cutera_def14a.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant o
Check the
appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
o Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to §240.14a-11(c) or §240.14a-2
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
x No
fee required.
o Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title of
each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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o
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Fee
paid previously with preliminary
materials.
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o |
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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NOTICE
OF 2010
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MAY 19, 2010
10:00 A.M.
Pacific Time
To
our Stockholders:
You are
cordially invited to attend the 2010 Annual Meeting of Stockholders of Cutera,
Inc. (the “Company”). The
meeting will be held at our principal executive offices located at
3240 Bayshore Blvd., Brisbane, California 94005-1021 on May 19, 2010
at 10:00 a.m. Pacific Time, for the following purposes:
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1.
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To
elect three Class III directors to each serve for a three-year term that
expires at the 2013 Annual Meeting of Stockholders and until their
successors have been duly elected and
qualified;
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2.
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To
ratify the appointment of PricewaterhouseCoopers LLP as our independent
registered public accounting firm (the “Independent Registered Public
Accounting Firm”) for the fiscal year ending December 31, 2010;
and
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3.
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To
transact such other business as may properly come before the Annual
Meeting, including any motion to adjourn to a later date to permit further
solicitation of proxies, if necessary, or before any adjournment
thereof.
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The
foregoing items of business are more fully described in the proxy statement
accompanying this Notice of Annual Meeting.
To help
conserve resources and reduce printing and distribution costs, we will be
mailing a notice to our stockholders, instead of a paper copy of this proxy
statement and our 2009 Annual Report, with instructions on how to access our
proxy materials over the Internet, including this proxy statement, our 2009
Annual Report and a form of proxy card or voting instruction
card. The notice will also contain instructions on how each of those
stockholders can receive a paper copy of our proxy materials.
The
meeting will begin promptly at 10:00 a.m., local time, and check-in will
begin at 9:30 a.m., local time. Only holders of record of shares
of our common stock (NASDAQ: CUTR) at the close of business on March 24,
2010 will be entitled to notice of, and to vote at, the meeting and any
postponements or adjournments of the meeting.
For a
period of at least 10 days prior to the meeting, a complete list of stockholders
entitled to vote at the meeting will be available and open to the examination of
any stockholder for any purpose relating to the Annual Meeting during normal
business hours at our principal executive offices located at 3240 Bayshore
Blvd., Brisbane, California 94005-1021.
By order
of the Board of Directors,
Kevin P.
Connors
President
and Chief Executive Officer
Brisbane,
California
April 9,
2010
YOUR
VOTE IS IMPORTANT!
REGARDLESS
OF WHETHER YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY VOTE BY TELEPHONE, OR
IF AVAILABLE, ELECTRONICALLY, OR, IF YOU RECEIVED PER YOUR REQUEST A PAPER COPY
OF OUR PROXY MATERIALS, COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD
IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. NO ADDITIONAL POSTAGE IS NECESSARY IF
THE PROXY CARD IS MAILED IN THE UNITED STATES OR CANADA. YOU MAY REVOKE YOUR
PROXY AT ANY TIME BEFORE IT IS VOTED AT THE MEETING.
TABLE
OF CONTENTS
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Pages
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QUESTIONS
AND ANSWERS REGARDING THIS SOLICITATION AND VOTING AT THE ANNUAL
MEETING
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1
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Why
am I receiving these proxy materials?
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1
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Why
did I receive a notice in the mail regarding the Internet availability of
the proxy materials instead of a paper copy of the proxy
materials?
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1
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What
is the purpose of the Annual Meeting?
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2
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Who
is entitled to attend the meeting?
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2
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Who
is entitled to vote at the meeting?
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2
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How
many shares must be present or represented to conduct business at the
meeting (that is, what constitutes a quorum)?
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2
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What
items of business will be voted on at the meeting?
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2
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How
does the Board recommend that I vote?
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2
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What
shares can I vote at the meeting?
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3
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What
is the difference between holding shares as a stockholder of record and as
a beneficial owner?
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3
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How
can I vote my shares without attending the meeting?
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3
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How
can I vote my shares in person at the meeting?
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3
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Can
I change my vote?
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3
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Is
my vote confidential?
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4
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What
vote is required to approve each item and how are votes
counted?
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4
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What
is a “broker non-vote”?
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4
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How
are “broker non-votes” counted?
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4
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How
are abstentions counted?
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5
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What
happens if additional matters are presented at the
meeting?
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5
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Who
will serve as inspector of election?
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5
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What
should I do in the event that I receive more than one set of proxy/voting
materials?
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5
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Who
is soliciting my vote and who will bear the costs of this
solicitation?
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5
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Where
can I find the voting results of the meeting?
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5
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What
is the deadline to propose actions for consideration at next year’s Annual
Meeting of stockholders or to nominate individuals to serve as
directors?
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6
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STOCK
OWNERSHIP
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7
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Security
Ownership of Certain Beneficial Owners and Management
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7
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Section
16(a) Beneficial Ownership Reporting Compliance
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8
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CORPORATE
GOVERNANCE AND BOARD MATTERS
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8
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Director
Independence
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8
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Board
Leadership Structure
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8
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Risk
Oversight and Analysis
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8
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Committees
of the Board
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9
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Meetings
Attended by Directors
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9
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Director
Nomination Process
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10
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Director
Compensation
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11
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Code
of Ethics
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12
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Corporate
Governance Committee Guidelines
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12
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Compensation
Committee Interlocks and Insider Participation
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12
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Certain
Relationships and Related Transactions
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12
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Family
Relationships
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13
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Communications
with the Board by Stockholders
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13
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REPORT
OF THE AUDIT COMMITTEE
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13
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PROPOSAL
ONE—ELECTION OF DIRECTORS
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15
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Classes
of the Board of Directors
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15
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Director
Nominees
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15
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Board
of Directors’ Recommendation
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16
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Directors
Whose Terms Extend Beyond the 2010 Annual Meeting
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16
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PROPOSAL
TWO —RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
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18
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Board
of Directors’ Recommendation
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18
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Audit
and Non-Audit Services
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18
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NAMED
EXECUTIVE OFFICERS
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19
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Compensation
Discussion and Analysis
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19
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Potential
Payments Upon Termination or Change in Control
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27
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Internal
Revenue Code Section 162(m) and Limitations on Executive
Compensation
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28
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Securities
Authorized for Issuance Under Equity Compensation Plans
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28
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Summary
Compensation Table
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28
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Grants
of Plan-Based Awards
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29
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Equity
Incentive Awards Outstanding
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29
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Options
Exercised and Stock Vested
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30
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COMPENSATION
COMMITTEE REPORT
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31
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OTHER
MATTERS
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32
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PROXY
STATEMENT
FOR
2010
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MAY 19, 2010
The Board
of directors of Cutera, Inc., a Delaware corporation, is soliciting the enclosed
proxy from you. The proxy will be used at our 2010 Annual Meeting of
Stockholders to be held on Wednesday, May 19, 2010, beginning at
10:00 a.m., Pacific Time, which is the local time, at our principal
executive offices located at 3240 Bayshore Blvd., Brisbane, California
94005-1021, and at any postponements or adjournments thereof. This
proxy statement contains important information regarding the
meeting. Specifically, it identifies the matters upon which you are
being asked to vote, provides information that you may find useful in
determining how to vote and describes the voting procedures.
In this
proxy statement the terms “we”, “our”, “Cutera” and the “Company” each refer to
Cutera, Inc.; the term “Board” means our Board of
directors; the term “proxy
materials” means this proxy statement, the enclosed proxy card, and our
Annual Report of Form 10-K for the year ended December 31, 2009, filed
with the U.S. Securities and Exchange commission (the “SEC”) on March 15,
2010, and the term “Annual
Meeting” means our 2010 Annual Meeting of Stockholders.
We are
sending the Notice of Internet Availability of Proxy Materials on or about
April 9, 2010, to all stockholders of record at the close of business on
March 24, 2010 (the “Record Date”).
QUESTIONS
AND ANSWERS REGARDING THIS SOLICITATION AND VOTING AT THE ANNUAL
MEETING
Why
am I receiving these proxy materials?
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You
are receiving these proxy materials from us because you were a stockholder
of record at the close of business on the Record Date (which was
March 24, 2010). As a stockholder of record, you are
invited to attend the meeting and are entitled to and requested to vote on
the items of business described in this proxy statement.
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Why
did I receive a notice in the mail regarding the Internet availability of
the proxy materials instead of a paper copy of the proxy
materials?
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Pursuant
to SEC rules, we have elected to provide access to our proxy materials
over the Internet. Accordingly, we are sending a Notice of
Internet Availability of Proxy Materials (the “Notice”) to our
stockholders.
All
stockholders will have the ability to access the proxy materials on a
website referred to in the Notice or request to receive a printed set of
the proxy materials.
Instructions
on how to access the proxy materials over the Internet or to request a
printed copy may be found on the Notice.
In
addition, stockholders may request to receive proxy materials in printed
form by mail or electronically by email on an ongoing
basis. Choosing to receive your future proxy materials by email
will save us the cost of printing and mailing documents to you and will
reduce the impact of our annual stockholders’ meetings on the
environment. If you chose in connection with our 2009 Annual
Meeting of Stockholders to receive future proxy materials by email, you
should receive an email this year with instructions containing a link to
those materials and a link to the proxy voting site. In
connection with our upcoming Annual Meeting, if you choose to receive
future proxy materials by email, you will receive an email next year with
instructions containing a link to those materials and a link to the proxy
voting site. Your election to receive proxy materials by email
will remain in effect until you terminate
it.
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What
is the purpose of the Annual Meeting?
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At
our meeting, stockholders of record will vote upon the items of business
outlined in the notice of meeting (on the cover page of this proxy
statement), each of which is described more fully in this proxy
statement. In addition, management will report on the
performance of the Company and respond to questions from
stockholders.
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Who
is entitled to attend the meeting?
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You
are entitled to attend the meeting only if you owned our common stock (or
were a joint holder) as of the Record Date or if you hold a valid proxy
for the meeting. You should be prepared to present photo identification
for admittance.
Please
also note that if you are not a stockholder of record but hold shares in
street name (that is, through a broker or nominee), you will need to
provide proof of beneficial ownership as of the Record Date, such as your
most recent brokerage account statement, a copy of the voting instruction
card provided by your broker, trustee or nominee, or other similar
evidence of ownership.
The
meeting will begin promptly at 10:00 a.m., local
time. Check-in will begin at 9:30 a.m., local
time.
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Who
is entitled to vote at the meeting?
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Only
stockholders who owned our common stock at the close of business on the
Record Date are entitled to notice of and to vote at the meeting, and at
any postponements or adjournments thereof.
As
of the Record Date, 13,440,720 shares of our common stock were
outstanding. Each outstanding share of our common stock
entitles the holder to one vote on each matter considered at the
meeting. Accordingly, there are a maximum of 13,440,720 votes
that may be cast at the meeting.
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How
many shares must be present or represented to conduct business at the
meeting (that is, what constitutes a quorum)?
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The
presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of our common stock entitled to vote at the meeting
will constitute a quorum. A quorum is required to conduct
business at the meeting. The presence of the holders of our
common stock representing at least 6,720,361 votes will be required to
establish a quorum at the meeting. Both abstentions and broker
non-votes are counted for the purpose of determining the presence of a
quorum.
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What
items of business will be voted on at the meeting?
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The
items of business scheduled to be voted on at the meeting are as
follows:
1.
the election of three nominees to serve as Class III directors on our
Board; and
2.
the ratification of the appointment of PricewaterhouseCoopers LLP as our
Independent Registered Public Accounting Firm for the 2010 fiscal
year.
These
proposals are described more fully below in this proxy
statement. As of the date of this proxy statement, the only
business that our Board intends to present or knows of that others will
present at the meeting is as set forth in this proxy
statement. If any other matter or matters are properly brought
before the meeting, it is the intention of the persons who hold proxies to
vote the shares they represent in accordance with their best
judgment.
