of
|
|
|
Under Equity Compensation
|
|
|
|
of Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Plans (Excluding Securities
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in Column(a)
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
4,665,037
|
|
|
$
|
17.51
|
|
|
|
1,055,472
|
(1)
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,665,037
|
|
|
$
|
17.51
|
|
|
|
1,055,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes 1,055,472 shares available for issuance under the
2005 Plan. The 2001 Plan was terminated upon completion of our
initial public offering in October 2005. No shares of common
stock are available under the 2001 Plan other than to satisfy
exercises of stock options granted under the 2001 Plan prior to
its termination. |
16
Security
Ownership of
Certain Beneficial Owners and Management
The following table sets forth certain information as of
April 17, 2009 as to shares of our common stock
beneficially owned by: (1) each person who is known by us
to own beneficially more than 5% of our common stock,
(2) each of our named executive officers listed in the
summary compensation table, (3) each of our directors and
(4) all of our directors and executive officers as a group.
We have determined beneficial ownership in accordance with the
rules of the SEC. Except as indicated by the footnotes below, we
believe, based on the information furnished to us, that the
persons and entities named in the table below have sole voting
and investment power with respect to all shares of common stock
that they beneficially own, subject to applicable community
property laws.
In computing the number of shares of common stock beneficially
owned by a person and the percentage ownership of that person,
we deemed outstanding shares of common stock subject to options
held by that person that are currently exercisable or
exercisable within 60 days after April 17, 2009, the
record date for the Annual Meeting. We did not deem these shares
outstanding, however, for the purpose of computing the
percentage ownership of any other person.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
|
|
|
Common
|
|
|
|
Number of Shares
|
|
|
Stock
|
|
|
|
of Common Stock
|
|
|
Beneficially
|
|
Name and Address of Beneficial Owner(1)
|
|
Beneficially Owned
|
|
|
Owned
|
|
|
5% Stockholders:
|
|
|
|
|
|
|
|
|
Entities Affiliated with Baker Brothers Advisors(2)
|
|
|
5,374,284
|
|
|
|
18.8
|
%
|
Entities Affiliated with Versant Ventures(3)
|
|
|
2,391,372
|
|
|
|
8.4
|
%
|
Entities Affiliated with Tarrant Capital Advisors, Inc.(4)
|
|
|
1,910,273
|
|
|
|
6.7
|
%
|
Entities Affiliated with AXA Financial, Inc.(5)
|
|
|
1,751,654
|
|
|
|
6.1
|
%
|
Entities Affiliated with Kleiner Perkins Caufield &
Byers(6)
|
|
|
1,665,160
|
|
|
|
5.8
|
%
|
Directors and Named Executive Officers:
|
|
|
|
|
|
|
|
|
Julian C. Baker(2)(7)
|
|
|
5,399,034
|
|
|
|
18.9
|
%
|
Brook H. Byers(6)(7)
|
|
|
1,706,492
|
|
|
|
6.0
|
%
|
Fred E. Cohen, M.D., D.Phil.(4)(8)
|
|
|
79,370
|
|
|
|
*
|
|
Samuel D. Colella(3)(7)
|
|
|
2,391,372
|
|
|
|
8.4
|
%
|
Ginger L. Graham
|
|
|
|
|
|
|
*
|
|
Randall S. Livingston(9)
|
|
|
48,236
|
|
|
|
*
|
|
Woodrow A. Myers, Jr., M.D.(10)
|
|
|
41,562
|
|
|
|
*
|
|
Joffre B. Baker, Ph.D.(11)
|
|
|
443,583
|
|
|
|
1.5
|
%
|
G. Bradley Cole(12)
|
|
|
232,368
|
|
|
|
*
|
|
Kimberly J. Popovits(13)
|
|
|
528,820
|
|
|
|
1.8
|
%
|
Randal W. Scott, Ph.D.(14)
|
|
|
2,056,142
|
|
|
|
7.2
|
%
|
Steven Shak, M.D.(15)
|
|
|
562,624
|
|
|
|
2.0
|
%
|
All directors and executive officers as a group
(12 persons)(16)
|
|
|
13,489,603
|
|
|
|
45.8
|
%
|
|
|
|
* |
|
Represents beneficial ownership of less than 1%. |
|
|
|
(1) |
|
Unless otherwise stated, the address of each beneficial owner
listed on the table is
c/o Genomic
Health, Inc., 301 Penobscot Drive, Redwood City, California
94063. |
|
(2) |
|
According to Amendment No. 3 to Schedule 13D filed
jointly on June 10, 2008 by Julian C. Baker and
Felix J. Baker, Julian C. Baker and Felix J. Baker
share voting and dispositive power with respect to
5,374,284 shares of the Companys common stock,
including 173,897 shares owned by Baker Bros. Investments,
L.P., 193,759 shares owned by Baker/Tisch Investments,
L.P., 20,095 shares owned by Baker Bros. Investments |
17
|
|
|
|
|
II, L.P., 1,226,119 shares owned by Baker Biotech
Fund I, L.P., 3,492,192 shares owned by Baker Brothers
Life Sciences, L.P., 94,325 shares owned by 14159, L.P.,
each, a limited partnership, and 173,897 shares owned by
FBB Associates, a general partnership of which Julian C. Baker
and Felix J. Baker are the sole partners. In addition, as of the
date of the filing, Julian C. Baker had shared voting and
dispositive power with respect to an option to purchase
24,750 shares of the Companys common stock. The
principal address for entities affiliated with Baker Brothers
Advisors is 677 Madison Avenue, New York, New York 10065.
Mr. Baker disclaims beneficial ownership of the shares held
by these entities except to the extent of his pecuniary interest
therein. |
|
(3) |
|
According to Amendment No. 1 to Schedule 13G filed
jointly on March 2, 2009 by Versant Venture Capital I,
L.P., Versant Side Fund I, L.P., Versant Affiliates
Fund I-A,
L.P., Versant Affiliates
Fund I-B,
L.P., Versant Ventures I, LLC, Brian G. Atwood, Samuel D.
Colella, Ross A. Jaffe, William J. Link, Donald B. Milder,
Barbara N. Lubash and Rebecca B. Robertson (together, the
Versant Entities), Versant Venture Capital I,
L.P. has shared power to vote and dispose of or direct the
disposition of 2,192,150 shares, Versant Side Fund I.
L.P. has shared power to vote and dispose of or direct the
disposition of 42,994 shares, Versant Affiliates
Fund I-A,
L.P. has shared power to vote and dispose of or direct the
disposition of 42,412 shares, and Versant Affiliates
Fund I-B,
L.P. has shared power to vote and dispose of or direct the
disposition of 89,066 shares. In addition, as of the date
of the filing, Mr. Colella had shared voting and
dispositive power with respect to an option to purchase
24,750 shares of common stock held by Mr. Colella for
the benefit of Versant Ventures I, LLC. Versant
Ventures I, LLC is the general partner of Versant Venture
Capital I, L.P., Versant Side Fund I, L.P., Versant
Affiliates
Fund I-A,
L.P. and Versant Affiliates
Fund I-B,
L.P (the Funds). Brian G. Atwood, Samuel D. Colella,
Ross A. Jaffe, William J. Link, Donald B. Milder, Barbara N.
Lubash and Rebecca B. Robertson, as the Managing Directors of
Versant Ventures I, LLC, have shared power to vote and
dispose of or direct the disposition of 2,391,372 shares of
our common stock. The principal address for the Versant Entities
is 3000 Sand Hill Road, #4-210, Menlo Park, California 94025.
Mr. Colella, as a managing director of Versant
Ventures I, LLC, is deemed to have shared voting and
investment power with respect to the shares held by the Funds.
Mr. Colella disclaims beneficial ownership of the shares
held by the Funds, except to the extent of his pecuniary
interest therein. |
|
(4) |
|
According to information provided by Tarrant Capital Advisors,
Inc. (Tarrant), Tarrant is the beneficial owner of
and has the sole power to vote and dispose of or direct the
disposition of the shares reported opposite its name in the
table above; such shares are held directly by TPG Ventures, L.P.
(TPG Ventures) and TPG Biotechnology Partners, L.P.
(TPG Biotech and, together with TPG Ventures, the
TPG Funds). Tarrant is the sole shareholder of
Tarrant Advisors, Inc., which is the general partner of TPG
Ventures Professional, L.P., which is the general partner of TPG
Ventures Partners, L.P., which is the managing member of TPG
Ventures Holdings, L.L.C. (TPG Ventures Holdings),
which is the sole member of each of TPG Ventures Advisors, LLC
(TPG Ventures Advisors) and TPG Biotech Advisors,
L.L.C. (TPG Biotech Advisors). TPG Ventures Advisors
is the general partner of TPG Ventures GenPar, L.P., which is
the general partner of TPG Ventures. TPG Biotech Advisors is the
general partner of TPG Biotechnology GenPar, L.P., which is the
general partner of TPG Biotech. The principal address for the
TPG Funds is 301 Commerce Street, Suite 3300,
Fort Worth, Texas 76102. David Bonderman and James G.
Coulter are officers, directors and sole shareholders of Tarrant
and therefore may be deemed to beneficially own these shares.
Dr. Cohen, who is also one of our directors, is a partner
at TPG. Dr. Cohen disclaims beneficial ownership of the
shares held by the TPG Funds. |
|
(5) |
|
According to a Schedule 13G filed jointly on
February 13, 2009 by AXA Financial, Inc., AXA, AXA
Assurances I.A.R.D. Mutuelle and AXA Assurances Vie Mutuelle,
AllianceBernstein L.P., an investment advisor and subsidiary of
AXA Financial Inc., has sole power to vote 1,324,430 shares
and sole power to dispose of or direct the disposition of
1,438,220 shares that are beneficially owned by
unaffiliated third-party client accounts managed by
AllianceBernstein L.P., AXA Equitable Life Insurance Company, a
subsidiary of AXA Financial, Inc., has sole power to vote and to
dispose of or direct the disposition of 191,120 shares, and
AXA Framlington, a subsidiary of AXA, has sole power to vote and
to dispose of or direct the disposition of 122,314 shares.
The principal address for AXA Financial, Inc. is 1290 Avenue of
the Americas, New York, New York 10104. The principal address
for AXA is 25, avenue Matignon, 75008 Paris, France. The
principal address for AXA Assurances I.A.R.D. Mutuelle and AXA
Assurances Vie Mutuelle AXA is 26, rue Drouot, 75009 Paris,
France. |
18
|
|
|
(6) |
|
According to a Schedule 13G filed jointly on
February 14, 2006 by Kleiner Perkins Caufield &
Byers X-A, L.P., Kleiner Perkins Caufield & Byers X-B,
L.P. and KPCB X Associates, L.P. 1,619,483 shares are
beneficially owned by Kleiner Perkins Caufield & Byers
X-A, L.P. and 45,677 shares are beneficially owned by
Kleiner Perkins Caufield & Byers X-B, L.P. KPCB X
Associates, L.P. is the general partner of Kleiner Perkins
Caufield & Byers X-A, L.P. and Kleiner Perkins
Caufield & Byers X-B, L.P. and has shared power to
vote and dispose of or direct the disposition of the shares of
stock held by Kleiner Perkins Caufield & Byers X-A,
L.P. and Kleiner Perkins Caufield & Byers X-B, L.P.
