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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Align Technology Inc | NASDAQ:ALGN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.33 | 0.46% | 287.87 | 283.93 | 298.40 | 295.69 | 287.02 | 291.90 | 353,639 | 05:00:03 |
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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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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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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ALIGN TECHNOLOGY, INC.
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Roger E. George
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Senior Vice President, Corporate and Legal Affairs
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TABLE OF CONTENTS
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Page
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Time and Date
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10:00 a.m., Pacific Daylight Time, on Wednesday, May 16, 2018
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Place
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Corporate Headquarters, 2820 Orchard Parkway, San Jose, California 95134
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Items of Business
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1. To elect the ten (10) directors named in this proxy statement
2. To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accountants for the fiscal year ending December 31, 2018
3. To conduct an advisory (non-binding) vote on executive compensation
4. To consider such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof
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Adjournments and Postponements
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Any action on the items of business described above may be considered at the annual meeting at the time and on the date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed.
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Record Date
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Only stockholders who owned shares of our common stock at the close of business on March 21, 2018 are entitled to vote.
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Meeting Admission
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All stockholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting. Registration will begin at 9:30 a.m. If you attend, please know that you may be asked to present valid picture identification, such as a driver’s license or passport. Stockholders holding stock in brokerage accounts (“street name” holders) will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date. Cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting.
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Voting
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Your vote is very important. Regardless of whether you plan to attend the Annual Meeting, we hope you will vote as soon as possible. You may vote your shares over the Internet or by telephone. If you received a paper copy of a proxy card by mail, you may submit your proxy for the annual meeting by completing, signing, dating and returning your proxy card in the pre-addressed envelope provided. For specific instructions on how to vote your shares, please refer to the section entitled
General Information - How do I vote?
in the proxy statement.
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Item
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Voting Standard
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Vote Recommendation
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Page Reference
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1
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Annual Election of Directors
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Majority of votes cast
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FOR each nominee
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5
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2
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Ratification of Independent Registered Public Accounting Firm
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Majority of votes cast
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FOR
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17
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3
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Advisory Vote on Named Executive Officer Compensation
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Majority of votes cast
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FOR
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21
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Committee Memberships*
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Name
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Age
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Director Since
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Primary Occupation
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Independent?
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AC
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CC
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NCGC
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TC
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Joseph M. Hogan
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60
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2015
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President & CEO, Align Technology, Inc.
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No
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Kevin J. Dallas
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54
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2018
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Corporate Vice President, Artificial Intelligence & Intelligent Cloud Business Development, Microsoft Corporation
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Yes
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X
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Joseph Lacob
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62
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1997
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Managing Partner & CEO of The Golden State Warriors
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Yes
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C
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X
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C. Raymond Larkin, Jr. (1)
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69
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2004
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Principal of Group Outcome LLC
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Yes
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X
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George J. Morrow
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66
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2006
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Retired, EVP of Worldwide Sales & Marketing, Amgen, Inc.
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Yes
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C
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X
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Thomas M. Prescott
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62
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2002
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Retired, President & CEO, Align Technology, Inc.
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No
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X
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Andrea L. Saia
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60
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2013
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Retired, Global Head of Vision Care, Novartis AG
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Yes
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X
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X
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X
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Greg J. Santora
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66
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2003
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Retired, CFO, Shopping.com
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Yes
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C
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X
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Susan E. Siegel
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57
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2017
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CEO, GE Ventures
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Yes
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X
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X
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Warren S. Thaler
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55
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2004
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Consultant, Gund Investment Corporation
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Yes
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X
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X
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X
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(1)
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Mr. Larkin is Chairman of the Board of Directors
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Independence
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Best Practices
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8 of 10 director nominees are independent
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Double trigger for all cash compensation arrangement in event of change of control for all executives
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Independent Chairman of the Board has strong role with significant governance responsibilities
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Stock ownership requirements for directors and executives that are reviewed annually.
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Separate CEO and Chairman of the Board roles
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Independent directors meet without management present
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The Audit, Compensation and Nominating and Governance Committees are each comprised wholly of independent directors
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Insider Trading Policy prohibits officers, directors and employees from engaging in hedging transactions or pledging Align's securities as collateral for loans
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Accountability
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Risk Oversight
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Annual election of directors
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Board oversight of our overall risk management infrastructure
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Majority voting in uncontested elections
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Committee oversight of certain risks related to each committee's area of responsibility
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Annual performance self-evaluations by Board and committees
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Ongoing Board refreshment - increased the size of our Board to ten directors and appointed a new director, Kevin J. Dallas, to fill the newly created vacancy. Mr. Dallas will stand for election at the Annual meeting
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2017
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Year over Year Growth
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Total Net Revenues
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$1.5B
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+36.4%
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Clear Aligner*
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$1.3B
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+36.6%
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Scanners & Services
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$164.2M
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+35.1%
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Invisalign Shipments
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931.0K
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+31.4%
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•
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44.9% volume growth from International doctors led by growth from China and our core Europe, Middle East and Africa ("EMEA") markets. In total, international volume represented 38% of worldwide Invisalign case shipments.
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•
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24.3% volume growth from North American doctors driven by continued adoption of Invisalign treatment by orthodontists, especially for teenage patients, and GP dentists as seen in record annualized Invisalign treatment utilization of 46.6 cases and 8.2 cases per doctor, respectively.
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•
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In 2017, a total of 237.5 thousand teenagers, or 26% of total Invisalign volume started treatment with Invisalign clear aligners, a 40.4% increase from 2016.
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•
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Expanded restorative digital workflow solutions for iTero Element
®
scanner to include iTero Chairside CAD, a chairside prosthetics design software application that will support same-day dentistry as part of collaboration with exocad GmbH.
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•
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Reached our 1 millionth Invisalign
®
Teen patient and our 5 millionth Invisalign
®
patient milestones.
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•
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Signed distribution agreement with Glidewell Dental for the iTero Element
®
intraoral scanning system in North America with glidewell.io™ In-Office Solution, a chairside restorative ecosystem designed to simplify the process of prescribing and delivering laboratory-quality dental restorations.
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•
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Opened the first Invisalign
®
store pilot in San Francisco to help consumers connect with an Invisalign
®
provider to improve their smile with Invisalign® treatment.
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•
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Awarded nearly $300,000 to researchers at universities in North America, Europe and Asia Pacific as part of Align's Research Award Program to support clinical and scientific dental research.
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•
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Signed distribution agreement with Patterson Dental for iTero Element
®
intraoral scanning system in U.S. and Canada.
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•
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Opened the first Invisalign
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Treatment Planning Facility in Chengdu, China to support customers in the region.
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•
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Launched TimeLapse technology for digital scan comparisons and ability to complete a scan in as little as 1 minute as part of a software upgrade for the iTero Element
®
intraoral scanners.
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•
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Received U.S. Patents for SmartTrack material, an innovative multi-layer polymer that delivers more gentle, constant force to improve control of tooth movements with Invisalign
®
clear aligners.
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•
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Achieved over 1 million scans submitted with iTero Element
®
scanner since its introduction in 2015.
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•
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Introduced Invisalign
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Teen with mandibular advancement feature, the first clear aligner solution for Class II correction in growing tween and teen patients. (Not yet available in the U.S., pending FDA approval).
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•
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Expanded digital implant workflow options for the iTero
®
intraoral scanner with Nobel Biocare implants and ELOS Medtech scan bodies.
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Q:
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Why am I receiving these materials?
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A:
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Our Board of Directors (the “Board”) is providing these materials to you in connection with its solicitation of proxies for use at Align’s
2018
Annual Meeting of Stockholders, which will take place on
Wednesday
,
May 16, 2018
at
10:00 a.m.
local time, at our corporate headquarters located at 2820 Orchard Parkway, San Jose, California 95134 (referred to in this proxy statement as the “Annual Meeting”). As a stockholder, you are invited to attend the Annual Meeting and are requested to vote on the items of business described in this proxy statement.
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Q:
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What information is contained in these materials?
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A:
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The proxy materials include our proxy statement for the Annual Meeting and our
2017
Annual Report on Form 10-K. If you received a paper copy of these materials by mail, the proxy materials also include a proxy card for the Annual Meeting. If you received a notice of the Internet availability of the proxy materials instead of a paper copy of the proxy materials, see "
How do I vote?"
below. The information in this proxy statement contains important information regarding our Annual Meeting. Specifically, it identifies the proposals on which you are being asked to vote, provides information you may find useful in determining how to vote and describes the voting procedures.
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A:
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In accordance with rules adopted by the SEC, we are making this proxy statement and our Annual Report available to our stockholders by providing access to such documents on the Internet instead of mailing printed copies. Stockholders will not receive printed copies of the proxy materials unless they request them. Instead, the Notice of Internet Availability of Proxy Materials (Notice), which was mailed to most of our stockholders, will instruct you as to how you may access and review all of the proxy materials on the Internet. The Notice also instructs you as to how you may submit your proxy on the Internet. If you received the Notice by mail and would prefer to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice.
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Q:
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Who can vote at the Annual Meeting?
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A:
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If you are a stockholder of record or a beneficial owner who owned our common stock at the close of business on
March 21, 2018
, the record date for the Annual Meeting, you are entitled to vote at the Annual Meeting. As of the record date,
80,143,979
of our common stock were issued and outstanding and no shares of our preferred stock were issued and outstanding.
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Q:
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What is the difference between holding shares directly or as a beneficial owner, in street name?
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A:
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Most of our stockholders hold their shares as a beneficial owner through a brokerage firm, bank or other nominee. As summarized below, there are some differences between shares held of record and those owned beneficially.
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Q:
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How do I vote?
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A:
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Voting via the Internet.
You may vote by proxy over the Internet by following the instructions on the Notice. Stockholders who requested to receive printed proxy materials may submit proxies over the Internet by following the instructions on the proxy card. Most of Align’s stockholders who hold shares beneficially in street name may vote by accessing the website specified in the voting instructions provided by their broker or other nominee. A number of banks and brokerage firms are participating in a program provided through Broadridge Investor Communication Solutions that offers the means to grant proxies to vote shares through the Internet. If your shares are held in an account with a broker or bank participating in the Broadridge Investor Communication Solutions program, you may grant a proxy to vote those shares via the Internet by contacting the website shown on the instruction form received from your broker or bank. Your vote must be received by
8:59 p.m. Pacific Time, on May 15, 2018
.
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Q:
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What if I don’t give specific voting instructions?
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A:
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In the election of directors, you may vote “FOR,” “AGAINST” or “ABSTAIN.” If you elect to “ABSTAIN” in the election of directors, the abstention will not impact the election of directors. In tabulating the voting results for the election of directors, only "FOR" and "AGAINST" votes are counted.
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Q:
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Can I change or revoke my vote?
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A:
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Subject to any rules your broker or other nominee may have, you may change your proxy instructions at any time before your proxy is voted at the Annual Meeting.
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•
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grant a new proxy bearing a later date by following the instructions provided in the Notice or the proxy card, which will automatically revoke the previous proxy;
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•
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provide written notice of the revocation to:
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•
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attend the Annual Meeting and vote in person. Your attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically request.
|
•
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submit new voting instructions to your broker or other nominee; or
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•
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if you have obtained a legal proxy from your broker or other nominee giving you the right to vote your shares at the Annual Meeting, attend the Annual Meeting and vote in person.
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Q:
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What are we voting on and what vote is required to approve each item?
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A:
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The proposals that will be presented at the Annual meeting, our Board's voting recommendations, the vote required and the way the vote is calculated for the proposals are as follows:
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PROPOSAL
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Vote Required
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Board's Voting Recommendation
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Broker Discretionary Voting Allowed?