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How
does the Board recommend that I vote?
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Our
Board recommends that you vote your shares “FOR” each of the director
nominees and “FOR” the ratification of PricewaterhouseCoopers LLP as our
Independent Registered Public Accounting Firm for the 2010 fiscal
year.
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What
shares can I vote at the meeting?
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You
may vote all shares owned by you as of the Record Date, including
(1) shares held directly in your name as the stockholder of record,
and (2) shares held for you as the beneficial owner
through a broker, trustee or other nominee such as a bank.
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What
is the difference between holding shares as a stockholder of record and as
a beneficial owner?
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Most
of our stockholders hold their shares through a broker or other nominee
rather than directly in their own name. As summarized below,
there are some distinctions between shares held of record and those owned
beneficially.
Stockholders of
Record. If your shares are registered directly in your
name with our transfer agent, Computershare Trust Company, Inc., you are
considered, with respect to those shares, the stockholder of record,
and these proxy materials are being sent directly to you by
us. As the stockholder of record,
you have the right to grant your voting proxy directly to Cutera or to
vote in person at the meeting. We have enclosed a proxy card
for your use.
Beneficial
Owner. If your shares are held in a brokerage account or
by another nominee, you are considered the beneficial owner of
shares held in street name, and these proxy materials are being forwarded
to you together with a voting instruction card. As the
beneficial owner, you have the right to direct your broker, trustee or
nominee how to vote and are also invited to attend the
meeting. Please note that since a beneficial owner is not the
stockholder of
record, you may not vote these shares in person at the meeting
unless you obtain a “legal proxy” from the broker, trustee or nominee that
holds your shares, giving you the right to vote the shares at the
meeting. Your broker, trustee or nominee has enclosed or
provided voting instructions for you to use in directing the broker,
trustee or nominee how to vote your shares.
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How
can I vote my shares without attending the meeting?
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Whether
you hold shares directly as the stockholder of record or beneficially in
street name, you may direct how your shares are voted without attending
the meeting. Stockholders of record of our common stock may
submit proxies by completing, signing and dating their proxy cards and
mailing them in the accompanying pre-addressed envelope. Our
stockholders who hold shares beneficially in street name may vote by mail
by completing, signing and dating the voting instruction cards provided by
the broker, trustee or nominee and mailing them in the accompanying
pre-addressed envelope.
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How
can I vote my shares in person at the meeting?
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Shares
held in your name as the stockholder of record may be voted in person at
the meeting. Shares held beneficially in street name may be
voted in person only if you obtain a legal proxy from the broker, trustee
or nominee that holds your shares giving you the right to vote the
shares. Even if you plan to attend the meeting, we recommend
that you also submit your proxy card or voting instructions as described
above so that your vote will be counted if you later decide not to, or are
unable to, attend the meeting.
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Can
I change my vote?
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You
may change your vote at any time prior to the vote at the
meeting. If you are the stockholder of record, you may change
your vote by granting a new proxy bearing a later date (which
automatically revokes the earlier proxy), by providing a written notice of
revocation to our Secretary prior to your shares being voted, or by
attending the meeting and voting in person. Attendance at the
meeting will not cause your previously granted proxy to be revoked unless
you specifically so request.
For
shares you hold beneficially in street name, you may change your vote by
submitting new voting instructions to your broker, trustee or nominee, or,
if you have obtained a legal proxy from your broker, trustee or nominee
giving you the right to vote your shares, by attending the meeting and
voting in person.
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Is
my vote confidential?
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Proxy
instructions, ballots and voting tabulations that identify individual
stockholders are handled in a manner that protects your voting
privacy. Your vote will not be disclosed either within Cutera
or to third parties, except: (1) as necessary to meet applicable
legal requirements, (2) to allow for the tabulation of votes and
certification of the vote, and (3) to facilitate a successful proxy
solicitation. Occasionally, stockholders provide written
comments on their proxy card, which are then forwarded to our
management.
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What
vote is required to approve each item and how are votes
counted?
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The
vote required to approve each item of business and the method for counting
votes is set forth below:
Election of
Directors. The three director nominees receiving the
highest number of affirmative “FOR” votes at the meeting (a plurality of
votes cast) will be elected to serve as Class III
directors. You may vote either “FOR” or “WITHHOLD” your vote
for the director nominees. A properly executed proxy marked
“WITHHOLD” with respect to the election of one or more directors will not
be voted with respect to the director or directors indicated, although it
will be counted for purposes of determining whether there is a
quorum.
Ratification of
PricewaterhouseCoopers LLP as our Independent Registered Public Accounting
Firm. For the ratification of the appointment of our
Independent Registered Public Accounting Firm, the affirmative “FOR” vote
of a majority of the shares represented in person or by proxy and entitled
to vote on the item will be required for approval. You may vote
“FOR,” “AGAINST” or “ABSTAIN” for this item of business. If you
“ABSTAIN,” your abstention has the same effect as a vote
“AGAINST.”
If
you provide specific instructions with regard to certain items, your
shares will be voted as you instruct on such items. If you sign
your proxy card or voting instruction card without giving specific
instructions, your shares will be voted in accordance with the
recommendations of the Board (“FOR” all of the Company’s nominees to the
Board, “FOR” ratification of PricewaterhouseCoopers LLP as our Independent
Registered Public Accounting Firm, and in the discretion of the proxy
holders on any other matters that may properly come before the
meeting).
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What
is a “broker non-vote”?
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A
“broker non-vote”
occurs when a broker expressly instructs on a proxy card that it is not
voting on a matter, whether routine or non-routine. Under the
rules that govern brokers who have record ownership of shares that are
held in street name for their clients who are the beneficial owners of the
shares, brokers have the discretion to vote such shares on routine
matters, which includes ratifying the appointment of an independent
registered public accounting firm but does not include the election of
directors. Therefore, if you do not otherwise instruct your
broker, the broker may turn in a proxy card voting your shares “FOR”
ratification of the Independent Registered Public Accounting
Firm. However,
beginning this year, if you do not instruct your broker how to vote with
respect to the election of directors, your broker may not vote with
respect to such proposal and your shares will not be counted as voting in
favor of the election of directors.
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How
are “broker non-votes” counted?
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Broker
non-votes will be counted for the purpose of determining the presence or
absence of a quorum for the transaction of business, but they will not be counted in
tabulating the voting result for any particular
proposal.
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How
are abstentions counted?
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If
you return a proxy card that indicates an abstention from voting on all
matters, the shares represented will be counted for the purpose of
determining both the presence of a quorum and the total number of votes
cast with respect to a proposal (other than the election of directors),
but they will not be voted on any matter at the meeting. In the
absence of controlling precedent to the contrary, we intend to treat
abstentions in this manner. Accordingly, abstentions will have
the same effect as a vote “AGAINST” a
proposal.
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What
happens if additional matters are presented at the
meeting?
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Other
than the two proposals described in this proxy statement, we are not aware
of any other business to be acted upon at the meeting. If you
grant a proxy, the persons named as proxy holders, Kevin P. Connors
(our President, Chief Executive Officer and member of our Board) and
Ronald J. Santilli (our Chief Financial Officer), will have the
discretion to vote your shares on any additional matters that may be
properly presented for a vote at the meeting. If, for any
unforeseen reason, any of our nominees is not available as a candidate for
director, the persons named as proxy holders will vote your proxy for such
other candidate or candidates as may be nominated by our
Board.
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Who
will serve as inspector of election?
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We
expect a representative of Computershare Trust Company, Inc., our transfer
agent, to tabulate the votes, and expect Rajesh Madan, our Vice President
of Finance to act as inspector of election at the meeting.
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What
should I do in the event that I receive more than one set of proxy/voting
materials?
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You
may receive more than one set of these proxy solicitation materials,
including multiple copies of this proxy statement and multiple proxy cards
or voting instruction cards. For example, if you hold your
shares in more than one brokerage account, you may receive a separate
voting instruction card for each brokerage account in which you hold
shares. In addition, If you are a stockholder of record and
your shares are registered in more than one name, you may receive more
than one proxy card. Please complete, sign, date and return
each Cutera proxy card and voting instruction card that you receive to
ensure that all your shares are voted.
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Who
is soliciting my vote and who will bear the costs of this
solicitation?
|
Your
vote is being solicited on behalf of the Board, and the Company will bear
the entire cost of solicitation of proxies, including preparation,
assembly, printing and mailing of this proxy statement. In
addition to these mailed proxy materials, our directors and employees may
also solicit proxies in person, by telephone, by electronic mail or by
other means of communication. Directors and employees will not
be paid any additional compensation for soliciting proxies. We
may reimburse brokerage firms, banks and other agents for the cost of
forwarding proxy materials to beneficial owners. We may also
engage the services of a professional proxy solicitation firm to aid in
the solicitation of proxies from certain brokers, bank nominees and other
institutional owners. Our costs for such services, if retained,
will not be material.
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Where
can I find the voting results of the meeting?
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We
intend to announce preliminary voting results at the Annual Meeting and
file a Form 8-K with the SEC within four business days after the end
of our Annual Meeting to report the voting
results.
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What
is the deadline to propose actions for consideration at next year’s Annual
Meeting of stockholders or to nominate individuals to serve as
directors?
|
As
a stockholder, you may be entitled to present proposals for action at a
future meeting of stockholders, including director
nominations.
Stockholder Proposals:
For a stockholder proposal to be considered for inclusion in our proxy
statement for the Annual Meeting to be held in 2011, the written proposal
must be received by our corporate Secretary at our principal executive
offices no later than December 9, 2010, which is the date 120
calendar days before the anniversary of the mailing date of the Notice of
Internet Availability of Proxy Materials. If the date of next year’s
Annual Meeting is moved more than 30 days before or after the anniversary
date of this year’s Annual Meeting, the deadline for inclusion of
proposals in our proxy statement is instead a reasonable time before we
begin to print and mail its proxy materials. Such proposals also must
comply with the requirements of Rule 14a-8 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and any other applicable
rules established by the SEC. Stockholders interested in submitting such a
proposal are advised to contact knowledgeable legal counsel with regard to
the detailed requirements of applicable securities
laws. Proposals should be addressed to:
Secretary
Cutera,
Inc.
3240
Bayshore Blvd.
Brisbane,
California 94005-1021
Nomination
of Director Candidates: You may propose director candidates for
consideration by our Board. Any such recommendations should
include the nominee’s name and qualifications for Board membership and
should be directed to the “Secretary” at the address of our principal
executive offices set forth above. In addition, our Bylaws
permit stockholders to nominate directors for election at an Annual
Meeting of stockholders. To nominate a director, the
stockholder must provide the information required by our Bylaws, as well
as a statement by the nominee consenting to being named as a nominee and
to serve as a director if elected. In addition, the stockholder
must give timely notice to our corporate Secretary in accordance with the
provisions of our Bylaws, which require that the notice be received by our
corporate Secretary no later than December 9, 2010.
Copy of Bylaw
Provisions: You may contact our corporate Secretary at our
principal executive offices for a copy of the relevant bylaw provisions
regarding the requirements for making stockholder proposals and nominating
director candidates.
|
STOCK
OWNERSHIP
Security
Ownership of Certain Beneficial Owners and Management
The
following table provides information relating to the beneficial ownership of our
common stock as of the Record Date, by:
|
·
|
each
stockholder known by us to own beneficially more than 5% of our common
stock;
|
|
·
|
each
of our Named Executive Officers named in the Summary Compensation Table on
page 27 (our Chief Executive Officer and our Chief Financial
Officer);
|
|
·
|
each
of our directors; and
|
|
·
|
all
of our directors and Named Executive Officers as a
group.
|
The
number of shares beneficially owned by each entity, person, director or
executive officer is determined in accordance with the rules of the SEC, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares
over which the individual has the sole or shared voting power or investment
power and any shares that the individual has the right to acquire within
60 days of March 24, 2010 (the Record Date) through the exercise of
any stock option or other right. The number and percentage of shares
beneficially owned is computed on the basis of 13,440,720 shares of our common
stock outstanding as of the Record Date. The information in the
following table regarding the beneficial owners of more than 5% of our common
stock is based upon information supplied by principal stockholders or
Schedules 13D and 13G filed with the SEC.