The principal address for the Kleiner Perkins
Caufield & Byers affiliated entities is 2750 Sand Hill
Road, Menlo Park, California 94025. Mr. Byers, who is also
one of our directors, is a managing member of the general
partner and, as such, has shared voting and investment authority
over these shares. Mr. Byers disclaims beneficial ownership
of these shares except to the extent of his pecuniary interest
therein. |
|
(7) |
|
Includes options to purchase 24,750 shares of common stock
that are exercisable within 60 days of April 17, 2009. |
|
(8) |
|
Includes options to purchase 24,750 shares of common stock
that are exercisable within 60 days of April 17, 2009
and 6,068 shares held in a family trust, of which
Dr. Cohen is a trustee. |
|
(9) |
|
Includes options to purchase 42,087 shares of common stock
that are exercisable within 60 days of April 17, 2009. |
|
(10) |
|
Includes options to purchase 29,562 shares of common stock
that are exercisable within 60 days of April 17, 2009. |
|
(11) |
|
Includes options to purchase 149,346 shares of common stock
that are exercisable within 60 days of April 17, 2009.
Also includes 36,113 shares held by the Baker Charitable
Remainder Trust and 66,343 shares held by the Joffre and
Diana J. Baker 1998 Trust. Dr. Baker and his wife are
trustees and beneficiaries of both trusts. |
|
(12) |
|
Includes options to purchase 228,368 shares of common stock
that are exercisable within 60 days of April 17, 2009.
Also includes 1,000 shares held by Mr. Coles
daughter. |
|
(13) |
|
Includes options to purchase 149,346 shares of common stock
that are exercisable within 60 days of April 17, 2009.
Also includes 8,670 shares held by Ms. Popovits
son. |
|
(14) |
|
Includes options to purchase 79,999 shares of common stock
that are exercisable within 60 days of April 17, 2009.
Also includes 5,199 shares held for the benefit of
Dr. Scotts children, of which Dr. Scotts
sister is trustee. |
|
(15) |
|
Includes options to purchase 149,346 shares of common stock
that are exercisable within 60 days of April 17, 2009. |
|
(16) |
|
Includes options to purchase 927,054 shares of common stock
that are exercisable within 60 days of April 17, 2009. |
19
Report of
the Audit Committee
The Audit Committee operates under a written charter adopted by
the board of directors. A link to the Audit Committee Charter is
available on our website at www.genomichealth.com. All members
of the Audit Committee meet the independence standards
established by The NASDAQ Stock Market.
The Audit Committee assists the board of directors in fulfilling
its responsibility to oversee managements implementation
of Genomic Healths financial reporting process. It is not
the duty of the Audit Committee to plan or conduct audits or to
determine that the financial statements are complete and
accurate and are in accordance with generally accepted
accounting principles, or to assess or determine the
effectiveness of the Companys internal control over
financial reporting. Management is responsible for the financial
statements and the reporting process, including the system of
internal control over financial reporting and disclosure
controls. The independent registered public accounting firm is
responsible for expressing an opinion on the conformity of those
financial statements with accounting principles generally
accepted in the United States and of the effectiveness of the
Companys internal control over financial reporting.
In discharging its oversight role, the Audit Committee reviewed
and discussed the audited financial statements contained in the
Annual Report on
Form 10-K
with Genomic Healths management and the independent
registered public accounting firm.
The Audit Committee has discussed issues deemed significant by
the independent registered public accounting firm, including
those required by AICPA Professional Standards, Vol. 1, AU
section 380, as adopted by the Public Company Accounting
Oversight Board in Rule 3200T. In addition, the Audit
Committee has received the written disclosures and the letter
from the independent registered public accounting firm required
by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent registered public
accounting firms communications with the Audit Committee
concerning independence, and has discussed with the independent
registered public accounting firm such firms independence.
The Audit Committee has discussed with Genomic Healths
independent registered public accounting firm, with and without
management present, their evaluations of Genomic Healths
internal control over financial reporting and the overall
quality of Genomic Healths financial reporting.
In reliance on the reviews and discussion with management and
the independent registered public accounting firm referred to
above, the Audit Committee recommended to the board of
directors, and the board approved, the inclusion of the audited
financial statements in Genomic Healths Annual Report on
Form 10-K
for the year ended December 31, 2008, for filing with the
SEC. The Audit Committee has appointed Ernst & Young
LLP to serve as Genomic Healths independent registered
public accounting firm for the 2009 fiscal year.
Audit Committee
Randall S. Livingston
Fred E. Cohen, M.D., D.Phil.
Samuel D. Colella
20
Proposal 2
Approval
of the Amended and Restated Genomic Health, Inc. 2005 Stock
Incentive Plan
In January 2009, the board of directors amended and restated our
2005 Stock Incentive Plan, subject to the approval of our
stockholders at the Annual Meeting. The following summary of the
principal features of the Plan is qualified by reference to the
terms of the Plan, a copy of which is available without charge
upon stockholder request to Secretary, Genomic Health, Inc., 301
Penobscot Drive, Redwood City, California 94063. The Plan has
also been filed electronically with the Securities and Exchange
Commission together with this Proxy Statement, and can be
accessed on the SECs web site at
http://www.sec.gov.
Description
of Amendments
The amended and restated Plan approved by the board of directors
and submitted for stockholder approval includes a provision that
would increase the number of shares of our common stock reserved
for issuance under the Plan from 5,000,000 to 8,980,000. The
amended and restated Plan also extends the term under which
awards may be granted under the Plan until January 27,
2019. In addition, the introductory paragraph of
Section 11(a) of the Plan was revised to provide that
adjustments in the number of shares available for issuance under
the Plan in the event of stock splits, dividends or other
changes shall be as appropriate and equitable.
We are also asking our stockholders to approve the material
terms of the Plan to preserve corporate income tax deductions
that may otherwise be disallowed pursuant to Section 162(m)
of the Internal Revenue Code of 1986, as amended (the
Code). Section 162(m) limits a
corporations income tax deduction for compensation paid to
certain executive officers who are covered employees
within the meaning of Section 162(m) to $1,000,000 per
person per year unless the compensation qualifies as
performance-based compensation. For a grant under
the Plan to qualify as performance-based
compensation, among other requirements, the Plan must have
been approved by our public stockholders. Awards granted under
the Plan during a transition period ending on the earlier of the
date of a material modification of the Plan or the Annual
Meeting are, however, exempt from the deduction disallowance
rule of Section 162(m). The availability of the exemption
for awards of performance-based compensation therefore depends
upon obtaining approval of the Plan by our public stockholders.
If stockholder approval of the amended and restated Plan is not
obtained, no additional grants of stock options and no awards of
stock appreciation rights, restricted shares or stock units will
be made to our executive officers under the Plan following the
Annual Meeting.
The
Plan
The Plan was adopted prior to, but became effective upon, our
initial public offering in September 2005. The purpose of the
Plan is to assist management in the recruitment, retention and
motivation of employees, outside directors and consultants who
are in a position to make material contributions to our
long-term success and the creation of stockholder value. The
Plan offers a significant incentive to encourage our employees,
outside directors and consultants by enabling those individuals
to acquire shares of our common stock, thereby increasing their
proprietary interest in the growth and success of our Company.
The Plan provides for the direct award or sale of shares of
common stock (including restricted stock), the award of stock
units and stock appreciation rights, and the grant of both
incentive stock options to purchase common stock intended to
qualify for preferential tax treatment under Section 422 of
the Code and nonstatutory stock options to purchase common stock
that do not qualify for such treatment under the Code. All
employees (including officers) and directors of the Company or
any subsidiary and any consultant who performs services for the
Company or a subsidiary are eligible to purchase shares of
common stock and to receive awards of shares or grants of
nonstatutory stock options. Only employees are eligible to
receive grants of incentive stock options, stock units or stock
appreciation rights.
As of December 31, 2008, 387 officers and employees and
seven non-employee directors were eligible to be considered to
purchase shares of common stock and to receive awards under the
Plan. As of December 31, 2008, 129,011 shares had been
issued upon exercise of options granted under the Plan, options
to purchase 3,815,517 shares
21
were outstanding, and 1,055,472 shares remained available
for future grant. No restricted stock, stock units or stock
appreciation rights have been granted under the Plan.
Administration
The Plan is administered by the Compensation Committee of our
board of directors. Subject to the limitations set forth in the
Plan, the Compensation Committee has the authority to determine,
among other things, to whom awards will be granted, the number
of shares subject to awards, the term during which an option or
stock appreciation right may be exercised and the rate at which
the awards may vest, including any performance criteria to which
vesting may be subject. The Compensation Committee also has the
authority to determine the consideration and methodology of
payment for awards.
The board of directors has created a second committee, the
Non-Management Stock Option Committee, which is authorized to
make awards and grants under the Plan to new employees, other
than to any member of our board of directors, individuals
designated by our board of directors as Section 16
officers, and employees who hold the title of Vice
President or above. This committee may not make any awards or
grants to any new employee that total more than
50,000 shares of common stock.
Maximum
Shares and Award Limits
Under the Plan, the maximum number of shares of common stock
authorized for issuance as awards was initially set at
5,000,000. As amended and restated, 8,980,000 shares will
be available for issuance under the Plan. All awards granted
since our initial public offering have been granted under the
Plan.
No award recipient may be granted incentive stock options that
are exercisable for the first time in any calendar year for
common stock having a total fair market value (determined as of
the option grant) in excess of $100,000. In addition, no one
award recipient may receive options, stock appreciation rights,
restricted shares or stock units under the Plan in any calendar
year that relate to more than 1,650,000 shares.
The exercise price of each option will be set by the
Compensation Committee, subject to the following limits. The
exercise price of an incentive stock option cannot be less than
100% of the common stocks fair market value on the date
the option is granted, and in the event an award recipient is
deemed to be a 10% owner of our Company or one of our
subsidiaries, the exercise price of an incentive stock option
cannot be less than 110% of the common stocks fair market
value on the date the option is granted. The exercise price of a
nonqualified stock option cannot be less than 85% of the common
stocks fair market value on the date the option is
granted. On March 31, 2009, the closing price for our
common stock on The NASDAQ Global Market was $24.38. The maximum
period in which an option may be exercised will be fixed by the
Compensation Committee but cannot exceed ten years, and in the
event an award recipient is deemed to be a 10% owner of our
Company or one of our subsidiaries, the maximum period for an
incentive stock option granted to such award recipient cannot
exceed five years.
These limitations, and the terms of outstanding awards, shall be
adjusted as appropriate and equitable in the event of a stock
dividend, stock split, reclassification of stock or similar
events. If restricted shares are forfeited, then such shares
will become available for awards under the Plan. If stock units,
options, or stock appreciation rights are forfeited or terminate
for any other reason before being settled or exercised, then the
corresponding shares will again become available for awards
under the Plan. If stock units are settled or stock appreciation
rights are exercised, then only the number of shares, if any,
actually issued in settlement of such stock units or stock
appreciation rights will reduce the number of available shares
and the balance will become available for awards under the Plan.
Stock
Options
The terms of any awards of stock options under the Plan will be
set forth in a stock option agreement to be entered into between
the Company and the recipient. The Compensation Committee will
determine the terms and conditions of such option grants, which
need not be identical. Stock options may provide for the
accelerated exercisability in the event of the award
recipients death, disability, or retirement or other
events and may provide for expiration prior to the end of its
term in the event of the termination of the award
recipients service. The
22
Compensation Committee may modify, extend or renew outstanding
options or may accept the cancellation of outstanding options in
return for the grant of new options for the same or a different
number of shares and at the same or a different exercise price,
or in return for the grant of the same or a different number of
shares. The option price may be paid in cash or, to the extent
that the stock option agreement so provides, by surrendering
shares of common stock, in consideration of services rendered to
the Company, by delivery of an irrevocable direction to a
securities broker to sell shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate
exercise price, by delivery of an irrevocable direction to a
securities broker or lender to pledge shares, as security for a
loan, and to deliver all or part of the loan proceeds to the
Company in payment of the aggregate exercise price, by
delivering a full-recourse promissory note, or in any other form
that is consistent with applicable laws, regulations and rules.
