def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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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 Pursuant to §240.14a-12 |
eResearchTechnology, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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and identify the filing for which the offsetting fee was paid previously. Identify the
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eResearchTechnology,
Inc.
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held April 28,
2010
Important Notice Regarding the
Availability of Proxy Materials for the
Annual Meeting of Stockholders
to Be Held on April 28, 2010
The Notice of Annual Meeting,
proxy statement, annual report and proxy card
are available at
http://proxydocs.com/eres.
To the stockholders of eResearchTechnology, Inc.:
We will hold our annual meeting of stockholders at our executive
offices located at 1818 Market Street, Philadelphia, PA 19103,
at 10:00 A.M. on April 28, 2010 for the following
purposes:
1. To elect three directors to serve terms of three years
and until their successors are elected.
2. To ratify the selection by our audit committee of our
board of directors of the firm of KPMG LLP as our independent
registered public accountants for 2010.
3. To transact any other business that may properly come
before the meeting or any adjournment, postponement or
continuation thereof.
Stockholders of record as of the close of business on
March 3, 2010 are entitled to notice of and to vote at the
meeting.
We are mailing our 2009 annual report, which is not part of our
proxy soliciting material, to stockholders of record together
with this notice.
It is important that you vote your shares at our annual meeting.
Whether or not you plan to attend the meeting, please complete,
date and sign the enclosed proxy card and return it in the
enclosed envelope. Your proxy may be revoked at any time prior
to the time it is voted.
By order of the Board of Directors,
JOEL MORGANROTH, MD
Chairman of the Board of Directors
March 5, 2010
Philadelphia, Pennsylvania
eResearchTechnology,
Inc.
PROXY STATEMENT
These proxy materials are furnished in connection with
solicitation of proxies by the board of directors (the
board of directors or the board) of
eResearchTechnology, Inc., a Delaware corporation, for the
annual meeting of stockholders to be held at 10:00 A.M. on
Wednesday, April 28, 2010 at our executive offices located
at 1818 Market Street, Philadelphia, Pennsylvania 19103, and any
adjournment, postponement or continuation of such meeting. These
proxy materials are being mailed to stockholders on or about
March 17, 2010. Unless the context indicates otherwise, all
references in this proxy statement to we,
us, our, ERT or the
Company mean eResearchTechnology, Inc.
CONTENTS
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OUR
ANNUAL MEETING
What
is the purpose of our annual meeting?
At our annual meeting, stockholders will act upon the matters
outlined in the notice of meeting on the cover page of this
proxy statement, including:
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the election of three directors; and
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the ratification of the selection by our audit committee of our
board of directors of the firm of KPMG LLP as independent
registered public accountants for 2010.
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In addition, our management will report on our performance
during 2009 and respond to appropriate questions from
stockholders.
What
should I do now?
You should first read this proxy statement carefully. After you
have decided how you wish to vote your shares, you should
complete, properly sign and return the accompanying proxy card
to us in the enclosed postage-paid return envelope. The proxies
will vote your shares as you direct. If your shares are
registered in your name, you may also attend our annual meeting
and either deliver your completed proxy in person or vote in
person. If your shares are held in street name and
you wish to vote them at the annual meeting, you will need to
obtain a signed proxy from the nominee in whose name your shares
are registered.
VOTING
Who is
entitled to vote at our annual meeting?
Holders of record of our common stock at the close of business
on the record date, March 3, 2010, are entitled to receive
notice of and to vote at our annual meeting, and any
adjournment, postponement or continuation of our annual meeting.
A complete alphabetical list of the record holders of our common
stock entitled to vote at our annual meeting will be available
for inspection at our principal executive offices during normal
business hours for any purpose germane to our annual meeting for
a period of ten days prior to the date of our annual meeting. As
of the record date, there were 48,788,076 outstanding shares of
our common stock.
What
are the voting rights of our stockholders?
Each share of common stock outstanding as of the record date is
entitled to one vote on each matter that may be brought before
the annual meeting.
Who
can attend our annual meeting?
All stockholders as of the record date, or their duly appointed
proxies, may attend our annual meeting. Even if you currently
plan to attend our annual meeting, we recommend that you also
submit your proxy so that your vote will be counted if you later
decide not to attend, or are unable to attend, our annual
meeting.
If you hold your shares in street name, that is,
through a broker or other nominee, you will need to bring a copy
of a brokerage statement reflecting your stock ownership as of
the record date and check in at the registration desk at our
annual meeting.
What
constitutes a quorum?
The presence at our annual meeting, in person or by proxy, of
the holders of a majority of the total votes entitled to be cast
by the holders of our common stock outstanding on the record
date on a particular issue will constitute a quorum for the
purpose of considering such matter. Proxies received but marked
as abstentions and broker non-votes will be included in the
calculation of the number of shares present at our annual
meeting.
1
How do
I vote in person?
If your shares are registered in your name and you attend our
annual meeting and wish to vote in person, we will provide you
with a ballot before voting commences at our annual meeting.
How do
I vote if my shares are held in street name?
If you are not a stockholder of record, but you are a
beneficial owner, meaning that your shares are
registered in a name other than your own, such as a
brokers name, you must either direct the holder of record
of your shares as to how you want to vote your shares or obtain
a form of proxy from the holder of record that you may then vote.
What
if I fail to instruct my broker?
Brokers normally have discretion to vote on routine matters,
such as ratification of the appointment of independent
registered public accounting firms, but not on non-routine
matters. Brokers who are members of the New York Stock Exchange
do not have discretionary authority to vote in director
elections. We encourage you to provide voting instructions to
your broker by completing the voting instruction card or proxy
that it sends to you.
May I
change my vote after I return my proxy card?
Yes. Even after you have returned your proxy card, you may
change your vote at any time before your proxy is exercised by
filing either a notice of revocation or a duly executed proxy
bearing a later date with our secretary. The proxy holders will
not vote your proxy if you attend our annual meeting in person
and request the revocation of your proxy, although your
attendance at our annual meeting will not by itself revoke your
proxy.
What
are the recommendations of our board of directors?
Unless you provide contrary instructions on your proxy card, the
persons named as proxy holders on the proxy card will vote in
accordance with the recommendations of our board of directors.
Our board of directors recommends that you vote for the election
of our three nominees for director and for the ratification of
the selection by our audit committee of our board of directors
of the firm of KPMG LLP as independent registered public
accountants for 2010.
What
vote is required?
Election of Directors. Election of directors
will be by plurality of the votes cast. Accordingly, the three
candidates who receive the highest number of For
votes cast by the holders of our common stock will be elected as
directors. A properly executed proxy card marked Withhold
Authority will not be voted with respect to the nominee or
nominees so indicated although the votes represented by the
proxy card will be counted for the purposes of determining
whether a quorum is present. Our certificate of incorporation
and by-laws do not authorize cumulative voting in the election
of directors.
Other Matters. Any other proposal, including
the proposal to ratify the appointment of KPMG LLP as our
independent registered public accountants for 2010, will require
the affirmative vote of a majority of the votes that the holders
of shares present in person or by proxy are entitled to cast on
such proposal.
Abstentions and shares held by brokers and nominees as to which
we have not received voting instructions from the beneficial
owner of, or other person entitled to vote, such shares and as
to which the broker or nominee does not have discretionary
voting power, i.e., broker non-votes, are considered shares of
outstanding stock entitled to vote and such shares are counted
in determining whether a quorum or a majority is present. An
abstention or a broker non-vote will therefore have the
practical effect of voting against approval of any matter that
properly comes before our annual meeting other than the election
of directors because each abstention or broker non-vote will not
represent a vote for approval of the matter.
2
Who
will pay the costs of soliciting proxies on behalf of our board
of directors?
We will pay the entire cost of this proxy solicitation,
including preparing and mailing this proxy statement on behalf
of our board of directors. In addition, we may make arrangements
with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy materials to the
beneficial owners of stock, and we may reimburse expenses for
doing so. Our directors, officers or regular employees may
solicit proxies in person or by telephone, but will not receive
additional compensation for doing so.
STOCK
OWNERSHIP
The Stock
Ownership of Our Principal Stockholders, Directors and Executive
Officers
The following table shows the amount and percentage, as of
March 3, 2010, of our common stock that is beneficially
owned by (i) each of our directors, director nominees and
named executive officers; (ii) our directors and executive
officers as a group; and (iii) each person whom we know to
own beneficially more than 5% of our common stock.
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Shares
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Beneficially
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Percentage
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Name of Beneficial Owner
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Owned
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Owned
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FMR LLC(1)
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6,069,402
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12.4
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Blum Capital Partners, L.P.(2)
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5,631,806
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11.5
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Columbia Wanger Asset Management, L.P.(3)
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4,886,800
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10.0
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BlackRock Inc.(4)
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3,432,572
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7.0
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Joel Morganroth, MD(5)(6)
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1,463,161
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3.0
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Michael J. McKelvey, Ph.D(5)(6)
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341,581
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*
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Jeffrey S. Litwin, MD(5)(6)
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320,415
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*
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Stephen S. Phillips(5)
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305,860
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Amy Furlong(5)(6)
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139,005
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Sheldon M. Bonovitz(5)
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103,832
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Elam M. Hitchner(5)
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84,500
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Gerald A. Faich, MD, MPH(5)
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77,000
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Keith D. Schneck(5)(6)
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63,264
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Stephen M. Scheppmann(5)
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52,000
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Michael F. DeMane(5)
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32,000
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All directors and executive officers as a group
(16 persons)(5)
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3,722,729
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7.3
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Less than 1.0% |
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The information presented in the table and in this footnote is
as reported in a Schedule 13G/A filed with the Securities and
Exchange Commission on February 16, 2010 by FMR LLC
(FMR), Edward C. Johnson 3d (Johnson),
Fidelity Management & Research Company
(Fidelity) and Fidelity Advisor Small Cap Fund
(Fidelity Small Cap), all located at 82 Devonshire
Street, Boston, MA 02109. FMR is a parent holding company.
Fidelity, a wholly-owned subsidiary of FMR and an investment
adviser registered under Section 203 of the Investment
Advisers Act of 1940, is the beneficial owner of
5,135,113 shares of ERTs common stock at
December 31, 2009, of which Fidelity Small Cap, an
investment company registered under the Investment Company Act
of 1940, held 3,600,000 shares. FMR and Johnson, through
its control of Fidelity, each has sole power to dispose of the
5,135,113 shares owned by Fidelitys funds. Pyramis
Global Advisors Trust Company (Pyramis),
located at 900 Salem Street, Smithfield, RI 02917, an indirect
wholly-owned subsidiary of FMR, is the beneficial owner of
934,289 shares of ERTs common stock, of which Johnson
and FMR, through its control of Pyramis, each has sole
dispositive power over 934,289 shares and sole power to
vote or to direct the voting of 863,219 shares. |
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Blum Capital Partners, L.P. (Blum L.P.) is located
at 909 Montgomery Street, Suite 400, San Francisco,
California 94133. The information presented in the table and in
this footnote is as reported in a Schedule 13D/A filed with
the Securities and Exchange Commission on January 5, 2010
by Blum Capital Partners, L.P., a California limited
partnership; Richard C. Blum & Associates, Inc., a
California corporation; Blum Strategic GP II, L.L.C., a Delaware
limited liability company; Blum Strategic GP III, L.L.C., a
Delaware limited liability company; Blum Strategic GP III, L.P.,
a Delaware limited liability partnership; Blum Strategic GP IV,
L.L.C., a Delaware limited liability company; Blum Strategic GP
IV, L.P., a Delaware limited liability partnership; and
Saddlepoint Partners GP, L.L.C., a Delaware limited liability
company. Blum L.P.s principal business is acting as
general partner for investment partnerships and providing
investment advisory services. Blum L.P. is an investment advisor
registered with the Securities and Exchange Commission. |
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Columbia Wanger Asset Management, L.P. (Columbia) is
located at 227 West Monroe Street, Suite 3000,
Chicago, Illinois 60606. The information presented in the table
and in this footnote is as reported in a Schedule 13G/A
filed with the Securities and Exchange Commission on
February 9, 2010 by Columbia. |
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BlackRock Inc. (BlackRock) is located at 40 East
52nd Street, New York, New York 10022. This information is as
reported by BlackRock, BlackRock Advisors (UK) Limited,
BlackRock Institutional Trust Company, N.A., BlackRock
Fund Advisors, BlackRock Investment Management, LLC and
BlackRock International LTd in a Schedule 13G/A filed with
the Securities and Exchange Commission on January 29, 2010. |
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Includes the following shares issuable with respect to options
granted pursuant to our 1996 Stock Option Plan and our Amended
and Restated 2003 Equity Incentive Plan, which are currently
exercisable or exercisable within 60 days after
March 3, 2010: |
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Name
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Number of options
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Joel Morganroth, MD
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242,500
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Michael J. McKelvey, Ph.D.