Shares of
our common stock that a person has the right to acquire within 60 days of
the Record Date are deemed outstanding for purposes of computing the percentage
ownership of the person holding such rights, but are not deemed outstanding for
purposes of computing the percentage ownership of any other person, except with
respect to the percentage ownership of all directors and executive officers as a
group. To our knowledge, except as set forth in the footnotes to this
table and subject to applicable community property laws, each person or entity
named in the table has sole voting and disposition power with respect to the
shares set forth opposite such person’s or entity’s name. The address
for those persons for which an address is not otherwise provided is c/o Cutera,
Inc., 3240 Bayshore Blvd., Brisbane, California 94005-1021.
Name
and Address of Beneficial Owner
|
|
Number
of Shares Outstanding
|
|
|
Warrants
and Options Exercisable Within 60 Days
|
|
|
Approximate
Percent Owned
|
|
Eagle
Asset Management, Inc.
|
|
|
1,471,089 |
|
|
|
— |
|
|
|
10.9% |
|
Individuals
and entities affiliated with Fidelity Management & Research
Company.
|
|
|
1,284,550 |
|
|
|
— |
|
|
|
9.6% |
|
Entities
affiliated with American Century Companies, Inc.
|
|
|
1,025,800 |
|
|
|
— |
|
|
|
7.6% |
|
Individuals
and entities affiliated with GAMCO Investors, Inc.
|
|
|
869,000 |
|
|
|
— |
|
|
|
6.5% |
|
Dimensional
Fund Advisors LP
|
|
|
783,266 |
|
|
|
— |
|
|
|
5.8% |
|
BlackRock,
Inc.
|
|
|
701,240 |
|
|
|
— |
|
|
|
5.2% |
|
David B.
Apfelberg
|
|
|
27,308 |
|
|
|
52,000 |
|
|
|
* |
|
Annette J.
Campbell-White
|
|
|
64,082 |
|
|
|
62,000 |
|
|
|
* |
|
Kevin P.
Connors
|
|
|
479,761 |
|
|
|
222,310 |
|
|
|
5.1% |
|
David A.
Gollnick
|
|
|
177,062 |
|
|
|
41,126 |
|
|
|
1.6% |
|
W. Mark
Lortz
|
|
|
9,593 |
|
|
|
62,000 |
|
|
|
* |
|
Timothy J.
O’Shea
|
|
|
7,308 |
|
|
|
42,000 |
|
|
|
* |
|
Jerry P.
Widman
|
|
|
7,308 |
|
|
|
62,000 |
|
|
|
* |
|
Ronald J.
Santilli
|
|
|
12,770 |
|
|
|
120,003 |
|
|
|
1.0% |
|
All
directors and Named Executive Officers as a group
(8 persons)
|
|
|
785,192 |
|
|
|
663,439 |
|
|
|
10.3% |
|
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a)
of the Exchange Act requires our directors, officers and beneficial owners of
more than 10% of our common stock to file reports of ownership and reports of
changes in the ownership with the SEC. Such persons are required by
SEC regulations to furnish us with copies of all Section 16(a) forms they
file.
Based
solely on our review of the copies of such forms received by us, or written
representations from reporting persons that no Forms 3, 4 or 5 were
required of such persons, we believe that during our fiscal year ended
December 31, 2009, all reports were timely filed.
CORPORATE
GOVERNANCE AND BOARD MATTERS
Director
Independence
Our Board
currently consists of eight authorized directors, with one
vacancy. The Company’s directors are Kevin P. Connors,
David A. Gollnick, Timothy J. O’Shea, David B. Apfelberg,
W. Mark Lortz, Jerry P. Widman, and Annette J.
Campbell-White. Our Board has determined that each of the directors
other than Kevin P. Connors, the Company’s President and Chief Executive
Officer, and David A. Gollnick, the Company’s former Executive Vice
President of Research and Development and a current consultant to our Company
satisfy the current “independent director” standards established by rules of The
NASDAQ Stock Market LLC (“Nasdaq”).
Board
Leadership Structure
Our Board
does not have a chairman or lead independent director. Our Chief
Executive Officer, Mr. Connors, performs many of the functions that a chairman
would typically perform, including setting the agenda for each board meeting and
presiding over such meetings. In addition, as described in more
detail below, the Board has two standing committees, an Audit Committee and a
Compensation Committee. The chairman and each member of these
committees is an independent director. The Board delegates
substantial duties and responsibilities to each committee. The
committees make recommendations to the Board and report regularly to the Board
on their activities and any actions they have taken. We believe that
our independent board committees and their chairman are an important aspect of
our board leadership structure.
Risk
Oversight and Analysis
Our
management is responsible for managing the risks we face in the ordinary course
of operating our business. The Board oversees potential risks and our
risk management activities by receiving operational and strategic presentations
from management which include discussions of key risks to our
business. While our Board has the ultimate responsibility for risk
management and oversight, various committees of the Board also support the Board
in its fulfillment of this responsibility. For example, our Audit
Committee assists the Board in its risk oversight function by reviewing and
discussing with management our system of disclosure controls and our internal
controls over financial reporting, and risks associated with our cash investment
policies. Our business is run conservatively and excessive risk
taking has been discouraged. As a result, risk analysis has not been
a significant factor for our Compensation Committee in establishing
compensation.
Committees
of the Board
Our Board
has two standing committees: the Audit Committee and the Compensation
Committee. From time to time, our Board may also create various ad
hoc committees for special purposes. The membership during the last
fiscal year and the function of each of the committees are described
below.
|
|
|
|
|
|
Non-Employee
Directors:
|
|
|
|
|
|
|
|
Jerry P.
Widman
|
|
|
X |
* |
|
|
X |
|
|
Timothy J.
O’Shea
|
|
|
X |
|
|
|
|
|
|
W. Mark
Lortz
|
|
|
X |
|
|
|
|
|
|
David B.
Apfelberg
|
|
|
|
|
|
|
X |
* |
|
Annette J.
Campbell-White
|
|
|
|
|
|
|
X |
|
|
David A.
Gollnick**
|
|
|
|
|
|
|
|
|
|
Employee
Directors:
|
|
|
|
|
|
|
|
|
|
Kevin P.
Connors
|
|
|
|
|
|
|
|
|
|
Number
of Meetings Held During the Last Fiscal Year
|
|
|
7 |
|
|
|
4 |
|
|
X =
|
Committee
member
|
* =
|
Chairman
of Committee
|
**
=
|
Mr. Gollnick
resigned from the position of Executive Vice President of Research and
Development effective March 20, 2009 and continues to be a member of
our Board and a consultant to our
Company.
|
Audit
Committee. The Audit Committee oversees the Company’s
accounting and financial reporting processes and the audits of its financial
statements. In this role, the Audit Committee monitors and oversees
the integrity of the Company’s financial statements and related disclosures, the
qualifications, independence, and performance of the Company’s Independent
Registered Public Accounting Firm, and the Company’s compliance with applicable
legal requirements and its business conduct policies. Our Board has
determined that each member of the Audit Committee meets the independence and
financial literacy requirements of the Nasdaq rules and the independence
requirements of the SEC. Our Board has determined that Jerry P.
Widman continues to qualify as an “audit committee financial expert,” as defined
in SEC rules. The Audit Committee has a written charter, which was
adopted by our Board in January 2004, a copy of which can be found on our
website at www.cutera.com. The report of the Audit Committee appears
on page 13 of this proxy statement.
Compensation
Committee. The Compensation Committee, together with the
Board, establishes compensation for the Chief Executive Officer and the other
executive officers and administers the Company’s 2004 Equity Incentive Plan (as
amended in 2008) and 2004 Employee Stock Purchase Plan. The
Compensation Committee has a written charter, which was adopted by our Board in
January 2004, and amended on April 13, 2007 and on April 25, 2008, and
can be found on our website.
Meetings
Attended by Directors
During
2009, the Board held five meetings, the Audit Committee held seven meetings and
the Compensation Committee held four meetings. No director attended
fewer than 75% of the meetings of the Board or committee(s) on which he or she
served during 2009.
The
directors of the Company are encouraged to attend the Company’s Annual Meeting
of Stockholders, and director Kevin P. Connors attended the meeting in 2009
in person, and directors David B. Apfelberg, Annette J.
Campbell-White, Timothy J. O’Shea and Jerry Widman attended that meeting
telephonically. No other board members attended that meeting, in
person or telephonically.
Director
Nomination Process
Nominations. Our
Board does not currently have a nominating committee or other committee
performing a similar function nor do we have any formal written policies
outlining the factors and process relating to the selection of nominees for
consideration for Board membership by the full Board and the
stockholders. Our Board has adopted resolutions in accordance with
the Nasdaq Rules authorizing a majority of its independent members to recommend
qualified nominees for consideration by the full Board. Our Board
believes that it is appropriate for us to not have a standing nominating
committee because of a number of factors, including the number of independent
directors who want to participate in consideration of candidates for membership
on the Board. Our Board consists of seven members, five of whom are
independent. Our Board considered forming a nominating committee
consisting of several of the independent members of our
Board. Forming a committee consisting of less than all of the
independent members would have resulted in the omission of the other independent
members of our Board who wanted to participate in considering qualified
candidates for Board membership. Since our Board desired the
participation in the nominations process of all of its independent members, it
therefore decided not to form a nominating committee and instead authorized a
majority of the independent members of our Board to make and consider
nominations for Board membership. The independent members of our
Board do not have a nominating committee charter, but act pursuant to Board
resolutions as described above. Each of the members of our Board
authorized to recommend nominees to the full Board is independent within the
meaning of the current “independent director” standards established by Nasdaq’s
rules. Our Board intends to review this matter periodically, and may
in the future elect to designate a formal nominating committee.
Director
Qualifications. While the independent members of our Board
have not established specific minimum qualifications for director candidates,
the candidates for Board membership should have the highest professional and
personal ethics and values, and conduct themselves consistent with our Code of
Ethics. While the independent members of the Board have not
formalized specific minimum qualifications they believe must be met by a
candidate to be recommended by the independent members, the independent members
of the Board believe that candidates and nominees must reflect a Board that is
comprised of directors who (i) have broad and relevant experience,
(ii) are predominantly independent, (iii) are of high integrity,
(iv) have qualifications that will increase overall Board effectiveness and
enhance long-term stockholder value, and (v) meet other requirements as may
be required by applicable rules, such as financial literacy or financial
expertise with respect to Audit Committee members.
Stockholder Nominations and
Recommendations. As described above in the Question and Answer
section of this proxy statement under “What is the deadline to propose actions
for consideration at next year’s Annual Meeting of Stockholders or to nominate
individuals to serve as directors?,” our Bylaws set forth the procedure for the
proper submission of stockholder nominations for membership on our
Board. In addition, the independent members of our Board may consider
properly submitted stockholder recommendations (as opposed to formal
nominations) for candidates for membership on the Board. A
stockholder may make such a recommendation by submitting the following
information to our Secretary at 3240 Bayshore Blvd., Brisbane, California
94005-1021: the candidate’s name, home and business contact information,
detailed biographical data, relevant qualifications, professional and personal
references, information regarding any relationships between the candidate and
Cutera within the last three years and evidence of ownership of Cutera stock by
the recommending stockholder.