Options generally will be nontransferable except in the event of
the award recipients death, but the Compensation Committee
may allow the transfer of non-qualified stock options through a
gift or domestic relations order to the award recipients
family members.
Stock options granted under the Plan generally must be exercised
by the optionee before the earlier of the expiration of such
option or 90 days after termination of the optionees
employment, except that the period may be extended on certain
events including death and termination of employment due to
disability. Each stock option agreement will set forth the
extent to which the award recipient will have the right to
exercise the option following the termination of the
recipients service with us, and the right to exercise the
option of any executors or administrators of the award
recipients estate or any person who has acquired such
options directly from the award recipient by bequest or
inheritance.
Options granted to non-employee directors generally must be
exercised before the earlier of the expiration of the option or
12 months after termination of service as a director, and
are subject to acceleration of vesting in the event of a change
in control.
Automatic
Option Grants to Directors
Each non-employee director who first joins our board of
directors after the effective date of the Plan receives a
nonstatutory option to purchase 16,500 shares of our common
stock on the date of election to the board. Twenty-five percent
of the shares subject to each option vest and become exercisable
on the first anniversary of the date of grant. The balance of
the shares vest and become exercisable monthly over a three year
period beginning on the day that is one month after the first
anniversary of the date of grant, at a monthly rate of 2.0833%
of the number of shares subject to such options. In addition, on
the business day after each annual meeting of our stockholders,
each non-employee director who was not elected to the board of
directors for the first time at such meeting receives an option
to purchase 8,250 shares of common stock, provided that the
non-employee director has served on the board for at least six
months. Each annual option granted to non-employee directors
vests and becomes exercisable on the first anniversary of the
date of grant, or on the first business day following the next
regular annual meeting of stockholders after the date of grant
in the event such meeting occurs prior to the first anniversary
date of the grant. Options granted to non-employee directors
will become fully vested if a change in control occurs with
respect to our Company during the directors service.
Restricted
Shares
The terms of any awards of restricted shares under the Plan will
be set forth in a restricted share agreement to be entered into
between the Company and the recipient. The Compensation
Committee will determine the terms and conditions of such
restricted share agreements, which need not be identical. A
restricted share award may be subject to vesting requirements or
transfer restrictions or both. Award recipients who are granted
restricted shares generally have all of the rights of a
stockholder with respect to such shares. Restricted shares may
be issued for consideration determined by the Compensation
Committee, including cash, cash equivalents, full-recourse
promissory notes, past services and future services.
Restricted
Stock Units
The terms of any awards of stock units under the Plan will be
set forth in a restricted stock unit agreement to be entered
into between the Company and the recipient. The Compensation
Committee will determine the terms and
23
conditions of such restricted stock unit agreements, which need
not be identical. Stock units give an award recipient the right
to acquire a specified number of shares of stock, or at the
Compensation Committees discretion, the equivalent value
in cash, at a future date upon the satisfaction of certain
vesting conditions based upon a vesting schedule or performance
criteria established by the Compensation Committee. Stock units
may be granted in consideration of a reduction in the award
recipients other compensation, but no cash consideration
is typically required of the award recipient. Unlike restricted
stock, the stock underlying stock units will not be issued until
the stock units have vested, and recipients of stock units
generally will have no voting or dividend rights prior to the
time the vesting conditions are satisfied.
Stock
Appreciation Rights
The terms of any awards of stock appreciation rights under the
Plan will be set forth in an agreement to be entered into
between the Company and the recipient. The Compensation
Committee will determine the terms, conditions and restrictions
of any such agreements, which need not be identical. A stock
appreciation right generally entitles the award recipient to
receive a payment upon exercise equal to the amount by which the
fair market value of a share of common stock on the date of
exercise exceeds the value of a share of common stock on the
date of grant. The amount payable upon the exercise of a stock
appreciation right may be settled in cash or by the issuance of
shares of common stock.
Qualifying
Performance Criteria
The Plan sets forth performance criteria used in the case of an
award intended to qualify as performance-based
compensation under Section 162(m) of the Code. To
qualify as a performance-based compensation, the
number of shares or other benefits granted, issued, retainable
or vested under an award may be made subject to the attainment
of performance goals for a specified period of time relating to
one or more of the following performance criteria, either
individually, alternatively or in any combination, applied to
either us as a whole or to a business unit or subsidiary, either
individually, alternatively or in any combination, and measured
either annually or cumulatively over a period of years, on an
absolute basis or relative to a pre-established target, to
previous years results or to a designated comparison group
or index, in each case as specified by the Compensation
Committee in the award: (a) cash flow, (b) earnings
per share, (c) earnings before interest, taxes and
amortization, (d) return on equity, (e) total
stockholder return, (f) share price performance,
(g) return on capital, (h) return on assets or net
assets, (i) revenue, (j) income or net income,
(k) operating income or net operating income,
(l) operating profit or net operating profit,
(m) operating margin or profit margin, (n) return on
operating revenue, (o) return on invested capital, or
(p) market segment shares. The Compensation Committee may
appropriately adjust any evaluation of performance under a
qualifying performance criteria to exclude any of the following
events that occurs during a performance period: (i) asset
write-downs, (ii) litigation or claim judgments or
settlements, (iii) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting
reported results, (iv) accruals for reorganization and
restructuring programs and (v) any extraordinary
nonrecurring items as described in Accounting Principles Board
Opinion No. 30
and/or in
managements discussion and analysis of financial condition
and results of operations appearing in our annual report to
stockholders for the applicable year. If applicable, the
Compensation Committee shall determine the qualifying
performance criteria not later than the 90th day of the
performance period, and shall determine and certify, for each
award recipient, the extent to which the qualifying performance
criteria have been met. The Compensation Committee may not in
any event increase the amount of compensation payable under the
Plan upon the attainment of a qualifying performance goal to an
award recipient who is a covered employee within the
meaning of Section 162(m).
Amendment
and Termination
No awards may be granted under the Plan after January 27,
2019. The board of directors may amend or terminate the Plan at
any time, but an amendment will not become effective without the
approval of our stockholders to the extent required by
applicable laws, regulations or rules. No amendment or
termination of the Plan will affect an award recipients
rights under outstanding awards without the award
recipients consent.
24
Effect of
Certain Corporate Events
In the event of a subdivision of the outstanding common stock or
a combination or consolidation of the outstanding common stock
(by reclassification or otherwise) into a lesser number of
shares, a spin-off or a similar occurrence, or declaration of a
dividend payable in common stock or, if in an amount that has a
material effect on the price of the shares, in cash, the
Compensation Committee will make adjustments in the number
and/or
exercise price of options
and/or the
number of shares available under the Plan, as appropriate.
In the event of a merger or other reorganization, outstanding
options will be subject to the agreement of merger or
reorganization. Such agreement may provide for the assumption of
outstanding options by the surviving corporation or its parent,
for their continuation by the Company (if the Company is the
surviving corporation), for payment of a cash settlement equal
to the difference between the amount to be paid for one share
under the agreement of merger or reorganization and the exercise
price for each option, or for the acceleration of the
exercisability of each option followed by the cancellation of
options not exercised, in all cases without the optionees
consent.
Federal
Income Tax Aspects of Awards Under the Plan
This is a brief summary of the federal income tax aspects of
awards that may be made under the Plan based on existing
U.S. federal income tax laws. This summary provides only
the basic tax rules. It does not describe a number of special
tax rules, including the alternative minimum tax and various
elections that may be applicable under certain circumstances. It
also does not reflect provisions of the income tax laws of any
municipality, state or foreign country in which a holder may
reside, nor does it reflect the tax consequences of a
holders death. The tax consequences of awards under the
Plan depend upon the type of award and, if the award is to an
executive officer, whether the award qualifies as
performance-based compensation under Section 162(m) of the
Code.
Incentive Stock Options. The recipient of an
incentive stock option generally will not be taxed upon grant of
the option. Federal income taxes are generally imposed only when
the shares of stock from exercised incentive stock options are
disposed of, by sale or otherwise. The amount by which the fair
market value of the stock on the date of exercise exceeds the
exercise price is, however, included in determining the option
recipients liability for the alternative minimum tax. If
the incentive stock option recipient does not sell or dispose of
the stock until more than one year after the receipt of the
stock and two years after the option was granted, then, upon
sale or disposition of the stock, the difference between the
exercise price and the market value of the stock as of the date
of exercise will be treated as a capital gain, and not ordinary
income. If a recipient fails to hold the stock for the minimum
required time, at the time of the disposition of the stock, the
recipient will recognize ordinary income in the year of
disposition generally in an amount equal to any excess of the
market value of the common stock on the date of exercise (or, if
less, the amount realized or disposition of the shares) over the
exercise price paid for the shares. Any further gain (or loss)
realized by the recipient generally will be taxed as short-term
or long-term gain (or loss) depending on the holding period. We
will generally be entitled to a tax deduction at the same time
and in the same amount as ordinary income is recognized by the
option recipient.
Nonqualified Stock Options. The recipient of
stock options not qualifying as incentive stock options
generally will not be taxed upon the grant of the option.
Federal income taxes are generally due from a recipient of
nonqualified stock options when the stock options are exercised.
The difference between the exercise price of the option and the
fair market value of the stock purchased on such date is taxed
as ordinary income. Thereafter, the tax basis for the acquired
stock is equal to the amount paid for the stock plus the amount
of ordinary income recognized by the recipient. We will
generally be entitled to a tax deduction at the same time and in
the same amount as ordinary income is recognized by the option
recipient by reason of the exercise of the option.
Other Awards. Recipients who receive
restricted stock unit awards will generally recognize ordinary
income when they receive shares upon settlement of the awards,
in an amount equal to the fair market value of the shares at
that time. Recipients who receive awards of restricted stock
subject to a vesting requirement generally recognize ordinary
income at the time vesting occurs, in an amount equal to the
fair market value of the stock at that time minus the amount, if
any, paid for the stock. However, a recipient who receives
restricted shares which are not vested may, within 30 days
of the date the shares are transferred, elect in accordance with
Section 83(b) of the Code to recognize ordinary
compensation income at the time of transfer of the shares rather
than upon the vesting dates.
25
We will generally be entitled to a tax deduction at the same
time and in the same amount as ordinary income is recognized by
the recipient.
Section 162(m). Section 162(m) would
render non-deductible to us certain compensation in excess of
$1,000,000 received in any year by certain executive officers
unless such excess is performance-based compensation
(as defined in the Code) or is otherwise exempt from
Section 162(m), such as under the transition rule described
above. The availability of the exemption for awards of
performance-based compensation not covered by the transition
period rule depends upon obtaining approval of the Plan by our
public stockholders. Assuming stockholder approval, grants of
options and stock appreciation rights, and grants of restricted
shares and stock units conditioned on attainment of one or more
performance goals set forth in the Plan, may qualify as
performance-based compensation and be exempt from
Section 162(m).
Section 409A. Any deferrals made under
the Plan, including awards granted under the Plan that are
considered to be deferred compensation, must satisfy the
requirements of Section 409A of the Code to avoid adverse
tax consequences to participants. These requirements include
limitations on election timing, acceleration of payments, and
distributions. We intend to structure any deferrals and awards
under the Plan to meet the applicable tax law requirements.
Plan
Benefits
The Compensation Committee has not made any determination with
respect to future awards under the Plan, and any allocation of
such awards will be made only in accordance with the provisions
of the Plan, including the additional shares of stock that the
stockholders are being asked to approve. Because awards under
the Plan are subject to the discretion of the Compensation
Committee, awards under the Plan for the current or any future
year are not determinable. Future option exercise prices under
the Plan are not determinable because they will be based upon
the fair market value of our common stock on the date of grant.