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Proposal 1 — To Elect Ten (10) Director Nominees
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A nominee must receive more "for" votes than "against" votes and the number of votes "for" must be the majority of the required quorum
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FOR
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NO
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||||
Proposal 2 — To Ratify the Appointment of PwC as Align’s Independent Registered Public Accounting Firm for Fiscal 2018
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Majority of Shares Entitled to Vote and Present in Person or Represented by Proxy
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FOR
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YES
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||||
Proposal 3 — To Consider an Advisory Vote to Approve the Compensation of our Named Executive Officers
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Majority of Shares Entitled to Vote and Present in Person or Represented by Proxy
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FOR
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NO
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Q:
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What constitutes a quorum?
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A:
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A quorum, which is a majority of the outstanding shares of our common stock as of the record date, must be present or represented by proxy in order to hold the Annual Meeting and to conduct business. As of the record date,
80,143,979
shares of common stock, representing the same number of votes, were outstanding. That means that we need the holders of at least
40,071,990
shares of common stock to be represented for us to have a quorum. Your shares will be counted as present at the Annual Meeting if you attend the Annual Meeting in person. Your shares will be considered present and represented by proxy if you submit a properly executed proxy card or vote via the Internet or by telephone. Under the General Corporation Law of
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Q:
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Who will bear the cost of soliciting votes for the Annual Meeting?
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A:
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We will bear the entire cost of proxy solicitation, including the preparation, assembly, printing and mailing of proxy materials. The original solicitation of proxies by mail may be supplemented by solicitation by telephone and other means by directors, and employees of Align. None of these officers, directors or employees will receive special compensation for such services. In addition, we may reimburse brokerage firms and other custodians for their reasonable out-of-pocket expenses for forwarding these proxy materials to you.
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Q:
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Who will count the vote?
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A:
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We expect a representative from Align will tabulate the proxies and act as inspector of the election.
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Q:
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What is Align’s website address?
|
A.
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Our website address is
www.aligntech.com.
We make this proxy statement, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended available on our website in the Investor Relations section, as soon as reasonably practicable after electronically filing such material with the Securities and Exchange Commission (“SEC”).
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Q:
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Where can I find the voting results of the meeting?
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A:
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The preliminary results will be announced at the Annual Meeting. The final results will be published in a Current Report on Form 8-K, which we will file with the SEC by
May 22, 2018
.
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Q:
|
Is there any information that I should know regarding future annual meetings?
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A:
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Stockholder proposals may be included in our proxy statement for an annual meeting so long as they are provided to us on a timely basis and satisfy the other conditions set forth in SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. For a stockholder proposal to be considered for inclusion in our proxy statement for the annual meeting to be held in
2019
, we must receive the proposal at our principal executive offices, addressed to the Corporate Secretary, no later than December 7, 2018. In addition, a stockholder proposal that is not intended for inclusion in our proxy statement under Rule 14a-8 may be brought before the
2019
annual meeting so long as we receive information and notice of the proposal in compliance with the requirements set forth in our Bylaws, addressed to the Corporate Secretary at our principal executive offices, not later than February 15, 2019 nor earlier than January 16, 2019.
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Kevin J. Dallas
Age: 54
Director since 2018
Board committees: Technology
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Kevin J. Dallas has served as a director of Align Technology, Inc. since March 2018. In his current role at Microsoft Corporation (NASDAQ: MSFT), Mr. Dallas is Corporate Vice President, Artificial Intelligence & Intelligent Cloud Business Development. At Microsoft, his team creates partnerships that help enable the digital transformation of customers and partners across a range of industries including: connected/autonomous vehicles, industrial IoT, discrete manufacturing, retail, financial services, media and entertainment, and healthcare. With advanced technologies that include intelligent cloud and intelligent edge services, Microsoft enables business outcomes that include: transforming products, optimizing operations, empowering employees, and enhancing customer engagement. Prior to joining Microsoft in 1996, Mr. Dallas held roles at NVIDIA Corporation and National Semiconductor (now Texas Instruments Inc.) in the U.S., Europe and the Middle East in roles that included microprocessor design, systems engineering, product management, and end-to-end business leadership. He holds an Executive M.B.A. from the Kellogg School of Management at Northwestern University, and a B.S. degree in Computer Science from Staffordshire University, Stoke-on-Trent, Staffordshire, England.
Mr. Dallas joins the Board with considerable business experience in the technology industry. With over 20 years' at Microsoft Corporation in senior leadership roles, including his current executive position, Mr. Dallas brings a broad understanding of the operational, financial and strategic issues facing technology companies today, making him well qualified for service as a director and as a member of our Technology Committee.
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Joseph M. Hogan
Age: 60 Director since 2015 No Board committees |
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Mr. Hogan has served as our President and Chief Executive Officer and a member of our Board since June 2015. Prior to joining us, Mr. Hogan was Chief Executive Officer of ABB Ltd., a global power and automation technologies company based in Zurich, Switzerland, from 2008 to 2013. Prior to ABB, Mr. Hogan worked at General Electric Company (GE) in a variety of executive and management roles from 1985 to 2008, including eight years as Chief Executive Officer of GE Healthcare from 2000 to 2008. Mr. Hogan earned a MSBA from Robert Morris University and a B.S. in Business Administration from Geneva College.
Mr. Hogan is an accomplished chief executive with extensive experience in leading the strategic and operational aspects of large and complex, international organizations in the healthcare and technology industries. As the President and Chief Executive Officer of Align, Mr. Hogan is responsible for management's execution of operational objectives and serves as an integral connection between the Board of Directors and Align's management team, enabling alignment between the Board's strategic expectations and Align's current and future strategy and operations. |
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Joseph Lacob
Age: 62 Director since 1997 Board committees: Nominating and Governance (Chair) and Technology |
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Mr. Lacob has served as a director of Align since August 1997 and has been a partner of Kleiner Perkins Caufield & Byers (KPCB), a venture capital firm, since May 1987. In 2011, Mr. Lacob acquired The Golden State Warriors of the National Basketball Association. He is currently the Managing Partner and CEO of the Warriors. Prior to joining KPCB in 1987, Mr. Lacob was an executive with Cetus Corporation (now Chiron), FHP International, a health maintenance organization, and the management consulting firm of Booz, Allen & Hamilton. He was previously on the board of directors of Orexigen Therapeutics, a biopharmaceutical company focused on the development of pharmaceutical product candidates for the treatment of obesity. Mr. Lacob received his B.S. in Biological Sciences from the University of California at Irvine, his Masters in Public Health from the University of California at Los Angeles and his M.B.A. from Stanford University.
Mr. Lacob has demonstrated success in his business and leadership skills, serving as a partner of KPCB since 1987. In his role at KPCB, he has gained considerable technology, health care and life sciences industry experience. During his career at KPCB, Mr. Lacob has been closely involved with investments in over fifty life science companies, including the start-up or incubation of a dozen ventures, and with KPCB's medical technology practice, which includes over thirty therapeutic and diagnostic medical device companies. With this extensive business background, Mr. Lacob also brings considerable finance and investment experience that has proven to be valuable in addressing issues that arise at Align. |
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C. Raymond Larkin Jr.
(Chairman of the Board) Age: 69 Director since 2004 Board committees: Nominating and Governance |
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Mr. Larkin has served as a director of Align since March 2004. In February 2006, Mr. Larkin was appointed as Chairman of the Board. He currently is a Principal of Group Outcome L.L.C., a merchant banking firm concentrating on medical technologies. From 2001 to 2007, he served as a part time Venture Partner at Cutlass Capital, a venture capital firm. Mr. Larkin was previously Chairman and Chief Executive Officer at Eunoe, Inc., a medical device company. From 1983 to March 1998, he held various executive positions with Nellcor Puritan Bennett, Inc., a medical instrumentation company, for which he served as President and Chief Executive Officer from 1989 until 1998. Mr. Larkin also held various positions of increasing responsibility at Bentley Laboratories/American Hospital Supply from 1976 to 1983. He serves on the board of directors of Heartware, Inc., a medical device company developing implant devices for the treatment of advanced heart failure. Mr. Larkin received his B.S. in Industrial Management from LaSalle University.
Mr. Larkin brings with him considerable business experience in the medical device industry serving as President and CEO of a large public company. In his role as President and CEO of Nellcor Puritan Bennett, Inc., Mr. Larkin took on significant management, strategic and operational responsibilities leading that business through significant growth, including numerous mergers & acquisitions. This operational experience has proven valuable in addressing issues that have arisen at Align. With his knowledge of the medical device and health care industry, Mr. Larkin provides valuable insight to our Board. Mr. Larkin’s experience as a member of the board of directors of various public companies provides Mr. Larkin a deep understanding of the role of the board of directors and positions him well to serve as our Chairman. |
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George J. Morrow
Age: 66 Director since 2006 Board committees: Compensation (Chair)
Nominating and Governance
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Mr. Morrow has served as a director of Align since February 2006. From February 2011 until January 2013, Mr. Morrow served as a consultant to Amgen Inc., a global biotechnology company. From 2003 until his retirement in February 2011, he was the Executive Vice President, Global Commercial Operations at Amgen Inc., where he also served as Executive Vice President of Worldwide Sales and Marketing between 2001 and 2003. From 1992 to 2001, Mr. Morrow held multiple leadership positions at GlaxoSmithKline Inc. and its subsidiaries, including President and Chief Executive Officer of Glaxo Wellcome Inc. He is a member of the board of directors of Vical Incorporated, a company that researches and develops biopharmaceutical products, Otonomy, Inc., a clinical-stage biopharmaceutical company focused on the development and commercialization of innovative therapeutics for diseases and disorders of the inner and middle ear and Neurocrine Biosciences, a biotechnology company focused on neurologic, psychiatric and endocrine related disorders. He was on the board of Safeway Inc., a food and drug retailer from May 2013 until February 2015. Mr. Morrow holds a B.S. in Chemistry from Southampton College, Long Island University, an M.S. in Biochemistry from Bryn Mawr College and an M.B.A. from Duke University.
As a former executive vice president at Amgen and Glaxo, two large public companies, Mr. Morrow brings to our Board considerable business experience in the medical technology industry. As part of the executive leadership at Amgen, Mr. Morrow has recent front-line exposure to many of the issues facing public companies today, particularly on the operational, regulatory, financial and corporate governance fronts. Mr. Morrow's leadership skills and experience make him knowledgeable of the complex issues facing global companies today and give him an understanding of what makes businesses work effectively and efficiently. These skills and experience are extremely valuable to our Board and enable Mr. Morrow to be an effective Compensation Committee chairman and an asset to the Nominating and Governance Committee.
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Thomas M. Prescott
Age: 62 Director since 2002 Board committees: Technology |
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Mr. Prescott served as our President and Chief Executive Officer from 2002 until his retirement in June 2015. Prior to joining Align, Mr. Prescott was President and Chief Executive Officer of Cardiac Pathways, Inc. from May 1999 to August 2001 and a consultant for Boston Scientific Corporation from August 2001 to January 2002 after its acquisition of Cardiac Pathways in August 2001. Prior to Cardiac Pathways, Mr. Prescott held various sales, general management and executive roles at Nellcor Puritan Bennett, Inc. from April 1994 to May 1999, and various management positions at GE Medical Systems from October 1987 to April 1994. In addition, Mr. Prescott served in sales, marketing and management roles at Siemens AG from December 1980 to July 1986. He received his B.S. in Civil Engineering from Arizona State University and Masters in Management from Northwestern University. Mr. Prescott has served as a member of the Board since joining Align in 2002.
Mr. Prescott's 13 years of experience at our Company as our CEO gives him deep knowledge and understanding of Align and its business. Mr. Prescott’s prior experience as CEO of another publicly traded medical device company demonstrates his leadership capability and business acumen. His experience with strategic and operational issues in the life sciences industry along with his service on the board of directors of other companies in this industry gives him insight into the issues facing this industry and brings valuable expertise to our Board and our Technology Committee.