Identifying and Evaluating Director
Nominees. Typically new candidates for nomination to the Board
are suggested by existing directors or by our executive officers, although
candidates may initially come to our attention through professional search
firms, stockholders or other persons. The independent members of the
Board carefully review the qualifications of any candidates who have been
properly brought to their attention. Such a review may, in the
Board’s discretion, include a review solely of information provided to the Board
or may also include discussion with persons familiar with the candidate, an
interview with the candidate or other actions that the Board deems
proper. The Board shall consider the suitability of each candidate,
including the current members of the Board, in light of the current size and
composition of the Board. In evaluating the qualifications of the
candidates, the independent members of the Board considers many factors,
including, issues of character, judgment, independence, expertise, length of
service, and other commitments. In addition, the independent members
of the Board take into account diversity in professional experience, skills and
background in considering and evaluating candidates. However, while
diversity relating to background, skill, experience and perspective is one
factor considered in the nomination process, the Company does not have a formal
policy relating to diversity. The Board evaluates such factors, among
others, and does not assign any particular weighting or priority to any of these
factors. Candidates properly recommended by stockholders are
evaluated by the independent directors using the same criteria as other
candidates. Candidates are not discriminated against on the basis of
race, religion, national origin, sexual orientation, disability or any other
basis proscribed by law.
Director
Compensation
The
following table sets forth a summary of the cash compensation and the grant date
fair value of fully vested stock awarded to our non-employee directors in the
year ended December 31, 2009.
|
|
Fees
Earned or Paid in Cash(1)
|
|
|
|
|
|
|
|
David B.
Apfelberg
|
|
$ |
55,000 |
|
|
$ |
60,000 |
(3) |
|
$ |
115,000 |
|
Annette J.
Campbell-White
|
|
|
41,000 |
|
|
|
60,000 |
(4) |
|
|
101,000 |
|
David A.
Gollnick
|
|
|
22,500 |
|
|
|
— |
(5) |
|
|
22,500 |
|
W. Mark
Lortz
|
|
|
42,500 |
|
|
|
60,000 |
(6) |
|
|
102,500 |
|
Timothy J.
O’Shea
|
|
|
42,500 |
|
|
|
60,000 |
(7) |
|
|
102,500 |
|
Jerry P.
Widman
|
|
|
61,000 |
|
|
|
60,000 |
(8) |
|
|
121,000 |
|
(1)
|
Amounts
were earned in connection with serving on our Board and its committees, or
committee Chairman retainers, each as described below.
|
(2)
|
Amounts
shown in this column are the aggregate grant date fair value of fully
vested stock awards granted during the year ended December 31, 2009
calculated in accordance with Accounting Standards Codification
(ASC) Topic 718. See Note 5 of the Notes to
Consolidated Financial Statements included in our Annual Report on
Form 10-K for the year ended December 31, 2009 filed with the
SEC on March 15, 2010 for a discussion of valuation assumptions for
stock-based compensation.
|
(3) |
At
December 31, 2009, David B. Apfelberg held options to purchase
52,000 shares of common stock.
|
(4) |
At
December 31, 2009, Annette J. Campbell-White held options to
purchase 62,000 shares of common stock. |
(5) |
David
A. Gollnick resigned from the position of Executive Vice President of
Research and Development effective March 20, 2009. He continues to be
a member of our Board and is a consultant to our Company. At
December 31, 2009, Mr. Gollnick held options to purchase 41,126
shares of common stock. |
(6) |
At
December 31, 2009, W. Mark Lortz held options to purchase 62,000
shares of common stock. |
(7) |
At
December 31, 2009, Timothy J. O’Shea held options to purchase
42,000 shares of common stock. |
(8)
|
At
December 31, 2009, Jerry P. Widman held options to purchase
62,000 shares of common
stock.
|
From
January 1, 2009 through June 28, 2009, our non-employee directors
earned an annual retainer of $25,000 for regular board meetings. In
June 2009, the Board reviewed a report from Mercer, the Company’s compensation
consultant, relating to director compensation. The results of the
Mercer report demonstrated that: 1) there was a trend away from per meeting
fees and towards annual retainers for services rendered by Board and Committee
members, 2) cash compensation for directors was increasing based on the
additional duties and responsibilities of Board and committee members, and
3) there was a trend away from stock options to fully vested equity grants
based on a fixed dollar value rather than a share value. On
June 29, 2009, our Board, following recommendations of its Compensation
Committee revised the annual compensation of its non-employee
directors. Accordingly, our non-employee directors currently earn an
annual retainer of $45,000 for regular board meetings; $6,000 for Compensation
Committee meetings; and $7,500 for Audit Committee
meetings. Additionally in 2009, the Chairman of the Audit Committee
earned an annual retainer of $20,000 and the Chairman of the Compensation
Committee earned an annual retainer of $20,000. Our directors no
longer receive per meeting fees for board and committee meetings regardless of
the number of meetings held throughout the year.
Our 2004
Equity Incentive Plan provides for the automatic grant of options to our
non-employee directors. Effective from January 1, 2008, each
non-employee director who is appointed to the Board will receive an initial
option to purchase 14,000 shares of our common stock upon such appointment, and
effective June 29, 2009, each non-employee director who is a director on
the date of each Annual Meeting of stockholders and has been a director for at
least the preceding six months will receive stock on an annual basis equivalent
to the number of shares represented by the quotient of $60,000 divided by the
closing stock price of our common stock on the date of each Annual Meeting of
stockholders. All options granted under those automatic grant
provisions will have an exercise price equal to fair market value on the date of
grant and a term of seven years. Each option to purchase 14,000
shares will become exercisable as to one-third of the shares subject to the
option on each anniversary of its date of grant, provided the non-employee
director remains a director on such dates. Each stock will become
vested as to 100% of the shares on the date of grant.
Code
of Ethics
We are
committed to maintaining the highest standards of business conduct and
ethics. Our Code of Ethics, as amended, (the “Code”) reflects our
values and the business practices and principles of behavior that support this
commitment. The Code is intended to satisfy SEC rules for a “code of ethics”
required by Section 406 of the Sarbanes-Oxley Act of 2002, as well as the
Nasdaq listing standards requirement for a “code of conduct.” The
Code is an Exhibit to our Form 8-K filed with the SEC on
April 27, 2004, was amended and restated on November 19,
2009, and is available on the Company’s website at
www.cutera.com. We will post any amendment to the Code, as well as
any waivers that are required to be disclosed by the rules of the SEC or Nasdaq,
on our website.
Corporate
Governance Committee Guidelines
We do not
have a Corporate Governance Committee and have not adopted corporate governance
guidelines. Our Board, together with our committees fulfill the role
that a Corporate Governance Committee would provide and work with management on
corporate governance matters generally.
Compensation
Committee Interlocks and Insider Participation
No member
of our Compensation Committee, nor any of our executive officers, has a
relationship that would constitute an interlocking relationship with executive
officers or directors of another entity. No Compensation Committee
member is an officer or employee of Cutera.
Certain
Relationships and Related Transactions
In the
Company’s last fiscal year, and except for compensation paid to its directors
and executive officers for services performed in such roles, and except as
provided in the following paragraph, there has not been, nor is there currently
proposed, any transaction or series of similar transactions to which the Company
was or is to be a party in which the amount involved exceeds $120,000 and in
which any director, executive officer, holder of more than 5% of our common
stock or any member of their immediate families had or will have a direct or
indirect material interest.
We
entered into a consulting agreement with David A. Gollnick on March 2,
2009 upon Mr. Gollnick’s resignation as the Company’s Executive Vice
President of Research and Development, pursuant to which Mr. Gollnick is
compensated for services that he provides to us, including assisting with
transitioning the duties and responsibilities of the position of Vice President
of Research and Development to a successor and providing product development and
clinical support. Payments to Mr. Gollnick under this agreement
in 2009 were approximately $110,400. In addition, Mr. Gollnick
was paid approximately $22,500 in connection with serving on our Board and
approximately $71,784 in base salary prior to his resignation as the Company’s
Executive Vice President of Research and Development in the year ended
December 31, 2009.
Family
Relationships
There are
no family relationships among any of our directors or executive
officers.
Communications
with the Board by Stockholders
Stockholders
wishing to communicate with the Board or with an individual Board member
concerning the Company may do so by writing to the Board or to the particular
Board member, and mailing the correspondence to: Attention: Board of Directors,
c/o Secretary, Cutera, Inc., 3240 Bayshore Blvd., Brisbane, California
94005-1021. The envelope should indicate that it contains a
stockholder communication. All such stockholder communications will
be forwarded to the director or directors to whom the communications are
addressed.
REPORT
OF THE AUDIT COMMITTEE
The
material in this section is not deemed filed with the SEC and is not
incorporated by reference in any filing of our Company under the Securities Act
of 1933 or the Securities Exchange Act of 1934, whether made before or after the
date of this Proxy Statement and irrespective of any general incorporation
language in those filings.
The Audit
Committee of the Board of Directors is comprised solely of independent directors
(as defined by Nasdaq rules) who were all appointed by the Board of
Directors. The Audit Committee operates pursuant to a written charter
adopted by the Board of Directors, a copy of which can be found on our
website. The Audit Committee reviews and assesses the adequacy of its
charter on an annual basis. As more fully described in the charter,
the purpose of the Audit Committee is to provide general oversight of Cutera’s
financial reporting, integrity of financial statements, internal controls and
internal audit functions. The Audit Committee has authority to retain
outside legal, accounting or other advisors as its deems necessary to carry out
its duties and to require Cutera to pay for such expenditures.
The Audit
Committee monitors Cutera’s external audit process, including the scope, fees,
auditor independence matters and the extent to which the Independent Registered
Public Accounting Firm may be retained to perform non-audit
services. The Audit Committee has responsibility for the appointment,
compensation, retention and oversight of Cutera’s Independent Registered Public
Accounting Firm. The Audit Committee also reviews the results of the
external audit work with regard to the adequacy and appropriateness of Cutera’s
financial, accounting and internal controls over financial
reporting. In addition, the Audit Committee generally oversees
Cutera’s internal compliance programs. The Audit Committee members
are not all professional accountants or auditors, and their function is not
intended to duplicate or to certify the activities of management and the
Independent Registered Public Accounting Firm, nor can the Audit Committee
certify that the Independent Registered Public Accounting Firm is “independent”
under applicable rules.
The Audit
Committee provides advice, counsel and direction to management and the
Independent Registered Public Accounting Firm on matters for which it is
responsible based on the information it receives from management and the
Independent Registered Public Accounting Firm and the experience of its members
in business, financial and accounting matters.
Management
is responsible for the preparation and integrity of Cutera’s financial
statements, accounting and financial reporting processes and internal control
over financial reporting for compliance with applicable accounting standards,
laws and regulations.
Cutera’s
Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP, is
responsible for performing an independent audit of Cutera’s financial statements
in accordance with generally accepted auditing standards and expressing an
opinion in its report on those financial statements, and for expressing an
opinion on the effectiveness of Cutera’s internal control over financial
reporting.
In this
context, the Audit Committee hereby reports as follows:
|
·
|
The
Audit Committee has reviewed and discussed the audited financial
statements for 2009 with Cutera’s
management.
|
|
·
|
The
Audit Committee has discussed with the Independent Registered Public
Accounting Firm the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standard, AU 380),
SAS 99 (Consideration of Fraud in a Financial Statement Audit) and
SEC rules discussed in Final Releases Nos. 33-8183 and
33-8183a.
|
The Audit
Committee has received written disclosures and a letter from the Independent
Registered Public Accounting Firm, PricewaterhouseCoopers LLP, pursuant to
Rule 3526, Communication
with Audit Committees Concerning Independence, of the Public Company
Accounting Oversight Board (“PCAOB”), and has discussed with
PricewaterhouseCoopers LLP its independence.
|
·
|
The
Audit Committee has discussed with the Independent Registered Public
Accounting Firm the overall scope and plans for its
audit.
|
|
·
|
The
Audit Committee has met with the Independent Registered Public Accounting
Firm, with and without management present, to discuss the results of its
examinations, its evaluations of our internal control over financial
reporting, and to discuss the overall quality of our financial
reporting.
|
|
·
|
The
Audit Committee has considered whether the provision by the Independent
Registered Public Accounting Firm of non-audit services is compatible with
maintaining its independence.
|
|
·
|
Based
on the review and discussion referred to above, the Audit Committee has
approved that the audited financial statements and the report of
management on internal control over financial reporting be included in
Cutera’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2009.
|
The
foregoing report is provided by the undersigned members of the Audit
Committee.