No stock units, shares of restricted stock or stock appreciation
rights have been awarded under the Plan.
Our named executive officers received option grants under the
Plan as set forth in this Proxy Statement in the table entitled
Grants of Plan-Based Awards under the caption
Executive Compensation. Our non-employee directors
received option grants under the Plan as set forth in this Proxy
Statement in the section entitled Director
Compensation. The following table sets forth information
with respect to stock options granted under the Plan in 2008 to
the following:
|
|
|
|
|
|
|
Number of
|
|
Name and Position
|
|
Options(#)(1)
|
|
|
All current executive officers as a group (5 persons)
|
|
|
230,000
|
|
All current non-employee directors as a group (7 persons)
|
|
|
66,000
|
|
All employees and consultants, including current officers who
are not executive officers, as a group
|
|
|
895,380
|
|
|
|
|
(1) |
|
All options were granted at an exercise price per share equal to
the fair market value on the date of grant. |
Required
Vote
Approval of the amended and restated 2005 Stock Incentive Plan
requires the affirmative vote of a majority of the shares
present and voting at the Annual Meeting. Unless marked to the
contrary, proxies received will be voted FOR
approval of the amended and restated 2005 Stock Incentive Plan.
Your board of directors recommends a vote FOR approval of the
amended and restated 2005 Stock Incentive Plan.
26
Proposal 3
Ratification
of the Appointment of Independent Registered Public Accounting
Firm
The Audit Committee has appointed Ernst & Young LLP as
our independent registered public accounting firm for the year
ending December 31, 2009. Representatives of
Ernst & Young LLP are expected to be present at the
Annual Meeting. They will have an opportunity to make a
statement, if they desire to do so, and will be available to
respond to appropriate questions. Although stockholder
ratification of our independent registered public accounting
firm is not required by our Bylaws or otherwise, we are
submitting the selection of Ernst & Young LLP to our
stockholders for ratification to permit stockholders to
participate in this important corporate decision.
Principal
Accountant Fees and Services
Ernst & Young LLP has audited our financial statements
since our inception in 2000. Aggregate fees for professional
services rendered for us by Ernst & Young LLP for the
years ended December 31, 2008 and 2007 were as follows:
|
|
|
|
|
|
|
|
|
Services Provided
|
|
2008
|
|
|
2007
|
|
|
Audit
|
|
$
|
594,000
|
|
|
$
|
627,000
|
|
Audit-Related
|
|
|
|
|
|
|
|
|
Tax
|
|
|
49,000
|
|
|
|
59,000
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
643,000
|
|
|
$
|
686,000
|
|
|
|
|
|
|
|
|
|
|
Audit fees. For the years ended
December 31, 2008 and 2007, audit fees were for the
integrated audits of our annual financial statements and our
internal control over financial reporting and the review of
quarterly financial statements included in our quarterly reports
on
Form 10-Q.
For the year ended December 31, 2007, audit fees also
included services provided in connection with our Registration
Statement on
Form S-3,
including comfort letters and consents.
Tax fees. For the years ended
December 31, 2008 and 2007, tax fees were for the
preparation of our tax returns, tax planning and tax consulting
services. For the year December 31, 2007, tax fees also
included fees for a study of change in control under
Section 382 of the Code and a state and local nexus study.
Audit
Committee Pre-Approval Policies and Procedures
The Audit Committee has implemented pre-approval policies and
procedures related to the provision of audit and non-audit
services. Under these procedures, the Audit Committee
pre-approves both the type of services to be provided by
Ernst & Young LLP and the estimated fees related to
these services. All of the services in 2007 and 2008 were
pre-approved.
During the approval process, the Audit Committee considers the
impact of the types of services and the related fees on the
independence of the independent registered public accounting
firm. The services and fees must be deemed compatible with the
maintenance of that firms independence, including
compliance with rules and regulations of the SEC.
Throughout the year, the Audit Committee will review any
revisions to the estimates of audit and non-audit fees initially
approved.
Required
Vote
Ratification of the appointment of Ernst & Young LLP
requires the affirmative vote of a majority of the shares
present and voting at the Annual Meeting in person or by proxy.
Unless marked to the contrary, proxies received will be voted
FOR ratification of the appointment. In the event
ratification is not obtained, the Audit Committee will
27
review its future selection of our independent registered public
accounting firm but will not be required to select a different
independent registered public accounting firm.
Your board of directors recommends a vote FOR ratification of
Ernst & Young LLP as our independent registered public
accounting firm.
Stockholder
Proposals for the 2010 Annual Meeting
If a stockholder wishes to present a proposal to be considered
for inclusion in our proxy statement for the 2010 Annual Meeting
of Stockholders, the proponent and the proposal must comply with
the proxy proposal submission rules of the SEC. One of the
requirements is that the proposal be received by Genomic
Healths Secretary no later than December 22, 2009.
Proposals we receive after that date will not be included in the
proxy statement. We urge stockholders to submit proposals by
Certified Mail Return Receipt Requested.
A stockholder proposal not included in our proxy statement for
the 2010 Annual Meeting will not be eligible for presentation at
the meeting unless the stockholder gives timely notice of the
proposal in writing to our Secretary at our principal executive
offices and otherwise complies with the provisions of our
Bylaws. To be timely, our Bylaws provide that we must have
received the stockholders notice not less than
90 days nor more than 120 days prior to the first
anniversary date of the preceding years annual meeting;
however, if we have not held an annual meeting in the previous
year or the date of the annual meeting is called for a date that
is more than 30 days before or more than 60 days after
the first anniversary date of the preceding years annual
meeting, we must have received the stockholders notice not
later than the close of business on the later of the
90th day prior to the date of the scheduled annual meeting
or the 7th day following the earlier of the day on which
notice of the annual meeting date was mailed or the day of the
first public announcement of the annual meeting date. An
adjournment or postponement of an annual meeting will not
commence a new time period or extend any time period for the
giving of the stockholders notice described above. The
stockholders notice must set forth, as to each proposed
matter, the information required by our Bylaws. The presiding
officer of the meeting may refuse to acknowledge any matter not
made in compliance with the foregoing procedure.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers and directors, and persons who
own more than 10% of a registered class of our equity
securities, to file reports of ownership on Forms 3, 4 and
5 with the SEC. Officers, directors and greater than 10%
stockholders are required to furnish us with copies of all
Forms 3, 4 and 5 they file.
Based solely on our review of the copies of such forms we have
received and written representations from certain reporting
persons that they filed all required reports, we believe that
all of our officers, directors and greater than 10% stockholders
complied with all Section 16(a) filing requirements
applicable to them with respect to transactions during 2008,
except for Forms 4 related to sales of common stock
pursuant to a
Rule 10b5-1
sales plan by Dr. Baker on November 12, 2008 and
December 10, 2008, which incorrectly reported that an
aggregate of 9,258 shares were sold from the Baker Family
Charitable Remainder Trust. On March 6, 2009, amended
Forms 4 were filed to correctly report that the shares sold
on these dates were actually held directly in
Dr. Bakers name.
Other
Matters
Your board of directors does not know of any other business that
will be presented at the Annual Meeting. If any other business
is properly brought before the Annual Meeting, the proxy holders
will vote in accordance with their judgement unless you direct
them otherwise in your proxy instructions.
28
Whether or not you intend to be present at the Annual Meeting,
we urge you to vote by signing and mailing the enclosed proxy or
submitting your proxy by telephone or the Internet promptly.
By Order of the Board of Directors.
G. Bradley Cole
Chief Operating Officer,
Chief Financial Officer and Secretary
Redwood City, California
April 30, 2009
Our 2008 Annual Report on
Form 10-K
has been mailed with this Proxy Statement. We will provide
copies of exhibits to our Annual Report on
Form 10-K,
but will charge a reasonable fee per page to any requesting
stockholder. Stockholders may make such requests in writing to
Secretary, Genomic Health, Inc., 301 Penobscot Drive, Redwood
City, California 94063. The request must include a
representation by the stockholder that as of April 17,
2009, the stockholder was entitled to vote at the Annual
Meeting. Our
10-K and
exhibits are also available at www.genomichealth.com.
29
GENOMIC HEALTH, INC.
2005 STOCK INCENTIVE PLAN
(Adopted by the Board on September 8, 2005,
and amended and restated by the Board on January 28, 2009.)