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266,250
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Jeffrey S. Litwin, MD
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242,251
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Stephen S. Phillips
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122,000
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Amy Furlong
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124,625
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Sheldon M. Bonovitz
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97,000
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Elam M. Hitchner
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77,000
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Gerald A. Faich, MD, MPH
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67,000
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Stephen M. Scheppmann
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52,000
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Keith D. Schneck
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43,750
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Michael F. DeMane
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32,000
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All directors and executive officers as a group
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1,909,766
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Includes the following shares of restricted stock which are
subject to forfeiture pursuant to restrictions which will lapse
in four equal annual installments beginning February 26,
2011: |
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Name
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Number of shares
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Joel Morganroth, MD
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20,661
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Michael J. McKelvey, Ph.D.
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55,331
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Jeffrey S. Litwin, MD
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17,414
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Amy Furlong
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14,380
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Keith D. Schneck
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18,514
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All directors and executive officers as a group
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172,204
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Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, or
the Exchange Act, requires that our officers and directors, as
well as persons who own 10% or more of a class of our equity
securities, file reports of their ownership of our securities,
as well as statements of changes in such ownership, with us and
the Securities and Exchange Commission. Based upon written
representations we received from our officers, directors and 10%
or greater
4
stockholders, and our review of the statements of beneficial
ownership changes our officers, directors and 10% or greater
stockholders filed during 2009, we believe that all such filings
required during 2009 were made on a timely basis except that
each of Sheldon M. Bonovitz, Michael F. DeMane, Gerald A. Faich,
MD, MPH, Elam M. Hitchner, Stephen S. Phillips and Stephen M.
Scheppmann filed one Form 4 to report one option grant two
days late.
ELECTION
OF DIRECTORS
(Proposal No. 1)
Introduction
Our board of directors currently consists of eight members. Each
director is elected for a three-year term and until the
directors successor has been duly elected. The current
three-year terms of our directors expire in the years 2010, 2011
and 2012, respectively.
Nominating
Procedures
In accordance with the policy of our governance and nominating
committee, a stockholder desiring to propose a candidate for our
board of directors to our governance and nominating committee
should submit a written recommendation, together with
biographical information concerning the individual, to our
chairman of our governance and nominating committee at
eResearchTechnology, Inc., 1818 Market Street, Philadelphia, PA
19103. While recommendations may be submitted for consideration
at any time, we request that recommendations be received prior
to November 15 in any year for consideration in connection with
the nomination and election of directors at our next annual
meeting of stockholders. Once our governance and nominating
committee has identified a prospective nominee, including
candidates proposed by stockholders, it makes an initial
determination as to whether to conduct a full evaluation of the
candidate. This initial determination is based on whatever
information is provided to our governance and nominating
committee with the recommendation of the prospective candidate,
as well as our governance and nominating committees own
knowledge of the prospective candidate, which may be
supplemented by inquiries to the person making the
recommendation or others. The preliminary determination is based
primarily on the need for additional board members to fill
vacancies or expand the size of our board and the likelihood
that the prospective nominee can satisfy the evaluation factors
described below. If our governance and nominating committee
determines, in consultation with the chairman of our board and
other board members as appropriate, that additional
consideration is warranted, it will then evaluate the
prospective nominee against the standards and qualifications it
has established, including:
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Except as noted below, the director candidate must be
independent in accordance with Rule 5605(a)(2) of The
Nasdaq Stock Market, Inc. (Nasdaq) listing standards.
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Our board of directors will consider appointing a limited number
of individuals who are not independent to serve as directors. We
currently have, and historically have had, directors who are or
were not independent in accordance with Rule 5605(a)(2) of
the Nasdaq listing standards. The consideration of these
individuals will include consideration of the items listed below
while also maintaining an appropriate level of management
service on our board of directors.
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The candidate must have business experience that includes
leading or occupying a senior position in the operations of a
significant business or occupying a senior executive or advisory
position in business strategy, investing or mergers and
acquisitions of a significant business. While not required,
experience in health care, particularly pharmaceuticals,
biotechnology or medical devices, is preferred.
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The candidate must have prior board experience. While public
company board experience is not required, it is highly preferred.
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The candidate must have an excellent business and personal
reputation for accomplishment and integrity. We prefer that our
candidates have personal characteristics that include a
deliberative style and being a good listener, articulate,
direct, succinct and able to accept/respect other board
members opinions.
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The candidate must have personal and business references from
people upon whose recommendations our governance and nominating
committee can rely.
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Candidates must be able to commit adequate time to our board of
directors and our committees to attend at least 75% of board and
committee meetings in person and to be a significant contributor
to each. At a minimum, this means, on average, not less than one
full day every month for ordinary matters, a full day for
regularly scheduled quarterly meetings and occasional
unscheduled hours of accessibility. Living or working within 90
minutes of Philadelphia is not required but is highly preferred.
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Our board of directors will also consider, in its choice of
candidates, the need for specific expertise needed for service
with its various committees such as the governance and
nominating, compensation and audit committees. Such expertise
would include experience serving on such committees on other
boards of directors or specific experience with the substantive
responsibilities of those committees.
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Our governance and nominating committee also considers such
other relevant factors as it deems appropriate, including the
current composition of our boards committees, expertise,
diversity and the evaluations of other prospective nominees. The
committee does not have a separate policy with respect to its
consideration of each of these relevant factors but deems them
collectively as valuable criteria in the nominating process.
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In connection with the evaluation of prospective nominees, our
governance and nominating committee determines whether to
interview the prospective nominee. If warranted, one or more
members of our governance and nominating committee, and others
as appropriate, interview prospective nominees in person or by
telephone. After completing this evaluation and interview, our
governance and nominating committee makes a recommendation to
the full board as to the persons who should be nominated by our
board, and our board determines the nominees after considering
the recommendation and report of our governance and nominating
committee. We do not currently employ an executive search firm,
or pay a fee to any other third party, to locate qualified
candidates for director positions.
In addition to evaluating nominees to fill vacancies, the
governance and nominating committee annually reviews incumbent
directors whose terms are expiring. The governance and
nominating committee solicits feedback from members of the board
and members of management in making its recommendations
regarding board nominees, whether they be incumbent directors or
new nominees.
On an annual basis, our governance and nominating committee
undergoes a self evaluation to determine its effectiveness in
nominating candidates using the above standards and
qualifications.
Action By
Our Governance and Nominating Committee
Our governance and nominating committee met on December 8,
2009 for the purpose of evaluating the performance and
qualifications of the members of our board of directors and
nominating candidates for election as directors by our
stockholders at our annual meeting. After considering
performance on our board of directors during 2009, personal
qualifications and other individual attributes, our governance
and nominating committee nominated, and our board of directors
thereafter accepted and approved, the individuals named below.
Our governance and nominating committee considered the diversity
of nominees when evaluating its nominations. Specifically, our
governance and nominating committee believes that the diverse
experience, skills and insights each nominee brings to our board
has enhanced our ability to compete successfully in the past.
Our governance and nominating committee expects that the mix of
experience possessed by the nominees will help us succeed in the
future. For additional information regarding the professional
experience of our nominees, as well as our directors continuing
in office, please refer to the biographies below.
Candidates
for Election
Three directors are to be elected at our annual meeting. The
nominees are Sheldon M. Bonovitz, Gerald A. Faich, MD, MPH and
Elam M. Hitchner, all of whom currently serve on our board.
Unless otherwise instructed, the proxies solicited by our board
of directors will be voted for the election of the three
nominees.
6
In the event any nominee is unable or declines to serve as a
director at the time of our annual meeting, the proxies intend
to vote for a substitute nominee designated by our board of
directors. We have no reason to believe that any of the nominees
are unable or will decline to serve as a director if elected.
Any vacancy occurring on our board of directors for any reason
may be filled by a majority of our directors then in office
until the expiration of the term of the class of directors in
which the vacancy exists.
OUR BOARD
OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION OF MR. BONOVITZ, DR. FAICH AND MR.
HITCHNER.
The names of our nominees for director and directors who will
continue in office after our annual meeting until the expiration
of their respective terms, together with certain information
regarding them, are as follows:
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Year of
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Age As
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Expiration of
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Name
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of March 1, 2010
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Term as Director
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Nominees for Election
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Sheldon M. Bonovitz
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2013
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Gerald A. Faich, MD, MPH
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2013
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Elam M. Hitchner
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2013
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Directors Continuing in Office
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Michael F. DeMane
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2011
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Michael J. McKelvey, Ph.D
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2012
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Joel Morganroth, MD
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2011
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Stephen S. Phillips
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2011
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Stephen M. Scheppmann
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2012
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Mr. Bonovitz has been nominated by our board of
directors, with the recommendation of our governance and
nominating committee, to serve as a member of our board for a
three-year term beginning in April 2010. Mr. Bonovitz has
served on our board of directors since 1999. Mr. Bonovitz
is Chairman Emeritus of and counsel to Duane Morris LLP, having
stepped down as Chairman and Chief Executive Officer in January
2008 after serving ten years in those positions.
Mr. Bonovitz has been a director of Comcast Corporation
since March 1979. In addition to serving as a director of
Comcast Corporation, he currently serves on the advisory boards
of several privately-held companies and on the Board of Trustees
of The Curtis Institute of Music, The Philadelphia Museum of Art
and The Barnes Foundation. He also serves on the Board of The
Free Library of Philadelphia Foundation and as a Trustee of the
Christian and Mary Lindbach Foundation and The Dolfinger-McMahon
Foundation. He is President and a Trustee of the Foundation for
Self-Taught American Artists and Chairman of the Board of
Philadelphias Children First Fund. Mr. Bonovitz
brings to ERT his broad legal experience and leadership skills
as CEO and Chairman of Duane Morris LLP, an international law
firm, and a director of Comcast Corporation, a public company
and leading provider of entertainment, information and
communication products and services, as well as directorships
held for many other private companies over his career. For these
reasons, in addition to his past service as a director of ERT
and the fact that he is an independent director,
Mr. Bonovitz has been nominated to serve an additional term
as director on our board.
Dr. Faich has been nominated by our board of
directors, with the recommendation of our governance and
nominating committee, to serve as a member of our board for a
three-year term beginning in April 2010. Dr. Faich has
served on our board of directors since 2004. Dr. Faich has
served as Senior Vice President of UBC Epidemiology and Risk
Management since June 2005. He served as the President of
Pharmaceutical Safety Assessments, a consulting firm, from 1994
until June 2009. Dr. Faich co-chaired the original CIOMS
International Adverse Reaction Working Group and was a founding
board member of the International Society of
Pharmacoepidemiology. Dr. Faich is a Fellow of the American
Colleges of Physicians, Preventive Medicine and Epidemiology and
has authored over 90 scientific papers and received numerous
awards. He is currently a Senior Scholar at the Jefferson
Medical University. Dr. Faich brings to ERT extensive
experience in business, preventive medicine,
Pharmacoepidemiology and FDA-regulated research. For these
reasons, in addition to his past service as a director
7
of ERT and the fact that he is an independent director,
Dr. Faich has been nominated to serve an additional term as
director on our board.
Mr. Hitchner has been nominated by our board of
directors, with the recommendation of our governance and
nominating committee, to serve as a member of our board for a
three-year term beginning in April 2010. Mr. Hitchner has
served on our board of directors since 2004. Mr. Hitchner
was a partner in the law firm of Pepper Hamilton LLP from May
1992 to June 1999, and returned to the firm in January 2001 as a
partner and, subsequently, counsel through 2004. Commencing in
2005, Mr. Hitchner began providing consulting services to
the firm. Mr. Hitchner is also a director of Destination
Maternity Corporation, for which he has served on the audit
committee since 1993, including as chairman of that committee
since 2000. Mr. Hitchner brings to ERT his broad legal
experience and leadership skills as partner and legal counselor
of Pepper Hamilton LLP, an international law firm, and director,
non-executive chairman and audit committee member of Destination
Maternity Corporation, a public company and leading designer and
retailer of maternity apparel. For these reasons, in addition to
his past service as a director of ERT and the fact that he is an
independent director, Mr. Hitchner has been nominated to
serve an additional term as director on our board.