W. Mark
Lortz
Timothy J.
O’Shea
Jerry P.
Widman
PROPOSAL
ONE—ELECTION OF DIRECTORS
Classes
of the Board of Directors
Our
Amended and Restated Certificate of Incorporation provides that our Board shall
be divided into three classes designated as Class I, Class II and
Class III, respectively, with the classes of directors serving for
staggered three-year terms. Our Board currently consists of seven
directors, divided among the three classes as follows: two Class I
directors, Kevin P. Connors and David A. Gollnick, whose terms expire
at our Annual Meeting of Stockholder to be held in 2011; two Class II
directors, David B. Apfelberg and Timothy J. O’Shea, whose terms
expire at our Annual Meeting of Stockholders to be held in 2012; and three
Class III directors, Annette J. Campbell-White, W. Mark Lortz and
Jerry P. Widman, whose terms expire at this Annual Meeting.
The name
of each member of the Board, the class in which he or she serves, and his or her
age as of the Record Date, principal occupation and length of service on the
Board are as follows:
|
|
|
|
|
|
|
|
|
Class I
Directors
|
|
|
|
|
|
|
|
|
|
|
|
Kevin P.
Connors
|
2011
|
|
|
|
48 |
|
|
President
and Chief Executive Officer
|
|
|
1998 |
|
|
David A.
Gollnick(1)
|
2011
|
|
|
|
45 |
|
|
Former
Executive Vice President of Research and Development
|
|
|
1998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class II
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy J.
O’Shea(3)
|
2012
|
|
|
|
57 |
|
|
Managing
Director, Oxo Capital
|
|
|
2004 |
|
|
David B.
Apfelberg(2)
|
2012
|
|
|
|
68 |
|
|
Clinical
Professor of Plastic Surgery, Stanford University Medical
Center
|
|
|
1998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class III
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Mark
Lortz(3)
|
2010
|
|
|
|
58 |
|
|
Former
Chief Executive Officer, TheraSense, Inc.
|
|
|
2004 |
|
|
Jerry P.
Widman(2)(3)
|
2010
|
|
|
|
67 |
|
|
Former
Chief Financial Officer, Ascension Health
|
|
|
2004 |
|
|
Annette J.
Campbell-White(2)
|
2010
|
|
|
|
63 |
|
|
Managing
General Partner, MedVenture Associates I-V
|
|
|
1998 |
|
|
(1)
|
Mr. Gollnick
resigned from the position of Executive Vice President of Research and
Development effective March 20,
2009.
|
(2)
|
Member
of the Compensation Committee.
|
(3)
|
Member
of the Audit Committee.
|
Director
Nominees
The Board
has nominated W. Mark Lortz, Jerry P. Widman and Annette J.
Campbell-White for re-election as Class III directors.
W. Mark
Lortz has served as a member of our board of directors since June
2004. Mr. Lortz served as the Chairman, President and Chief
Executive Officer of TheraSense until June of 2004 after its acquisition by
Abbott Laboratories. Prior to TheraSense, Mr. Lortz held several
positions at LifeScan, including Vice President, Operations and Group Vice
President, Worldwide Business Operations. Prior to LifeScan,
Mr. Lortz has 18 years of experience with the General Electric Company
in several divisions. Mr. Lortz is a member of the board of
directors of NeuroMetrix, a publicly-traded manufacturer of neurological
diagnostic and therapeutic devices, and Neuralieve, a privately held medical
technology company. Within the past five
years, Mr. Lortz also served on the board of directors of
IntraLase. Mr. Lortz holds an M.B.A. in Management from
Xavier University and a B.S. in Engineering Science from Iowa State
University. We believe Mr. Lortz’s qualifications to serve on
our board of directors include his executive leadership and management
experience as a former Chief Executive Officer, as well as his experience
serving on the boards of other public and private companies.
Jerry P.
Widman has served as a member of our board of directors since March
2004. From 1982 to 2001, Mr. Widman served as the Chief
Financial Officer of Ascension Health, a not-for-profit multi-hospital
system. Mr. Widman currently serves as a member of the board of
directors of three other privately-held companies in the healthcare
industry. Within the past five
years, Mr. Widman also served on the board of directors of
ArthroCare Corporation, United Surgical Partners International and the
Trizetto Group. Mr. Widman
holds a B.B.A. from Case Western Reserve University, an M.B.A. from the
University of Denver, and a J.D. from Cleveland State University and is a
Certified Public Accountant. We believe Mr. Widman’s
qualifications to serve on our board of directors include his financial
expertise and prior experience as a Chief Financial Officer, as well as his
experience serving
on the boards of various public and private companies.
Annette J.
Campbell-White has served as a member of our board of directors since November
1998. Since May 1986, Ms. Campbell-White has been the Managing
General Partner of MedVenture Associates I-V, which are venture
partnerships investing primarily in early stage businesses in the healthcare
field. Ms. Campbell-White currently serves on the boards of a
number of privately-held companies. Ms. Campbell-White holds a
B.S. in Chemical Engineering and an M.S. in Chemistry, both from the University
of Cape Town, South Africa. We believe Ms. Campbell-White’s
qualifications to serve on our board of directors include her diverse experience
in investment banking transactions, as well as her expertise in the medical
device industry and understanding of the Company' s operations having served as
a director of the Company while it was a private company.
If
elected to our board of directors, directors W. Mark Lortz, Jerry P.
Widman and Annette J. Campbell-White would each hold office as a
Class III director until our Annual Meeting of Stockholders to be held in
2013 or until his or her earlier resignation, removal, or death.
Board
of Directors’ Recommendation
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE THREE NOMINEES FOR
CLASS III DIRECTOR LISTED ABOVE.
Directors
Whose Terms Extend Beyond the 2010 Annual Meeting
David B.
Apfelberg, MD has served as a member of our board of directors since November
1998. Since 1980, Dr. Apfelberg has held various roles at the
Stanford University Medical Center, and currently serves as a Clinical Professor
of Plastic Surgery. Since 1987, Dr. Apfelberg has also been a
consultant for entrepreneurs and venture capital companies in the areas of
medical devices and medicine. From June 1991 to May 2001,
Dr. Apfelberg was Director of the Plastic Surgery Center in Atherton,
California. Dr. Apfelberg holds both a B.M.S., Bachelor of
Medical Science, and an M.D. from Northwestern University Medical
School. We believe Dr. Apfelberg’s qualifications to serve on
our board of directors include his medical expertise, understanding of our
products, and his knowledge of the aesthetics market generally.
Timothy J.
O’Shea has served as a member of our board of directors since April
2004. Mr. O’Shea has been with Oxo Capital since 2008 and serves
as a managing director. From 1995 to 2008, he served in a variety of
management positions at Boston Scientific, including Corporate Vice President of
Business Development from 2000 to 2008. Mr. O’Shea
holds a B.A. in history from the University of Detroit. We believe
Mr. O’Shea’s qualifications to serve on our board of directors include his
corporate marketing knowledge as well as his diverse experience in the medical
device industry working for a large medical device company.
Kevin P.
Connors has served as our President and Chief Executive Officer and as a member
of our board of directors since our inception in August
1998. Mr. Connors also currently serves as a member of the board
of directors of the Exploratorium in San Francisco. From May 1996 to
June 1998, Mr. Connors served as President and General Manager of Coherent
Medical Group, a unit of Coherent Inc., which manufactures lasers, optics and
related accessories. We believe Mr. Connors’ qualifications to
serve on our board of directors include his leadership experience in the
aesthetic medical equipment industry prior to joining Cutera and the substantial
understanding of the Company and its operations that he has gained while serving
as President, Chief Executive Officer and director of the Company since
inception.
David A.
Gollnick has served as a member of our Board since our inception in August
1998. He served as our Vice President of Research and Development
from August 1998 until April 2007, and served as our Executive Vice President of
Research and Development from April 2007 until March 2009. From June 1996 to
July 1998, Mr. Gollnick was Vice President of Research and Development at
Coherent Medical Group, a unit of Coherent Inc. Mr. Gollnick
holds a B.S. in Mechanical Engineering from Fresno State
University. We believe Mr. Gollnick’s qualifications to serve on
our board of directors include his technical experience in researching and
developing products for the aesthetic medical equipment industry and his
understanding of our employees and products.
PROPOSAL
TWO—RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit
Committee of the Board has selected PricewaterhouseCoopers LLP as the
Independent Registered Public Accounting Firm to perform the audit of the
Company’s consolidated financial statements for the fiscal year ending
December 31, 2010. PricewaterhouseCoopers LLP audited the
Company’s consolidated financial statements for the fiscal years 2001 through
2009.
The Board
is asking the stockholders to ratify the selection of PricewaterhouseCoopers LLP
as the Company’s Independent Registered Public Accounting Firm for
2010. Although not required by law, by rules of Nasdaq, or by the
Company’s bylaws, the Board is submitting the selection of
PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of
good corporate practice. Even if the selection is ratified, the Audit
Committee in its discretion may select a different Independent Registered Public
Accounting Firm at any time during the year if it determines that such a change
would be in the best interests of the Company and its stockholders.
Representatives
of PricewaterhouseCoopers 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 from
the Company’s stockholders.
Board
of Directors’ Recommendation
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR 2010.
Audit
and Non-Audit Services
The Audit
Committee is directly responsible for the appointment, compensation, and
oversight of the Company’s Independent Registered Public Accounting
Firm. In addition to retaining PricewaterhouseCoopers LLP to audit
the Company’s consolidated financial statements for 2009, the Audit Committee
retained PricewaterhouseCoopers LLP to provide other auditing and advisory
services in 2009. The Audit Committee understands the need for
PricewaterhouseCoopers LLP to maintain objectivity and independence in its
audits of the Company’s financial statements. The Audit Committee has
reviewed all non-audit services provided by PricewaterhouseCoopers LLP in 2009
and has concluded that the provision of such services was compatible with
maintaining PricewaterhouseCoopers LLP’s independence in the conduct of its
auditing functions.
To help
ensure the independence of the Independent Registered Public Accounting Firm,
the Audit Committee has adopted a policy for the pre-approval of all audit and
non-audit services to be performed for the Company by its Independent Registered
Public Accounting Firm. Pursuant to this policy, all audit and
non-audit services to be performed by the Independent Registered Public
Accounting Firm must be approved in advance by the Audit
Committee. The Audit Committee may delegate to one or more of its
members the authority to grant the required approvals, provided that any
exercise of such authority is presented to the full Audit Committee at its next
regularly scheduled meeting.
The
aggregate fees incurred by the Company for audit and non-audit services in 2009
and 2008 were as follows:
|
|
|
|
|
|
|
Audit
Fees
|
|
$ |
596,500 |
|
|
$ |
710,800 |
|
Audit
Related Fees
|
|
|
— |
|
|
|
— |
|
Tax
Fees
|
|
|
— |
|
|
|
— |
|
All
Other Fees
|
|
|
1,500 |
|
|
|
1,500 |
|
Total
|
|
$ |
598,000 |
|
|
$ |
712,300 |
|
In the
above table, in accordance with the SEC’s definitions and rules, “audit fees”
are fees for professional services for the audit of a company’s financial
statements and internal control over financial reporting included in the annual
report on Form 10-K and for the review of a company’s financial statements
included in the quarterly reports on Form 10-Q; “audit-related fees” are
fees for services that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements; “tax fees” are fees for
tax compliance, tax advice and tax planning; and “all other fees” are a
subscription fee for a PricewaterhouseCoopers LLP online service used for
accounting research purposes. Included in audit fees are fees that
were billed and unbilled for services rendered during the year ended
December 31, 2009.