Table of Contents
|
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|
Page |
SECTION 1. ESTABLISHMENT AND PURPOSE |
|
|
1 |
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|
|
SECTION 2. DEFINITIONS |
|
|
1 |
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|
|
|
|
|
(a) Affiliate |
|
|
1 |
|
|
(b) Award |
|
|
1 |
|
|
(c) Board of Directors |
|
|
1 |
|
|
(d) Change in Control |
|
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1 |
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|
(e) Code |
|
|
2 |
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|
(f) Committee |
|
|
2 |
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|
(g) Company |
|
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2 |
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|
(h) Consultant |
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|
3 |
|
|
(i) Employee |
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3 |
|
|
(j) Exchange Act |
|
|
3 |
|
|
(k) Exercise Price |
|
|
3 |
|
|
(l) Fair Market Value |
|
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3 |
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|
(m) ISO |
|
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3 |
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|
(n) Nonstatutory Option or NSO |
|
|
3 |
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|
(o) Offeree |
|
|
4 |
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|
(p) Option |
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4 |
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(q) Optionee |
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|
4 |
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|
(r) Outside Director |
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4 |
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|
(s) Parent |
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4 |
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(t) Participant |
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4 |
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|
(u) Plan |
|
|
4 |
|
|
(v) Purchase Price |
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|
4 |
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|
(w) Restricted Share |
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4 |
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|
(x) Restricted Share Agreement |
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4 |
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|
(y) SAR |
|
|
4 |
|
|
(z) SAR Agreement |
|
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4 |
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|
(aa) Service |
|
|
4 |
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|
(bb) Share |
|
|
5 |
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|
(cc) Stock |
|
|
5 |
|
|
(dd) Stock Option Agreement |
|
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5 |
|
|
(ee) Stock Unit |
|
|
5 |
|
-i-
|
|
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|
Page |
(ff) Stock Unit Agreement |
|
|
5 |
|
|
(gg) Subsidiary |
|
|
5 |
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|
|
(hh) Total and Permanent Disability |
|
|
5 |
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|
|
SECTION 3. ADMINISTRATION |
|
|
5 |
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|
(a) Committee Composition |
|
|
5 |
|
|
(b) Committee for Non-Officer Grants |
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5 |
|
|
(c) Committee Procedures |
|
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6 |
|
|
(d) Committee Responsibilities |
|
|
6 |
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SECTION 4. ELIGIBILITY |
|
|
7 |
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(a) General Rule |
|
|
7 |
|
|
(b) Automatic Grants to Outside Directors |
|
|
7 |
|
|
(c) Ten-Percent Stockholders |
|
|
8 |
|
|
(d) Attribution Rules |
|
|
8 |
|
|
(e) Outstanding Stock |
|
|
8 |
|
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|
|
SECTION 5. STOCK SUBJECT TO PLAN |
|
|
8 |
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|
|
(a) Basic Limitation |
|
|
8 |
|
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(b) Award Limitation |
|
|
9 |
|
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(c) Additional Shares |
|
|
9 |
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|
|
SECTION 6. RESTRICTED SHARES |
|
|
9 |
|
|
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|
|
(a) Restricted Stock Agreement |
|
|
9 |
|
|
(b) Payment for Awards |
|
|
9 |
|
|
(c) Vesting |
|
|
9 |
|
|
(d) Voting and Dividend Rights |
|
|
9 |
|
|
(e) Restrictions on Transfer of Shares |
|
|
9 |
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|
SECTION 7. TERMS AND CONDITIONS OF OPTIONS |
|
|
10 |
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|
|
(a) Stock Option Agreement |
|
|
10 |
|
|
(b) Number of Shares |
|
|
10 |
|
|
(c) Exercise Price |
|
|
10 |
|
|
(d) Withholding Taxes |
|
|
10 |
|
|
(e) Exercisability and Term |
|
|
10 |
|
|
(f) Exercise of Options |
|
|
10 |
|
|
(g) Effect of Change in Control |
|
|
11 |
|
|
(h) No Rights as a Stockholder |
|
|
11 |
|
|
(i) Modification, Extension and Renewal of Options |
|
|
11 |
|
|
(j) Restrictions on Transfer of Shares |
|
|
11 |
|
|
(k) Buyout Provisions |
|
|
11 |
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|
|
SECTION 8. PAYMENT FOR SHARES |
|
|
11 |
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|
|
(a) General Rule |
|
|
11 |
|
-ii-
|
|
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Page |
(b) Surrender of Stock |
|
|
11 |
|
|
(c) Services Rendered |
|
|
12 |
|
|
(d) Cashless Exercise |
|
|
12 |
|
|
(e) Exercise/Pledge |
|
|
12 |
|
|
(f) Promissory Note |
|
|
12 |
|
|
(g) Other Forms of Payment |
|
|
12 |
|
|
(h) Limitations under Applicable Law |
|
|
12 |
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|
|
SECTION 9. STOCK APPRECIATION RIGHTS |
|
|
12 |
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|
|
(a) SAR Agreement |
|
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12 |
|
|
(b) Number of Shares |
|
|
12 |
|
|
(c) Exercise Price |
|
|
12 |
|
|
(d) Exercisability and Term |
|
|
13 |
|
|
(e) Effect of Change in Control |
|
|
13 |
|
|
(f) Exercise of SARs |
|
|
13 |
|
|
(g) Modification or Assumption of SARs |
|
|
13 |
|
|
(h) Buyout Provisions |
|
|
13 |
|
|
|
|
|
|
SECTION 10. STOCK UNITS |
|
|
13 |
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|
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|
|
|
(a) Stock Unit Agreement |
|
|
13 |
|
|
(b) Payment for Awards |
|
|
13 |
|
|
(c) Vesting Conditions |
|
|
14 |
|
|
(d) Voting and Dividend Rights |
|
|
14 |
|
|
(e) Form and Time of Settlement of Stock Units |
|
|
14 |
|
|
(f) Death of Recipient |
|
|
14 |
|
|
(g) Creditors Rights |
|
|
14 |
|
|
|
|
|
|
SECTION 11. ADJUSTMENT OF SHARES |
|
|
14 |
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|
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|
|
(a) Adjustments |
|
|
14 |
|
|
(b) Dissolution or Liquidation |
|
|
15 |
|
|
(c) Reorganizations |
|
|
15 |
|
|
(d) Reservation of Rights |
|
|
16 |
|
|
|
|
|
|
SECTION 12. DEFERRAL OF AWARDS |
|
|
16 |
|
|
|
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|
|
(a) Committee Powers |
|
|
16 |
|
|
(b) General Rules |
|
|
16 |
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|
|
SECTION 13. AWARDS UNDER OTHER PLANS |
|
|
16 |
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|
|
SECTION 14. PAYMENT OF DIRECTORS FEES IN SECURITIES |
|
|
17 |
|
|
|
|
|
|
(a) Effective Date |
|
|
17 |
|
|
(b) Elections to Receive NSOs, Restricted Shares or Stock Units |
|
|
17 |
|
|
(c) Number and Terms of NSOs, Restricted Shares or Stock Units |
|
|
17 |
|
-iii-
|
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|
Page |
SECTION 15. LEGAL AND REGULATORY REQUIREMENTS |
|
|
17 |
|
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|
|
SECTION 16. WITHHOLDING TAXES |
|
|
17 |
|
|
|
|
|
|
(a) General |
|
|
17 |
|
|
(b) Share Withholding |
|
|
17 |
|
|
|
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|
|
SECTION 17. OTHER PROVISIONS APPLICABLE TO AWARDS |
|
|
18 |
|
|
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|
|
(a) Transferability |
|
|
18 |
|
|
(b) Qualifying Performance Criteria |
|
|
18 |
|
|
|
|
|
|
SECTION 18. NO EMPLOYMENT RIGHTS |
|
|
18 |
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|
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|
|
SECTION 19. DURATION AND AMENDMENTS |
|
|
19 |
|
|
|
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|
|
(a) Term of the Plan |
|
|
19 |
|
|
(b) Right to Amend or Terminate the Plan |
|
|
19 |
|
|
(c) Effect of Termination |
|
|
19 |
|
|
|
|
|
|
SECTION 20. EXECUTION |
|
|
19 |
|
-iv-
GENOMIC HEALTH, INC.
2005 STOCK INCENTIVE PLAN
(As amended and restated on January 28, 2009)
SECTION 1. ESTABLISHMENT AND PURPOSE.
The Plan was adopted by the Board of Directors on September 8, 2005, and shall be effective as
of the date of the initial offering of Stock to the public pursuant to a registration statement
filed by the Company with the Securities and Exchange Commission (the Effective Date). The Plan
was amended and restated on January 28, 2009. The purpose of the Plan is to promote the long-term
success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside
Directors and Consultants to focus on critical long-range objectives, (b) encouraging the
attraction and retention of Employees, Outside Directors and Consultants with exceptional
qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder
interests through increased stock ownership. The Plan seeks to achieve this purpose by providing
for Awards in the form of restricted shares, stock units, options (which may constitute incentive
stock options or nonstatutory stock options) or stock appreciation rights.
SECTION 2. DEFINITIONS.
(a) Affiliate shall mean any entity other than a Subsidiary, if the Company and/or one or
more Subsidiaries own not less than 50% of such entity.
(b) Award shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit
under the Plan.
(c) Board of Directors shall mean the Board of Directors of the Company, as constituted
from time to time.
(d) Change in Control shall mean the occurrence of any of the following events:
(i) A change in the composition of the Board of Directors occurs, as a result of which
fewer than one-half of the incumbent directors are directors who either:
(A) Had been directors of the Company on the look-back date (as defined
below) (the original directors); or
(B) Were elected, or nominated for election, to the Board of Directors with the
affirmative votes of at least a majority of the aggregate of the original directors
who were still in office at the time of the election or nomination and the directors
whose election or nomination was previously so approved (the continuing
directors); or
-1-
(ii) Any person (as defined below) who by the acquisition or aggregation of
securities, is or becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Companys then outstanding securities ordinarily (and
apart from rights accruing under special circumstances) having the right to vote at
elections of directors (the Base Capital Stock); except that any change in the relative
beneficial ownership of the Companys securities by any person resulting solely from a
reduction in the aggregate number of outstanding shares of Base Capital Stock, and any
decrease thereafter in such persons ownership of securities, shall be disregarded until
such person increases in any manner, directly or indirectly, such persons beneficial
ownership of any securities of the Company; or
(iii) The consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, if persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other reorganization own
immediately after such merger, consolidation or other reorganization 50% or more of the
voting power of the outstanding securities of each of (A) the continuing or surviving entity
and (B) any direct or indirect parent corporation of such continuing or surviving entity; or
(iv) The sale, transfer or other disposition of all or substantially all of the
Companys assets.
For purposes of subsection (d)(i) above, the term look-back date shall mean the later of (1)
the Effective Date or (2) the date 24 months prior to the date of the event that may constitute a
Change in Control.
For purposes of subsection (d)(ii)) above, the term person shall have the same meaning as
when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other
fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent
or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of the Stock.
Any other provision of this Section 2(d) notwithstanding, a transaction shall not constitute a
Change in Control if its sole purpose is to change the state of the Companys incorporation or to
create a holding company that will be owned in substantially the same proportions by the persons
who held the Companys securities immediately before such transaction, and a Change in Control
shall not be deemed to occur if the Company files a registration statement with the United States
Securities and Exchange Commission for the initial offering of Stock to the public.
(e) Code shall mean the Internal Revenue Code of 1986, as amended.
(f) Committee shall mean the Compensation Committee as designated by the Board of Directors,
which is authorized to administer the Plan, as described in Section 3 hereof.
(g) Company shall mean Genomic Health, Inc., a Delaware corporation.
-2-
(h) Consultant shall mean a consultant or advisor who provides bona fide services to the
Company, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service
as a member of the Board of Directors) or a member of the board of directors of a Parent or a
Subsidiary, in each case who is not an Employee.
(i) Employee shall mean any individual who is a common-law employee of the Company, a
Parent, a Subsidiary or an Affiliate.
(j) Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
(k) Exercise Price shall mean, in the case of an Option, the amount for which one Share may
be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement.
Exercise Price, in the case of a SAR, shall mean an amount, as specified in the applicable SAR
Agreement, which is subtracted from the Fair Market Value of one Share in determining the amount
payable upon exercise of such SAR.
(l) Fair Market Value with respect to a Share, shall mean the market price of one Share,
determined by the Committee as follows:
(i) If the Stock was traded over-the-counter on the date in question but was not traded
on The Nasdaq Stock Market, then the Fair Market Value shall be equal to the last
transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall
be equal to the mean between the last reported representative bid and asked prices quoted
for such date by the principal automated inter-dealer quotation system on which the Stock is
quoted or, if the Stock is not quoted on any such system, by the Pink Sheets LLC;
(ii) If the Stock was traded on The Nasdaq Stock Market, then the Fair Market Value
shall be equal to the last reported sale price quoted for such date by The Nasdaq Stock
Market;
(iii) If the Stock was traded on a United States stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price reported for such
date by the applicable composite-transactions report; and
(iv) If none of the foregoing provisions is applicable, then the Fair Market Value
shall be determined by the Committee in good faith on such basis as it deems appropriate.
In all cases, the determination of Fair Market Value by the Committee shall be conclusive and
binding on all persons.
(m) ISO shall mean an employee incentive stock option described in Section 422 of the Code.
(n) Nonstatutory Option or NSO shall mean an employee stock option that is not an ISO.
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(o) Offeree shall mean an individual to whom the Committee has offered the right to acquire
Shares under the Plan (other than upon exercise of an Option).
(p) Option shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the
holder to purchase Shares.
(q) Optionee shall mean an individual or estate who holds an Option or SAR.
(r) Outside Director shall mean a member of the Board of Directors who is not a common-law
employee of, or paid consultant to, the Company, a Parent or a Subsidiary.
(s) Parent shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a Parent on a date after
the adoption of the Plan shall be a Parent commencing as of such date.
(t) Participant shall mean an individual or estate who holds an Award.
(u) Plan shall mean this 2005 Stock Incentive Plan of Genomic Health, Inc., as amended from
time to time.
(v) Purchase Price shall mean the consideration for which one Share may be acquired under
the Plan (other than upon exercise of an Option), as specified by the Committee.
(w) Restricted Share shall mean a Share awarded under the Plan.
(x) Restricted Share Agreement shall mean the agreement between the Company and the
recipient of a Restricted Share which contains the terms, conditions and restrictions pertaining to
such Restricted Shares.
(y) SAR shall mean a stock appreciation right granted under the Plan.
(z) SAR Agreement shall mean the agreement between the Company and an Optionee which
contains the terms, conditions and restrictions pertaining to his or her SAR.