Mr. DeMane has served on our board of directors
since July 2008. Mr. DeMane has served as Senior Advisor
with Thomas, McNerney & Partners, a health care
venture capital firm, since April 2009. Mr. DeMane served
as Chief Operating Officer of Medtronic, Inc. from August 2007
to May 2008. Prior to that, Mr. DeMane served at Medtronic
as Senior Vice President and President of Europe, Canada, Latin
America and Emerging Markets from August 2005 to August 2007 and
Senior Vice President and President, Spinal, ENT and Navigation
from February 2002 to August 2005. Mr. DeMane currently
serves on the boards of Denali Medical, Inc. and Torax Medical,
Inc., both medical device technology companies. Mr. DeMane
brings to ERT his extensive experience as a senior executive in
the health care industry, including his service as Chief
Operating Officer and Senior Vice President and President of
Europe, Canada, Latin America and Emerging Markets for
Medtronic, Inc., a leading medical technology company. For this
reason, in addition to his past service as a director of ERT and
the fact that he is an independent director, Mr. DeMane
should continue to serve as one of our directors.
Dr. McKelvey has served as our President and Chief
Executive Officer since June 2006 and has served on our board of
directors since July 2006. Prior to joining us,
Dr. McKelvey was employed for five years by PAREXEL
International, one of the largest biopharmaceutical outsourcing
organizations in the world, where he served as Corporate Senior
Vice President, Clinical Research Services. Dr. McKelvey
brings to ERT key leadership experience for one of the largest
biopharmaceutical outsourcing organizations in the world. For
this reason, in addition to his past service as a director and
our Chief Executive Officer, Dr. McKelvey should continue
to serve as one of our directors.
Dr. Morganroth has served as the chairman of our
board of directors since 1999 and a member of our board of
directors since 1997. He has served as our Chief Scientific
Officer since April 2006. Prior to that, he served as our Chief
Scientist from March 2001 to December 2005 and our Chief
Executive Officer from 1993 to March 2001. In addition,
Dr. Morganroth has consulted for us since 1977.
Dr. Morganroth is a globally recognized cardiologist and
clinical researcher. Dr. Morganroth served for over ten
years as an external Medical Review Officer/Expert for the
U.S. Food and Drug Administration.
Dr. Morganroths brings to ERT his invaluable
background in the healthcare industry, clinical expertise as a
globally recognized cardiologist coupled with his position as
external Medical Review Officer/Expert for the U.S. Food
and Drug Administration. For these reasons, in addition to his
past service as chairman of our board and our Chief Scientific
Officer, Dr. Morganroth should continue to serve as one of
our directors.
Mr. Phillips has served on our board of directors
since August 2002. Mr. Phillips has served as Special
Counsel to Medtronic, Inc. since 1999. Mr. Phillips was the
Executive Vice President, General Counsel and Secretary of
Sofamor Danek Group, Inc., a manufacturer of spinal implants and
cranial navigation systems used in neurosurgery, before its
acquisition in 1999 by Medtronic. Mr. Phillips serves on
the advisory boards of several privately-held companies.
Mr. Phillips brings to ERT his extensive background as
legal counselor to businesses in the health care industry,
including his service as General Counsel of Sofamor Danek Group.
Inc., a leading medical technology company, and his membership
on the boards of a number of private European and
U.S. businesses. For these
8
reasons, in addition to his past service as a director of ERT
and the fact that he is an independent director,
Mr. Phillips should continue to serve as one of our
directors.
Mr. Scheppmann has served on our board of directors
since January 2006. Since September 2007, Mr. Scheppmann
has served as Executive Vice President and Chief Financial
Officer of Teradata Corporation, a data warehousing and
enterprise analytics company. From May 2006 until May 2007, he
served as Executive Vice President and Chief Financial Officer
for Per-Se Technologies, Inc., a healthcare business services
and information technology company and a wholly-owned subsidiary
of McKesson Corporation. From May 2000 to May 2006,
Mr. Scheppmann served as Executive Vice President and Chief
Financial Officer for NOVA Information Systems, Inc., a leading
electronics payments processing company. Mr. Scheppmann
brings to ERT his extensive experience as Chief Financial
Officer and board member for several healthcare and high-tech
businesses. For these reasons, in addition to his past service
as a director of ERT and the fact that he is an independent
director, Mr. Scheppmann should continue to serve as one of
our directors.
There are no family relationships among our directors, our
director nominees and our executive officers.
CORPORATE
GOVERNANCE MATTERS
Our Board
of Directors and Its Committees
General
Our board of directors is comprised of eight members, six of
whom are independent directors. See Director
Independence for further information. The independent
directors are as follows: Sheldon M. Bonovitz, Michael F.
DeMane, Gerald A. Faich, MD, MPH, Elam M. Hitchner, Stephen S.
Phillips and Stephen M. Scheppmann. The other two directors are
Michael J. McKelvey, Ph.D, our current President and Chief
Executive Officer, and Joel Morganroth, MD, our Chief Scientific
Officer who currently serves as chairman of our board.
Dr. Morganroth serves as the chairman of our board of
directors and Dr. McKelvey serves as our Chief Executive
Officer. Our board of directors separated these positions when
Dr. Morganroth stepped down as our Chief Executive Officer
in 2001. The board determined that Dr. Morganroth should
concentrate his efforts on board leadership and scientific
developments and vision while our Chief Executive Officer would
develop and implement our business plan. Because
Dr. Morganroth is not independent in accordance with Nasdaq
Rule 5605(a)(2), the board, at the recommendation of the
governance and nominating committee, appointed Mr. Hitchner
to the role of lead independent director effective immediately
following our annual meeting on April 28, 2010. Among other
things, our lead independent director will be responsible for
working with our chairman in support of the management,
development and effective functioning of our board. In addition,
our lead independent director will be responsible for
coordinating the board and managements roles in corporate
governance and stockholder relations and will be responsible for
relationships between management and our board. Our lead
independent director shall have specific responsibilities as set
forth by the governance and nominating committee. Our governance
and nominating committee may modify or expand our lead
independent directors duties and responsibilities from
time to time.
Our Chief Executive Officer reports directly to the board of
directors and is responsible for the
day-to-day
management of our Company, including all material risks. In
addition to reporting to our Chief Executive Officer, our Chief
Financial Officer reports directly to our audit committee and is
responsible for
day-to-day
financial and compliance risk management. Our audit committee is
responsible for oversight of financial and compliance risk
management and obtains information through discussions with our
Chief Financial Officer at each meeting. In addition, both our
board and audit committee discuss risk with our independent
registered public accountants prior to and at the conclusion of
the annual audit of financial statements. Our compensation
committee is responsible for the oversight of risk related to
our compensation plans and arrangements. Our governance and
nominating committee is responsible for oversight of risk
associated with board independence, conflicts of interest and
other corporate governance matters. Our board plays a role in
the oversight of overall risk through discussions with our Chief
Executive Officer and Chief Financial Officer at each board
meeting and through reports from the committees of our board on
the risk assessments in their respective areas of
responsibility. In addition, Dr. Morganroth and
9
Dr. McKelvey both serve on our executive management team as
well as on our board of directors. In these capacities, they
meet with our executive management team on a regular basis to
facilitate the exchange of information regarding material risks
and report such information directly to the board. Our board
believes its structure allows for a free exchange of important
information concerning the risks relevant to our Company.
Our board of directors held a total of eight meetings during
2009, and our independent directors met in executive session at
the five regularly scheduled meetings. Each director attended
more than 75% of the meetings of our board of directors and of
any committee of which he was a member. Our board has not
adopted a formal policy regarding board member attendance at our
annual meeting of stockholders, but our board highly encourages
all board members to attend such meetings. In April 2009, all
members of our board standing for reelection or continuing in
office were present at the annual meeting of stockholders.
Our board of directors has a compensation committee, an audit
committee and a governance and nominating committee.
Compensation
Committee
Our compensation committee is currently composed of three
members of our board of directors, all of whom, in the judgment
of our board, (i) are independent in accordance with
Rule 5605(a)(2) of the listing standards of Nasdaq;
(ii) are Non-employee Directors for purposes of
Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the
Exchange Act); and (iii) satisfy the
requirements of an outside director for purposes of
Section 162(m) of the Internal Revenue Code. Our
compensation committee is primarily responsible for determining
or making recommendations to our board of directors regarding
the compensation payable to our executive officers and
directors. In addition, our compensation committee is
responsible for making recommendations to our board of directors
regarding additions, deletions and alterations with respect to
the various employee benefit plans and other fringe benefits
that we provide. Our compensation committee also is primarily
responsible for administering our equity compensation plans and
making determinations or recommendations to our board of
directors with respect to awards of equity compensation to our
employees and the terms and conditions on which the equity
compensation is awarded. See Executive
Compensation Compensation Discussion and
Analysis for further information. Our compensation
committee has the responsibility and authority described in its
written charter, which has been adopted and approved by our
board of directors and made available on our website at
www.ERT.com. Our compensation committee, which currently
consists of Messrs. Bonovitz, Hitchner and Phillips, held
eight meetings during 2009. Mr. Hitchner serves as chairman
of our compensation committee.
Audit
Committee
Our audit committee, which was established in accordance with
Section 3(a)(58)(A) of the Exchange Act, is currently
composed of three members of our board of directors, all of
whom, in the judgment of our board, are independent in
accordance with Rule 5605(a)(2) of the Nasdaq listing
standards and satisfy the criteria in Rule 5605(c)(2) of
the Nasdaq listing standards. Our audit committee is primarily
responsible for engaging and approving the services performed by
our independent registered public accountants and reviewing and
evaluating our accounting principles and reporting practices and
its system of internal accounting controls. Our audit committee
has the responsibility and authority described in its written
charter, which has been adopted and approved by our board of
directors and made available on our website at
www.ERT.com. Our audit committee, which currently
consists of Messrs. DeMane, Hitchner and Scheppmann, held
nine meetings during 2009. Messrs. Scheppmann has been
determined by our board of directors to be an audit
committee financial expert as defined in Item 407 of
Regulation S-K.
Mr. Scheppmann serves as the chairman of our audit
committee.
Governance
and Nominating Committee
Our governance and nominating committee is currently composed of
four members of our board of directors, all of whom, in the
judgment of our board, are independent in accordance with
Rule 5605(a)(2) of the Nasdaq listing standards. Our
governance and nominating committee is primarily responsible for
recommending to our board governance policies for our Company,
the appropriate size, function and needs of our board to perform
that governance and qualified candidates for our board. Our
governance and nominating committee has the
10
responsibility and authority described in its written charter,
which has been adopted and approved by our board and made
available on our website at www.ERT.com. Our governance
and nominating committee, which currently consists of
Messrs. Bonovitz, Hitchner and Phillips and Dr. Faich,
held four meetings during 2009. Mr. Phillips serves as
chairman of our governance and nominating committee.
Compensation
Committee Interlocks and Insider Participation
During 2009, Messrs. Bonovitz, Hitchner and Phillips all
served on our compensation committee. None of these individuals
is a current or former officer or employee of our Company or any
of our subsidiaries, nor had they had any other relationship
requiring disclosure by us under Item 404 of
Regulation S-K.
Director
Independence
Our board recognizes the importance of director independence. We
are subject to the listing standards of Nasdaq, which require
that a majority of our directors be independent. Under the
Nasdaq listing standards, a director is independent if he is not
an executive officer or employee of our Company and does not
have any relationship that, in the opinion of our board of
directors, would interfere with his exercise of independent
judgment in carrying out his responsibilities as a director. The
listing standards also identify a variety of relationships that,
if they exist, prevent a director from being considered
independent.
Our board has determined that six of our eight directors are
independent under these standards. The independent directors are
as follows: Sheldon M. Bonovitz, Michael F. DeMane, Gerald A.
Faich, MD, MPH, Elam M. Hitchner, Stephen S. Phillips and
Stephen M. Scheppmann. The other two directors are Michael J.