All of
the services provided by PricewaterhouseCoopers LLP described in the table above
were approved by the Audit Committee.
NAMED
EXECUTIVE OFFICERS
Set forth
below is certain information concerning our Named Executive Officers as of the
Record Date.
|
|
|
|
|
Kevin P.
Connors
|
|
|
48 |
|
|
President,
Chief Executive Officer and Director
|
Ronald J.
Santilli
|
|
|
50 |
|
|
Executive
Vice President and Chief Financial
Officer
|
Further
information regarding Kevin P. Connors is provided above under “Directors
Whose Terms Extend Beyond the 2010 Annual Meeting.”
Ronald J.
Santilli has served as our Chief Financial Officer since September 2001 and as
our Executive Vice President since April 2007. From September
2001 to April 2007, Mr. Santilli served as our Vice
President. From April 2001 to August 2001, Mr. Santilli served
as Senior Director of Financial Planning and Accounting at Lumenis, a
manufacturer of medical lasers. From May 1993 to March 2001,
Mr. Santilli held several positions at Coherent Inc., including Sales
Operations Manager, Controller of the Medical Group and, most recently, Director
of Finance and Administration. Mr. Santilli holds a B.S. in
Business Administration from San Jose State University and an M.B.A. in Finance
from Golden Gate University.
Compensation
Discussion and Analysis
Overview
The
primary objectives of our compensation programs are:
|
·
|
that
they be fair, objective and consistent across the employee
population;
|
|
·
|
that
compensation be directly and substantially linked to measurable corporate
and individual performance; and
|
|
·
|
that
compensation remains competitive, so that we can attract, motivate, retain
and reward the key employees whose knowledge, skills and performance are
necessary for our success.
|
We seek
to foster a culture where individual performance is aligned with organizational
objectives. We evaluate and reward our Named Executive Officers based on the
comparable industry specific and general market compensation for their
respective positions in the company and an evaluation of their contributions to
the achievement of short-and long-term organizational goals. Executive
compensation is reviewed annually by our Compensation Committee, and adjustments
are made to reflect performance-based factors and competitive
conditions.
Role
of Our Compensation Committee
Compensation
Committee Charter
The
Compensation Committee establishes compensation for our two Named Executive
Officers – our Chief Executive Officer and Chief Financial Officer, and
administers our equity incentive plans, which are currently the 2004 Equity
Incentive Plan and the 2004 Employee Stock Purchase Plan. The Compensation
Committee has a written charter, which was adopted by our Board in January 2004,
and was amended in April 2007 and in April 2008. A copy of this charter, as
amended, can be found on our website, which is www.cutera.com.
Duties
of the Compensation Committee
The
responsibilities of the Compensation Committee include:
|
(i)
|
Establishing
the following for the Named Executive Officers and such other officers as
appropriate: (a) annual base salary, (b) annual incentive bonus, which may
include the setting of specific goals and amounts, (c) equity
compensation, (d) agreements for employment, severance and
change-of-control, and (e) any other benefits, compensation or
arrangements, other than benefits generally available to our
employees.
|
|
(ii)
|
Reviewing
and making recommendations to our Board of Directors, at such intervals as
may be decided by the Compensation Committee from time to time, regarding
(a) general compensation goals and guidelines for our employees and the
criteria by which bonuses and stock compensation awards to our employees
are determined; and, (b) other policies and plans for the provision of
compensation to our employees, directors and
consultants.
|
|
(iii)
|
Acting
as Administrator of our 2004 Equity Incentive Plan, 2004 Employee Stock
Purchase Plan, and any other equity compensation plans adopted by our
Board.
|
|
(iv)
|
Reviewing
and making recommendations to our Board with respect to policies relating
to the issuance of equity incentives to employees, consultants and
directors.
|
|
(v)
|
Evaluating
the compensation of the independent members of our
Board.
|
|
(vi)
|
Preparing
the report that follows this Compensation Discussion and
Analysis.
|
Compensation
Committee Members
The
members of our Compensation Committee are appointed by our Board. The members of
that committee as of the Record Date were Dr. David B. Apfelberg (chairman), Mr.
Jerry P. Widman and Ms. Annette J. Campbell-White. Each member of the
Compensation Committee is an “outside director” for purposes of Section 162(m)
of the Internal Revenue Code, a “non-employee director” for purposes of Rule
16b-3 under the Exchange Act and satisfies the independence requirements imposed
by Nasdaq.
Role
of the Compensation Committee and its Consultant in Setting Executive
Compensation
Our
Compensation Committee establishes the compensation packages for our Named
Executive Officers to ensure consistency with market compensation rates for
similar positions, our compensation philosophy and corporate governance
guidelines. Decisions are made only by the directors who are “outside directors”
for purposes of Section 162(m) of the Internal Revenue Code and “non-employee
directors” for purposes of Rule 16b-3 under the Exchange Act.
With the
SEC’s recent reforms relating to executive compensation disclosure, our
Compensation Committee has assumed an active role in reviewing market data and
working with a compensation consultant on executive compensation matters. From
2005 to March 2009, we worked with a third-party compensation consultant,
Compensia, to assist us in setting executive compensation. In March 2009, we
replaced Compensia with Mercer as our third-party compensation consultant.
Because certain components of executive compensation—such as bonus targets—are
driven by operational priorities, as to which management has greater insight
than the Board or the Compensation Committee, the Compensation Committee has
directed management to interface with the Committee and the compensation
consultant to help establish appropriate targets.
Due to
the significant cost associated with services provided by a compensation
consultant, we may decide not to engage a compensation consultant each year, but
rather once every few years. This decision shall be evaluated regularly and will
be based on the Compensation Committee’s evaluation of whether the prior report
obtained, along with increased disclosures of other public companies from our
Peer Group relating to executive compensation disclosure, is sufficient to allow
them to make informed and reasonable decisions with regard to
executive-compensation matters.
Role
of our Executives in Setting Compensation
On
occasion, the Compensation Committee meets with members of our management team,
including Messrs. Kevin Connors and Ron Santilli, to obtain recommendations with
respect to Company compensation programs, practices and packages for executives,
other employees and directors. Management may make recommendations to the
Compensation Committee on all components of compensation. The Compensation
Committee considers, but is not bound to and does not always accept,
management’s recommendations with respect to these matters. The Compensation
Committee has the ultimate authority to make decisions with respect to the
compensation of our Named Executive Officers and does not delegate any of its
compensation functions to others.
Market
Benchmarks
In
developing its recommendations for annual compensation packages for our Named
Executive Officers, our Compensation Committee worked with Mercer to gather
market data and identify an appropriate peer group of public companies. The
members of that peer group are Athenahealth, Atrion Corporation, Candela
(acquired by Syneron Medical, Ltd.), Cryolife, Cynosure, Emageon, Exactech,
I-Flow Corporation, Lifecore Biomedical, Medecision, Meridian Bioscience,
Osteotech, Palomar Medical Technologies, Quadramed, RTI Biologics, Solta
Medical, Transcend Services, and Tutogen Medical (the “Peer Group”). Our
Compensation Committee used this data in developing its recommendations for
annual compensation for our Named Executive Officers, but also ensured that its
recommendations were consistent with the philosophy underlying our compensation
programs.
Compensation
Components
Our Named
Executive Officers are compensated with cash, equity and non-equity incentives,
and other customary employee benefits.
Cash
Compensation. Cash compensation consists of base salary, participation in
a discretionary bonus program and participation in a discretionary
profit-sharing plan. Our cash compensation goals for our Named Executive
Officers are based upon the following principals:
|
·
|
Salary
should generally be set at or above the 50th percentile of the Peer
Group;
|
|
·
|
Salary
should be positioned to reflect each individual’s experience, performance
and potential;
|
|
·
|
A
significant portion of cash compensation should be “at risk;”
and
|
|
·
|
The
amount of discretionary bonuses payable in any quarter is based on revenue
growth, compared with the same quarter in the prior year, and the
operating profit before stock-based compensation and non-operational
expenses, or “Adjusted Operating Profit.” Further, discretionary bonuses
are payable only if we have an Adjusted Operating Profit for that
quarter.
|
Base Salary and Total Target Cash
Compensation. Total target cash compensation for each Named Executive
Officer includes his annual base salary, annual target bonus level (described
below) and annual profit-sharing payments.
During
2009, our Compensation Committee retained Mercer, a third-party compensation
consultant, to assist it with establishing compensation for our Named Executive
Officers. In 2009, Mercer’s fees for compensation consulting to the Compensation
Committee were approximately $68,000. Mercer does not provide any other services
to us other than the services it performs at the request of the Compensation
Committee. Mercer assisted the Compensation Committee’s executive
compensation-setting process by:
|
·
|
assessing
the competitiveness of our compensation arrangements for the Named
Executive Officers and making recommendations regarding the 2009 equity
grants to these individuals;
|
|
·
|
assessing
the competitiveness of our compensation arrangements for the members of
our Board and making recommendations regarding the compensation program’s
design and levels; and
|
|
·
|
reviewing
and providing comments on the structure of the stock option exchange
program.
|
Mercer
concluded that our executive total target cash compensation program was well
aligned with the practices of the broader medical device industry and direct
peers.
Following
its review of Mercer’s report, the Compensation Committee made recommendations
to our Board to maintain the annual base salary and total target cash
compensation of our Named Executive Officers as that set by our Board in
February 2008.
Discretionary Bonus Program.
In addition to base salary compensation, we had a discretionary bonus program in
2009 for our Named Executive Officers and other personnel pursuant to which cash
payments may be made quarterly based on the Company’s performance in the
then-preceding quarter. The annual target bonus levels as a percentage of base
salary for the Named Executive Officers effective through December 31, 2009,
remained the same as that set by our Board in February 2008 at 60% for Mr.
Connors and 45% for Mr. Santilli. Payments made under the discretionary bonus
program are at the Board's option. We, however, have historically made payments
in accordance with this program.
Target
bonuses in 2009 were calculated based upon a matrix of revenue growth and
Adjusted Operating Profit. For example, at 10% revenue growth and 10% Adjusted
Operating
Profit, an individual would receive 100% of his or her target bonus. At 50%
revenue growth and 25% Adjusted Operating Profit, an individual would receive
375% of his or her target bonus. There were no bonuses paid to our Named
Executive Officers in the first, second and third quarters because we did not
have an Adjusted Operating Profit in those quarters. We paid bonuses in the
fourth quarter of 2009 to our named Executive Officers based upon achieving an
Adjusted Operating Profit for that quarter. The actual bonus earned by each of
our Named Executive Officers in 2009 decreased significantly over 2008 and was
equal to approximately 6% of their respective annual target bonus.
Discretionary Profit-Sharing
Program. We also have a discretionary profit sharing program for our
Named Executive Officers and other employees pursuant to which cash payments may
be made quarterly. Target profit-sharing payments are calculated based upon half
of the quarterly pre-tax Adjusted Operating Profit percentage (pre-tax Adjusted
Operating Profit divided by revenue) multiplied by the Named Executive Officer’s
gross salary earned during that quarter. There were no profit-sharing payments
made to our Named Executive Officers in the first, second and third quarters of
2009 because we neither had revenue growth, nor an Adjusted Operating Profit in
those quarters. We made profit-sharing payments in the fourth quarter to our
named Executive Officers based upon achieving an Adjusted Operating Profit for
that quarter. The profit-sharing payments made to each of our Named Executive
Officers in 2009 were equal to approximately 0.6% of their respective annual
base salary.