(aa) Service shall mean service as an Employee, Consultant or Outside Director, subject to
such further limitations as may be set forth in the Plan or the applicable Stock Option Agreement,
SAR Agreement, Restricted Share Agreement or Stock Unit Agreement. Service does not terminate when
an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if
the terms of the leave provide for continued Service crediting, or when continued Service crediting
is required by applicable law. However, for purposes of determining whether an Option is entitled
to ISO status, an Employees employment will be treated as terminating 90 days after such Employee
went on leave, unless such Employees right to return to active work is guaranteed by law or by a
contract. Service terminates in any event when the approved leave ends, unless such Employee
immediately returns to active work. The Company determines which leaves count toward Service, and
when Service terminates for all purposes under the Plan.
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(bb) Share shall mean one share of Stock, as adjusted in accordance with Section 11 (if
applicable). All share numbers herein assume, and no adjustment shall be made in respect of, the
one-for-three reverse split of the Stock approved by the Board of Directors on the date of initial
adoption of the Plan.
(cc) Stock shall mean the Common Stock of the Company.
(dd) Stock Option Agreement shall mean the agreement between the Company and an Optionee
that contains the terms, conditions and restrictions pertaining to such Option.
(ee) Stock Unit shall mean a bookkeeping entry representing the equivalent of one Share, as
awarded under the Plan.
(ff) Stock Unit Agreement shall mean the agreement between the Company and the recipient of
a Stock Unit which contains the terms, conditions and restrictions pertaining to such Stock Unit.
(gg) Subsidiary shall mean any corporation, if the Company and/or one or more other
Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding
stock of such corporation. A corporation that attains the status of a Subsidiary on a date after
the adoption of the Plan shall be considered a Subsidiary commencing as of such date.
(hh) Total and Permanent Disability shall mean permanent and total disability as defined by
section 22(e)(3) of the Code.
SECTION 3. ADMINISTRATION.
(a) Committee Composition. The Plan shall be administered by the Committee. The Committee
shall consist of two or more directors of the Company, who shall be appointed by the Board. In
addition, the composition of the Committee shall satisfy (i) such requirements as the Securities
and Exchange Commission may establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as
the Internal Revenue Service may establish for outside directors acting under plans intended to
qualify for exemption under Section 162(m)(4)(C) of the Code.
(b) Committee for Non-Officer Grants. The Board may also appoint one or more separate
committees of the Board, each composed of one or more directors of the Company who need not satisfy
the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not
considered officers or directors of the Company under Section 16 of the Exchange Act, may grant
Awards under the Plan to such Employees and may determine all terms of such grants. Within the
limitations of the preceding sentence, any reference in the Plan to the Committee shall include
such committee or committees appointed pursuant to the preceding sentence. The Board of Directors
may also authorize one or more officers of the Company to designate Employees, other than officers
under Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such
Awards to be received by such persons; provided, however, that the Board of Directors shall specify
the total number of Awards that such officers may so award.
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(c) Committee Procedures. The Board of Directors shall designate one of the members of the
Committee as chairman. The Committee may hold meetings at such times and places as it shall
determine. The acts of a majority of the Committee members present at meetings at which a quorum
exists, or acts reduced to or approved in writing (including via email) by all Committee members,
shall be valid acts of the Committee.
(d) Committee Responsibilities. Subject to the provisions of the Plan, the Committee shall
have full authority and discretion to take the following actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating to the Plan;
(iii) To adopt, amend or terminate sub-plans established for the purpose of satisfying
applicable foreign laws including qualifying for preferred tax treatment under applicable
foreign tax laws;
(iv) To authorize any person to execute, on behalf of the Company, any instrument
required to carry out the purposes of the Plan;
(v) To determine when Awards are to be granted under the Plan;
(vi) To select the Offerees and Optionees;
(vii) To determine the number of Shares to be made subject to each Award;
(viii) To prescribe the terms and conditions of each Award, including (without
limitation) the Exercise Price and Purchase Price, and the vesting or duration of the Award
(including accelerating the vesting of Awards, either at the time of the Award or
thereafter, without the consent of the Participant), to determine whether an Option is to be
classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the
agreement relating to such Award;
(ix) To amend any outstanding Award agreement, subject to applicable legal restrictions
and to the consent of the Participant if the Participants rights or obligations would be
materially impaired;
(x) To prescribe the consideration for the grant of each Award or other right under the
Plan and to determine the sufficiency of such consideration;
(xi) To determine the disposition of each Award or other right under the Plan in the
event of a Participants divorce or dissolution of marriage;
(xii) To determine whether Awards under the Plan will be granted in replacement of
other grants under an incentive or other compensation plan of an acquired business;
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(xiii) To correct any defect, supply any omission, or reconcile any inconsistency in
the Plan or any Award agreement;
(xiv) To establish or verify the extent of satisfaction of any performance goals or
other conditions applicable to the grant, issuance, exercisability, vesting and/or ability
to retain any Award; and
(xv) To take any other actions deemed necessary or advisable for the administration of
the Plan.
Subject to the requirements of applicable law, the Committee may designate persons other than
members of the Committee to carry out its responsibilities and may prescribe such conditions and
limitations as it may deem appropriate, except that the Committee may not delegate its authority
with regard to the selection for participation of or the granting of Options or other rights under
the Plan to persons subject to Section 16 of the Exchange Act. All decisions, interpretations and
other actions of the Committee shall be final and binding on all Offerees, all Optionees, and all
persons deriving their rights from an Offeree or Optionee. No member of the Committee shall be
liable for any action that he has taken or has failed to take in good faith with respect to the
Plan, any Option, or any right to acquire Shares under the Plan.
SECTION 4. ELIGIBILITY.
(a) General Rule. Only common-law employees of the Company, a Parent or a Subsidiary shall be
eligible for the grant of ISOs. Only Employees, Consultants and Outside Directors shall be eligible
for the grant of Restricted Shares, Stock Units, Nonstatutory Options or SARs.
(b) Automatic Grants to Outside Directors.
(i) Each Outside Director who first joins the Board of Directors on or after the
Effective Date, and who was not previously an Employee, shall receive a Nonstatutory Option,
subject to approval of the Plan by the Companys stockholders, to purchase 16,500 Shares
(subject to adjustment under Section 11) on the date of his or her election to the Board of
Directors. Twenty-five percent (25%) of the Shares subject to each Option granted under this
Section 4(b)(i) shall vest and become exercisable on the first anniversary of the date of
grant. The balance of the Shares subject to such Option (i.e. the remaining seventy-five
percent (75%)) shall vest and become exercisable monthly over a three-year period beginning
on the day which is one month after the first anniversary of the date of grant, at a monthly
rate of 2.0833% of the total number of Shares subject to such Option. Notwithstanding the
foregoing, each such Option shall become vested if a Change in Control occurs with respect
to the Company during the Optionees Service.
(ii) On the first business day following the conclusion of each regular annual meeting
of the Companys stockholders, commencing with the annual meeting occurring after the
Effective Date, each Outside Director who was not elected to the Board for the first time at
such meeting and who will continue serving as a member of the Board of Directors thereafter
shall receive an Option to purchase 8,250 Shares (subject to
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adjustment under Section 11), provided that such Outside Director has served on the
Board of Directors for at least six months. Each Option granted under this Section 4(b)(ii)
shall vest and become exercisable on the first anniversary of the date of grant; provided,
however, that each such Option shall become exercisable in full immediately prior to the
next regular annual meeting of the Companys stockholders following such date of grant in
the event such meeting occurs prior to such first anniversary date. Notwithstanding the
foregoing, each Option granted under this Section 4(b)(ii) shall become vested if a Change
in Control occurs with respect to the Company during the Optionees Service.
(iii) The Exercise Price of all Nonstatutory Options granted to an Outside Director
under this Section 4(b) shall be equal to 100% of the Fair Market Value of a Share on the
date of grant, payable in one of the forms described in Section 8(a), (b) or (d).
(iv) All Nonstatutory Options granted to an Outside Director under this Section 4(b)
shall terminate on the earlier of (A) the day before the tenth anniversary of the date of
grant of such Options or (B) the date twelve months after the termination of such Outside
Directors Service for any reason; provided, however, that any such Options that are not
vested upon the termination of the Outside Directors Service as a member of the Board of
Directors for any reason shall terminate immediately and may not be exercised.
(c) Ten-Percent Stockholders. An Employee who owns more than 10% of the total combined voting
power of all classes of outstanding stock of the Company, a Parent or Subsidiary shall not be
eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5)
of the Code.
(d) Attribution Rules. For purposes of Section 4(c) above, in determining stock ownership, an
Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employees
brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly,
by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately
by or for its stockholders, partners or beneficiaries.
(e) Outstanding Stock. For purposes of Section 4(c) above, outstanding stock shall include
all stock actually issued and outstanding immediately after the grant. Outstanding stock shall
not include shares authorized for issuance under outstanding options held by the Employee or by any
other person.
SECTION 5. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. Shares offered under the Plan shall be authorized but unissued Shares
or treasury Shares. The aggregate number of Shares authorized for issuance as Awards under the Plan
shall not exceed 8,980,000 Shares. The limitations of this Section 5(a) shall be subject to
adjustment pursuant to Section 11. The number of Shares that are subject to Options or other Awards
outstanding at any time under the Plan shall not exceed the number of Shares which then remain
available for issuance under the Plan. The Company, during the term of the
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Plan, shall at all times reserve and keep available sufficient Shares to satisfy the
requirements of the Plan.
(b) Award Limitation. Subject to the provisions of Section 11, no Participant may receive
Options, SARs, Restricted Shares or Stock Units under the Plan in any calendar year that relate to
more than 1,650,000 Shares.
(c) Additional Shares. If Restricted Shares or Shares issued upon the exercise of Options are
forfeited, then such Shares shall again become available for Awards under the Plan. If Stock Units,
Options or SARs are forfeited or terminate for any other reason before being exercised, then the
corresponding Shares shall again become available for Awards under the Plan. If Stock Units are
settled, then only the number of Shares (if any) actually issued in settlement of such Stock Units
shall reduce the number available under Section 5(a) and the balance shall again become available
for Awards under the Plan. If SARs are exercised, then only the number of Shares (if any) actually
issued in settlement of such SARs shall reduce the number available in Section 5(a) and the balance
shall again become available for Awards under the Plan.
SECTION 6. RESTRICTED SHARES.
(a) Restricted Stock Agreement. Each grant of Restricted Shares under the Plan shall be
evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted
Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms
that are not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements
entered into under the Plan need not be identical.
(b) Payment for Awards. Restricted Shares may be sold or awarded under the Plan for such
consideration as the Committee may determine, including (without limitation) cash, cash
equivalents, full-recourse promissory notes, past services and future services.
(c) Vesting. Each Award of Restricted Shares may or may not be subject to vesting. Vesting
shall occur, in full or in installments, upon satisfaction of the conditions specified in the
Restricted Stock Agreement. A Restricted Stock Agreement may provide for accelerated vesting in the
event of the Participants death, disability or retirement or other events. The Committee may
determine, at the time of granting Restricted Shares of thereafter, that all or part of such
Restricted Shares shall become vested in the event that a Change in Control occurs with respect to
the Company.
(d) Voting and Dividend Rights. The holders of Restricted Shares awarded under the Plan shall
have the same voting, dividend and other rights as the Companys other stockholders. A Restricted
Stock Agreement, however, may require that the holders of Restricted Shares invest any cash
dividends received in additional Restricted Shares. Such additional Restricted Shares shall be
subject to the same conditions and restrictions as the Award with respect to which the dividends
were paid.
(e) Restrictions on Transfer of Shares. Restricted Shares shall be subject to such rights of
repurchase, rights of first refusal or other restrictions as the Committee may determine.
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Such restrictions shall be set forth in the applicable Restricted Stock Agreement and shall
apply in addition to any general restrictions that may apply to all holders of Shares.