McKelvey, Ph.D, our current President and Chief Executive
Officer, and Joel Morganroth, MD, our Chief Scientific Officer
who currently serves as chairman of our board. In making the
determination of independence, we considered
Mr. Bonovitzs status during 2009 as Chairman Emeritus
of and counsel to the law firm of Duane Morris LLP, which
performs legal services for us, but concluded that this
relationship did not interfere with his exercise of independent
judgment. In addition, each of the directors serving on the
audit, compensation and governance and nominating committees is
one of the independent directors noted above.
On an annual basis, each director and executive officer is
obligated to complete a director and officer questionnaire which
requires disclosure of any transactions with us in which the
director or executive officer, or any member of his or her
immediate family, has a direct or indirect material interest.
Directors have an affirmative obligation to notify our board of
any material changes in their relationships, which may affect
their independence status as determined by our board. The
obligation encompasses all relationships between directors and
us or members of senior management and their affiliates.
Code of
Ethics and Business Conduct
We have adopted a Code of Ethics and Business Conduct that
applies to our Chief Executive Officer, Chief Financial Officer
(who serves as our principal financial and principal accounting
officer) and other employees and directors. The Code of Ethics
and Business Conduct is available on our website at
www.ERT.com. We intend to post amendments to or waivers
of our Code of Ethics and Business Conduct, to the extent
applicable to our Chief Executive Officer and Chief Financial
Officer, at that location on our website.
Stockholder
Communications with our Board of Directors
Stockholders who wish to communicate with our board of directors
or with a particular director may send a letter to our secretary
at eResearchTechnology, Inc., 1818 Market Street, Philadelphia,
PA 19103 or post a question via www.ethicspoint.com. Any
communication should clearly specify that it is intended to be
made to the entire board of directors or to one or more
particular director(s). Our audit committee reviews all such
correspondence submitted via www.ethicspoint.com. Our
secretary reviews all other correspondence and will forward to
our board of directors a summary of all such correspondence and
copies of all correspondence that, in the opinion of the
secretary, deals with the functions of our board of directors or
committees thereof or that he otherwise determines requires
their attention. If there is a question regarding an item of
correspondence and the distribution of the communication to a
member of our board, the secretary will consult with the
chairman of our board or the chairman
11
of the applicable committee to establish the appropriate
distribution. Directors may at any time review a log of all
correspondence received by us that is addressed to members of
our board of directors and request copies of any such
correspondence. Concerns relating to accounting, internal
accounting controls or auditing matters are immediately brought
to the attention of the chairman of our audit committee and
handled in accordance with procedures established by our audit
committee with respect to such matters. A copy of our audit
committees procedures for the submission and handling of
complaints or concerns regarding accounting, internal accounting
controls or auditing matters is available within our Code of
Ethics and Business Conduct on our website at www.ERT.com.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The following discussion and analysis focuses on the 2009
compensation of the individuals who served as our principal
executive and financial officers during 2009, together with our
three other most highly compensated executive officers.
Throughout this proxy statement, we refer to these individuals
as our named executive officers. You should read this discussion
and analysis together with the compensation tables and related
disclosures set forth below. This discussion contains
forward-looking statements that are based on our current plans,
considerations, expectations and determinations regarding future
compensation programs. Actual compensation programs that we
adopt may differ materially from currently planned programs as
summarized in this discussion.
Our
Compensation Philosophy
Our compensation philosophy was developed to balance and align
the goals of executive management and our stockholders. The
program is intended to attract, motivate, reward and retain the
management talent required to achieve our corporate objectives
and increase stockholder value, while at the same time making
the most efficient use of stockholder resources. To this end,
the compensation philosophy puts a strong emphasis on pay for
performance, to correlate the long-term growth of stockholder
value with managements most significant compensation
opportunities.
Review
of External Data
Periodically, as part of the annual review of compensation, we
have engaged third party compensation consulting firms to
establish guidelines for our executive officers. During 2006,
the compensation committee engaged Mercer Human Resource
Consulting LLC (Mercer), an outside global human
resources consulting firm, to review our executive officer
compensation policies and the material terms of the related
employment agreements. Mercer compared the compensation of our
executive officers with two different sources: (1) an
established group of peer companies using publicly available
proxy statement data to measure compensation value that Mercer
developed for the purpose of this survey, and (2) an
analysis of broader published survey data based on functional
responsibility. The companies Mercer included in our peer group
were:
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Advisory Board Co.
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PDI Inc
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Albany Molecular Research Inc.
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Phase Forward Inc.
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Alfacell Corp
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PRA International
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Bio Imaging Technologies, Inc.
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SYMYX Technologies Inc.
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Bio Reference Labs
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Tripos Inc.
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Kendle International, Inc.
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Vital Images Inc.
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These 12 public contract research organizations and other
companies had sales, net profit margins and market values in
similar ranges to ours for 2006 and represent companies with
whom we might compete for executive employees.
Mercer developed the survey data using two proprietary databases
(the Mercer Americas Executive Remuneration Database and the
Watson Wyatt Data Services Report on Top Management) and a
library of published compensation sources, from which it
compiled comparative compensation data for each of our named
executive
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officers. For purposes of this discussion, we refer to the data
Mercer developed from its review of the peer group compensation
information and the survey data as market data.
Mercer reviewed the publicly available proxy data for our peer
group to compare the compensation of our executive officers to
their individual respective peers in the peer group. Mercer also
used the survey data to make compensation comparisons for each
executive in the study. In each case, Mercer analyzed the
compensation elements that comprise the primary components of
the compensation for our named executive officers as discussed
further below: base salary, short-term non-equity incentive
compensation (which, together with base salary, Mercer refers to
as total cash compensation) and long-term equity incentives.
Mercer analyzed this data for the three-year period 2003 to 2005
using the following financial metrics: sales percent change,
EBITDA growth, return on invested capital, gross profit margin
and total stockholder return. Mercer collected this data at the
25th, 50th and 75th percentiles and compared the officer
positions to survey positions based upon similar position
responsibilities. Where necessary, Mercer made adjustments to
the market data to account for differences in the complexity and
scope of our comparable executive officers position.
Mercer advised us that these adjustments were consistent with
its typical practice.
The results of both of these analyses indicated that, in 2007,
our executive officers were generally in the range between the
median and the 75th percentile of our peer group with respect to
total cash compensation. For the peer group review, most
executive officers were above the median but below the 75th
percentile. For the survey data, the target total cash
compensation was generally above the 75% target, with two
positions the president and chief executive officer
and the executive vice president and chief financial
officer being below the 75% target. In addition,
Mercer reported that the compensation of our executive officers
was comparable at the same percentile level when normalized for
the financial metrics presented above. Based on these results,
our compensation committee concluded that the total cash
compensation of our named executive officers was competitive
with our peer group.
The information provided during this process helped establish
guidelines for compensation within the performance levels of our
company. For 2007, our compensation committee relied upon the
prior Mercer analysis to conclude that no adjustments to
compensation levels were necessary to respond to market
conditions. Based on its conversations with representatives of
Mercer and our chief executive officer, our compensation
committee concluded that the Mercer analysis performed for 2007
compensation was sufficiently current and that it did not need
further detailed analysis of our executive officer compensation
to assist in establishing 2008 and 2009 executive compensation.
As the compensation committee was establishing 2009 compensation
in late 2008, the global economy was beginning to slow down
considerably and pharmaceutical, CRO and biotech industries that
we serve began curtailing expenditures on research and
development resulting in postponements and cancellations of
scheduled clinical trials. As a result of the general economic
slowdown, a number of companies announced that 2009 compensation
would remain flat or have minor upward adjustments. Because of
the uncertainty in the compensation area generally, the
compensation committee retained Exequity, LLP
(Exequity), independent board and management
advisors, to advise the committee as to the current compensation
practices for 2009 salary, bonus and long-term incentive
programs. Based on the advice received from Exequity on general
compensation developments and taking into consideration our
results of operations in 2008, we set compensation levels for
our named executive officers for 2009 at levels consistent with
2008 compensation, with an increase commensurate with our
performance and the performance of the individual executive
officer and providing a cost of living adjustment.
Elements
of Our Compensation Program
In 2009, the basic components of named executive officer
compensation continued to consist of base salary, a cash
incentive bonus plan with both Company and individual
performance objectives and long-term incentives in the form of
stock options. Dr. Morganroths compensation included
each of these components. In addition,
Dr. Morganroths professional corporation received
consulting fees relating to Dr. Morganroths
initiation of a company consulting practice through the
transition of his historic consulting services to our Company.
For more information on specific compensation elements for each
named executive officer see Compensation of
our Named Executive Officers below.
13
The relative weighting of each of the three basic components is
designed to reward both short-term and long-term performance.
Excluding Dr. Morganroths consulting fees, base
salary for 2009 represented approximately 45% to 59% of total
compensation, the cash incentive plan component for 2009
represented approximately 8% to 20% of total compensation, and
the long-term equity component for 2009 represented
approximately 20% to 42% of total annual compensation.
Total Cash Compensation. This is a combination of both
base salary plus annual cash incentives, and, in limited
circumstances, bonus payments. We face competition for qualified
employees, and our compensation committee believes it is
important that executive officer compensation levels be
competitive with contract research organizations and other
comparable companies. The total cash compensation is based upon
the outcome of the various elements of the collection of
external data described above.
In 2009, we continued to offer a cash incentive compensation
program permitting our executive officers to earn cash bonuses
based on achieving targeted financial goals as well as
individual performance. We designed this program to reward
participants for achieving financial, operating and individual
goals that are key to the success of our business and aligned
with the near- and long-term interests of our stockholders.
Based on recommendations of management, the compensation
committee established targeted financial goals which were
believed to be aggressive given the deterioration in general
economic conditions and the developing uncertainty in our
market. However, to assure flexibility, provide appropriate cash
incentives and reward performance under these circumstances, the
compensation committee increased the portion of the cash
incentive compensation program related to individual goals for
our executive officers from 20% in 2008 to between 25% and 40%
for 2009, with the exception of Dr. Morganroth, who did not
have individual goals as part of his incentive compensation
program. Each executive officer was eligible to participate in
the program.
At the beginning of each fiscal year, our board, at the
recommendation of the compensation committee, working with our
chief executive officer, sets the quantitative performance goals
under our cash incentive compensation plan, sets goals for
individual performance and finalizes each participants
bonus opportunity. For 2009, we set the cash incentive
compensation opportunities for all of our named executive
officers, with the exception of Dr. McKelvey, at 50% of
base salary based on the market data described above and at the
recommendation of our chief executive officer, with which our
compensation committee concurred. Dr. McKelveys cash
incentive compensation opportunity was set at 75% of base
salary. Each named executive officer had the potential to
achieve between 50% and 150% of his or her cash incentive
compensation opportunity noted in the table below that is
allocable to each quantitative performance target category,
based on the extent to which we achieved the various specified
targets. The quantitative performance targets, as described
below, included revenues, net income and contract bookings
targets. In addition each named executive officer had the
potential to achieve between 0% and 100% of the cash incentive
compensation opportunity noted in the table below that is
allocable to individual performance, depending upon the extent
to which each individual achieved his or her specific
performance goals.
We identified revenues and net income as the primary
quantitative performance targets because these were the two key
measures which would influence our financial performance and on
which we wanted our named executive officers to focus. Given the
importance of managing our business to the bottom line profit
goals, we gave greater weight to the net income target than to
the revenue target. For 2009, the revenue target was
$130.0 million and the net income target was
$24.9 million, but we did not achieve the minimum revenue
or net income targets under the plan and thus no bonuses were
paid with respect to these two performance targets. In addition,
for each named executive officer, with the exception of
Dr. Morganroth, 25% to 40% of the bonus opportunity was
tied to individual performance objectives. These individual
performance objectives generally included up to four specific
objectives based on the officers area of responsibility as
well as a subjective assessment of the officers overall
performance. For executives with responsibilities which involve
selling efforts, including Dr. Litwin, a portion of their
bonus was tied to the achievement of predetermined contract
revenue targets (Contract Targets).