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Andrea L. Saia
Age: 60 Director since 2013 Board committees: Audit, Compensation and Technology |
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Ms. Saia has served as a director of Align since July 2013. Ms. Saia was previously the Global Head of Vision Care in the Alcon division of Novartis AG, from 2011 until her retirement in 2012. Prior to this role, she served as President and Chief Executive Officer of CibaVision Corporation, a subsidiary of Novartis, from 2008 to 2011. From 2005 to 2007, she relocated to Switzerland and served as President of Europe, Middle East, and Africa operations, CibaVision’s largest regional business unit. She initially joined CibaVision in 2002 as Global Head of Marketing and was promoted to President of the Global Lens Business the following year. Prior to Novartis, Ms. Saia was the Chief Marketing Officer for GCG Partners Inc. Ms. Saia also held senior management and marketing positions with global consumer products companies such as Procter & Gamble Co., Unilever, and Revlon, Inc. Ms. Saia earned an M.B.A. from J.L. Kellogg Graduate School of Management and a B.S. in Business Administration from Miami University. Ms. Saia also served on the board of directors of Coca-Cola Enterprises, Inc., the marketer, producer and distributor of Coca-Cola products in European markets from 2012 to 2016. Since July 2016, Ms. Saia has also served on the board of directors of LivaNova PLC, a global medical technology company.
Ms. Saia comes to the Board as an accomplished global business executive with over 30 years’ experience in the medical device and consumer products industries with multinational companies including Novartis, Unilever, brings to the Board extensive global business experience, a broad understanding of the healthcare, medical device and consumer products industries, strong management skills and operational expertise through her positions at Novartis. In those positions, she dealt with a wide range of issues as they rebuilt and strengthened the innovation and operating functions, and delivered industry leading sales and profit growth. The Board believes that her extensive knowledge of healthcare, medical device and consumer products industries provides her with insights that are particularly helpful and valuable to our Board. In addition, Ms. Saia also serves on the board of directors of another publicly traded company which gives her insight and perspective into current best practices at the board level and enables her to be an effective contributing member of our Board and our Audit Committee and a strong addition to the Compensation Committee and Technology Committee. |
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Greg J. Santora
Age: 66 Director since 2003 Board committees: Audit (Chair) and Compensation |
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Mr. Santora has served as a director of Align since July 2003. Mr. Santora served as Chief Financial Officer at Shopping.com, a provider of internet-based comparison shopping resources, from December 2003 until September 2005. From 1997 through 2002, he served as Senior Vice President and Chief Financial Officer for Intuit, Inc., a provider of small business and personal finance software. Prior to Intuit, Mr. Santora spent nearly 13 years at Apple Computer in various senior financial positions including Senior Finance Director of Apple Americas and Senior Director of Internal Consulting and Audit. Mr. Santora, who began his accounting career with Arthur Andersen L.L.P., has been a CPA since 1974. He served on the board of directors of RetailMeNot, Inc., a digital coupon site, from May 2013 until its sale in May 2017. Mr. Santora holds a B.S. in Accounting from the University of Illinois and an M.B.A. from San Jose University.
Mr. Santora is an experienced financial leader with over 35 years of finance and accounting experience gained through his education and work at a major accounting firm and his later positions as Chief Financial Officer of Intuit and Shopping.com. The compliance, financial reporting and audit expertise Mr. Santora gained in his senior finance and operations roles, including as chief financial officer, has proven valuable in addressing issues that have arisen at Align during Mr. Santora’s tenure as Audit Committee chairman. Mr. Santora's service on the board of directors and audit committee of another publicly traded company, gives him insight and perspective into current best practices with respect to finance organizations and the audit committee function. |
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Susan E. Siegel
Age: 57 Director since 2017 Nominating and Governance and Technology |
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Susan E. Siegel has been a member of our Board of Directors since 2017. In November 2017, she was appointed Chief Innovation Officer at General Electric and Chief Executive Officer of GE Business Innovations, GE's growth and innovation business. Since 2012, she has been Chief Executive Officer of GE Ventures, now subsumed into her new role. Prior to joining GE, from May 2006 to May 2012, she was a General Partner at Mohr Davidow Ventures, where she led healthcare and lifescience investments. From April 1998 to April 2006, Ms. Siegel was at Affymetrix, Inc. where she served as President and as a member of the board of directors. Ms. Siegel holds a B.S. in Biology from the University of Puerto Rico and a M.S. in Biochemistry and Molecular Biology from Boston University Medical School.
We believe that Ms. Siegel possesses specific attributes that qualify her to serve as a member of our Board of Directors, including her experience of growing biotechnology companies for over 30 years by bringing key enabling technologies to the forefront of biomedical research and healthcare and for her pioneering leadership in personalized medicine. This experience also brings valuable expertise to our Board and as a member of our nominating and governance and technology committees. |
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Warren S. Thaler
Age: 55 Director since 2004 Board committees: Audit, Nominating and Governance, and Technology |
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Mr. Thaler has served as a director of Align since June 2004. Since July 2017, Mr. Thaler has been a consultant to Gund Investment Corporation, an investment firm owned by Gordon Gund with holdings in real estate and private equity securities. Prior to acting as a consultant for Gund Investment Corporation, Mr. Thaler served as its president. Since 1990, Mr. Thaler has served on the board of directors of several privately held companies owned by the Gund family. From 1990 to 2005, Mr. Thaler was on the board of directors of the Cleveland Cavaliers and Gund Arena Company and from 2001 to 2005 represented the Cleveland Cavaliers as its Alternate Governor at meetings of the National Basketball Association’s Board of Governors. Mr. Thaler received his B.A. from Princeton University and his M.B.A. from Harvard University.
Mr. Thaler’s demonstrated executive level management skills make him an important advisor to our Board. His success in building businesses as well as his finance and investment experience gained at Gund and through his education makes Mr. Thaler well suited for our Audit Committee. Mr. Thaler’s business background makes him a valuable component of a well rounded Board and a key member of the Board’s audit, nominating and governance, and technology committees. |
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Position
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Stock Ownership Requirements
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CEO
|
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5.0x annual base salary
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Executive officers
|
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2.0x annual base salary
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Non-Employee Directors
|
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Amount equal in market value to $250,000
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•
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shares of Align common stock held directly by the director or officer or in trust for the benefit of the director or officer or his or her family member living in the same household,
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•
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50% of the gain on vested in-the-money stock options, and
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•
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shares of underlying Align restricted stock units held directly by a director or officer, whether or not yet vested.
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Audit Committee
|
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2017 Meetings: 10
Members: Greg J. Santora (Chair) Andrea L. Saia Warren S. Thaler |
Oversees and monitors our accounting and financial reporting processes, our financial statement audits, and our internal accounting and financial controls.
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Responsible for appointing, compensating, retaining, terminating and overseeing the work of our independent auditors.
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Responsible for reviewing the auditors proposed scope, approach and independence.
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Pre-approves audit and non-audit services.
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Provides oversight and monitors our Internal Audit Department.
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Reviews, approves and monitors our Code of Business Conduct and Ethics.
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Oversees and reviews our risk management policies.
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Establishes procedures for receiving, retaining and treating complaints regarding accounting, internal accounting controls or auditing matters.
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None of the Audit Committee members are employees of Align, and our Board has determined that each member is independent within the meaning of the NASDAQ listing standards and the rules and regulations of the SEC.
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Our Board has determined that Mr. Santora is qualified as an “audit committee financial expert” within the meaning of the rules of the SEC and has confirmed that the other members of the Audit Committee are able to read and understand financial statements.
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Compensation Committee
|
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2017 Meetings: 7
Members: George Morrow (Chair) Andrea Saia
Greg Santora
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Ensures that the Align’s compensation programs successfully align the interest of employees, including executive officers, with those of the Align’s stockholders.
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Reviews and administers all compensation arrangements for executive officers and reviews general compensation goals and guidelines for Align’s employees and the criteria for which bonuses are to be determined.
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Retains, oversees, and assesses the independence of compensation consultants and advisors.
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Assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs.
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May form and delegate authority to subcommittees when appropriate, although no such delegation is currently in effect.
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None of the Compensation Committee members are employees of Align, and our Board has determined that each member is independent within the meaning of the NASDAQ listing standards.
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Nominating and Governance Committee
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2017 Meetings: 2
Members: Joseph Lacob (Chair) C. Raymond Larkin Jr. George Morrow Warren S. Thaler Susan E. Siegel (joined in February 2018) |
Identifies, evaluates and recommends nominees to the Board.
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Evaluates the composition, organization and governance of the Board and its committees.
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Develops and recommends corporate governance principles applicable to Align.
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Technology Committee
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2017 Meetings: 2
Members: Kevin J. Dallas (joined March 2018) Joseph Lacob
Thomas M. Prescott Andrea Saia Susan E. Siegel
Warren Thaler Thomas M. Prescott |
Reviews Align's technology and development activities. Oversees and advises the Board on matters of innovation and technology.
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•
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the highest personal and professional ethics and integrity;
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•
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proven achievement and competence in the nominee’s field and the ability to exercise sound business judgment;
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•
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skills and experience that are complementary to those of the existing Board;
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•
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the ability to assist and support management and make significant contributions to Align’s success; and
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•
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an understanding of the fiduciary responsibilities that is required of a member of the Board and the commitment of time and energy necessary to diligently carry out those responsibilities.
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•
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our compensation program is designed to provide a balanced mix of cash and equity, annual, and longer-term incentives in order to encourage strategies and actions that are in Align’s long-term best interests;
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•
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base salaries are consistent with an employee’s responsibilities so that they are not motivated to take excessive risks to achieve a reasonable level of financial security;
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•
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we establish performance goals under our annual cash incentive plan that we believe (A) are reasonable in light of past performance and market conditions, and (B) encourage success without encouraging excessive risk taking to achieve short-term results, and, therefore, do not encourage unnecessary or excessive risk-taking;
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•
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the performance goals that determine payouts under our annual cash incentive plans are company-wide in order to encourage decision-making that is in the best long-term interests of Align and our stockholders as a whole;
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•
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under our annual cash incentive plans, achievement of performance goals at levels below full target reduces only the payout related to that goal, not the other goals, and therefore does not result in an “all-or-nothing” approach;
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•
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our executive officers can receive a maximum award of 240% of their target under our cash incentive compensation plan in order in part to avoid excessive risk taking;
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•
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the Compensation Committee has discretion over annual cash incentive program payouts;
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•
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for our executive officers, we use a portfolio of equity based incentives that incentivize performance over a variety of time periods with respect to several balanced goals:
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•
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Restricted Stock Units ("RSUs") retain value even in a depressed market making it less likely that employees take unreasonable risks to get, or keep, equity grant “in the money”; and
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•
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performance-based market stock units ("MSUs") measure relative stockholder return over a three-year performance cycle; and
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•
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executive officers are subject to share ownership guidelines.
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Description
|
Current Fee
|
||
Annual Retainer for Board Membership (other than Chairman)
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$
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50,000
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Annual Retainer for membership on the Compensation and/or Audit Committee
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$
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13,500
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Annual Retainer for Chair of Compensation Committee and/or Audit Committee
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$
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27,000
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Annual Retainer for membership on the Nominating and Governance Committee and/or Technology Committee
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$
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5,000
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Annual Retainer for Chair of Nominating and Governance Committee and/or Technology Committee
|
$
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10,000
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Annual Retainer for Chairman of the Board
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$
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210,000
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Name
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|
Fees Earned or Paid in Cash ($)
|
|
Stock Awards ($)
(1)
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|
Total ($)
|
|||
Joseph Lacob
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65,000
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423,889
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488,889
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C. Raymond Larkin Jr.
