United states

Executive Compensation Components

Our executive compensation consists of base salary, cash incentive bonuses, long-term incentive compensation, and broad-based benefits programs. We have not adopted any formal guidelines for allocating total compensation between long-term and short-term compensation, cash compensation and non-cash compensation, or among different forms of non-cash compensation. The compensation committee considers a number of factors in setting compensation for our executive officers, including Company performance, as well as the executive’s performance, experience, responsibilities and the compensation of executive officers in similar positions at comparable companies.

Summary Compensation Table

The following table presents information regarding the compensation awarded to, earned by, and paid to each individual who served as our principal executive officer and the two most highly-compensated executive officers (other than the principal executive officer) as of the last day of the fiscal year ended December 31, 2016 (such individuals collectively referred to as our “Named Executive Officers”). The following table also presents information regarding the compensation awarded to, earned by, and paid to each of our Named Executive Officers during the fiscal year ended December 31, 2015.

 

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SUMMARY COMPENSATION TABLE

 

Name and Principal Position		Year				Salary ($) (1)				Bonus ($) (2)				Stock Awards ($) (3)				Option Awards ($) (3)				Non-Equity Incentive Plan Compensation ($) (4)				All Other Compensation ($) (5)				Total ($)
Steven C. Lockard			2016				430,327				230,000				—				—				500,000				3,428				1,163,755
Chief Executive Officer			2015				352,875				—				3,005,952				3,793,351				250,000				3,101				7,405,279
Wayne G. Monie			2016				306,971				170,000				—				—				155,000				6,453				638,424
Chief Manufacturing Technology Officer			2015				296,563				—				1,115,490				1,408,912				106,000				6,446				2,933,411
Mark R. McFeely  (6)			2016				335,577				—				—				—				210,000				89,529				635,106
Chief Operating Officer

 

(1)

The base salary for Mr. Lockard at the beginning of fiscal year 2016 was $355,500 and was adjusted to $400,000 effective April 1, 2016, in connection with the Company’s annual merit increase. Mr. Lockard’s base salary was later increased to $500,000 effective August 1, 2016 in conjunction with the Company’s successful IPO. The base salary for Mr. Monie at the beginning of fiscal year 2016 was $298,750 and was adjusted to $310,000 effective April 1, 2016 in connection with the Company’s annual merit increase. The base salary for Mr. McFeely at the beginning of fiscal year 2016 was $325,000 and was adjusted to $350,000 effective August 1, 2016 in conjunction with the Company’s successful IPO.

 

(2)	In connection with the Company’s successful IPO in July 2016, Messrs. Lockard and Monie were awarded special bonus payments of $230,000 and $170,000, respectively.

 

(3)

The amounts reported represent the grant date fair value of the stock options and restricted stock units, as applicable, awarded to the Named Executive Officers during the fiscal year ended December 31, 2015, calculated in accordance with FASB ASC Topic 718. Such grant date fair values do not take into account any estimated forfeitures related to service vesting conditions. The assumptions used in calculating the grant date fair values of the stock options and restricted stock units, as applicable, reported in this column are set forth in the Notes to Consolidated Financial Statements elsewhere in this prospectus. The amounts reported in this column reflect the accounting cost for these stock options and restricted stock units and do not correspond to the actual economic value that may be received by the Named Executive Officers upon exercise of the stock options or the vesting and/or settlement of the restricted stock units. No stock options or restricted stock units awards were granted to the Named Executive Officers during the fiscal year ended December 31, 2016.

 

(4)

Amounts for the fiscal years ended December 31, 2016 and 2015 represent the actual bonus compensation paid for such year pursuant to the Company’s and each Named Executive Officer’s achievement of certain performance metrics. For the fiscal year ended December 31, 2016, Messrs. Lockard, Monie and McFeely were each awarded bonus compensation equal to approximately 100% of their applicable target bonuses. For the fiscal year ended December 31, 2015, Messrs. Lockard and Monie were each awarded bonus compensation equal to approximately 70% of their applicable target bonuses. Mr. McFeely joined the Company in 2015 and did not receive any bonus compensation in 2015.

 

(5)

Represents for Mr. Lockard, company matching contributions under our 401(k) plan equal to $2,600 and group term life insurance equal to $828 in 2016 and company matching contributions under our 401(k) plan equal to $2,350 and group term life insurance equal to $751 in 2015. Represents for Mr. Monie, company matching contributions under our 401(k) plan equal to $5,915 and group term life insurance equal to $538 in 2016 and company matching contributions under our 401(k) plan equal to $5,886 and group term life insurance equal to $560 in 2015. Represents for Mr. McFeely, reimbursed costs related to his relocation to the Company’s Scottsdale, Arizona corporate office equal to $61,204, a tax gross up equal to $27,497 and group term life insurance equal to $828 in 2016.

 

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(6)	Mr. McFeely was not a Named Executive Officer for the fiscal year ended December 31, 2015.

Base Salaries

For the year ended December 31, 2016, the annual base salaries for each of Messrs. Lockard, Monie and McFeely prior to April 1, 2016 were $355,500, $298,750 and $325,000, respectively. Effective April 1, 2016, the annual base salaries for each of Messrs. Lockard and Monie were increased to $400,000 and $310,000, respectively. In addition, effective August 1, 2016, the annual base salaries for each of Messrs. Lockard and McFeely were increased to $500,000 and $350,000, respectively.