14
The following table summarizes the bonus opportunity and related
performance targets we set in 2009 for each of our named
executive officers:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Bonus Opportunity Based On
|
|
|
|
Bonus
|
|
|
|
|
|
Net
|
|
|
Contract
|
|
|
Individual
|
|
Name
|
|
Opportunity
|
|
|
Revenues
|
|
|
Income
|
|
|
Targets
|
|
|
Performance
|
|
|
Michael J. McKelvev, Ph.D
|
|
$
|
386,250
|
|
|
|
15
|
%
|
|
|
45
|
%
|
|
|
|
|
|
|
40
|
%
|
Keith D. Schneck
|
|
|
149,350
|
|
|
|
15
|
|
|
|
45
|
|
|
|
|
|
|
|
40
|
|
Joel Morganroth, M.D
|
|
|
101,378
|
|
|
|
30
|
|
|
|
70
|
|
|
|
|
|
|
|
|
|
Jeffrey S. Litwin, M.D
|
|
|
140,595
|
|
|
|
15
|
|
|
|
40
|
|
|
|
20
|
%
|
|
|
25
|
|
Amy Furlong
|
|
|
129,470
|
|
|
|
15
|
|
|
|
45
|
|
|
|
|
|
|
|
40
|
|
We establish financial and operating performance targets that we
believe are reasonably attainable based on information available
to us when the targets are approved. If our named executive
officers and we perform as we expect, we anticipate that
participants will achieve 100% of their bonus opportunity.
Bonuses are payable based on the extent to which targets are
achieved. Bonuses are normally payable within ninety days after
the end of the year in which the bonuses are earned. Our
compensation committee retains the discretion to adjust the
amount of any bonus paid under the plan, regardless of the
extent to which any of the performance targets is achieved.
Dr. Litwin and Dr. Morganroth were entitled to
additional compensation, which is not included in the discussion
or table above. Dr. Morganroths professional
corporation was entitled to an 80% share of the net amounts
billed by the ERT Consulting Group for
Dr. Morganroths services to our customers and
additional bonuses as may be determined at the discretion of the
Board of Directors. Dr. Litwin was entitled to an
additional bonus equal to 10% of the gross profits (defined as
revenue less direct payments made to providers of consulting) of
the ERT Consulting Group, up to a maximum bonus of $70,000,
annually. For more information on specific compensation elements
for each named executive officer see
Compensation of our Named Executive
Officers below.
Long-Term Incentive in Form of Stock
Options. Our compensation committee believes that
appropriate management ownership of our stock is an effective
tool to assist in the process of building stockholder value.
Additionally, we use this compensation tool to assist in
aligning the interests of management and our stockholders. Our
compensation committee has used stock options, rather than other
forms of long-term incentives, because they create value for the
executive only if stockholder value is increased through an
increased share price. However, equity-based compensation may
also include stock appreciation rights, restricted stock,
restricted stock units or other long term performance awards as
permitted by the Amended and Restated 2003 Equity Incentive
Plan. Equity awards are typically approved in February of each
year, with the grant date historically having been set as the
second business day following our announcement of results of
operations for the preceding year in order to make sure that the
exercise price takes into account any impact of the public
disclosure of information regarding our results of operations
for the prior year. In addition, new executive officers may
receive a grant of long-term equity incentives as part of their
negotiated compensation package. Options are granted at a per
share exercise price equal to the market price of our common
stock on the date of grant. All options typically become
exercisable over four years, in equal annual increments
beginning one year after the date of grant, contingent upon the
officers continued employment with us. Awards of
restricted stock typically have similar terms for the lapse of
restrictions applicable to those shares.
15
Existing
Equity Compensation Plans
The following table presents certain information as of
December 31, 2009 regarding our equity compensation plans:
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|
|
|
|
|
|
|
|
|
|
|
|
Number of securities to be
|
|
|
Weighted-average
|
|
|
|
|
|
|
issued upon exercise of
|
|
|
exercise price of
|
|
|
Number of securities
|
|
|
|
outstanding options,
|
|
|
outstanding options,
|
|
|
remaining available for
|
|
Plan Category
|
|
warrants and rights
|
|
|
warrants and rights
|
|
|
future issuance
|
|
|
Equity compensation plans approved by security holders
|
|
|
4,406,606
|
|
|
$
|
9.62
|
|
|
|
2,288,755
|
(1)
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,406,606
|
|
|
$
|
9.62
|
|
|
|
2,288,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Subsequent to December 31, 2009, the compensation committee
granted additional equity awards such that, as of the date of
this proxy statement, 1,438,778 shares remain available for
future issuance under our plans. |
Other Benefits. Our named executive officers
also participated in benefit programs in which all of our
employees, or all employees in certain categories of employees
that included our named executive officers, were eligible to
participate. All employees in the United States were eligible to
participate in the 401K Retirement Savings Plan (the 401K
Plan). The 401K Plan is a tax-qualified retirement savings
plan pursuant to which all United States-based employees were
able to contribute the lesser of up to 25%, or in the case of
highly compensated employees, which would include all of our
named executive officers, up to 9% of their annual salary or the
limit prescribed by the Internal Revenue Service to the 401K
Plan on a before-tax basis. We matched 50% of the first 6% of
pay that was contributed to the 401K Plan. Except for
Dr. Morganroth, all of our named executive officers
participated in the 401K Plan. All employee contributions to the
401K Plan vested immediately upon contribution and all Company
matching contributions vest at a rate of 25% for each year of
employment after the first full year of employment, such that
100% of the matching component is vested after five years of
service with us. All employees at the level of vice president
and higher, which included all of our named executive officers,
received a monthly car allowance of $770 per month except for
Dr. McKelvey and Dr. Morganroth, who each received a
monthly car allowance of $1,000. All employees are offered life
insurance at two times their respective salary, up to a maximum
of $450,000, for which we pay the premium which, in 2009,
amounted to an average of $0.095 per month per $1,000 of
coverage for each employee. All employees are offered long-term
disability insurance at 60% of monthly salary up to a maximum
benefit of $10,000, for which we pay the premium which, in 2009
amounted to an average of $0.165 per $100 of monthly salary. All
employees are offered short-term disability insurance at 60% of
weekly salary up to a maximum benefit of $2,000, for which we
pay 55% of the premium, except for Dr. Litwin for whom we
pay 100% of the premium. In 2009, these payments amounted to
$0.122 per month per $10 of coverage or, for Dr. Litwin,
$0.221 per month per $10 of coverage. All employees are offered
health insurance for which we pay a portion of the premium. We
have entered into employment agreements with all of our
executive officers which include change of control and severance
payments under certain circumstances that are designed to
promote stability and continuity of senior management. For
further information regarding amounts paid or payable under such
agreements for the named executive officers, see
Potential Payments Upon Termination or Change
of Control.
The
Role of Our Compensation Committee and Chief Executive
Officer
The compensation committee of our board of directors has the
authority to determine, but may also recommend to our board for
a final decision, the compensation for our executive officers,
including our named executive officers. Our compensation
committee also makes recommendations to our board of directors
concerning compensation and benefit policies for our Company. In
establishing or recommending compensation levels and policy, it
is the belief of our compensation committee and our board that
the most effective compensation program is
16
one that provides executives competitive base salaries and
significant incentives to achieve both current and long-term
strategic business goals.
Both our chief executive officer and our compensation committee
have utilized outside compensation consultants to assist in
establishing base-lines for salary, bonuses and non-cash
compensation for the executive officers. See
Review of External Data for more
information about the role of compensation consultants in
developing our compensation programs. Our chief executive
officer annually reviews the performance of each named executive
officer (other than his performance and that of our chairman and
chief scientific officer, which are reviewed by our compensation
committee). Our chief executive officer presents his conclusions
and recommendations based on these reviews, including his
proposed salary adjustments, incentive compensation and annual
equity award amounts, to our compensation committee. After our
compensation committee reviews the recommendations with the
chief executive officer, our compensation committee exercises
its discretion in accepting or modifying any recommended
adjustments or awards to executives and either makes a final
determination regarding the compensation of our executive
officers or delivers its recommendations to our board for final
determination.
The aforementioned process generally is performed annually in
the November through February time frame. Toward the end of this
time-frame, our compensation committee also assesses the extent
to which the performance objectives under the bonus plan have
been achieved for the prior year and either determines or makes
a recommendation to the board with respect to the bonus to be
paid, if any, for the prior year. As part of this process, the
compensation committee reviews the extent to which our chief
executive officer achieved his individual performance goals, and
our chief executive officer reports to our compensation
committee on the extent to which our other named executive
officers achieved their respective individual performance goals.
After our compensation committee makes its final decisions with
respect to salary, bonus and non-cash compensation
recommendations, it presents them for our boards
consideration at the February board meeting. Salary adjustments
approved in February are generally made retroactive to January
first of the year of the meeting.
Tax
Considerations
Section 162(m) of the Internal Revenue Code disallows a tax
deduction to publicly held companies for compensation paid to
certain of their executive officers, to the extent that
compensation exceeds $1,000,000 per covered officer in any
fiscal year. The limitation applies only to compensation that is
not considered to be performance-based which, for purposes of
Section 162(m), does not include the consulting fees we pay
to Dr. Morganroths professional corporation that are
included in his total compensation for purposes of this
compensation discussion and analysis. Non-performance-based
compensation paid to our executive officers for 2009 did not
exceed the $1,000,000 limit per officer, and our compensation
committee does not anticipate that the non-performance-based
compensation to be paid to our executive officers in the
foreseeable future will exceed that limit.
Compensation
Committee Report
Our compensation committee has reviewed and discussed the
compensation discussion and analysis that appears under the
caption Executive Compensation Compensation
Discussion and Analysis with management and, based on such
review and discussions, our compensation committee recommended
to our board that the disclosure set forth above under the
caption Executive Compensation Compensation
Discussion and Analysis be included in this proxy
statement and incorporated by reference in our annual report on
Form 10-K
for the year ended December 31, 2009.
This report of our compensation committee does not constitute
soliciting material and should not be deemed filed or
incorporated by reference into any other ERT filing under the
Securities Act or the Exchange Act, except to the extent that we
specifically incorporate this report by reference therein.