(2)
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210,000
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591,132
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|
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801,132
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George Morrow
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79,917
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|
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423,889
|
|
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503,806
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Thomas M. Prescott
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55,000
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|
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423,889
|
|
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478,889
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Andrea L. Saia
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82,000
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|
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423,889
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|
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505,889
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Greg Santora
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90,500
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|
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423,889
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|
|
514,389
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Susan E. Siegel
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45,833
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|
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516,058
|
|
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561,891
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Warren Thaler
|
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73,500
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|
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423,889
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|
|
497,389
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(1)
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The amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of awards of RSUs. There can be no assurance that the grant date fair value amounts will ever be realized. The RSUs are time based awards and are not subject to performance or market conditions.
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(2)
|
Mr. Larkin is the Chairman of the Board.
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Name
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Option Awards
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Stock Awards
|
||
Mr. Lacob
|
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20,000
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|
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3,115
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Mr. Larkin
|
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15,000
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|
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4,344
|
|
Mr. Morrow
|
|
|
|
3,115
|
|
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Mr. Prescott
(1)
|
|
|
|
86,615
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|
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Ms. Saia
|
|
|
|
|
3,115
|
|
Mr. Santora
|
|
|
|
3,115
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|
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Ms. Siegel
|
|
|
|
3,115
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|
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Mr. Thaler
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|
|
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3,115
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|
|
2017 Target Value of Equity Awards
|
2018 Target Value of Equity Awards
|
||||
Board (other than Chairman)
|
$
|
380,000
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|
$
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300,000
|
|
Chairman
|
$
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530,000
|
|
$
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400,000
|
|
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2017
|
|
2016
|
||||
Audit fees
(1)
|
$
|
2,930,511
|
|
|
$
|
3,412,612
|
|
Audit-related fees
(2)
|
258,175
|
|
|
918,009
|
|
||
Tax fees
(3)
|
1,048,526
|
|
|
1,689,773
|
|
||
All other fees
(4)
|
6,965
|
|
|
4,140
|
|
||
Total fees:
|
$
|
4,244,177
|
|
|
$
|
6,024,534
|
|
(1)
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Audit fees
— These are fees for professional services performed by PwC for the annual audit of Align’s financial statements and review of financial statements included in Align’s quarterly filings, and services that are normally provided in connection with statutory and regulatory filings or engagements, and attest services, except those not required by statute or regulation.
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(2)
|
Audit-related fees
— These are fees for technical advisory consultations performed by PwC that are reasonably related to the performance of the audit or review of Align’s financial statements and are not reported under “Audit fees”, including fees for due diligence services and pre-implementation assessment of controls relating to enterprise resource planning ("ERP") software system (only relates to 2016).
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(3)
|
Tax fees
— These are fees for professional services performed by PwC with respect to tax compliance, tax advice and tax planning.
|
(4)
|
All other fees
— These consist of all other fees billed to us for professional services performed by PwC and not reported under "Audit fees," "Audit-related fees" and "Tax fees."
|
•
|
the integrity of Align’s financial statements;
|
•
|
Align’s compliance with legal and regulatory requirements;
|
•
|
the independent registered public accountant’s qualifications, independence and performance;
|
•
|
adequacy of Align’s internal accounting and financial controls; and
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•
|
Align’s internal audit department.
|
•
|
providing guidance with respect to Align’s relationship with the independent auditors, including having responsibility for their appointment, compensation and retention;
|
•
|
involved in the selection of the audit firm’s lead engagement partner;
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•
|
reviewing the results and audit scope;
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•
|
approving audit and non-audit services;
|
•
|
reviewing and discussing with management the quarterly and annual financial reports;
|
•
|
overseeing and reviewing Align’s risk management policies; and
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•
|
overseeing management’s implementation and maintenance of effective systems of internal controls.
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Respectfully submitted by:
|
AUDIT COMMITTEE
|
Greg J. Santora, Chair
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Andrea L. Saia
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Warren S. Thaler
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2017 Performance Highlights
|
Record net revenues of $1.5 billion, representing a 36.4% year-over-year growth
|
Clear Aligner net revenues up 36.6% and iTero scanner net revenues up 35.1% year-over-year
- 44.9% volume growth from International doctors led by growth from China and our core EMEA markets. In total, international volume represented 38% of worldwide Invisalign case shipments.
- 24.3% volume growth from North American doctors driven by continued adoption of Invisalign treatment by orthodontists, especially for teenage patients, and GP dentists as seen in record annualized Invisalign treatment utilization of 46.6 cases and 8.2 cases per doctor, respectively.
In 2017, a total of 237.5 thousand teenagers, or 26% of total Invisalign volume started treatment with Invisalign clear aligners, a 40.4% increase from 2016
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Achieved operating income of $353.6 million or 24% of revenues
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Invisalign shipments were up 31.4% year-over-year with 44.9% and 24.3% of volume growth coming from our international doctors and North America doctors, respectively
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Exited the year with $761.5 million of cash, cash equivalents and investments
|
Achieved several major milestones:
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- Reached our 1 millionth Invisalign Teen and our 5 millionth Invisalign patient milestones
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- Invisalign volume in EMEA exceeded 200,000 cases for the first time
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- Opened our first Treatment Planning operations in China and Germany
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Corporate Governance Highlights
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Continued to grant long-term equity awards, including performance-based market stock units, which are earned based on a comparison of Align's stock price performance to the NASDAQ Composite index over a three-year performance period
|
All of our post-employment cash compensation arrangements in the event of a change in control are "double trigger" arrangements that require both a change in control plus a qualifying termination of employment before any cash payments are made. In addition, our Compensation Committee has determined that acceleration of equity will also be subject to double trigger requirements for any officer joining after September 2016
|
Executive officers are not entitled to any tax gross-up treatment on any severance for change-of-control benefits
|
Continued to demonstrate prudent use of equity while balancing stockholder concerns with the motivation of our executive officers to achieve Align's business goals and create long-term stockholder value. In 2017, Align's overall equity award adjusted burn rate (which counts each RSU and earned MSU award as 2.5 shares) was 1.85%
|
Plan Category
|
|
Number of securities
to be issued upon
exercise
of outstanding options, RSUs and MSUs(a)
(1)
|
|
Weighted average
exercise price of
outstanding
options
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans
(excluding securities
reflected in column(a))
(1)(2)(3)
|
Equity compensation plans approved by security holders
|
|
1,843,573
|
|
$11.36
|
|
7,620,549
|
Equity compensation plans not approved by security holders
|
|
—
|
|
—
|
|
—
|
Total
|
|
1,843,573
|
|
$11.36
|
|
7,620,549
|
(1)
|
Includes 1,340,759 restricted stock units and 428,100 market-performance based restricted stock units at target, which have an exercise price of zero.
|
(2)
|
Includes 735,301 shares available for issuance under our ESPP. We are unable to ascertain with specificity the number of securities to be issued upon exercise of outstanding rights or the weighted average exercise price of outstanding rights under the ESPP.
|
(3)
|
Excludes 507,775 of potentially issuable MSUs if performance targets are achieved at maximum payout.
|
•
|
Joseph M. Hogan, our President and Chief Executive Officer
|
•
|
John F. Morici, our Senior Vice President, Global Finance and Chief Financial Officer
|
•
|
Stuart Hockridge, our Senior Vice President, Global Human Resources
|
•
|
Raphael S. Pascaud, our Chief Marketing Portfolio & Business Development Officer and Senior Vice President, iTero Scanners & Services
|
•
|
Lynn Pendergrass, our former Vice President, Americas. Ms. Pendergrass was employed as an executive officer of Align as of December 31, 2017 until she transitioned her role as Vice President, Americas prior to her departure from Align in March 2018.
|
2017 Executive Compensation
|
|
2017 executive compensation program was designed based on Align's outstanding 2016 business and financial performance.
|
|
|
|
|
Our executive compensation program emphasizes performance-based pay
|
|
|
- 90% of our CEO's total-target annual compensation was subject to annual performance goals or tied to the value of our common stock.
|
|
|
- 79% of our other NEO's total-target annual compensation was subject to annual performance goals or tied to the value of our common stock.
|
|
|
|
|
|
Based on outstanding performance against aggressive 2017 objectives, NEOs received maximum annual incentive payments (bonuses) of 240% of their target award opportunity.
|
Strong Compensation Pay Practices
|
|
Core governance principles and practices are employed to align executive compensation with stockholder interests.
|
|
|
|
|
Stockholders indicated strong support for our executive compensation program in 2017 with approximately 94% of the total votes cast at our 2017 annual meeting voting in favor of our NEO compensation.
|
|
|
|
|
|
We continue to carefully manage equity burn rates with our overall equity-based burn rate for 2017 was 0.74% and our adjusted gross burn rate was 1.85%.
|
Strong 2017 Company Performance
|
|
We created long-term, sustained value for our stockholders with our stock price increasing from $96.96 to $222.19 per share during 2017, reflecting strong stock price appreciation and a one-year total stockholder return of 129%.
|
|
|
|
|
2017 net revenues were a record $1.5 billion, a 36.4% increase from 2016.
|
|
|
|
|
|
We shipped a record 931 thousand Invisalign cases, an increase of 31.4% compared to 2016.
|
|
|
|
|
|
2017 operating income was $353.6 million, or 24.0% of revenues.
|
|
|
|
•
|
We achieved the 1 millionth Invisalign teenage patient and 5 millionth Invisalign patient milestones, demonstrating increased global acceptance of Invisalign treatment.
|
•
|
237.5 thousand teenagers started orthodontic treatment with Invisalign, an increase of 40.4% from the prior year.
|
•
|
Invisalign annualized utilization increased to a record 46.6 cases per North American Orthodontist, a record 8.2 cases per North America GP Dentist and a record 12.7 cases per International doctors compared to 36.6, 7.6 and 12.0, respectively, in 2016.
|
•
|
We trained a total of 16,500 new Invisalign doctors, of which 67% were trained internationally.
|
•
|
We grew international Invisalign case shipments 44.9% in 2017 compared to 2016, driven by growth from China and our core EMEA country markets. International volume represented 38% of worldwide Invisalign case shipments.
|
•
|
We achieved over 1 million scans submitted with iTero Element® scanner since its introduction in 2015.
|
•
|
Expansion of our traditional and digital media campaigns targeting both men and women as well as significant investment in our marketing to teens and moms resulting in over 15 million unique visitors to Invisalign websites worldwide and 1.8 million potential patients searched for an Invisalign provider via the “doctor locator” webpage, an increase of 41% compared to 2016.
|
•
|
We have created long-term, sustained value for our stockholders.
Our stock price increased from $96.96 to $222.19 per share during 2017, reflecting strong stock price appreciation and a one-year TSR of 129%. This compares to the NASDAQ Composite Index one-year TSR of 27%. Our three-year TSR is 290% compared with the three-year NASDAQ Composite Index TSR of 66%.
|
•
|
Stockholders continue to indicate strong support for our executive compensation program.
In 2017, we held our sixth annual stockholder advisory vote on the compensation of our named executive officers. Approximately 94% of the total votes cast at our 2017 annual meeting voted in favor of our named executive officer compensation. As we evaluated our executive compensation practices since that vote, we were mindful of the strong support our stockholders expressed for our executive compensation program. As a result, the Compensation Committee generally believes that the stockholder advisory vote
|
•
|
Our compensation program continues to emphasize performance-based pay.
Our compensation program is designed to pay more when our financial and strategic performance is robust and less when it is not, providing built-in flexibility in the management of our operating expenses and enabling us to preserve strategic programs when economic conditions are unfavorable. A significant portion of our executive officers’ compensation is variable and tied to the success of our business and the individual performance of our executives. Consistent with this pay-for-performance orientation, Align believes that annual cash incentive (bonus) awards and long-term equity compensation should together represent the most significant portion of total target direct compensation. As a result, a larger portion of our executive officers’ total target compensation is at risk relative to Align’s other employees. We believe this is appropriate because our executive officers bear the greatest responsibility for Align’s results and can exert the greatest influence on Align’s performance. As illustrated by the chart below, in fiscal 2017, approximately 60% of Mr. Hogan's total target direct compensation was completely "at-risk" based on our performance against measurable performance objectives.
|
•
|
Annual cash incentive awards reflected positive 2017 Corporate performance.