Bonuses

During the fiscal year ended December 31, 2016, we maintained a bonus plan, pursuant to which each of our Named Executive Officers was eligible to earn an annual bonus based on the Company’s and the Named Executive Officer’s achievement of certain performance goals. For fiscal 2016, the target annual bonuses for Messrs. Lockard, Monie and McFeely were equal to 100%, 50% and 60%, respectively, of the applicable Named Executive Officer’s base salary. Based on the Company’s achievement of the relevant performance goals under the bonus plan, as well as each Named Executive Officer’s achievement of the relevant personal performance goals under the bonus plan, our compensation committee determined that the bonuses would be paid at 100% of target for each Named Executive Officer.

In connection with the Company’s successful IPO in July 2016, Messrs. Lockard and Monie were also awarded special bonus payments of $230,000 and $170,000, respectively.

Equity Compensation

We did not grant any of our Named Executive Officers any equity awards during the fiscal year ended December 31, 2016.

Health and Welfare Benefits

Our named executive officers are eligible to participate in all of our employee benefit plans, including our medical, dental, life and disability insurance plans, in each case on the same basis as other employees of the same status.

401(k) Plan

We maintain a tax-qualified retirement plan that provides all regular employees with an opportunity to save for retirement on a tax-advantaged basis. Under our 401(k) plan, participants may elect to defer a portion of their compensation on a pre-tax basis and have it contributed to the plan subject to the applicable annual limits of the Code. Pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Employee elective deferrals are 100% vested at all times. The 401(k) plan allows for matching contributions to be made by us. Currently, we match up to 25% of the first 8% of deferred compensation. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan and all contributions are deductible by us when made.

Perquisites and Personal Benefits

We generally do not provide perquisites or personal benefits to our Named Executive Officers other than in connection with the relocation of a Named Executive Officer. We did, however, in 2016, reimburse Mr. McFeely $61,204 for costs he incurred, as well as a tax gross up equal to $27,497, in connection with his relocation to our Scottsdale, Arizona corporate office.

 

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Employment Agreements for Messrs. Lockard, Monie and McFeely

In 2016, we entered into employment agreements with each of Messrs. Lockard, Monie and McFeely, effective as of the completion of our IPO, pursuant to which the executives will continue to serve as our Chief Executive Officer, Chief Manufacturing Technology Officer and Chief Operating Officer, respectively. The terms of the employment agreements are substantially similar to each other and provide for at-will employment. The agreements also set forth initial base salaries, initial annual target bonuses and eligibility to participate in our benefit plans, generally. The current salaries for Messrs. Lockard, Monie and McFeely are $500,000, $310,000 and $350,000, respectively, and the current annual target bonuses for Messrs. Lockard, Monie and McFeely are equal to 100%, 50% and 60% of their base salaries, respectively.

Pursuant to the employment agreements, each of Messrs. Lockard, Monie and McFeely will be subject to standard confidentiality and nondisclosure, assignment of intellectual property work product and post-termination noncompetition and non-solicitation of employees, consultants and customers covenants.

Involuntary Termination of Employment Not in Connection with a Change in Control

Pursuant to the employment agreements, in the event the applicable Named Executive Officer is terminated by us without “cause” (as defined in the executive’s agreement) or he resigns for “good reason” (as defined in the executive’s agreement), in each case subject to the delivery of a fully effective release of claims and continued compliance with applicable restrictive covenants, the Named Executive Officer will be entitled to (i) a cash severance equal to 150%, 50% and 100% of the base salaries of Messrs. Lockard, Monie and McFeely, respectively (payable in 18, 6 and 12 monthly installments for Messrs. Lockard, Monie and McFeely, respectively) and (ii) up to 18, 6 and 12 monthly cash payments equal to our monthly contribution for health insurance for Messrs. Lockard, Monie and McFeely, respectively.

Involuntary Termination of Employment in Connection with a Change in Control

In the event a Named Executive Officer is terminated by us without cause or he resigns for good reason, in each case within 12 months following a change in control (as defined in the executive’s agreement), subject to the delivery of a fully effective release of claims and continued compliance with applicable restrictive covenants, the Named Executive Officer will not be entitled to the severance benefits described above, but will instead be entitled to the following: (i) a lump sum cash severance payment equal to 150%, 100% and 100% of the base salaries of Messrs. Lockard, Monie and McFeely, respectively, and 150%, 100% and 100% of the annual target bonuses of Messrs. Lockard, Monie and McFeely, respectively, (ii) up to 18, 12 and 12 monthly cash payments for Messrs. Lockard, Monie and McFeely, respectively, equal to our monthly contribution for health insurance for the Named Executive Officer, (iii) for all outstanding and unvested equity awards of the Company subject to time-based vesting held by the Named Executive Officer, full accelerated vesting of such awards, with a post-termination exercise period, if applicable, of one year and (iv) for all outstanding and unvested equity awards of the Company subject to performance-based vesting held by the Named Executive Officer, fully accelerated vesting of such awards to the extent the applicable performance goals have been met at such time.

The Company may terminate each Named Executive Officer’s employment for cause by a vote of the Board at a meeting of the Board called and held for such purpose.

The payments and benefits provided under the employment agreements in connection with a change in control may not be eligible for federal income tax deduction for the Company pursuant to Section 280G of the Code. These payments and benefits may also be subject to an excise tax under Section 4999 of the Code. If the payments or benefits payable to each Named Executive Officer in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Code, then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to him.

 

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