Elam M. Hitchner (Chair)
Sheldon M. Bonovitz
Stephen S. Phillips
17
Summary
Compensation Table
The table below summarizes the total compensation paid or earned
by each of the named executive officers for the fiscal years
ended December 31, 2009, 2008 and 2007.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
Non-Equity
|
|
All Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Incentive Plan
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)
|
|
Michael J. McKelvey, Ph.D
|
|
|
2009
|
|
|
$
|
515,000
|
|
|
$
|
|
|
|
$
|
479,408
|
|
|
$
|
95,000
|
|
|
$
|
57,737
|
(2)
|
|
$
|
1,147,145
|
|
President and Chief
|
|
|
2008
|
|
|
$
|
500,000
|
|
|
$
|
|
|
|
$
|
523,578
|
|
|
$
|
414,831
|
|
|
$
|
55,963
|
|
|
$
|
1,494,372
|
|
Executive Officer
|
|
|
2007
|
|
|
$
|
370,000
|
|
|
$
|
|
|
|
$
|
166,855
|
|
|
$
|
137,335
|
|
|
$
|
57,391
|
|
|
$
|
731,581
|
|
Keith D. Schneck
|
|
|
2009
|
|
|
$
|
298,700
|
|
|
$
|
|
|
|
$
|
159,803
|
|
|
$
|
47,500
|
|
|
$
|
28,329
|
(3)
|
|
$
|
534,332
|
|
Executive Vice President
|
|
|
2008
|
|
|
$
|
117,115
|
|
|
$
|
|
|
|
$
|
568,480
|
|
|
$
|
64,777
|
|
|
$
|
10,139
|
|
|
$
|
760,511
|
|
and Chief Financial Officer
|
|
|
2007
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Joel Morganroth, MD
|
|
|
2009
|
|
|
$
|
202,757
|
|
|
$
|
|
|
|
$
|
149,149
|
|
|
$
|
|
|
|
$
|
1,334,788
|
(4)
|
|
$
|
1,686,694
|
|
Chairman of the Board
|
|
|
2008
|
|
|
$
|
196,851
|
|
|
$
|
|
|
|
$
|
142,794
|
|
|
$
|
110,069
|
|
|
$
|
1,659,966
|
|
|
$
|
2,109,680
|
|
and Chief Scientific Officer
|
|
|
2007
|
|
|
$
|
189,280
|
|
|
$
|
|
|
|
$
|
100,113
|
|
|
$
|
70,256
|
|
|
$
|
1,426,192
|
|
|
$
|
1,785,841
|
|
Jeffrey S. Litwin, MD
|
|
|
2009
|
|
|
$
|
281,190
|
|
|
$
|
|
|
|
$
|
106,535
|
|
|
$
|
102,500
|
|
|
$
|
30,496
|
(3)
|
|
$
|
520,721
|
|
Executive Vice President
|
|
|
2008
|
|
|
$
|
273,000
|
|
|
$
|
|
|
|
$
|
118,995
|
|
|
$
|
202,017
|
|
|
$
|
31,833
|
|
|
$
|
625,845
|
|
and Chief Medical Officer
|
|
|
2007
|
|
|
$
|
260,000
|
|
|
$
|
|
|
|
$
|
66,742
|
|
|
$
|
101,541
|
|
|
$
|
30,473
|
|
|
$
|
458,756
|
|
Amy Furlong
|
|
|
2009
|
|
|
$
|
258,940
|
|
|
$
|
|
|
|
$
|
106,535
|
|
|
$
|
47,500
|
|
|
$
|
24,483
|
(3)
|
|
$
|
437,458
|
|
Executive Vice President,
|
|
|
2008
|
|
|
$
|
242,000
|
|
|
$
|
|
|
|
$
|
154,694
|
|
|
$
|
133,852
|
|
|
$
|
24,507
|
|
|
$
|
555,053
|
|
Cardiac Safety Operations
|
|
|
2007
|
|
|
$
|
220,000
|
|
|
$
|
|
|
|
$
|
66,742
|
|
|
$
|
81,659
|
|
|
$
|
17,980
|
|
|
$
|
386,381
|
|
|
|
|
(1) |
|
Reflects the aggregate grant date fair value in accordance with
FASB ASC Topic 718. Amounts for 2007 and 2008 have been
recomputed under the same methodology in accordance with the SEC
rules. See note 1 to our consolidated financial statements
included in the 2009 annual report on
Form 10-K
for more information about our accounting for stock-based
compensation arrangements, including the assumptions made in
valuing such option awards. |
|
(2) |
|
Represents the sum of our 401K Plan contributions and the dollar
value of the insurance premiums and the automobile allowance we
paid and the $26,811 that we paid for Dr. McKelveys
travel and accommodations while working in the Philadelphia
office. |
|
(3) |
|
Represents the sum of our 401K Plan contributions and the dollar
value of the insurance premiums, the automobile allowance and
parking we paid. |
|
(4) |
|
Represents the sum of the dollar value of the insurance
premiums, the automobile allowance and parking we paid and the
$1,320,300 in consulting fees we paid to
Dr. Morganroths wholly-owned professional corporation
in accordance with our consulting agreement. See Related
Party Transactions and note 10 to our consolidated
financial statements included in the 2009 Annual Report on
Form 10-K
for more information about the consulting agreement. |
18
Grants of
Plan Based Awards
The table below provides certain information with respect to
stock options granted to our named executive officers during
2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
Grant Date
|
|
|
|
|
|
|
Number of
|
|
Exercise or
|
|
Fair Value of
|
|
|
|
|
|
|
Securities
|
|
Base Price of
|
|
Stock and
|
|
|
|
|
|
|
Underlying
|
|
Option Awards
|
|
Option
|
Name
|
|
Grant Date
|
|
Action Date
|
|
Options (#)(2)
|
|
($/sh)
|
|
Awards ($)
|
|
Michael J. McKelvey, Ph.D
|
|
|
3/2/2009
|
|
|
|
2/24/2009
|
(1)
|
|
|
225,000
|
|
|
$
|
4.60
|
|
|
$
|
479,408
|
|
Keith D. Schneck
|
|
|
3/2/2009
|
|
|
|
2/24/2009
|
(1)
|
|
|
75,000
|
|
|
$
|
4.60
|
|
|
$
|
159,803
|
|
Joel Morganroth, MD
|
|
|
3/2/2009
|
|
|
|
2/24/2009
|
(1)
|
|
|
70,000
|
|
|
$
|
4.60
|
|
|
$
|
149,149
|
|
Jeffrey S. Litwin, MD
|
|
|
3/2/2009
|
|
|
|
2/24/2009
|
(1)
|
|
|
50,000
|
|
|
$
|
4.60
|
|
|
$
|
106,535
|
|
Amy Furlong
|
|
|
3/2/2009
|
|
|
|
2/24/2009
|
(1)
|
|
|
50,000
|
|
|
$
|
4.60
|
|
|
$
|
106,535
|
|
|
|
|
(1) |
|
The action date represents the date that the compensation
committee approved the option grants. The grant date was two
business days after our release of our 2008 results of operation
and 2009 financial guidance. See -Compensation Discussion
and Analysis Components of Our Compensation
Program Long-Term Incentives in Form of Stock
Options. |
|
(2) |
|
All stock option awards were made under the terms of our Amended
and Restated 2003 Equity Incentive Plan. All options become
exercisable over four years, in equal annual increments
beginning one year after the date of grant. The vesting of all
options are contingent upon the officers continued
employment with us, subject to acceleration under certain
circumstances in accordance with the terms of the named
executive officers employment agreement or as determined
by our compensation committee as authorized under the plan. The
options expire seven years following the date of the grant or
90 days from the date the executive terminates employment. |
Compensation
of Our Named Executive Officers
As described above, the core components of 2009 compensation for
each of our named executive officers consisted of base salary,
cash incentive bonus and long-term incentive equity awards. The
level for each of these components was determined by our
compensation committee consistent with the principles described
in this Compensation Discussion and Analysis.
Dr. McKelvey was our President and Chief Executive Officer
for the year ended December 31, 2009. At the beginning of
the year, Dr. McKelvey received a discretionary increase of
3.0% from his 2008 salary which increased his 2009 salary to
$515,000. This increase was based upon a review of the market
data which indicated Dr. McKelveys base salary was
significantly below the 75th percentile and
Dr. McKelveys performance during 2008 as recommended
by the compensation committee and approved by the board of
directors. For the year ended December 31, 2009,
Dr. McKelvey received a bonus of $95,000 based upon the
achievement of his individual performance objectives, which
included reviewing and making recommendations regarding
potential expansion opportunities, growing our electronic
patient reporting outcome business, implementing programs to
increase centralization of ECGs in clinical trials and executing
plans to enhance our information technology infrastructure.
Additionally, also based upon the compensation committees
and the boards review of the market data and his
performance, we awarded Dr. McKelvey a grant of 225,000
stock options valued at $2.13 per share, or a total of $479,408
at the time of the grant based upon the Black-Scholes valuation
method.
Mr. Schneck was our Executive Vice President and Chief
Financial Officer for the year ended December 31, 2009. At
the beginning of the year, Mr. Schneck received a
discretionary increase of 3.0% from his 2008 salary which
increased his 2009 salary to $298,700. This increase was based
upon a review of the market data and Mr. Schnecks
performance during 2008 as recommended by the compensation
committee and approved by the board of directors. For the year
ended December 31, 2009, Mr. Schneck received a bonus
of $47,500 based upon the achievement of his individual
performance objectives, which included enhancing the tax
efficiency and cash flow of our operations, improving investor
relations, implementing improvements to our billing systems and
finance/
19
accounting expenses and continuing to improve our planning and
forecasting processes. Also based upon the compensation
committee and the boards review of the market data and his
performance, we awarded Mr. Schneck a grant of 75,000 stock
options valued at $2.13 per share, or a total of $159,803 at the
time of the grant based upon the Black-Scholes valuation method.
Dr. Morganroth was the chairman of our board and our Chief
Scientific Officer for the year ended December 31, 2009. At
the beginning of the year, Dr. Morganroth received a
discretionary increase of 3.0% from his 2008 salary which
increased his 2009 salary to $202,757. In addition,
Dr. Morganroth received a stock option grant of 70,000
stock options valued at $2.13 per share, or a total of $149,149
at the time of the grant based upon the Black-Scholes valuation
method. In addition, in 2008, we entered into a new consulting
agreement with Joel Morganroth, MD, P.C., a professional
corporation owned by Dr. Morganroth. Certain of our
diagnostic testing and clinical research contracts require that
specified medical professional services be provided. We retained
Dr. Morganroths professional corporation to provide
these and other services related to the successful operation,
marketing and business development of our Cardiac Safety
division, including the development of a new consulting product
line, which was initially based on the transfer of substantially
all of the consulting work previously done by
Dr. Morganroth under his professional corporation. We paid
the corporation 80% of the net amounts billed by the ERT
Consulting Group for Dr. Morganroths services to our
customers. The professional corporation received a total of
$1,320,300 in fees under this agreement during 2009. The basis
for this compensation was historical consideration for the
efforts that Dr. Morganroth provides to our sales and
business development organizations and the transfer of his
historical consulting clientele to our new consulting business.
Dr. Morganroth is an important part of our efforts to
market our services to our various clients, and his consultative
skills and reputation in the marketplace are important factors
in our ability to win new contracts and retain existing clients.
Dr. Litwin was our Chief Medical Officer for the year ended
December 31, 2009. At the beginning of the year,
Dr. Litwin received a discretionary increase of 3.0% from
his 2008 salary which increased his 2009 salary to $281,190.
This increase was based upon a review of the market data and
Dr. Litwins performance during 2008 as recommended by
the compensation committee and approved by the board of
directors. For the year ended December 31, 2009,
Dr. Litwin received a bonus of $32,500 based upon the
achievement of his individual performance objectives, which
included continuing to improve our quality audit and management
systems, participating in our expanded sales and marketing
initiatives by representing the Company at meetings, conferences
and similar events and improving the profitability of our
consulting group. Additionally, he received a bonus of $70,000
based on our 2009 consulting profits. Also based upon the
compensation committee and the boards review of the market
data and his performance, we awarded Dr. Litwin a grant of
50,000 stock options valued at $2.13 per share, or a total of
$106,535 at the time of the grant based upon the Black-Scholes
valuation method.
Ms. Furlong was our Executive Vice President, Cardiac
Safety Operations for the year ended December 31, 2009. At
the beginning of the year, Ms. Furlong received a
discretionary increase of 7.0% from her 2008 salary which
increased her 2009 salary to $258,940. This increase was based
upon a review of the market data and Ms. Furlongs
performance during 2008 as recommended by the compensation
committee and approved by the board of directors. For the year
ended December 31, 2009, Ms. Furlong received a bonus
of $47,500 based upon the achievement of her individual
performance objectives, which included increasing centralization
of ECGs in clinical trials, improving our project assurance
methodology, reviewing call center efficiencies and implementing
technology solutions to streamline internal efficiency and
increase quality service to clients. Also based upon the
compensation committees and the boards review of the
market data and her performance, we awarded Ms. Furlong a
grant of 50,000 stock options valued at $2.13 per share, or a
total of $106,535 at the time of the grant based upon the
Black-Scholes valuation method.
Impact of
Compensation Policies on Risk Management
Our compensation committee reviewed our compensation policies
and practices for our employees and concluded that the risks
arising from our compensation policies and practices are not
reasonably likely to have a material adverse effect on us.