The Committee seeks to motivate management to continuously improve the financial performance of Align through a cash incentive (bonus) plan that rewards higher performance with increased incentive opportunities. This provides us with a variable expense structure, allowing us to reduce our compensation costs in challenging times and reward performance when business conditions and results warrant. Based on our strong 2017 financial results, we achieved a weighted average of 240% of our financial targets, which is the maximum achievement under our plan. As a result, the annual incentive payments for our NEOs were 240% of their target award opportunity, the maximum they could receive.
|
•
|
Equity awards are tied to the value of our common stock.
Value received under our annual equity awards varies based on our stock price performance. In particular, payouts of our MSUs awarded to our executive officers vary based on the relative performance of our stock compared to the NASDAQ Composite Index. MSUs granted in 2017 are earned based on Align’s relative stockholder return over a three-year performance period, with 100% of the earned shares vesting at the end of three years. For MSUs granted in 2014 that vested in February 2017, Align stock outperformed the NASDAQ Composite Index by 34% during the applicable performance period. As a result, due to Align’s continued outstanding stock price performance compared to the NASDAQ Composite Index during the performance period, the NEOs who were granted 2014 MSUs earned a maximum payout of 150% of their target awards. Our Compensation Committee specifically designed our MSU award program to closely tie actual long-term performance with long-term pay, and total stockholder return has been, and is expected to continue to be, the key measurement of our performance under this program. In 2017, our Compensation Committee elected to increase the maximum payout under our MSU program from 200% to 250% of target to recognize and reward the tremendous stock price appreciation of Align stock over the past several years. As a result, MSU awards made in and after February 2018 will include this higher maximum payout opportunity.
|
•
|
Compensation Committee Composed Solely of Independent Directors.
The Compensation Committee is composed solely of independent directors and it directly retains an independent compensation consultant.
|
•
|
Annual Say-on-Pay Votes.
We elected to hold an annual stockholder advisory ("say-on-pay") vote, and the Compensation Committee considers the outcome of the advisory vote in making compensation decisions.
|
•
|
Stock Ownership Guidelines.
We maintain stock ownership guidelines for our executive. The ownership guidelines for executive officers other than our CEO are 2.0X annual salary. Ownership guidelines for our CEO are 5.0X his annual salary.
|
•
|
No “single-trigger” on Cash Compensation.
All of our post-employment cash compensation arrangements in the event of a change in control of Align are “double-trigger” arrangements that require both a change in control of Align plus a qualifying termination of employment before any cash payments are paid. In addition, the employment agreements entered into by our CEO and any other executive who join us after September 2016, including Mr. Morici and Ms. Pendergrass, provide that such executive will only receive accelerated vesting of their stock if such executive is terminated for convenience within 18 months of the change of control (double trigger).
|
•
|
Annual Compensation-Related Risk Assessment.
Align’s executive compensation policies are structured to discourage inappropriate risk-taking by our executives. Our annual cash bonus incentive awards are capped at 240% of target for our executive officers in part to discourage excessive risk taking. The Compensation Risk Assessment located on page 14 of this proxy statement describes the Compensation Committee’s assessment that the risks arising from our company-wide compensation programs are reasonable, in the best interest of our stockholders, and not likely to have a material adverse effect on us.
|
•
|
No Hedging or Pledging Company Stock.
Employees may not directly or indirectly engage in transactions intended to hedge or offset the market value of Align’s common stock owned by them. In addition, our Insider Trading Policy further prohibits employees from directly or indirectly pledging Align common stock as collateral for any obligation.
|
•
|
Carefully Manage Equity Burn Rates.
We are committed to carefully managing the dilutive impact of equity compensation awards. Management and the Board regularly evaluate share utilization levels by reviewing the dilutive impact of stock compensation. Align’s overall equity-award-based gross burn rate for fiscal 2017 was 0.74% and Align's adjusted gross burn rate was 1.85%. Gross burn rate is defined as the number of equity awards granted in the year divided by shares outstanding. Adjusted gross burn rate includes a premium applied to full-value shares (e.g., RSUs and MSUs) of 2.5:1.
|
•
|
Offer competitive compensation
. We seek to provide competitive compensation opportunities to attract, retain and incent superior talent.
|
•
|
Reward performance
. A significant portion of total target compensation for our NEOs is tied to the achievement of financial objectives. We believe that this supports our pay-for-performance philosophy by directly and substantially linking rewards to the achievement of measurable financial targets and a shared set of critical strategic priorities. By also rewarding individual performance, we seek to recognize outstanding individual contributions.
|
•
|
Link the interests of our executives with those of our stockholders
. A significant portion of total target compensation for our NEOs is tied to the achievement of financial and strategic objectives and is in the form of long-term equity-based compensation. This structure is designed to focus decision-making and behavior on goals that are consistent with Align’s overall strategy.
|
Responsible Party
|
|
Roles and Responsibilities
|
|
|
|
Compensation Committee
|
|
Sets Align's overall compensation philosophy, which is reviewed and approved by the Board of Directors.
|
|
|
Reviews and approves our compensation programs; designs and monitors the execution of these programs.
|
|
|
Reviews and approves all cash based compensation arrangements for our executive officers (other than our CEO).
|
|
|
Reviews and recommends to our Board of Directors all cash based compensation arrangements for our CEO.
|
|
|
No member of the Compensation Committee is a former or current officer of Align or any of its subsidiaries. No executive officer of Align serves as a member of the Board or compensation committee of any entity that has one or more executive officers serving on Align's Board or Compensation Committee.
|
|
|
|
Consultant to the Compensation Committee
(Compensia, Inc. an independent executive compensation consulting firm retained directly by the Compensation Committee to assist it in performing its responsibilities.)
|
|
Compensia attends meetings of the Compensation Committee and communicates outside of meetings with its members and management with respect to the design and assessment of compensation packages for our executive officers. In 2017, Compensia provided the services below on behalf of the Committee.
|
|
|
Analyzed whether the compensation packages of our executive officers were consistent with our compensation philosophy and competitive within the market relative to our peer companies.
|
|
|
Assisted in defining the appropriate peer group of comparable companies.
|
|
|
Assisted in the design of our compensation programs for executives and board members, including discussing evolving compensation trends.
|
|
|
Reviewed the effectiveness of our compensation programs.
|
|
|
Provided advice on stock ownership guidelines for executive officers and directors.
|
|
|
Compiled and provided market data to assist in setting our compensation philosophy, plan parameters and measures.
|
|
|
Conducted a comprehensive review of compensation paid to the Board and provided recommendations to the Committee and the Board regarding director pay structure.
|
|
|
Provided updates on NASDAQ listing standards, Say-on-Pay results, and regulatory developments.
|
|
|
In addition, the Compensation Committee conducted a formal review of Compensia’s independence and is satisfied with the qualifications, performance and independence of Compensia. Compensia performed no other work for Align.
|
Executive Officers
(Assisted by Company Staff)
|
|
Management's role is to advise the Compensation Committee regarding the alignment and weighting of our performance measures under our annual cash incentive awards with our overall strategy, the impact of the design of our equity incentive awards on our ability to attract, motivate and retain highly talented executives and the competitiveness of our compensation program. Our CEO plays a significant role in setting the compensation for other NEOs. The CEO conducts performance reviews for the other NEOs, and makes recommendations to the Compensation Committee with respect to the other NEOs’ compensation. The Compensation Committee has the discretion to accept, reject, or modify the CEO's recommendations. The CEO leaves the meetings during discussions and deliberations of individual compensation actions affecting him personally. Ultimately all decisions regarding executive compensation are made by the Compensation Committee or in the case of CEO cash compensation, the full Board upon the recommendation of the Compensation Committee.
|
•
|
market comparison data (peer group data and survey data);
|
•
|
subjective elements, such as:
|
•
|
the scope of the executive’s role;
|
•
|
the executive’s:
|
•
|
experience;
|
•
|
qualifications;
|
•
|
skills; and
|
•
|
performance during the fiscal year (see discussion below on “
Role of Individual Performance”
);
|
•
|
internal equity; and
|
•
|
Align’s operational and financial performance.
|
•
|
Industry
-medical device companies and technology product companies, which are the industries from which we primarily recruit executive talent;
|
•
|
Market Capitalization
-companies with a market capitalization of between approximately $2.0 billion and $24.4 billion based upon the companies’ trading ranges at the time of selection which approximates 0.3 to 4.0 times Align's market capitalization at that time; and
|
•
|
Revenue
-companies with revenue of between approximately $295 million to $2.7 billion based upon the last four quarters of revenue at the time of selection which approximates 0.3 to 3.0 times Align's rolling four quarters of revenues at that time.
|
|
Revenue ($MM)
|
Market Capitalization ($MM)
|
Market Capitalization as a Multiple of Revenue
|
Peer Group 50th Percentile
|
$913
|
$3,966
|
4.2X
|
Align
|
$886
|
$6,098
|
6.9X
|
Percentile Rank
|
45%
|
73%
|
69%
|
ABIOMED*
|
Globus Medical*
|
Bio-Rad Laboratories
|
Haemonetics
|
Bio-Techne*
|
Illumina
|
Bruker
|
Insulet
|
Cepheid
|
Integra LifeSciences
|
Cooper Companies
|
Intuitive Surgical*
|
DexCom*
|
Myriad Genetics*
|
Edwards Lifesciences*
|
NuVasive
|
Fitbit*
|
Resmed
|
Element of Compensation
|
Target Percentile
|
Base salary
|
50
th
percentile
|
Target total cash compensation
|
65
th
to 75
th
percentile
|
Equity compensation
|
50
th
to 75
th
percentile
|
•
|
base salary;
|
•
|
annual cash incentive awards; and
|
•
|
long-term equity-based incentive grants.
|
Name
|
|
2016 Base Salary
|
|
2017 Base Salary
|
|
Percentage Increase over 2016
|
Joseph M. Hogan
|
|
$975,000
|
|
$1,000,000
|
|
2.6%
|
John F. Morici
|
|
$400,000
|
|
$428,000
|
|
7%
|
Stuart Hockridge
|
|
$355,000
|
|
$377,000
|
|
6.2%
|
Raphael S. Pascaud
|
|
$372,000
|
|
$386,000
|
|
3.8%
|
Lynn Pendergrass
|
|
N/A
(1)
|
|
$450,000
|
|
N/A
|
Measure/Weight/
Calculated
|
|
Why do we use this measure?
|
|
Target
(in millions)
|
|
Achievement
(in millions)
(1)
|
|
Level of Achievement vs Target
|
|
Impact on
Company
Multiplier
|
|||
Revenue
(1) (2) (3)
(60%)
|
|
Improvement in this measure aligns with our overall growth strategy
|
|
$1,275
|
|
$1,455
|
|
114%
|
|
|
178%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(1) (2) (3)
(40%)
|
|
Directly links incentive payments to company profitability and provides incentives to our employees (including our executives) to share in our profitability. Because profitability encompasses both revenue and expense management, the Compensation Committee believes this measure encourages a balanced, holistic approach by our executives to manage our business. The Compensation Committee considers operating profit before taxes because our executives cannot predict or directly affect our taxes or our tax rate.