Long-Term
Incentive Program. We believe that equity-based compensation promotes and
encourages long-term successful performance by our Named Executive Officers that
is aligned with the organization’s goals and the generation of stockholder
value. Our equity compensation goals for our Named Executive Officers and others
are based upon the following principals:
|
·
|
Stockholder
and executive interests should be
aligned;
|
|
·
|
Key
and high-performing employees, who have a demonstrable impact on our
performance and /or stockholder value, should be provided this
benefit;
|
|
·
|
The
program should be structured to provide meaningful retention incentives to
participants;
|
|
·
|
The
equity grants should reflect each individual’s experience, performance,
potential and be comparable to what the Peer Group grants for the
respective position; and
|
|
·
|
Actual
awards should be tailored to reflect individual performance and
attraction/retention goals.
|
Equity Incentive
Compensation. Under our 2004 Equity Incentive Plan, we are permitted to
grant stock options, stock appreciation rights, restricted shares, restricted
stock units, performance shares, and other stock-based awards. Under that Plan,
we grant options to our officers, directors and employees to purchase shares of
our common stock at an exercise price equal to the fair market value of such
stock on the date of grant. The grant date for stock options to our Named
Executive Officers is typically the date of a regularly scheduled board meeting,
or, for annual
merit grants, on or around June 1 of each year. Our outside directors are
granted stock annually on the date of our Annual Meeting of stockholders. We
have no program, plan or practice to select option grant dates (or set board
meeting and annual general meeting of stockholders dates) to correspond with the
release of material non-public information.
In June
2009, following the recommendations of Mercer, our Compensation Committee, with
the approval of our non-employee, outside directors, granted options to Messrs.
Connors and Santilli to acquire 120,000 and 55,000 shares of our common stock
under our 2004 Equity Incentive Plan, respectively. These equity grants are in
the form of stock option awards. At the time these awards were granted, the
unvested stock options of each of our Named Executive Officers had exercise
prices that were higher than the then-current per-share price of our common
stock. Each of these awards was issued for the purpose of retaining the
individual recipient and thus ultimately increasing the value of the
Company.
Each of
the stock option awards described in the preceding paragraph has a vesting
commencement date of June 1, 2009, a term of seven years, and vests as follows:
twelve
thirty-sixths of the total number of shares subject to the stock option shall
vest one full calendar year following the vesting commencement date and one
thirty-sixth of the total number of shares subject to the stock option shall
vest on the last day of each full calendar month thereafter, until all such
shares have vested, subject to the option holder continuing to provide services
to us through each such date.
In
addition, in May 2008 we granted retention options to our Named Executive
Officers that will cliff vest 100% in May 2011. We believe these option grants
provide a meaningful incentive for Named Executive Officers to continue
providing services until the end of that three-year period.
In 2005,
we issued performance unit awards (otherwise commonly referred to as restricted
stock units) to our Named Executive Officers and certain employees pursuant to,
and as provided under, the 2004 Equity Incentive Plan. Each recipient of an
award entered into a performance unit award agreement (or Award Agreement).
These awards vested annually at the rate of 25% of the units per year, for four
years, and became fully vested in 2009. Pursuant to the Award Agreements,
following each annual vesting date, the award was settled in stock, net of stock
withheld for the payment of employee taxes. Under the terms of the 2004 Equity
Incentive Plan and the Award Agreements, each unit had an initial value equal to
the fair market value of our common stock on the date of grant. On its vesting
date, the unit had a value equal to the fair market value of our common stock on
the date of vesting.
We also
have a 2004 Employee Stock Purchase Plan that provides eligible employees with
the opportunity to purchase shares of our common stock at a 15% discounted price
to the lower of the fair market value at either the beginning or the end of the
applicable offering period. During 2009, our Chief Financial Officer
participated in this Plan, but our Chief Executive Officer did not participate
in this Plan.
Option Exchange Program. In
January 2009, our Board determined that it would be in the best interests of the
Company and our stockholders to provide for a one-time exchange
of stock options that are underwater as of the date of exchange (the “Option
Exchange Program”), and delegated to its Compensation Committee the task of
developing a specific program. The Compensation Committee, after receiving input
from Mercer, approved the detailed terms of the Option Exchange Program in March
2009, subject to approval by our stockholders. At our 2009 Annual Meeting of
Stockholders held in May 2009, the stockholders of the Company approved the
Option Exchange Program for our employees and voted against the Option Exchange
Program for our executive officers and the independent members of our Board of
Directors.
In July
2009, we completed the Option Exchange Program for our employees to exchange
certain options outstanding for new options to purchase shares of our common
stock. As
a result, options to purchase 864,373 shares of our common stock were cancelled
and new options to purchase up to 447,841 shares of the Company’s common stock
were issued in exchange. The new options have an exercise price per share of
$8.49, the closing price of our common stock as reported on the Nasdaq Global
Select Market on the date that the offer expired and Option Exchange Program was
completed, are unvested as of the grant date, and subject to an additional six
(6) months of vesting over and above the vesting schedule of the surrendered
options. It is the view of our Board and its Compensation Committee that the
modified equity awards are a valuable incentive and retention tool and are a
part of compensation for non-executive employees of the Company.
Benefits. We provide the following
benefits to our Named Executive Officers generally on the same basis as the
benefits provided to all employees:
|
·
|
Health,
dental and vision insurance;
|
|
·
|
Short-and
long-term disability;
|
|
·
|
401(k)
plan, however, in 2009 we discontinued our discretionary employer match on
employee 401(k) contributions; and
|
|
·
|
Flexible
Spending Accounts.
|
These
benefits are consistent with those offered by other companies and specifically
with those companies with which we compete for employees.
We have
Change of Control and Severance Agreements with each of our Named Executive
Officers. The purpose of these agreements is to provide incentives to our
Named
Executive Officers to continue their employment with the Company and not be
distracted by the possibility of loss of employment as a result of an
acquisition of the Company
or for other reasons.
The
Change of Control and Severance Agreements provide that if a Named Executive
Officer’s employment with the Company is terminated by the Company without Cause
or by the executive for Good Reason either prior to 3 months before or after 12
months following a Change of Control (as such capitalized terms are defined in
the Change of Control and Severance Agreement) of the Company but not in
connection with a Change of Control, the executive will receive, subject to
signing a release of claims in favor of the Company, (i) a lump sum severance
payment equal to 200% of the annual base salary as in effect immediately prior
to such termination for our Chief Executive Officer and 100% of the annual base
salary as in effect immediately prior to such termination for our Chief
Financial Officer; and (ii) up to 24 months for our Chief Executive Officer and
up to 12 months for our Chief Financial Officer of reimbursement for premiums
paid for COBRA coverage.
The
Change of Control and Severance Agreements also provide that if an executive’s
employment with the Company is terminated by the Company without Cause or by the
executive for Good Reason and such termination occurs within the period
beginning 3 months before, and ending 12 months following, a Change of Control
of the Company and in connection with a Change of Control, the executive will
receive, subject to signing a release of claims in favor of the Company, (i) a
lump sum severance payment equal to 200% of the annual base salary as in effect
immediately prior to such termination or, if greater, at the level in effect
immediately prior to the Change of Control for our Chief Executive Officer and
100% of the annual base salary as in effect immediately prior to such
termination or, if greater, at the level in effect immediately prior to the
Change of Control for our Chief Financial Officer; (ii) a lump sum severance
payment equal to 100% of the executive’s annual target bonus for the fiscal year
in which the termination occurs or, if greater, executive’s annual target bonus
in effect immediately prior to the Change of Control; (iii) automatic vesting in
full of all outstanding and unvested equity awards held by the executive as of
the date of the Change of Control; and (iv) up to 24 months for our Chief
Executive Officer and up to 12 months for our Chief Financial Officer of
reimbursement for premiums paid for COBRA coverage.
Each
Change of Control and Severance Agreement has an initial term of three years,
and will extend for an additional year unless the Company or the applicable
executive provides written notice at least sixty days prior to the third
anniversary of the agreement. For purposes of these agreements, “Cause” shall
mean executive’s termination only upon (i) executive’s willful failure to
substantially perform executive’s duties (subject to notice and a reasonable
period to cure), other than a failure resulting from executive’s complete or
partial incapacity due to physical or mental illness or impairment; (ii)
executive’s willful act which constitutes gross misconduct and which is
injurious to the Company; (iii) executive’s willful breach of a material
provision of the Change of Control and Severance Agreement (subject to notice
and reasonable period to cure); or (iv) executive’s knowing, material and
willful violation of a federal or state law or regulation applicable to the
business of the Company.
For
purposes of these agreements, “Good Reason” shall mean executive’s termination
of employment within ninety (90) days following the expiration of any cure
period following the occurrence of one or more of the following, without
executive’s consent: (i) a material reduction in executive’s authority, duties,
or responsibilities relative to duties, position or responsibilities in effect
immediately prior to such reduction; (ii) a material reduction in executive’s
base salary as in effect immediately prior to such reduction; or (iii) a
material change in the geographic location at which executive must perform
services (in other words, the relocation of executive to a facility that is more
than fifty (50) miles from executive’s then-current location.
Based on
its review of our change-in-control program, Mercer determined that it is
aligned with the practices of our direct peers.
Potential
Payments Upon Termination or Change in Control
The
following table lists our Named Executive Officers and the estimated amounts
they would have become entitled to had their employment with us terminated
without cause or resigns for good reason not in connection with a Change of
Control on December 31, 2009.
|
|
Estimated
Total
Value of
Cash
Payment
|
|
|
Estimated
Total
Value of
Health
Coverage
Continuation
|
|
Kevin
P. Connors
|
|
$ |
840,000 |
|
|
$ |
14,616 |
|
Ronald
J. Santilli
|
|
$ |
290,000 |
|
|
$ |
20,652 |
|
The
following table lists our Named Executive Officers and the estimated amounts
they would have become entitled to had their employment with us terminated
without cause or resigns for good reason in connection with a Change of Control
on December 31, 2009.
|
|
Estimated
Total
Value of
Cash
Payment
|
|
|
Estimated
Total
Value of
Health
Coverage
Continuation
|
|
|
Value
of
Accelerated
Equity(1)
|
|
Kevin
P. Connors
|
|
$ |
1,092,000 |
|
|
$ |
14,616 |
|
|
$ |
655,099 |
|
Ronald
J. Santilli
|
|
|
420,500 |
|
|
$ |
20,652 |
|
|
$ |
137,413 |
|
(1)
|
We
estimate the value of acceleration of options and shares held by each of
our Named Executive Officers based on a share price of $8.51 per share as
of December 31, 2009 and the number of options and shares held by
each of our Named Executive Officers that were unvested as of
December 31, 2009.
|
Except
for these Change of Control and Severance Agreements, we do not have employment
agreements with any of our Named Executive Officers.
Internal
Revenue Code Section 162(m) and Limitations on Executive
Compensation
Section 162(m)
of the United States Internal Revenue Code of 1986, as amended, may limit our
ability to deduct for United States federal income tax purposes compensation
paid to either our Chief Executive Officer or to other highly paid executive
officers in any one fiscal year that is, for each such person, in excess of
$1,000,000. None of our executive officers received any such
compensation in excess of this limit during 2009, or any prior
year.
Grants of
stock options under the 2004 Equity Incentive Plan are not subject to the
deduction limitation; however, to preserve our ability to deduct the
compensation income associated with options granted to such executive officers
pursuant to Section 162(m) of the Internal Revenue Code, our 2004 Equity
Incentive Plan provides that no optionee may be granted option(s) to purchase
more than 500,000 shares of our common stock in any one fiscal
year. However, in the fiscal year in which the optionee is hired, an
optionee may be granted an option to purchase up to 1,000,000 shares of our
common stock.