20
Outstanding
Equity Awards at Fiscal Year-End
The table below provides certain information with respect to
stock options held by our named executive officers at
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Exercise
|
|
|
Option
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable(1)
|
|
|
Price ($/sh)
|
|
|
Expiration Date
|
|
|
Michael J. McKelvey, Ph.D
|
|
|
112,500
|
|
|
|
37,500
|
|
|
$
|
8.51
|
|
|
|
6/23/2013
|
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
$
|
7.41
|
|
|
|
2/23/2014
|
|
|
|
|
35,000
|
|
|
|
75,000
|
|
|
$
|
12.00
|
|
|
|
2/28/2015
|
|
|
|
|
|
|
|
|
225,000
|
|
|
$
|
4.60
|
|
|
|
3/2/2016
|
|
Keith D. Schneck
|
|
|
25,000
|
|
|
|
75,000
|
|
|
$
|
14.52
|
|
|
|
7/28/2018
|
|
|
|
|
|
|
|
|
75,000
|
|
|
$
|
4.60
|
|
|
|
3/2/2016
|
|
Joel Morganroth, MD
|
|
|
90,000
|
|
|
|
|
|
|
$
|
6.29
|
|
|
|
4/22/2013
|
|
|
|
|
37,500
|
|
|
|
|
|
|
$
|
22.09
|
|
|
|
2/9/2014
|
|
|
|
|
30,000
|
|
|
|
|
|
|
$
|
15.46
|
|
|
|
2/14/2012
|
|
|
|
|
22,500
|
|
|
|
7,500
|
|
|
$
|
14.70
|
|
|
|
2/10/2013
|
|
|
|
|
15,000
|
|
|
|
15,000
|
|
|
$
|
7.41
|
|
|
|
2/23/2014
|
|
|
|
|
7,500
|
|
|
|
22,500
|
|
|
$
|
12.00
|
|
|
|
2/28/2015
|
|
|
|
|
|
|
|
|
70,000
|
|
|
$
|
4.60
|
|
|
|
3/2/2016
|
|
Jeffrey S. Litwin, MD
|
|
|
9,000
|
|
|
|
|
|
|
$
|
1.02
|
|
|
|
3/5/2011
|
|
|
|
|
73,750
|
|
|
|
|
|
|
$
|
1.69
|
|
|
|
12/20/2011
|
|
|
|
|
52,500
|
|
|
|
|
|
|
$
|
6.29
|
|
|
|
4/22/2013
|
|
|
|
|
27,001
|
|
|
|
|
|
|
$
|
22.09
|
|
|
|
2/9/2014
|
|
|
|
|
20,000
|
|
|
|
|
|
|
$
|
15.46
|
|
|
|
2/14/2012
|
|
|
|
|
15,000
|
|
|
|
5,000
|
|
|
$
|
14.70
|
|
|
|
2/10/2013
|
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
$
|
7.41
|
|
|
|
2/23/2014
|
|
|
|
|
6,250
|
|
|
|
18,750
|
|
|
$
|
12.00
|
|
|
|
2/28/2015
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
4.60
|
|
|
|
3/2/2016
|
|
Amy Furlong
|
|
|
5,625
|
|
|
|
|
|
|
$
|
3.01
|
|
|
|
7/23/2012
|
|
|
|
|
11,250
|
|
|
|
|
|
|
$
|
6.29
|
|
|
|
4/22/2013
|
|
|
|
|
20,250
|
|
|
|
|
|
|
$
|
22.09
|
|
|
|
2/9/2014
|
|
|
|
|
20,000
|
|
|
|
|
|
|
$
|
15.46
|
|
|
|
2/14/2012
|
|
|
|
|
15,000
|
|
|
|
5,000
|
|
|
$
|
14.70
|
|
|
|
2/10/2013
|
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
$
|
7.41
|
|
|
|
2/23/2014
|
|
|
|
|
13,750
|
|
|
|
18,750
|
|
|
$
|
12.00
|
|
|
|
2/28/2015
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
4.60
|
|
|
|
3/2/2016
|
|
|
|
|
(1) |
|
All options become exercisable over four years, in equal annual
increments beginning one year after the date of grant, with the
exception of the grant of 10,000 options to Dr. McKelvey at
$12.00 per share and 7,500 options to Ms. Furlong at $12.00
per share which became exercisable in full one year after the
date of grant. The vesting of all options are contingent upon
the officers continued employment with us, subject to
acceleration under certain circumstances in accordance with the
terms of the named executive officers employment agreement
or as determined by our compensation committee as authorized
under the Amended and Restated 2003 Equity Incentive Plan. |
21
Option
Exercises
The following table provides certain information with respect to
stock options exercised by our named executive officers during
2009.
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Number of Shares
|
|
|
|
|
Acquired
|
|
Value Realized
|
Name
|
|
On Exercise (#)
|
|
on Exercise ($)(1)
|
|
Michael J. McKelvey, Ph.D
|
|
|
|
|
|
$
|
|
|
Keith D. Schneck
|
|
|
|
|
|
$
|
|
|
Joel Morganroth, MD
|
|
|
|
|
|
$
|
|
|
Jeffrey S. Litwin, MD
|
|
|
12,250
|
|
|
$
|
61,128
|
|
Amy Furlong
|
|
|
|
|
|
$
|
|
|
|
|
|
(1) |
|
Value realized equals the fair market value of the shares on the
date of exercise less the exercise price. |
Potential
Payments Upon Termination or Change of Control
We have entered into employment agreements with each of our
named executive officers under which we may be obligated to pay
certain severance and other benefits under certain circumstances
following termination of employment or changes of control of our
Company.
For the named executive officers, the agreements provide two
potential benefits: one payable in connection with terminations
upon death or disability or other than for cause, and one
payable under certain circumstances in connection with a change
of control of our Company.
Termination Upon Death or Disability or Other than For
Cause. If any such officers employment is
terminated upon death or disability or other than for cause, he
will be entitled to a lump sum cash payment equal to a
percentage of his then-applicable base salary plus bonus, if
any, together with continuation of benefits for a period
specified in his agreement. Dr. Morganroth would be
entitled to a payment equal to 2.6 times his base salary plus
continuation of benefits for a period of 2.6 years.
Dr. McKelvey and Mr. Schneck would be entitled to a
payment equal to 100% of their respective base salaries and
bonus plus continuation of benefits for a period of one year.
Dr. Litwin and Ms. Furlong would be entitled to a
payment equal to 50% of their respective base salaries and bonus
plus continuation of benefits for a period of six months.
For purposes of these provisions, including the change of
control benefits discussed below, benefits means our
standard health, dental, disability, life and accident insurance
benefits as in force at the time the benefit is calculated
together with the executives automobile allowance. In
addition, any bonus is calculated as if the executives
entire bonus opportunity was achieved and then pro-rated based
on the number of days of service during the applicable incentive
period.
Change of Control. Upon a change of control in
our Company, the named executive officers are entitled to
certain benefits only if one of three additional criteria is
satisfied:
|
|
|
|
|
the executive is terminated other than for cause;
|
|
|
|
the executive resigns within 60 days after the change of
control because neither we nor the other party to the change of
control transaction (the Buyer) offers the executive
a position with comparable responsibilities, authority, location
and compensation; or
|
|
|
|
for each such executive other than Dr. McKelvey, the
executive remains employed by us or the Buyer (or any of its
divisions or subsidiaries) for one year after the change of
control.
|
For purposes of these provisions, a change of control means any
of the following:
|
|
|
|
|
a change of control of a nature that would be required to be
reported in our proxy statement under the Exchange Act;
|
22
|
|
|
|
|
the approval by our board of directors of a sale, transfer or
disposition of all or substantially all of our assets and
business to an unrelated third party and the consummation
thereof; or
|
|
|
|
the approval by our board of directors of any merger,
consolidation or similar business combination or reorganization
of our Company that, if consummated, would have the effect
described in either the foregoing bullet points, and the
consummation thereof.
|
Under those circumstances, each such executive would be entitled
to a lump sum payment equal to a percentage of his salary and
bonus, if any, plus continuation of benefits for a specified
period of time and the acceleration of vesting for any stock
options that were not otherwise exercisable.
Dr. Morganroths employment agreement does not provide
for a bonus; his benefit would be 2.6 times his base salary plus
continuation of benefits for a period of six months.
Dr. McKelvey would be entitled to a benefit equal to 100%
of his base salary plus bonus plus continuation of benefits for
a period of two years. Mr. Schneck would be entitled to a
benefit equal to 100% of his base salary plus bonus plus
continuation of benefits for a period of one year.
Dr. Litwin and Ms. Furlong would be entitled to a
benefit equal to 50% of their respective base salaries plus
bonus plus continuation of benefits for a period of six months.
Conditions on Payment. Each named executive
officers agreement includes a customary confidentiality
covenant that survives termination of service together with a
one-year (two-year for Dr. Morganroth) noninterference and
nonsolicitation covenant with respect to vendors, customers,
suppliers, employees and agents of our Company and a one-year
(two-year for Dr. Morganroth) covenant not to compete with
us in the United States or in any foreign country in which any
customer to which we are providing services or technology is
located. Under the terms of the agreements, any breach of these
covenants results in the forfeiture of any payments we may be
obligated to make as described above after the occurrence of the
breach.
Tabular
Presentation
The table below reflects the amount of compensation to each of
our named executive officers in the event they become entitled
to the benefits described above. The amounts shown assume that
they became entitled to such benefits effective as of
December 31, 2009. The amounts shown also assume that the
criteria for earning a change of control benefit were satisfied
as of December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of
|
|
Other Benefits
|
|
|
Cash
|
|
Stock Options
|
|
|
|
401K Plan
|
|
Automobile
|
Name
|
|
Payment ($)
|
|
($)(1)
|
|
Insurance($)
|
|
Match ($)
|
|
Allowance ($)
|
|
Michael J. McKelvey, Ph.D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination on death,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
disability or other than for cause
|
|
$
|
901,250
|
|
|
$
|
|
|
|
$
|
12,155
|
|
|
$
|
16,500
|
|
|
$
|
12,000
|
|
Change of Control
|
|
$
|
901,250
|
|
|
$
|
317,250
|
|
|
$
|
24,311
|
|
|
$
|
16,500
|
|
|
$
|
24,000
|
|
Keith D. Schneck
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination on death,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
disability or other than for cause
|
|
$
|
448,050
|
|
|
$
|
|
|
|
$
|
12,155
|
|
|
$
|
13,442
|
|
|
$
|
9,240
|
|
Change of Control
|
|
$
|
448,050
|
|
|
$
|
105,750
|
|
|
$
|
12,155
|
|
|
$
|
13,442
|
|
|
$
|
9,240
|
|
Joel Morganroth, MD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Termination on death,
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|
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|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
disability or other than for cause
|
|
$
|
527,168
|
|
|
$
|
|
|
|
$
|
2,754
|
|
|
$
|
|
|
|
$
|
31,200
|
|
Change of Control
|
|
$
|
527,168
|
|
|
$
|
98,700
|
|
|
$
|
550
|
|
|
$
|
|
|
|
$
|
6,000
|
|
Jeffrey S. Litwin, MD
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Termination on death,
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|
|
|
|
|
|
|
|
|
|
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|
|
|
disability or other than for cause
|
|
$
|
210,893
|
|
|
$
|
|
|
|
$
|
6,197
|
|
|
$
|
6,327
|
|
|
$
|
4,620
|
|
Change of Control
|
|
$
|
210,893
|
|
|
$
|
70,500
|
|
|
$
|
6,197
|
|
|
$
|
6,327
|
|
|
$
|
4,620
|
|
Amy Furlong
|
|
|
|
|
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Termination on death,
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
disability or other than for cause
|
|
$
|
194,205
|
|
|
$
|
|
|
|
$
|
4,064
|
|
|
$
|
5,826
|
|
|
$
|
4,620
|
|
Change of Control
|
|
$
|
194,205
|
|
|
$
|
70,500
|
|
|
$
|
4,064
|
|
|
$
|
5,826
|
|
|
$
|
4,620
|
|
23
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|
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(1) |
|
This value was calculated based on the difference between the
closing price of the underlying stock at December 31, 2009
and the exercise price of the applicable stock option multiplied
by the number of unvested options that first would have become
exercisable on December 31, 2009 as a result of this
benefit. |
Director
Compensation
We do not compensate any director who is either (a) one of
our employees, (b) the beneficial owner of 10% or more of
our outstanding common stock (a Significant Holder)
or (c) a stockholder, member or partner of any entity which
itself is a Significant Holder.
In 2008, the compensation committee engaged Hay Group to review
our director compensation. As a result of Hay Groups
review, director compensation was increased effective April
2009. Prior to April 2009, each eligible director received a fee
of $1,500 for each board meeting attended, $1,000 for each audit
committee meeting attended and $500 for each compensation
committee and governance and nominating committee meeting
attended. Effective April 2009, each eligible director received
a fee of $2,000 for each board meeting attended and $1,000 for
each committee meeting attended. Also effective April 2009, we
increased the annual retainer paid to each eligible director
from $7,500 to $25,000, the additional annual retainer for the
chairman of our audit committee from $4,000 to $10,000 and the
additional annual retainers to the chairmen of our governance
and nominating and our compensation committees from $1,500 to
$5,000.
In 2009, each outside director (as defined),
received an option grant to purchase 22,000 shares of
common stock. Each director is also reimbursed for
out-of-pocket
expenses incurred in connection with attending meetings and
providing other services as a director.
The table below summarizes the compensation paid by us to our
directors who are not named executive officers for the fiscal
year ended December 31, 2009.