|
|
$272
|
|
$344
|
|
127%
|
|
|
91%
|
||
COMPANY MULTIPLIER:
|
|
|
|
|
|
|
|
240% (maximum amount)
|
(1)
|
During 2017, revenue and operating income achievement was adjusted downwards by $18.7 million and $9.4 million. This downward adjustment to our final bonus plan results was due to a 5% benefit in foreign exchange compared to the assumptions made in our annual operating plan. The Compensation Committee had previously approved adjustments (upwards or downwards) to our bonus plan results in the event the impact of foreign exchange was above 4 percentage points. No other adjustments were made to either the target or the level of achievement.
|
(2)
|
The target performance and the level of performance at which the funding for that particular financial performance measure will be capped as follows:
|
•
|
A rating of zero if achievement is below 90% of target. Company performance below target automatically reduces only the payout related to that goal, not the other goals, as we want executives to have the same incentive to achieve other financial goals as well as their individual performance goals even if our performance tracks below the target during the course of the year;
|
•
|
A rating ranging from 90% to 100% if achievement meets or exceeds the minimum performance level but does not achieve the target performance level; and
|
•
|
A rating of 101% and above if achievement exceeds the target performance level. Each individual financial metric is uncapped; however, once the Company Multiplier reaches 240% in the aggregate, the bonus pool is fully funded. Therefore, in the aggregate, the bonus pool for our executive officers will not exceed 240% funding.
|
(3)
|
The Compensation Committee has the discretion to exclude the following items from Revenue and Operating Income:
|
(a)
|
significant and/or extraordinary items that are not indicative of our core operating performance that are separately stated on our financial statements;
|
(b)
|
items identified as non-GAAP in Align’s quarterly earnings announcements; and
|
(c)
|
other discrete items as necessary that may result in unintended gain or loss under the bonus plan.
|
Name
|
|
Target Incentive Award (as % of Base Salary)
|
|
Target Incentive Award
|
|
Company Multiplier
|
|
Individual Multiplier
|
Actual Incentive Award
|
|
Actual Award as % of Target
|
Joseph M. Hogan
|
|
150%
|
|
$1,500,000
|
|
240%
|
|
100%
|
$3,600,000
|
|
240%
|
John F. Morici
|
|
60%
|
|
$257,000
|
|
240%
|
|
100%
|
$616,300
|
|
240%
|
Stuart Hockridge
|
|
60%
|
|
$226,000
|
|
240%
|
|
100%
|
$542,900
|
|
240%
|
Raphael S. Pascaud
|
|
60%
|
|
$231,000
|
|
240%
|
|
100%
|
$555,500
|
|
240%
|
Lynn Pendergrass
|
|
60%
|
|
$227,000
(1)
|
|
240%
|
|
100%
|
$545,000
|
|
240%
|
Award Type
|
Rationale for 2017 Portfolio
|
|
|
Why RSUs?
|
We believe RSUs reward retention (even in the event of a decline in Align’s share price) and provide an incentive to grow the value of Align’s stock. In addition, RSUs enable our executives to accumulate stock ownership in Align.
|
|
|
Why MSUs?
|
We believe MSUs provide a vehicle that has more consistent value delivery compared to stock options which also aligns the long-term interests of our executive officers and stockholders by rewarding executives for Align’s performance measured in relation to other companies over a specified period. The actual number of shares of our common stock issuable under MSUs varies based on over-or under-performance of Align’s stock price compared to the NASDAQ Composite Index during the three-year performance period. If Align under-performs the NASDAQ Composite Index, the percentage at which the MSUs convert into shares of Align stock will be reduced from 100%, at a rate of three to one (three-percentage-point reduction in units for each percentage point of under-performance), with a minimum percentage of 0%. This means that no shares will vest if Align underperforms the NASDAQ Composite by approximately 33 percentage points. If Align outperforms the NASDAQ Composite Index, the percentage at which the MSUs convert to shares will be increased from 100%, at a rate of three to one (three-percentage-point increase in units for each percentage point of over-performance), with a maximum percentage of 200%. This means that if Align outperforms the NASDAQ Composite by 33 percentage points, the maximum number of shares that will vest is 200% of the award amount. For example, if the NASDAQ Composite index increased by 10% over the performance period and our stock price increased by 30% over the performance period, then the number of shares issuable under the MSUs would be 160% of target or (130%-110%)*3=160%.
|
Award Type
|
Vesting Detail
|
|
|
RSUs
|
Typically vests over four-year with 1/4 vesting annually
|
|
|
MSUs
|
Three-year performance period
|
Name
|
|
RSUs
|
|
Target MSUs
(1)
|
Joseph M. Hogan
|
|
25,000
|
|
38,000
|
John F. Morici
|
|
|
|
|
February 2017 focal grant
|
|
7,000
|
|
7,000
|
Special one-time award
|
|
6,292
|
|
|
Stuart Hockridge
|
|
10,799
|
|
6,000
|
February 2017 focal grant
|
|
6,000
|
|
6,000
|
Special one-time award
|
|
4,799
|
|
|
Raphael S. Pascaud
|
|
7,600
|
|
7,600
|
Lynn Pendergrass
(2)
|
|
15,650
|
|
N/A
|
(1)
|
The number of MSUs set forth in this column represents the Target Shares; however, the actual number of MSUs to be earned, if any, is determined based on the formula set forth in the MSU Agreement up to a maximum of 200% of the amount of the Target Shares.
|
•
|
a change of control; and
|
•
|
termination without cause or for convenience.
|
THE COMPENSATION COMMITTEE
|
George J. Morrow, Chair
|
Andrea L. Saia
|
Greg Santora
|
Name and Principal
Position
|
|
Year
|
|
Salary
($)
|
|
Bonus ($)
(1)
|
|
Stock
Awards ($)
(2)(3)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
All Other
Compensation ($)
|
|
Total ($)
|
||||||
Joseph Hogan,
President & Chief Executive Officer
|
|
2017
|
|
998,077
|
|
|
—
|
|
|
7,118,945
|
|
|
3,600,000
|
|
|
27,025
|
|
|
11,744,047
|
|
|
2016
|
|
973,077
|
|
|
—
|
|
|
5,067,180
|
|
|
2,930,000
|
|
|
22,004
|
|
|
8,992,261
|
|
|
|
2015
|
|
548,077
|
|
|
1,500,000
|
|
|
14,330,100
|
|
|
960,000
|
|
|
44,822
|
|
|
17,382,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
John F. Morici,
Chief Financial Officer and Senior Vice
President, Global Finance
|
|
2017
|
|
425,846
|
|
|
—
|
|
|
2,742,889
|
|
|
616,320
|
|
|
39,904
|
|
|
3,824,959
|
|
|
2016
|
|
49,231
|
|
|
150,000
|
|
|
1,786,311
|
|
|
67,700
|
|
|
32,381
|
|
|
2,085,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stuart Hockridge
Senior Vice President, Global Human Resources
|
|
2017
|
|
375,308
|
|
|
—
|
|
|
2,419,664
|
|
|
542,880
|
|
|
13,502
|
|
|
3,351,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Raphael S. Pascaud
Chief Marketing Portfolio and Business
Development Officer, and Senior Vice
President iTero Scanner and Services
|
|
2017
|
|
386,000
|
|
|
—
|
|
|
1,688,378
|
|
|
555,500
|
|
|
18,081
|
|
|
2,647,959
|
|
|
2016
|
|
372,000
|
|
|
—
|
|
|
1,586,040
|
|
|
427,400
|
|
|
—
|
|
|
2,385,440
|
|
|
|
2015
|
|
369,000
|
|
|
—
|
|
|
1,362,720
|
|
|
311,300
|
|
|
2,298
|
|
|
2,045,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lynn Pendergrass
Vice President and Managing Director,
Americas Region
|
|
2017
|
|
372,115
|
|
|
400,000
|
|
|
1,772,050
|
|
|
545,000
|
|
|
128,459
|
|
|
3,217,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts reflect (i) a one-time signing bonus for Mr. Hogan, (ii) a one-time signing bonus for Mr. Morici and (iii) a one-time signing bonus for Ms. Pendergrass.
|
(2)
|
The amounts shown in this column reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Assumptions used in the calculations of these amounts are included in Note 10 to our audited financial statements for the year ended December 31, 2017 included in Align’s Annual Report on Form 10-K filed with the SEC on February 28, 2018. This same method was used for years ended December 31, 2016 and 2015. There can be no assurance that the grant date fair value amounts will ever be realized.
|
(3)
|
Stock awards for Mr. Morici and Mr. Hockridge include a special one-time RSU award granted in 2017.
|
Name
|
|
Dollar
Value of
Life
Insurance
Premiums
|
|
Matching
contributions
under Align’s
401(k) Plan
|
|
Matching contributions under Align's Health Spending Account
|
|
Airfare for travel companion
|
|
Employee Discount Program
|
|
Relocation
|
||||||||||||
Mr. Hogan
|
|
$
|
2,280
|
|
|
$
|
8,100
|
|
|
$
|
—
|
|
|
$
|
16,645
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mr. Morici
|
|
$
|
1,562
|
|
|
$
|
8,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30,242
|
|
Mr. Hockridge
|
|
$
|
1,426
|
|
|
$
|
8,100
|
|
|
$
|
2,000
|
|
|
$
|
—
|
|
|
$
|
1,976
|
|
|
$
|
—
|
|
Mr. Pascaud
|
|
$
|
1,987
|
|
|
$
|
16,094
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Ms. Pendergrass
|
|
$
|
1,326
|
|
|
$
|
8,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
119,033
|
|
•
|
cash amounts that could have been received in
2017
by our NEOs under the terms of our performance-based cash incentive plan (CIP); and
|
•
|
time-vested RSUs and performance-based MSUs awards granted by the Compensation Committee to our NEOs in
2017
reflected on an individual grant basis.
|
|
|
Type
of
Award
|
|
Grant
Date
|
|
Approval
Date
|
|
Estimated
Future
Payouts
Under
Non-Equity
Incentive Plan
Awards
|
|
Non-equity Incentive
|
|
Estimated Future
Payouts Under
Equity Incentive Plan
Awards
|
|
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#)
|
|
Grant Date
Fair value
of Options
and
Awards ($)
|
||||||||
Name
|
|
Target
($)
|
|
Maximum ($)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
|||||||||||||||
Joseph M. Hogan
|
|
CIP
|
|
|
|
|
|
1,500,000
|
|
|
3,600,000
|
|
|
|
|
|
|
|
|
|
||||
|
|
RSU
|
|
2/20/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
2,544,125
|
|
||||
|
|
MSU
|
|
2/20/2017
|
|
2/1/2017
|
|
|
|
|
|
38,000
|
|
|
76,000
|
|
|
|
|
4,574,820
|
|
|||
John F. Morici
|
|
CIP
|
|
|
|
|
|
256,800
|
|
|
616,320
|
|
|
|
|
|
|
|
|
|
||||
|
|
RSU
|
|
2/20/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
712,355
|
|
||||
|
|
RSU
|
|
9/20/2017
|
|
9/13/2017
|
|
|
|
|
|
|
|
|
|
6,292
|
|
|
1,187,804
|
|
||||
|
|
MSU
|
|
2/20/2017
|
|
2/1/2017
|
|
|
|
|
|
7,000
|
|
|
14,000
|
|
|
|
|
842,730
|
|
|||
Stuart Hockridge
|
|
CIP
|
|
|
|
|
|
226,200
|
|
|
542,880
|
|
|
|
|
|
|
|
|
|
||||
|
RSU
|
|
2/20/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
610,590
|
|
|||||
|
RSU
|
|
12/27/2017
|
|
12/22/2017
|
|
|
|
|
|
|
|
|
|
4,799
|
|
|
1,086,734
|
|
|||||
|
MSU
|
|
2/20/2017
|
|
2/1/2017
|
|
|
|
|
|
6,000
|
|
|
12,000
|
|
|
|
|
722,340
|
|
||||
Raphael S. Pascaud
|
|
CIP
|
|
|
|
|
|
231,600
|
|
|
555,840
|
|
|
|
|
|
|
|
|
|
||||
|
RSU
|
|
2/20/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
7,600
|
|
|
773,414
|
|
|||||
|
MSU
|
|
2/20/2017
|
|
2/1/2017
|
|
|
|
|
|
7,600
|
|
|
15,200
|
|
|
|
|
914,964
|
|
||||
Lynn Pendergrass
|
|
CIP
|
|
|
|
|
|
270,000
|
|
|
648,000
|
|
|
|
|
|
|
|
|
|
||||
|
RSU
|
|
3/20/2017
|
|
1/25/2017
|
|
|
|
|
|
|
|
|
|
15,650
|
|
|
1,772,050
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Threshold.