Securities
Authorized for Issuance Under Equity Compensation Plans
Our
stockholders approved each of our equity compensation plans, including a 2008
amendment to our 2004 Equity Incentive Plan. The following table
provides information regarding common stock that may be issued upon the exercise
of options and restricted stock units under our 2004 Equity Incentive Plan as of
December 31, 2009.
|
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
(a)
|
|
|
Weighted-average
exercise price of outstanding options, warrants and rights
(b)
|
|
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column (a))
(c)
|
|
Equity
compensation plans approved by security holders
|
|
|
2,692,555 |
|
|
$ |
10.87 |
|
|
|
1,840,381 |
|
Equity
compensation plan not approved by security holders
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
|
|
|
2,692,555 |
|
|
$ |
10.87 |
|
|
|
1,840,381 |
|
Summary
Compensation Table
The
following table sets forth summary compensation information for the years ended
December 31, 2009, 2008 and 2007 for our Chief Executive Officer and Chief
Financial Officer. We refer to these persons as our Named Executive
Officers elsewhere in this proxy statement. Except as provided below,
none of our Named Executive Officers received any other compensation required to
be disclosed by law or in excess of $10,000 annually.
Name
and Principal Position
|
|
|
|
|
|
|
|
Option
and Stock Awards (2)
|
|
|
Non-Equity
Incentive Plan Compensation (3)
|
|
|
All
Other Compensation (4)
|
|
|
|
|
Kevin
P. Connors President
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
$ |
420,000 |
|
|
$ |
18,454 |
|
|
$ |
481,284 |
|
|
$ |
― |
|
|
$ |
― |
|
|
$ |
919,738 |
|
2008
|
|
|
420,000 |
|
|
|
53,086 |
|
|
|
708,145 |
|
|
|
6,852 |
|
|
|
10,817 |
|
|
|
1,198,900 |
|
2007
|
|
|
390,833 |
|
|
|
258,267 |
|
|
|
444,608 |
|
|
|
7,725 |
|
|
|
10,358 |
|
|
|
1,111,791 |
|
Ronald J.
Santilli Executive
Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
$ |
290,000 |
|
|
$ |
10,012 |
|
|
$ |
220,589 |
|
|
$ |
― |
|
|
$ |
— |
|
|
$ |
520,601 |
|
2008
|
|
|
290,000 |
|
|
|
28,513 |
|
|
|
339,765 |
|
|
|
— |
|
|
|
10,350 |
|
|
|
668,628 |
|
2007
|
|
|
267,083 |
|
|
|
134,795 |
|
|
|
244,534 |
|
|
|
— |
|
|
|
10,358 |
|
|
|
656,770 |
|
(1)
|
Amounts
represent a discretionary bonus and profit sharing earned in 2008 and
2009.
|
(2)
|
Amounts
shown in this column are the aggregate grant date fair value of stock
awards granted during the year ended December 31, 2009 calculated in
accordance with ASC Topic 718. See Note 5 of the
Consolidated Notes to Financial Statements included in our Annual
Report on Form 10-K for the year ended December 31, 2009 filed
with the SEC on March 15, 2010 for a discussion of valuation
assumptions for stock-based
compensation.
|
(3)
|
Amounts
represent non-cash benefit associated with a company sponsored,
non-business, event for achieving sales targets in accordance with our
commission incentive plan.
|
(4)
|
Amount
represents 401(k) employer-match contributions and service award, where
applicable. In 2009, we discontinued our discretionary employer match on
employee 401(k) contributions.
|
Grants
of Plan-Based Awards
The
following table lists grants of plan-based awards made to our Named Executive
Officers in 2009 and their related grant date fair value calculated in
accordance with ASC Topic 718.
|
|
|
Estimated
Future Payouts Under Non-Equity Incentive Plan
Awards
|
|
|
All
Other Option Awards: Number of Securities Underlying |
|
|
Exercise
or Base Price of Option |
|
|
Grant
Date Fair Value of Stock Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
P. Connors President
and Chief Executive Officer
|
06/08/2009
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
120,000 |
|
|
|
$8.66 |
|
|
|
|
481,284 |
|
Ronald
J. Santilli Executive
Vice President and Chief Financial Officer
|
06/08/2009
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
55,000 |
|
|
|
$8.66 |
|
|
|
|
220,589 |
|
(1)
|
Amounts
reflect grant date fair value of equity awards calculated in accordance
with ASC Topic 718. See Note 5 of the Notes to
Consolidated Financial Statements included in our Annual Report on
Form 10-K for the year ended December 31, 2009 filed with the
SEC on March 15, 2010 for a discussion of valuation assumptions for
stock-based compensation.
|
(2)
|
The
per-share prices were the closing price of our common stock on the
respective dates of grant.
|
Equity
Incentive Awards Outstanding
The
following table lists the outstanding equity incentive awards held by our Named
Executive Officers as of December 31, 2009.
|
|
|
|
|
|
|
|
Number
of Securities Underlying Unexercised Earned
Options
|
|
|
Number
of Securities Underlying Unexercised Unearned
Options
|
|
|
|
|
|
|
Number
of Shares or
Units
of
Stock
that
Have
Not
Vested
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
that
Have
Not Vested
|
|
|
Date
Awards
Will
be
Fully
Vested
|
|
Kevin
P. Connors
|
|
|
50,000 |
|
|
|
— |
|
|
$ |
0.50 |
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
President
and
|
|
|
40,000 |
|
|
|
— |
|
|
|
2.50 |
|
6/8/2011
|
|
|
|
|
|
|
|
|
|
Chief
Executive Officer
|
|
|
3,333 |
|
|
|
— |
|
|
|
4.25 |
|
8/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
— |
|
|
|
20.25 |
|
7/28/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
48,125 |
|
|
|
6,875 |
(1) |
|
|
23.75 |
|
6/8/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
15,000 |
(1) |
|
|
24.46 |
|
6/8/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
12,488 |
|
|
|
20,812 |
(1) |
|
|
10.43 |
|
5/28/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
100,000 |
(2) |
|
|
10.43 |
|
5/28/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
120,000 |
(3) |
|
|
8.66 |
|
6/08/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
Ronald
J. Santilli |
|
|
20,000 |
|
|
|
— |
|
|
|
5.50 |
|
9/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Vice President and
|
|
|
3,372 |
|
|
|
— |
|
|
|
4.25 |
|
8/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,753 |
|
|
|
— |
|
|
|
4.25 |
|
8/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
— |
|
|
|
13.30 |
|
7/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
— |
|
|
|
20.25 |
|
7/28/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,625 |
|
|
|
4,375 |
(1) |
|
|
23.75 |
|
6/8/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,750 |
|
|
|
8,250 |
(1) |
|
|
24.46 |
|
6/8/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,138 |
|
|
|
8,562 |
(1) |
|
|
10.43 |
|
5/28/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
50,000 |
(2) |
|
|
10.43 |
|
5/28/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
55,000 |
(3) |
|
|
8.66 |
|
6/08/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
(1)
|
One-quarter
(1/4th) of the shares underlying each of these options vest on the one
year anniversary of the vesting commencement date and 1/48th of the
underlying shares vest each month
thereafter.
|
(2)
|
100%
of the shares underlying each of these options vest on the three year
anniversary of the vesting commencement
date.
|
(3)
|
One-third
(1/3rd) of the shares underlying each of these options vest on the one
year anniversary of the vesting commencement date and 1/36th of the
underlying shares vest each month
thereafter.
|
Options
Exercised and Stock Vested
The
following table lists the options exercised by, and stock vested to, our Named
Executive Officers in the year ended December 31, 2009.
|
|
|
|
|
|
|
|
|
Number
of Shares Acquired on Exercise
|
|
|
Value
Realized on Exercise (1)
|
|
|
Number
of Shares Acquired on Vesting
|
|
|
Value
Realized Upon Vesting (2)
|
|
Kevin
P. Connors President
and Chief Executive Officer
|
|
|
408,333 |
|
|
|
2,396,915 |
|
|
|
2,500 |
|
|
|
20,350 |
|
Ronald
J. Santilli Executive
Vice President and Chief Financial Officer
|
|
|
― |
|
|
|
― |
|
|
|
1,250 |
|
|
|
10,175 |
|
(1)
|
Represents
the excess of fair market value of the shares exercised on the exercise
date over the aggregate exercise price for such
shares.
|
(2)
|
These
shares were originally issued by us pursuant to performance unit
awards. On each vesting date, the unit had a value equal to the
fair market value of our common stock on the date of
vesting.
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COMPENSATION
COMMITTEE REPORT (1)
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis required by Item 402(b) of SEC Regulation S-K with
management. Based on such review and discussions, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in Cutera’s proxy statement.
The
foregoing report is provided by the undersigned members of the Compensation
Committee.
Dr. David
B. Apfelberg
Mr. Jerry
P. Widman
Ms. Annette
J. Campbell-White
(1)
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The
material in this report is not deemed soliciting material or filed with
the SEC and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date of
this Proxy Statement and irrespective of any general incorporation
language in those filings.
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OTHER
MATTERS
We are
not aware of any other business to be presented at the meeting. As of
the date of this proxy statement, no stockholder had advised us of the intent to
present any business at the meeting. Accordingly, the only business
that our Board of Directors intends to present at the meeting is as set forth in
this proxy statement.
If any
other matter or matters are properly brought before the meeting, the proxies
will use their discretion to vote on such matters in accordance with their best
judgment.
By order
of the Board of Directors,
Kevin
P. Connors
President
and Chief Executive Officer
Brisbane,
California
April 9,
2010
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CUTERA,
INC.
2010
ANNUAL MEETING OF STOCKHOLDERS
The
undersigned stockholder of Cutera, Inc., a Delaware corporation, hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement each dated April 9, 2010 and hereby appoints Kevin P.
Connors (our Chief Executive Officer and a member of our Board of Directors) and
Ronald J. Santilli (our Chief Financial Officer), each as proxy and
attorney-in-fact, with full power of substitution, on behalf and in the name of
the undersigned to represent the undersigned at the 2010 Annual Meeting of
Stockholders of Cutera, Inc. to be held on May 19, 2010 at 10:00 a.m.,
local time, at Cutera’s offices located at 3240 Bayshore Blvd., Brisbane,
California 94005-1021, and at any postponement or adjournment thereof, and to
vote all shares of common stock which the undersigned would be entitled to vote
if then and there personally present, on the matters set forth
below:
SEE
REVERSE SIDE
FOLD
AND DETACH HERE
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Please
mark your votes as indicated
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x |
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1.Election
of Directors
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FOR
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WITHHOLD
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2. Ratify
the appointment of PricewaterhouseCoopers LLP as the Independent
Registered Public Accounting Firm of the Company for the fiscal year
ending December 31, 2010
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FOR
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AGAINST
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ABSTAIN
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CLASS
III NOMINEES:
W. MARK LORTZ
JERRY P. WIDMAN
ANNETTE J.
CAMPBELL-WHITE
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THE
STOCKHOLDER MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY STRIKING OUT
THE INDIVIDUAL’S NAME ABOVE
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THIS
PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF THE NOMINATED CLASS III
DIRECTORS; (2) FOR THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM; AND (3) AS THE PROXY HOLDERS DEEM ADVISABLE ON SUCH OTHER MATTERS AS
MAY COME BEFORE THE MEETING.
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PLEASE
SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF THE STOCK IS
REGISTERED IN THE NAME OF TWO OR MORE PERSONS, EACH SHOULD
SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS AND
ATTORNEYS-IN-FACT SHOULD ADD THEIR TITLES. IF SIGNER IS A
CORPORATION, PLEASE GIVE FULL CORPORATE NAME AND HAVE A DULY AUTHORIZED
OFFICER SIGN, STATING TITLE. IF SIGNER IS A PARTNERSHIP, PLEASE
SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
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PLEASE
SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE,
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED
STATES.
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SIGNATURE(S)
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SIGNATURE(S)
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DATE:
, 2010
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NOTE:
This Proxy should be marked, signed by the stockholder(s) exactly as his or her
name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so
indicate. If shares are held by joint tenants or as community
property, both should sign.
FOLD
AND DETACH HERE