Director
Compensation
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Fees Earned or
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Option
|
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Paid in Cash
|
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Awards
|
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Total
|
|
Name(1)
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
Sheldon M. Bonovitz
|
|
$
|
50,625
|
|
|
$
|
46,875
|
|
|
$
|
97,500
|
|
Michael F. DeMane
|
|
$
|
41,125
|
|
|
$
|
46,875
|
|
|
$
|
88,000
|
|
Gerald A. Faich, MD, MPH
|
|
$
|
37,625
|
|
|
$
|
46,875
|
|
|
$
|
84,500
|
|
Elam M. Hitchner
|
|
$
|
68,750
|
|
|
$
|
46,875
|
|
|
$
|
115,625
|
|
Stephen S. Phillips
|
|
$
|
56,750
|
|
|
$
|
46,875
|
|
|
$
|
103,625
|
|
Stephen M. Scheppman
|
|
$
|
51,625
|
|
|
$
|
46,875
|
|
|
$
|
98,500
|
|
|
|
|
(1) |
|
Michael J. McKelvey, Ph.D, President and Chief Executive
Officer, and Joel Morganroth, MD, our chairman of the board and
Chief Scientific Officer, are not included in this table because
they are employees and thus receive no compensation for their
service as directors. All compensation received by
Drs. McKelvey and Morganroth as employees of our Company
and by Dr. Morganroths professional corporation
pursuant to its consulting agreement with us is shown in the
Summary Compensation Table. See Executive
Compensation Summary Compensation Table. |
|
(2) |
|
Reflects the aggregate grant date fair value in accordance with
FASB ASC Topic 718. See note 1 to our consolidated financial
statements included in the 2009 Annual Report on
Form 10-K
for more information about our accounting for stock-based
compensation arrangements, including the assumptions made in
valuing such option awards. As of December 31, 2009, each
individual listed in the table had the following number of
options outstanding: Sheldon M. Bonovitz-97,000; Michael F.
DeMane-32,000; Gerald A. Faich, MD, MPH-67,000; Elam M.
Hitchner-77,000; Stephen S. Phillips-122,000; and Stephen M.
Scheppman-52,000. |
24
RELATED
PARTY TRANSACTIONS
Under the terms of the charter of our audit committee, we
require prior audit committee approval of all related party
transactions because we recognize that they present a heightened
risk of conflicts of interest and can create the appearance of a
conflict of interest. We review for items in which an employee
may be a related party. Our Code of Ethics and Business Conduct
defines related parties to include the following: an
organization of which an employee of the company is an officer
or partner; the employee is a beneficial owner of ten percent
(10%) or more; any trust in which the employee has a substantial
interest, or serves as a trustee or in a similar fiduciary
capacity; and any immediate family member of an employee who may
significantly influence or be influenced by a business
transaction with an organization of which he or she is an
officer, director or partner. Such proposed transactions require
disclosure to and approval of an executive officer or director
and the audit committee. The audit committee reviews for related
party transactions at each of its quarterly meetings.
Certain of our diagnostic testing and clinical research
contracts require that specified medical professional services
be provided by Joel Morganroth, MD, our Chairman and Chief
Scientific Officer. We have retained Joel Morganroth,
MD, P.C., a professional corporation owned by
Dr. Morganroth, to provide these and other services related
to the successful operation, marketing and business development
of our Cardiac Safety division, which include consulting
services that Dr. Morganroths professional
corporation provides for us to our clients for which he received
80% of the fees we received from our clients for such services.
This professional corporation received fees for these services
of $1,312,300 for 2009. The consulting agreement continues on a
year to year basis unless terminated. See Executive
Compensation Compensation Discussion and
Analysis Compensation of Individual Named Executive
Officers for more information about
Dr. Morganroths consulting agreement.
During 2009, Sheldon M. Bonovitz, one of our directors, was the
Chairman Emeritus of and counsel to Duane Morris LLP, which
performs legal services for us. We paid $336,545 in fees to
Duane Morris LLP for their services performed for us in 2009.
RATIFICATION
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
(Proposal No. 2)
Our audit committee has designated KPMG LLP to be our
independent registered public accountants for the year ending
December 31, 2010. Our board of directors will offer a
resolution at our annual meeting to ratify this designation.
KPMG LLP has served as our independent registered public
accountants since July 2002. Our organizational documents do not
require that our stockholders ratify the selection of KPMG LLP
as our independent registered public accountants. We are doing
so because our board of directors believe it is a matter of good
corporate practice. If our stockholders do not ratify the
selection, our audit committee will reconsider whether or not to
retain KPMG LLP, but still may retain them. Even if the
selection is ratified, our audit committee, in its discretion,
may change the appointment at any time during the year if it
determines that such a change would be in the best interests of
us and our stockholders.
Approval of the proposal will require the favorable vote of a
majority of the stockholders present in person or by proxy and
entitled to vote at the annual meeting. OUR BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
RATIFICATION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS FOR FISCAL 2010. We anticipate that
representatives of KPMG LLP will be present at the meeting to
respond to appropriate questions and, if they desire, to make a
statement.
25
AUDIT AND
NON-AUDIT FEES
General
During 2008 and 2009, we retained KPMG LLP to provide
professional services in the following categories and amounts:
|
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|
|
|
|
|
|
|
|
|
2008
|
|
|
2009
|
|
|
Audit fees
|
|
$
|
591,200
|
|
|
$
|
545,800
|
|
Audit-related fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit and audit-related fees
|
|
|
591,200
|
|
|
|
545,800
|
|
Tax fees
|
|
|
147,800
|
|
|
|
207,900
|
|
All other fees
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Total fees
|
|
$
|
739,000
|
|
|
$
|
753,700
|
|
|
|
|
|
|
|
|
|
|
Audit fees for 2008 and 2009 include fees incurred for
professional services rendered in connection with the audit of
our consolidated financial statements for the years ended
December 31, 2008 and 2009 that are customary under
auditing standards generally accepted in the United States or
that are customary for the purpose of rendering an opinion on
the consolidated financial statements, and for the review of the
consolidated financial statements included in the quarterly
reports on
Form 10-Q
required to be filed during fiscal years 2008 and 2009. In
addition, audit fees for 2008 and 2009 include fees incurred for
professional services rendered in connection with the audit of
our internal control over financial reporting. In 2008 and 2009,
tax fees consisted of federal, state and local tax return
preparation. In addition, in 2008, tax fees included the
preparation and work related to the determination and support of
research and development tax credits available to us for those
years and, in 2009, tax fees included assistance with tax audits
performed by the regulatory tax authorities in the US and UK and
related tax planning consulting.
Our audit committee has considered all of the above services
performed by KPMG LLP and has determined that the provision
thereof is compatible with maintaining auditor independence. All
services rendered by KPMG LLP were permissible under applicable
laws and regulations and were pre-approved by our audit
committee. In accordance with its charter, our audit committee
pre-approves all audit and permissible non-audit services
provided by our independent registered public accountants. In
addition, it is our audit committees procedure to approve
any engagement or accounting project involving the independent
registered public accountants, and the related fees, prior to
commencement of the engagement or project.
Audit
Committee Report on Audited Consolidated Financial
Statements
The audit committee of our board of directors assists our board
with the oversight of our system of internal control, integrity
of financial reporting, adequacy of disclosures and compliance
with legal and regulatory requirements. Our audit committee is
directly responsible for the engagement, compensation, oversight
and evaluation of our independent registered public accountants
and, once retained, consults with and reviews recommendations
made by our independent registered public accountants with
respect to our consolidated financial statements, financial
records and financial controls.
Accordingly, our audit committee has (i) reviewed and
discussed our audited consolidated financial statements with
management and our independent registered public accountants;
(ii) discussed with our independent registered public
accountants the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended (Communications with
Audit Committees); (iii) received the written disclosures
and the letter from our independent registered public
accountants required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees); and
(iv) discussed with our independent registered public
accountants its independence from management and us, including
the matters in the written disclosures required by the
Independence Standards Board. Our audit committee also discussed
with our independent registered public accountants the overall
scope and plans for our audit. Our audit committee met both
separately and jointly with management and our
26
independent registered public accountants to discuss the results
of our accountants examination, their evaluation of our
internal control over financial reporting and the overall
quality of our financial reporting.
Based on the review and discussions referred to above, and
subject to the limitations of its role, our audit committee
recommended to our board of directors that our audited
consolidated financial statements be included in our annual
report on
Form 10-K
for the year ended December 31, 2009.
This report of our audit committee does not constitute
soliciting material and should not be deemed filed or
incorporated by reference into any other ERT filing under the
Securities Act of 1933, as amended (the Securities
Act), or the Exchange Act, except to the extent that we
specifically incorporate this report by reference therein.
Stephen M.
Scheppmann (Chair)
Michael F. DeMane
Elam H. Hitchner
27
STOCKHOLDER
PROPOSALS
Any stockholder who, in accordance with and subject to the
provisions of
Rule 14a-8
of the proxy rules of the Securities and Exchange Commission,
wishes to submit a proposal for inclusion in our proxy statement
for our 2010 annual meeting of stockholders must deliver such
proposal in writing to our Secretary at our principal executive
offices at 1818 Market Street, Philadelphia, PA 19103 no later
than November 5, 2010. Such proposals may be included in
next years proxy statement if they comply with certain
rules and regulations promulgated by the Securities and Exchange
Commission.
In accordance with
Rule 14a-4(c)
promulgated by the Securities and Exchange Commission pursuant
to the Exchange Act, the holders of proxies solicited by our
board of directors in connection with the 2011 annual meeting
may vote such proxies in their discretion on certain matters as
more fully described in such rule, including without limitation
on any matter coming before the meeting as to which we do not
have notice on or before January 31, 2011.
OTHER
MATTERS
Our board knows of no other matters that may be presented for
action at the 2010 annual meeting. However, if any other matter
properly comes before the annual meeting, the proxy holders will
vote in accordance with their judgment on such matter.
We urge you to vote, sign and return the enclosed form of proxy
promptly in the enclosed envelope.
By order of our board of directors,
KEITH D. SCHNECK,
Executive Vice President, Chief Financial Officer
and Secretary
28
ANNUAL MEETING OF STOCKHOLDERS OF
eResearchTechnology, Inc.
April 28, 2010
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 28, 2010:
The Notice of Annual Meeting, proxy statement, annual
report and proxy card
are available at http://www.proxydocs.com/eres
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
ê Please detach along perforated line and mail in the envelope provided.
ê
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n |
20330000000000000000 9 |
042810 |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
1. |
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Election of Directors: |
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NOMINEES: |
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o |
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FOR ALL NOMINEES
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O
O O |
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Sheldon M. Bonovitz
Gerald A. Faich, MD, MPH
Elam M. Hitchner |
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o
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WITHHOLD AUTHORITY
FOR ALL NOMINEES
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FOR ALL EXCEPT (See instructions below)
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INSTRUCTIONS:
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To withhold authority to vote for any
individual nominee(s), mark FOR ALL EXCEPT and fill in the
circle next to each nominee you wish to withhold, as shown
here:
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To change the address on your account, please check the box
at right and indicate your new address
in the address space above. Please note that changes
to the registered name(s) on the account may
not be submitted via this method.
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FOR |
AGAINST |
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ABSTAIN |
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Ratification of the appointment of KPMG LLP as independent registered public accountants.
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3. |
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In his or her discretion, the Proxy is authorized to vote upon such other business as may properly come before the meeting.
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You are urged to sign and return your proxy without delay in the return envelope provided for that purpose which requires no postage if mailed in the United States.
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Signature of Stockholder |
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Date: |
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Signature of Stockholder |
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Date: |
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n |
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Note: |
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by
authorized person.
|
n |
o n
eRESEARCHTECHNOLOGY, INC.
2010
ANNUAL MEETING OF STOCKHOLDERS
PROXY FOR HOLDERS OF COMMON STOCK
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints JOEL MORGANROTH, MD, MICHAEL MCKELVEY,
and KEITH SCHNECK, or any of them, with full power of substitution, the proxy of the undersigned to represent the undersigned at the Annual Meeting of Stockholders of eResearchTechnology, Inc. to
be held on April 28, 2010, or any adjournment or postponement thereof, and to vote the number of shares of the Common Stock of eResearchTechnology, Inc. which the undersigned would be
entitled to vote if personally present.
This proxy when properly executed will be voted in the manner directed herein by the
undersigned stockholder. If no direction is made, shares of the Common Stock represented by this proxy will be voted FOR the election of the nominees listed on the reverse side; FOR ratification
of KPMG LLP as independent registered public accountants; and in the discretion of the proxy holders on any other matter which comes before the meeting. This proxy may be revoked at any time prior to the time it is voted.
(Continued
and to be signed on the reverse side.)