SECTION 7. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a
Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all
applicable terms and conditions of the Plan and may be subject to any other terms and conditions
which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in
a Stock Option Agreement. The Stock Option Agreement shall specify whether the Option is an ISO or
an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not
be identical. Options may be granted in consideration of a reduction in the Optionees other
compensation.
(b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are
subject to the Option and shall provide for the adjustment of such number in accordance with
Section 11.
(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The
Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the
date of grant, except as otherwise provided in 4(c), and the Exercise Price of an NSO shall not be
less 85% of the Fair Market Value of a Share on the date of grant. Subject to the foregoing in
this Section 7(c), the Exercise Price under any Option shall be determined by the Committee at its
sole discretion. The Exercise Price shall be payable in one of the forms described in Section 8.
(d) Withholding Taxes. As a condition to the exercise of an Option, the Optionee shall make
such arrangements as the Committee may require for the satisfaction of any federal, state, local or
foreign withholding tax obligations that may arise in connection with such exercise. The Optionee
shall also make such arrangements as the Committee may require for the satisfaction of any federal,
state, local or foreign withholding tax obligations that may arise in connection with the
disposition of Shares acquired by exercising an Option.
(e) Exercisability and Term. Each Stock Option Agreement shall specify the date when all or
any installment of the Option is to become exercisable. The Stock Option Agreement shall also
specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years
from the date of grant (five years for Employees described in Section 4(c)). A Stock Option
Agreement may provide for accelerated exercisability in the event of the Optionees death,
disability, or retirement or other events and may provide for expiration prior to the end of its
term in the event of the termination of the Optionees Service. Options may be awarded in
combination with SARs, and such an Award may provide that the Options will not be exercisable
unless the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee
at its sole discretion shall determine when all or any installment of an Option is to become
exercisable and when an Option is to expire.
(f) Exercise of Options. Each Stock Option Agreement shall set forth the extent to which the
Optionee shall have the right to exercise the Option following termination of the
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Optionees Service with the Company and its Subsidiaries, and the right to exercise the Option
of any executors or administrators of the Optionees estate or any person who has acquired such
Option(s) directly from the Optionee by bequest or inheritance. Such provisions shall be determined
in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to
the Plan, and may reflect distinctions based on the reasons for termination of Service.
(g) Effect of Change in Control. The Committee may determine, at the time of granting an
Option or thereafter, that such Option shall become exercisable as to all or part of the Shares
subject to such Option in the event that a Change in Control occurs with respect to the Company.
(h) No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no
rights as a stockholder with respect to any Shares covered by his Option until the date of the
issuance of a stock certificate for such Shares. No adjustments shall be made, except as provided
in Section 11.
(i) Modification, Extension and Renewal of Options. Within the limitations of the Plan, the
Committee may modify, extend or renew outstanding options or may accept the cancellation of
outstanding options (to the extent not previously exercised), whether or not granted hereunder, in
return for the grant of new Options for the same or a different number of Shares and at the same or
a different exercise price, or in return for the grant of the same or a different number of Shares.
The foregoing notwithstanding, no modification of an Option shall, without the consent of the
Optionee, materially impair his or her rights or obligations under such Option.
(j) Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be
subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and
other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in
the applicable Stock Option Agreement and shall apply in addition to any general restrictions that
may apply to all holders of Shares.
(k) Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in
cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash
out an Option previously granted, in either case at such time and based upon such terms and
conditions as the Committee shall establish.
SECTION 8. PAYMENT FOR SHARES.
(a) General Rule. The entire Exercise Price or Purchase Price of Shares issued under the Plan
shall be payable in lawful money of the United States of America at the time when such Shares are
purchased, except as provided in Section 8(b) through Section 8(g) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so provides, payment may
be made all or in part by surrendering, or attesting to the ownership of, Shares which have already
been owned by the Optionee or his representative. Such Shares shall be valued at their Fair Market
Value on the date when the new Shares are purchased under the Plan. The Optionee shall not
surrender, or attest to the ownership of, Shares in payment of the Exercise
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Price if such action would cause the Company to recognize compensation expense (or additional
compensation expense) with respect to the Option for financial reporting purposes.
(c) Services Rendered. At the discretion of the Committee, Shares may be awarded under the
Plan in consideration of services rendered to the Company or a Subsidiary prior to the award. If
Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a
determination (at the time of the award) of the value of the services rendered by the Offeree and
the sufficiency of the consideration to meet the requirements of Section 6(b).
(d) Cashless Exercise. To the extent that a Stock Option Agreement so provides, payment may
be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to
the Company in payment of the aggregate Exercise Price.
(e) Exercise/Pledge. To the extent that a Stock Option Agreement so provides, payment may be
made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction
to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or
part of the loan proceeds to the Company in payment of the aggregate Exercise Price.
(f) Promissory Note. To the extent that a Stock Option Agreement or Restricted Stock
Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by
the Company) a full-recourse promissory note.
(g) Other Forms of Payment. To the extent that a Stock Option Agreement or Restricted Stock
Agreement so provides, payment may be made in any other form that is consistent with applicable
laws, regulations and rules.
(h) Limitations under Applicable Law. Notwithstanding anything herein or in a Stock Option
Agreement or Restricted Stock Agreement to the contrary, payment may not be made in any form that
is unlawful, as determined by the Committee in its sole discretion.
SECTION 9. STOCK APPRECIATION RIGHTS.
(a) SAR Agreement. Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement
between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan
and may be subject to any other terms that are not inconsistent with the Plan. The provisions of
the various SAR Agreements entered into under the Plan need not be identical. SARs may be granted
in consideration of a reduction in the Optionees other compensation.
(b) Number of Shares. Each SAR Agreement shall specify the number of Shares to which the SAR
pertains and shall provide for the adjustment of such number in accordance with Section 11.
(c) Exercise Price. Each SAR Agreement shall specify the Exercise Price. A SAR Agreement may
specify an Exercise Price that varies in accordance with a predetermined formula while the SAR is
outstanding.
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(d) Exercisability and Term. Each SAR Agreement shall specify the date when all or any
installment of the SAR is to become exercisable. The SAR Agreement shall also specify the term of
the SAR. A SAR Agreement may provide for accelerated exercisability in the event of the Optionees
death, disability or retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionees service. SARs may be awarded in
combination with Options, and such an Award may provide that the SARs will not be exercisable
unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant
but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may
provide that it will be exercisable only in the event of a Change in Control.
(e) Effect of Change in Control. The Committee may determine, at the time of granting a SAR
or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such
SAR in the event that a Change in Control occurs with respect to the Company.
(f) Exercise of SARs. Upon exercise of a SAR, the Optionee (or any person having the right to
exercise the SAR after his or her death) shall receive from the Company (a) Shares, (b) cash or (c)
a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the
Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the
amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs
exceeds the Exercise Price.
(g) Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may
modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs
(whether granted by the Company or by another issuer) in return for the grant of new SARs for the
same or a different number of shares and at the same or a different exercise price. The foregoing
notwithstanding, no modification of a SAR shall, without the consent of the holder, materially
impair his or her rights or obligations under such SAR.
(h) Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in
cash or cash equivalents a SAR previously granted, or (b) authorize an Optionee to elect to cash
out a SAR previously granted, in either case at such time and based upon such terms and conditions
as the Committee shall establish.
SECTION 10. STOCK UNITS.
(a) Stock Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced by a
Stock Unit Agreement between the recipient and the Company. Such Stock Units shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are not inconsistent
with the Plan. The provisions of the various Stock Unit Agreements entered into under the Plan need
not be identical. Stock Units may be granted in consideration of a reduction in the recipients
other compensation.
(b) Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no
cash consideration shall be required of the Award recipients.
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(c) Vesting Conditions. Each Award of Stock Units may or may not be subject to vesting.
Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in
the Stock Unit Agreement. A Stock Unit Agreement may provide for accelerated vesting in the event
of the Participants death, disability or retirement or other events. The Committee may determine,
at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall
become vested in the event that a Change in Control occurs with respect to the Company.
(d) Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior
to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committees
discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be
credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is
outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of
dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of
both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the
same conditions and restrictions (including without limitation, any forfeiture conditions) as the
Stock Units to which they attach.
(e) Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made
in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee.
The actual number of Stock Units eligible for settlement may be larger or smaller than the number
included in the original Award, based on predetermined performance factors. Methods of converting
Stock Units into cash may include (without limitation) a method based on the average Fair Market
Value of Shares over a series of trading days. Vested Stock Units may be settled in a lump sum or
in installments. The distribution may occur or commence when all vesting conditions applicable to
the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The
amount of a deferred distribution may be increased by an interest factor or by dividend
equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be
subject to adjustment pursuant to Section 11.
(f) Death of Recipient. Any Stock Units Award that becomes payable after the recipients
death shall be distributed to the recipients beneficiary or beneficiaries. Each recipient of a
Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by
filing the prescribed form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipients death. If no beneficiary
was designated or if no designated beneficiary survives the Award recipient, then any Stock Units
Award that becomes payable after the recipients death shall be distributed to the recipients
estate.
(g) Creditors Rights. A holder of Stock Units shall have no rights other than those of a
general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the
Company, subject to the terms and conditions of the applicable Stock Unit Agreement.
SECTION 11. ADJUSTMENT OF SHARES. |
(a) Adjustments. In the event of a subdivision of the outstanding Stock, a declaration of a
dividend payable in Shares, a declaration of a dividend payable in a form other than Shares
-14-
in an amount that has a material effect on the price of Shares, a combination or consolidation
of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate and
equitable adjustments in:
(i) The number of Options, SARs, Restricted Shares and Stock Units available for future
Awards under Section 5;
(ii) The limitations set forth in Section 5(b);
(iii) The number of NSOs to be granted to Outside Directors under Section 4(b);
(iv) The number of Shares covered by each outstanding Option and SAR;
(v) The Exercise Price under each outstanding Option and SAR; and
(vi) The number of Stock Units included in any prior Award which has not yet been
settled.
Except as provided in this Section 11, a Participant shall have no rights by reason of any issue by
the Company of stock of any class or securities convertible into stock of any class, any
subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or
any other increase or decrease in the number of shares of stock of any class.
(b) Dissolution or Liquidation. To the extent not previously exercised or settled, Options,
SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the
Company.
(c) Reorganizations. In the event that the Company is a party to a merger or other
reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization.
Such agreement shall provide for:
(i) The continuation of the outstanding Awards by the Company, if the Company is a
surviving corporation;
(ii) The assumption of the outstanding Awards by the surviving corporation or its
parent or subsidiary;
(iii) The substitution by the surviving corporation or its parent or subsidiary of its
own awards for the outstanding Awards;
(iv) Full exercisability or vesting and accelerated expiration of the outstanding
Awards; or
(v) Settlement of the full value of the outstanding Awards in cash or cash equivalents
followed by cancellation of such Awards.
-15-
(d) Reservation of Rights. Except as provided in this Section 11, an Optionee or Offeree
shall have no rights by reason of any subdivision or consolidation of shares of stock of any class,
the payment of any dividend or any other increase or decrease in the number of shares of stock of
any class. Any issue by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or Exercise Price of Shares subject to an Option. The grant of an
Option pursuant to the Plan shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or business structure, to
merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or
assets.
SECTION 12. DEFERRAL OF AWARDS.