There is no threshold performance level. Rather, Align's financial performance below a specific target automatically reduces only the payout related to that specific goal, not the other goals, because we want executives to have the same incentive to achieve strategic priorities as well as their individual performance goals even if our financial performance tracks below the target during the course of the year.
|
•
|
Target.
The target amounts assume a corporate performance percentage of 100% and that the NEO received 100% of his or her target.
|
•
|
Maximum.
The maximum amount any executive officer can receive is capped at 240% of their target award opportunity.
|
•
|
Align does not plan to time, nor has it timed, the release of material non-public information for the purpose of affecting the exercise price of its stock options should we decide to grant stock options again in the future;
|
•
|
consistent with the policy described in the bullet point above, all awards of equity compensation for new employees (other than new executive officers) are made on the first day of the month for those employees who started during the period between the 16
th
day of the month that is two months prior to the grant date and the 15
th
day of the month prior to the month of the grant date. For example, May 1, 2018 grants will cover new hires starting between March 16, 2018 and April 15, 2018; and
|
•
|
annual incentive grants are made on or about the same day for all employees (including executive officers); in each of 2017, 2016 and 2015 such date was February 20. The Compensation Committee sets the actual grant date approximately one week following approval of the size of each grant in order to provide Align managers with adequate time to inform each employee individually of their grant.
|
Name
|
|
Stock Awards
|
||||||||||||||
|
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)
|
|
F
o
o
t
n
o
t
e
|
|
Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($)
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
that have
Not Vested
(#)
|
|
F
o
o
t
n
o
t
e
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
|
|||||
Joseph M. Hogan
|
|
27,750
|
|
|
(1)
|
|
6,165,773
|
|
|
|
|
|
|
|
||
|
|
22,500
|
|
|
(3)
|
|
4,999,275
|
|
|
|
|
|
|
|
||
|
|
25,000
|
|
|
(4)
|
|
5,554,750
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
111,000
|
|
|
(2)
|
|
24,663,090
|
|
||
|
|
|
|
|
|
|
|
46,000
|
|
|
(5)
|
|
10,220,740
|
|
||
|
|
|
|
|
|
|
|
38,000
|
|
|
(6)
|
|
8,443,220
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
John F. Morici
|
|
14,126
|
|
|
(7)
|
|
3,138,656
|
|
|
|
|
|
|
|
||
|
|
7,000
|
|
|
(4)
|
|
1,555,330
|
|
|
|
|
|
|
|
||
|
|
6,292
|
|
|
(8)
|
|
1,398,019
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
7,000
|
|
|
(6)
|
|
1,555,330
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stuart Hockridge
|
|
16,166
|
|
|
(9)
|
|
3,591,924
|
|
|
|
|
|
|
|
||
|
|
6,000
|
|
|
(4)
|
|
1,333,140
|
|
|
|
|
|
|
|
||
|
|
4,799
|
|
|
(10)
|
|
1,066,290
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
6,000
|
|
|
(6)
|
|
1,333,140
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Raphael S. Pascaud
|
|
5,797
|
|
|
(12)
|
|
1,288,035
|
|
|
|
|
|
|
|
||
|
2,450
|
|
|
(13)
|
|
544,366
|
|
|
|
|
|
|
|
|||
|
|
6,000
|
|
|
(14)
|
|
1,333,140
|
|
|
|
|
|
|
|
||
|
|
9,000
|
|
|
(3)
|
|
1,999,710
|
|
|
|
|
|
|
|
||
|
|
7,600
|
|
|
(4)
|
|
1,688,644
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
12,000
|
|
|
(15)
|
|
2,666,280
|
|
||
|
|
|
|
|
|
|
|
12,000
|
|
|
(5)
|
|
2,666,280
|
|
||
|
|
|
|
|
|
|
|
7,600
|
|
|
(6)
|
|
1,688,644
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Lynn Pendergrass
|
|
15,650
|
|
|
(11)
|
|
3,477,274
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
RSUs vest at a rate of 25% of the total number of shares subject to the RSU on the first year, second year, third year and fourth year anniversary of the date of grant for vesting on December 31, 2015, December 31, 2016, December 31, 2017 and December 31, 2018.
|
(2)
|
MSUs vest 100% on June 1, 2018.
|
(3)
|
RSUs vest at a rate of 25% of the total number of shares subject to the RSU on the first year, second year, third year and fourth year anniversary of the date of grant for vesting on February 20, 2017, February 20, 2018, February 20, 2019 and February 20, 2020.
|
(4)
|
RSUs vest at a rate of 25% of the total number of shares subject to the RSU on the first year, second year, third year and fourth year anniversary of the date of grant for vesting on February 20, 2018, February 20, 2019, February 20, 2020, and February 20, 2021.
|
(5)
|
MSUs vest 100% on February 20, 2019.
|
(6)
|
MSUs vest 100% on February 20, 2020.
|
(7)
|
RSUs vest at a rate of 25% of the total number of shares subject to the RSU on the first year, second year, third and fourth year anniversary of the date of grant for vesting on November 20, 2017, November 20, 2018, November 20, 2019, and November 20, 2020.
|
(8)
|
RSUs vest at a rate of 25% of the total number of shares subject to the RSU on the first year, second year, third year and fourth year anniversary of the date of grant for vesting on September 20, 2018, September 20, 2019, September 20, 2020, and September 20, 2021.
|
(9)
|
RSUs vest at a rate of 25% of the total number of shares subject to the RSU on the first year, second year, third and fourth year anniversary of the date of grant for vesting on June 20, 2017, June 20, 2018, June 20, 2019 and June 20, 2020.
|
(10)
|
RSUs vest at a rate of 25% of the total number of shares subject to the RSU on the first year, second year, third year and fourth year anniversary of the date of grant for vesting on December 27, 2018, December 27, 2019, December 27, 2020, and December 27, 2021.
|
(11)
|
RSUs vest at a rate of 25% of the total number of shares subject to the RSU on the first year, second year, third year, and fourth year anniversary of the date of grant for vesting on March 20, 2018, March 20, 2019, March 20, 2020 and March 20, 2021.
|
(12)
|
RSUs vest at a rate of 25% of the total number of shares subject to the RSU on the first year, second year, third year, and fourth year anniversary of the date of grant for vesting on January 20, 2015, January 20, 2016, January 20, 2017 and January 20, 2018.
|
(13)
|
RSUs vest at a rate of 25% of the total number of shares subject to the RSU on the first year, second year, third year, and fourth year anniversary of the date of grant for vesting on February 20, 2015, February 20, 2016, February 20, 2017 and February 20, 2018.
|
(14)
|
RSUs vest at a rate of 25% of the total number of shares subject to the RSU on the first year, second year, third year, and fourth year anniversary of the date of grant for vesting on February 20, 2016, February 20, 2017, February 20, 2018 and February 20, 2019.
|
(15)
|
MSUs vest at a rate of 100% on February 20, 2018.
|
|
|
Option Awards
|
|
Stock Awards
|
||||||||||
Name
|
|
Number of Shares Acquired on Exercise
|
|
Value of Realized
Upon Exercise
(1)
|
|
Number of
Shares
Acquired
on Vesting
(2)
|
|
Value
Realized
on
Vesting
(3)
|
||||||
Joseph M. Hogan
|
|
—
|
|
|
$
|
—
|
|
|
35,250
|
|
|
$
|
6,929,010
|
|
John F. Morici
|
|
—
|
|
|
$
|
—
|
|
|
4,709
|
|
|
$
|
1,203,197
|
|
Stuart Hockridge
|
|
—
|
|
|
$
|
—
|
|
|
5,389
|
|
|
$
|
792,129
|
|
Raphael S. Pascaud
|
|
5,400
|
|
|
$
|
1,209,115
|
|
|
26,722
|
|
|
$
|
2,853,199
|
|
Lynn Pendergrass
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
(1)
|
The value realized on exercise equals the difference between (a) either (i) the actual sales price of our common stock underlying the options exercised if the shares were immediately sold or (ii) the closing price per share of our common stock as reported on the NASDAQ Global Market on the date of exercise if the shares were held and (b) the applicable exercise price of such stock options.
|
(2)
|
For each NEO, such number of shares represents the gross number of shares acquired by the NEO on the vesting date; however, because RSUs and MSUs are taxable to the individuals when they vest, the number of shares we issue to each of our NEOs is net of applicable withholding taxes which are paid by us on their behalf.
|
(3)
|
The value realized on vesting equals the closing price per share of our common stock as reported on the NASDAQ Global Market on the vesting date multiplied by the gross number of shares acquired on vesting as described above in note (2).
|
Name
|
|
Type of Payment
|
|
Payments Upon
Involuntary or Good
Reason Termination
Unrelated to
Change of Control
|
|
Payments Upon
Involuntary or
Good Reason
Termination
Related to a
Change of
Control
|
|
Change of
Control
Only
|
|
Death or Disability
|
||||||||
Joseph M. Hogan
|
|
Severance Payment
|
|
$
|
6,430,000
|
|
|
$
|
6,430,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
||||||||
|
|
RSUs
|
|
$
|
—
|
|
|
$
|
16,719,798
|
|
|
$
|
8,804,279
|
|
|
$
|
16,719,798
|
|
|
|
MSUs
|
|
$
|
—
|
|
|
$
|
69,212,185
|
|
|
$
|
46,319,310
|
|
|
$
|
69,212,185
|
|
|
|
Health and Welfare Benefits
|
|
$
|
1,428
|
|
|
$
|
1,428
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Total
|
|
$
|
6,431,428
|
|
|
$
|
92,363,411
|
|
|
$
|
55,123,589
|
|
|
$
|
85,931,983
|
|
(1)
|
twice his then current annual base salary;
|
(2)
|
the then current year’s target bonus, prorated for the number of days Mr. Hogan has been employed during the year; and
|
(3)
|
the greater of 150% of the then current year’s target bonus or the prior year’s actual bonus.
|
•
|
the performance period shall be deemed to end upon the closing of the change of control in order to determine Align’s stock price performance relative to the NASDAQ Composite index for the purpose of calculating the amount that Align has over or underperformed the NASDAQ Composite index (with the MSUs converting into shares of Align stock either being reduced from 100% (in the case of underperformance) or increased from 100% (in the case of overperformance) (the “Performance Multiplier”); and
|
•
|
Align’s stock price performance will be based on the per share value of Align’s common stock paid to its stockholders in connection with the change of control.
|
(1)
|
twice his then current annual salary;
|
(2)
|
the then current year’s target bonus, prorated for the number of days Mr. Hogan has been employed during the year; and
|
(3)
|
the greater of 150% of the then current year’s target bonus or the prior year’s actual bonus.
|
Name
|
|
Type of Payment
|
|
Payments Upon
Involuntary or
Good
Reason Termination
Unrelated to
Change
of Control
|
|
Payments Upon
Involuntary or
Good Reason
Termination
Related to a
Change of
Control
|
|
Change of
Control Only
|
||||
John F. Morici
|
|
Severance Payment
|
|
$
|
428,000
|
|
|
$
|
941,600
|
|
|
N/A
|
|
|
Equity
|
|
|
|
|
|
|
||||
|
|
RSUs
|
|
$
|
—
|
|
|
$
|
6,092,005
|
|
|
N/A
|
|
|
MSUs
|
|
$
|
—
|
|
|
$
|
3,110,660
|
|
|
|
|
|
Health and Welfare Benefits
|
|
$
|
—
|
|
|
$
|
27,485
|
|
|
N/A
|
|
|
Total
|
|
$
|
428,000
|
|
|
$
|
10,171,750
|
|
|
|
Lynn Pendergrass
|
|
Severance Payment
(1)
|
|
$
|
450,000
|
|
|
$
|
990,000
|
|
|
N/A
|
|
|
Equity
|
|
|
|
|
|
|
||||
|
|
RSUs
|
|
$
|
—
|
|
|
$
|
2,607,955
|
|
|
N/A
|
|
|
Health and Welfare Benefits
|
|
$
|
—
|
|
|
$
|
16,084
|
|
|
N/A
|
|
|
Total
|
|
$
|
450,000
|
|
|
$
|
3,614,039
|
|
|
|
(i)
|
the then current annual base salary;
|
(ii)
|
the then current year’s target bonus, prorated for the number of days such executive has been employed during the year; and
|
(iii)
|
the greater of the then current year’s target bonus or the prior year’s actual bonus.
|
|
||||||||||||||
Name
|
|
Type of Payment
|
|
Payments Upon
Involuntary or Good
Reason Termination
Unrelated to Change
of Control
|
|
Payments Upon
Involuntary or
Good Reason
Termination
Related to a
Change of
Control
|
|
Change of
Control Only
|
||||||
Stuart Hockridge
|
|
Severance Payment
|
|
$
|
829,400
|
|
|
$
|
829,400
|
|
|
$
|
—
|
|
|
|
Equity
|
|
|
|
|
|
|
||||||
|
|
RSUs
|
|
$
|
1,797,184
|
|
|
$
|
5,991,353
|
|
|
$
|
1,797,184
|
|
|
|
MSUs
|
|
$
|
767,012
|
|
|
$
|
2,666,280
|
|
|
$
|
767,012
|
|
|
|
Health and Welfare Benefits
|
|
$
|
16,846
|
|
|
$
|
16,846
|
|
|
$
|
16,846
|
|
|
|
Total
|
|
$
|
3,410,442
|
|
|
$
|
9,503,879
|
|
|
$
|
2,581,042
|
|
|
|
|
|
|
|
|
|
|
||||||
Raphael S. Pascaud
|
|
Severance Payment
|
|
$
|
1,045,000
|
|
|
$
|
1,045,000
|
|
|
$
|
—
|
|
|
|
Equity
|
|
|
|
|
|
|
||||||
|
|
RSUs
|
|
$
|
3,587,702
|
|
|
$
|
6,853,895
|
|
|
$
|
3,587,702
|
|
|
|
MSUs
|
|
$
|
7,279,310
|
|
|
$
|
11,376,128
|
|
|
$
|
7,279,310
|
|
|
|
Total
|
|
$
|
11,912,012
|
|
|
$
|
19,275,023
|
|
|
$
|
10,867,012
|
|
|
|
|
|
|
|
|
|
|
(i)
|
if Align under-performs the NASDAQ Composite index, the percentage at which the MSUs convert into shares of Align stock will be reduced from 100% at a rate of two to one (for 2015 or 2016 grants) or at a rate of three to one (for grants made in 2017); and
|
(ii)
|
if Align outperforms the index, the percentage at which the MSUs convert to shares will be increased from 100% at a rate of two to one (for 2015 or 2016 grants) or at a rate of three to one (for grants made in 2017).
|
(i)
|
the then current annual base salary;
|
(ii)
|
the then current year’s target bonus, prorated for the number of days such executive has been employed during the year; and
|
(iii)
|
the greater of the then current year’s target bonus or the prior year’s actual bonus.
|
•
|
the performance period shall be deemed to end upon the closing of the change of control in order to determine Align’s stock price performance relative to the NASDAQ Composite index for the purpose of calculating the amount that Align has over or underperformed the NASDAQ Composite index (with the MSUs converting into shares of Align stock either being reduced from 100% (in the case of underperformance) or increased from 100% (in the case of overperformance) at a rate of two to one (for 2015 or 2016 grants) or at a rate of three to one (for grants made in 2017)(the “Performance Multiplier”); and
|
•
|
Align’s stock price performance will be based on the per share value of the Company’s common stock paid to its stockholders in connection with the change of control.
|
(i)
|
executive’s then current annual base salary;
|
(ii)
|
executive’s then current year’s target bonus prorated for the number of days employed during the year, and
|
(iii)
|
the greater of the then current year’s target bonus or the prior year’s actual bonus.
|
•
|
unauthorized use or disclosure of the confidential information or trade secrets of Align;
|
•
|
any breach of the employment agreement or the Employee Proprietary Information and Inventions Agreement between the executive and Align;
|
•
|
conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any state thereof;
|
•
|
misappropriation of the assets of Align or any act of fraud or embezzlement by the executive, or any act of dishonesty by the executive in connection with the performance of his or her duties for Align that adversely affects its business or affairs;
|
•
|
intentional misconduct; or
|
•
|
the executive’s failure to satisfactorily perform his or her duties after the executive received written notice of such failure and was provided at least thirty (30) days to cure such failure.
|
•
|
the executive’s position, authority or responsibilities being significantly reduced;
|
•
|
the executive being asked to relocate his principal place of employment such that the commuting distance from his or her residence prior to the change of control is increased by over thirty-five (35) miles;
|
•
|
the executive’s annual base salary or bonus being reduced; or
|
•
|
the executive’s benefits being materially reduced.
|
•
|
a sale of all or substantially all of Align’s assets;
|
•
|
the acquisition of more than 50% of the common stock of Align by any person or group of persons;
|
•
|
a reorganization of Align wherein the holders of common stock of Align receive stock in another company (other than a subsidiary of Align), a merger of Align with another company wherein there is a 50% or greater change in the ownership of the common stock of Align as a result of such merger, or any other transaction in which Align (other than as the parent corporation) is consolidated for federal income tax purposes or is eligible to be consolidated for federal income tax purposes with another corporation; or
|
•
|
in the event that the common stock is traded on an established securities market, a public announcement that any person has acquired or has the right to acquire beneficial ownership of more than 50% of the then outstanding common stock, or the commencement of or public announcement of an intention to make a tender offer or exchange offer for more than 50% of the then outstanding common stock.
|
•
|
each stockholder known by us to own beneficially more than 5% of our common stock;
|
•
|
each of our executive officers named in the summary compensation table on page 39 of this proxy statement;
|
•
|
each of our directors; and
|
•
|
all of our directors and executive officers as a group.
|
Name and Address
|
|
Number of
Outstanding
Shares
Beneficially
Owned
|
|
Number of
Shares
Underlying
Options
Exercisable
and RSUs
vesting on or
before May 20,
2018
(1)
|
|
Total Shares
Beneficially
Owned
|
|
Percentage of
Outstanding
Shares
Beneficially
Owned
|
||||
The Vanguard Group
(2)
|
|
7,616,631
|
|
|
—
|
|
|
7,616,631
|
|
|
9.5
|
%
|
Gordon Gund, family members and affiliated entities
(3)
|
|
6,228,087
|
|
|
—
|
|
|
6,228,087
|
|
|
7.8
|
%
|
BlackRock, Inc.
(4)
|
|
5,153,023
|
|
|
—
|
|
|
5,153,023
|
|
|
6.4
|
%
|
Joseph M. Hogan
(5)
|
|
51,711
|
|
|
—
|
|
|
51,711
|
|
|
*
|
|
John F. Morici
|
|
2,919
|
|
|
—
|
|
|
2,919
|
|
|
*
|
|
Stuart Hockridge
|
|
4,856
|
|
|
—
|
|
|
4,856
|
|
|
*
|
|
Raphael S. Pascaud
|
|
35,587
|
|
|
—
|
|
|
35,587
|
|
|
*
|
|
Rebecca L Pendergrass
|
|
—
|
|
|
3,913
|
|
|
3,913
|
|
|
*
|
|
Kevin J. Dallas
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Joseph Lacob
|
|
296,264
|
|
|
13,115
|
|
|
309,379
|
|
|
*
|
|
C. Raymond Larkin, Jr.
|
|
82,922
|
|
|
19,344
|
|
|
102,266
|
|
|
*
|
|
George J. Morrow
|
|
51,400
|
|
|
3,115
|
|
|
54,515
|
|
|
*
|
|
Thomas M. Prescott
|
|
239,324
|
|
|
3,115
|
|
|
242,439
|
|
|
*
|
|
Andrea L. Saia
|
|
18,133
|
|
|
3,115
|
|
|
21,248
|
|
|
*
|
|
Greg J. Santora
|
|
19,000
|
|
|
3,115
|
|
|
22,115
|
|
|
*
|
|
Susan E. Siegel
|
|
814
|
|
|
3,115
|
|
|
3,929
|
|
|
*
|
|
Warren S. Thaler
(7)
|
|
135,984
|
|
|
3,115
|
|
|
139,099
|
|
|
*
|
|
All current executive officers and directors as a group (22 persons)
|
|
1,088,367
|
|
|
55,062
|
|
|
1,143,429
|
|
|
1.4
|
%
|
*
|
Less than 1%
|
(1)
|
Except as otherwise set forth in the footnotes below, represents shares of common stock that can be acquired upon the exercise of stock options and vesting of restricted stock units on or before May 20, 2018. This column includes the full amount of restricted stock units that will vest on or before May 20, 2018, although each executive officer will actually receive the number of shares that have vested net of the number of shares necessary to cover any applicable withholding taxes which Align will pay on their behalf.
|
(2)
|
Based on a filing with the Securities and Exchange Commission on Schedule 13G/A on February 12, 2018, indicating beneficial ownership as of December 31, 2017. Includes shares held by direct and indirect subsidiaries. The mailing address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
|
(3)
|
Based on a filing with the Securities and Exchange Commission on Schedule 13G/A on February 8, 2018, indicating beneficial ownership as of December 31, 2017. Includes shares held in trust for immediate family members and shares held by immediate family members. The mailing address for Gordon Gund is P.O. Box 3599, Battlecreek, Michigan 49016-3599.
|
(4)
|
Based on a filing with the Securities and Exchange Commission on Schedule 13G/A, on February 8, 2018, indicating beneficial ownership as of December 31, 2017. Includes shares held by direct and indirect subsidiaries. The mailing address for BlackRock, Inc. is 55 East 52
nd
Street, New York, New York 10055.
|
(5)
|
Includes 1,500 shares held by a member of the household.
|
(6)
|
Includes 47,400 shares held by Mr. Thaler and 88,584 shares held by The Thaler Family Trust, for the benefit of family members, as to which Mr. Thaler disclaims beneficial ownership.
|
•
|
you are a director or officer of Align and you desire to enter into a transaction with a Related Party (as defined above); or
|
•
|
you are an employee (other than a director or officer) and you desire to enter into a transaction with a Related Party that the Chief Financial Officer (in consultation with legal counsel) has deemed to be material to Align and is reportable under the rules and regulations of the Exchange Act,
|
THE BOARD OF
|
ALIGN TECHNOLOGY, INC.
|
|
April 5, 2018
|
Revenue
|
$
|
1,473,413
|
|
Foreign Exchange
|
(18,700
|
)
|
|
Adjusted Revenue for Company Multiplier
|
$
|
1,454,713
|
|
|
|
||
Operating Income
|
$
|
353,611
|
|
Foreign Exchange
|
(9,400
|
)
|
|
Adjusted Operating Income for Company Multiplier
|
$
|
344,211
|
|
1 Year Align Technology Chart |
1 Month Align Technology Chart |
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