(a) Committee Powers. The Committee (in its sole discretion) may permit or require a
Participant to:
(i) Have cash that otherwise would be paid to such Participant as a result of the
exercise of a SAR or the settlement of Stock Units credited to a deferred compensation
account established for such Participant by the Committee as an entry on the Companys
books;
(ii) Have Shares that otherwise would be delivered to such Participant as a result of
the exercise of an Option or SAR converted into an equal number of Stock Units; or
(iii) Have Shares that otherwise would be delivered to such Participant as a result of
the exercise of an Option or SAR or the settlement of Stock Units converted into amounts
credited to a deferred compensation account established for such Participant by the
Committee as an entry on the Companys books. Such amounts shall be determined by reference
to the Fair Market Value of such Shares as of the date when they otherwise would have been
delivered to such Participant.
(b) General Rules. A deferred compensation account established under this Section 12 may be
credited with interest or other forms of investment return, as determined by the Committee. A
Participant for whom such an account is established shall have no rights other than those of a
general creditor of the Company. Such an account shall represent an unfunded and unsecured
obligation of the Company and shall be subject to the terms and conditions of the applicable
agreement between such Participant and the Company. If the deferral or conversion of Awards is
permitted or required, the Committee (in its sole discretion) may establish rules, procedures and
forms pertaining to such Awards, including (without limitation) the settlement of deferred
compensation accounts established under this Section 12.
SECTION 13. AWARDS UNDER OTHER PLANS.
The Company may grant awards under other plans or programs. Such awards may be settled in the
form of Shares issued under this Plan. Such Shares shall be treated for all purposes under the Plan
like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares
available under Section 5.
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SECTION 14. PAYMENT OF DIRECTORS FEES IN SECURITIES.
(a) Effective Date. No provision of this Section 14 shall be effective unless and until the
Board has determined to implement such provision.
(b) Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside Director may
elect to receive his or her annual retainer payments and/or meeting fees from the Company in the
form of cash, NSOs, Restricted Shares or Stock Units, or a combination thereof, as determined by
the Board. Such NSOs, Restricted Shares and Stock Units shall be issued under the Plan. An election
under this Section 14 shall be filed with the Company on the prescribed form.
(c) Number and Terms of NSOs, Restricted Shares or Stock Units. The number of NSOs,
Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and
meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the
Board. The terms of such NSOs, Restricted Shares or Stock Units shall also be determined by the
Board.
SECTION 15. LEGAL AND REGULATORY REQUIREMENTS.
Shares shall not be issued under the Plan unless the issuance and delivery of such Shares
complies with (or is exempt from) all applicable requirements of law, including (without
limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, state securities laws and regulations and the regulations of any stock exchange on
which the Companys securities may then be listed, and the Company has obtained the approval or
favorable ruling from any governmental agency which the Company determines is necessary or
advisable. The Company shall not be liable to a Participant or other persons as to: (a) the
non-issuance or sale of Shares as to which the Company has been unable to obtain from any
regulatory body having jurisdiction the authority deemed by the Companys counsel to be necessary
to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences
expected, but not realized, by any Participant or other person due to the receipt, exercise or
settlement of any Award granted under the Plan.
SECTION 16. WITHHOLDING TAXES.
(a) General. To the extent required by applicable federal, state, local or foreign law, a
Participant or his or her successor shall make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company
shall not be required to issue any Shares or make any cash payment under the Plan until such
obligations are satisfied.
(b) Share Withholding. The Committee may permit a Participant to satisfy all or part of his
or her withholding or income tax obligations by having the Company withhold all or a portion of any
Shares that otherwise would be issued to him or her or by surrendering all or a portion of any
Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value
on the date when taxes otherwise would be withheld in cash. In no event may a Participant have
Shares withheld that would otherwise be issued to him or her in excess of the number necessary to
satisfy the legally required minimum tax withholding.
-17-
SECTION 17. OTHER PROVISIONS APPLICABLE TO AWARDS.
(a) Transferability. Unless the agreement evidencing an Award (or an amendment thereto
authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor
any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or
otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions
applicable to Shares issued under such Award), other than by will or the laws of descent and
distribution; provided, however, that an ISO may be transferred or assigned only to the extent
consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance in
violation of this Section 17(a) shall be void and unenforceable against the Company.
(b) Qualifying Performance Criteria. The number of Shares or other benefits granted, issued,
retainable and/or vested under an Award may be made subject to the attainment of performance goals
for a specified period of time relating to one or more of the following performance criteria,
either individually, alternatively or in any combination, applied to either the Company as a whole
or to a business unit or Subsidiary, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute basis or relative
to a pre-established target, to previous years results or to a designated comparison group or
index, in each case as specified by the Committee in the Award: (a) cash flow, (b) earnings per
share, (c) earnings before interest, taxes and amortization, (d) return on equity, (e) total
stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net
assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l)
operating profit or net operating profit, (m) operating margin or profit margin, (n) return on
operating revenue, (o) return on invested capital, or (p) market segment shares (Qualifying
Performance Criteria). The Committee may appropriately adjust any evaluation of performance under
a Qualifying Performance Criteria to exclude any of the following events that occurs during a
performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii)
the effect of changes in tax law, accounting principles or other such laws or provisions affecting
reported results, (iv) accruals for reorganization and restructuring programs and (v) any
extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or
in managements discussion and analysis of financial condition and results of operations appearing
in the Companys annual report to stockholders for the applicable year. If applicable, the
Committee shall determine the Qualifying Performance Criteria not later than the 90th
day of the performance period, and shall determine and certify, for each Participant, the extent to
which the Qualifying Performance Criteria have been met. The Committee may not in any event
increase the amount of compensation payable under the Plan upon the attainment of a Qualifying
Performance Goal to a Participant who is a covered employee within the meaning of Section 162(m)
of the Code.
SECTION 18. NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any right or Option granted under the Plan, shall be construed
to give any person any right to become, to be treated as, or to remain an Employee. The Company and
its Subsidiaries reserve the right to terminate any persons Service at any time and for any
reason, with or without notice.
-18-
SECTION 19. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, as set forth herein, shall terminate automatically on January
27, 2019 and may be terminated on any earlier date pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may amend or terminate the
Plan at any time and from time to time. Rights and obligations under any Award granted before
amendment of the Plan shall not be materially impaired by such amendment, except with consent of
the Participant. An amendment of the Plan shall be subject to the approval of the Companys
stockholders only to the extent required by applicable laws, regulations or rules.
(c) Effect of Termination. No Awards shall be granted under the Plan after the termination
thereof. The termination of the Plan shall not affect Awards previously granted under the Plan.
SECTION 20. EXECUTION.
To record the adoption of the Plan, as amended and restated, by the Board of Directors, the
Company has caused its authorized officer to execute the same.
-19-
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Using a black ink pen, mark your votes with an X as shown in
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this example. Please do not write outside the designated areas. |
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Annual Meeting Proxy Card |
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6 PLEASE FOLD ALONG THE PERFORATION, DETACH
AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
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Proposals The Board of Directors recommends a vote FOR all the nominees listed, FOR Proposal 2 and FOR Proposal 3.
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
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Please sign exactly as your name appears hereon. If the stock is registered in the names of two or more persons, each should sign. Executors, administrators, trustees, guardians
and attorneys-in-fact should add their titles. If a corporation, please give full corporate name and have a duly
authorized officer sign, stating title. If a partnership, please sign in partnership name by authorized person.
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Date (mm/dd/yyyy) Please
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box. |
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6 PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE
BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
Proxy GENOMIC
HEALTH, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 8, 2009
The undersigned hereby authorizes Randal W. Scott and G. Bradley Cole, and each of them, as proxies of the undersigned, with full power of substitution, to represent and vote the shares of common stock of
Genomic Health, Inc. (Genomic Health) which the undersigned may be entitled to vote at the Annual Meeting of Stockholders of Genomic
Health to be held at Seaport Center, 459 Seaport Court, Redwood City, California on June 8, 2009 at 10:00 a.m. (Pacific Time), and at any and all postponements or
adjournments thereof, with all powers that the undersigned would possess if personally present, upon and in respect of the following matters and in accordance with the following instructions.
Unless a contrary direction is indicated, this Proxy will be voted FOR Proposal 1, the election of directors, FOR Proposal 2, the approval of the
Amended and Restated Genomic Health, Inc. 2005 Stock Incentive Plan, FOR Proposal 3, the ratification of the appointment of Ernst & Young LLP as
independent registered public accounting firm and in accordance with the discretion of the Proxies on any other matters as may properly come before the Annual Meeting.
If specific instructions are indicated, this Proxy will be voted in accordance therewith.
Please mark, sign, date and mail this proxy card promptly, using the enclosed envelope.
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Electronic Voting Instructions
You can vote by Internet or
telephone! Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose
one of the two voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN
THE TITLE BAR. |
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Proxies
submitted by the Internet or telephone must be received by
11:59 p.m.,
Eastern Time, on June 7, 2009. |
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Vote by
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Internet and go
to www.investorvote.com/GHDX Follow
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Vote by
telephone Call toll
free 1-800-652-VOTE (8683) within the
United States, Canada
& Puerto Rico any time on a touch
tone telephone. There
is NO CHARGE to you for the call. |
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Using a black
ink pen, mark your votes with an X as shown in this
example. Please do not write outside the designated areas. |
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Follow the
instructions provided by the recorded message. |
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Annual Meeting Proxy Card
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C0123456789 |
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▼ IF YOU HAVE NOT VOTED VIA THE INTERNET
OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM
PORTION IN THE ENCLOSED ENVELOPE. ▼
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A |
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Proposals The Board of Directors recommends a vote FOR all the nominees listed, FOR Proposal 2 and FOR Proposal 3.
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1. |
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Election of Directors:
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01 - Randal W. Scott*
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02 - Kimberly J. Popovits*
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03 - Julian C. Baker* |
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04 - Brook H. Byers* |
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05 - Fred E. Cohen* |
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07 - Ginger L. Graham* |
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08 - Randall S. Livingston* |
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09 - Woodrow A. Myers, Jr.* |
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*Each to serve until the next Annual Meeting or until their successors have been duly elected and qualified.
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Mark here to vote FOR all nominees |
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Mark here to WITHHOLD vote from all nominees |
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For All
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To vote on the approval of the Amended and Restated
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To ratify the appointment of Ernst & Young LLP as
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Non-Voting Items |
Change of Address Please print new address below. |
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
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Please sign exactly as your name appears hereon. If the stock is registered in the names of two or more persons, each should sign. Executors, administrators, trustees, guardians and attorneys-in-fact should add their titles. If a corporation, please give full corporate name and have a duly authorized officer sign, stating title. If a partnership, please sign in partnership name by authorized person.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep
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Signature 2 Please keep
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6 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
Proxy GENOMIC HEALTH, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 8, 2009
The undersigned hereby authorizes Randal W. Scott and G. Bradley Cole, and
each of them, as proxies of the undersigned, with full power of substitution, to represent and vote the
shares of common stock of Genomic Health, Inc. (Genomic Health) which the undersigned may be entitled to vote
at the Annual Meeting of Stockholders of Genomic Health to be held at Seaport Center, 459 Seaport Court, Redwood City, California
on June 8, 2009 at 10:00 a.m. (Pacific Time), and at any and all postponements or adjournments thereof, with all powers that the
undersigned would possess if personally present, upon
and in respect of the following matters and in accordance with the following instructions.
Unless a contrary direction is indicated, this Proxy will be voted FOR Proposal 1, the
election of directors, FOR Proposal 2, the approval of the Amended and Restated Genomic Health, Inc. 2005 Stock Incentive Plan, FOR Proposal 3, the ratification
of the appointment of Ernst & Young LLP as independent registered public accounting firm and in accordance
with the discretion of the Proxies on any other matters as may properly come before the Annual Meeting. If specific instructions
are indicated, this Proxy will be voted in accordance therewith.
Please mark, sign, date and mail this proxy card promptly, using the enclosed envelope.