Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
________________
Form 10-K/A
Amendment
No. 1
(Mark
One)
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
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For
the fiscal year ended January 2, 2009
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or
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
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For
the transition period
from to
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Commission
file number: 0-11634
________________
STAAR
SURGICAL COMPANY
(Exact
name of registrant as specified in its charter)
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Delaware
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95-3797439
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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1911
Walker Avenue 91016
Monrovia,
California
(Address
of principal executive offices)
(626) 303-7902
Registrant’s
telephone number, including area code
Securities
registered pursuant to Section 12(b) of the Act:
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(Title of each
class)
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(Name of each exchange
on which registered)
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Common
Stock, $0.01 par value
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Nasdaq
Global Market
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Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No þ
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No þ
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes þ No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes o No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
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o Large
accelerated filer
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þ Accelerated
filer
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o Non-accelerated
filer
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o Smaller
reporting company
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(Do
not check if a smaller reporting
company)
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes o No þ
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant as of June 27, 2008, the last business day
of the registrant’s most recently completed second fiscal quarter, was
approximately $91,708,703 based on the closing price per share of $3.11 of the
registrant’s Common Stock on that date.
The
number of shares outstanding of the registrant’s Common Stock as of March 30,
2009 was 30,018,013.
DOCUMENTS
INCORPORATED BY REFERENCE
Items 13
and 14 of Part III of this Amendment No. 1 to Annual Report on Form 10-K/A are
incorporated by reference to the registrant’s definitive proxy statement
relating to its 2009 annual meeting of stockholders, which was filed with the
Securities and Exchange Commission pursuant to Regulation 14A on April 30,
2009.
STAAR
Surgical Company is filing this Amendment No. 1 (this “Amendment”) to its Annual
Report on Form 10-K for the fiscal year ended January 2, 2009 in response
to comments received from the SEC.
This
Amendment No. 1 speaks as of the filing date of the original Annual Report on
Form 10-K, except where otherwise expressly stated and except for the
certifications, which speak as of their respective dates and the filing date of
this Amendment No. 1.
Part III of this Amendment amends
disclosures originally provided in STAAR’s Proxy Statement filed with the
SEC on April 30, 2009. The
information contained in this Amendment No. 1 has not been updated to reflect
events occurring or trends arising after the original filing dates of the Form
10-K and Proxy Statement.
In
accordance with Rule 12b-15 under the Securities Exchange Act of 1934, this
Amendment republishes the amended items in their entirety.
TABLE
OF CONTENTS
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Page
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PART
I
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Item 1A.
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Risk
Factors
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4
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PART II
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Item 9A.
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Controls
and Procedures
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14
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PART III
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Item 10.
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Directors,
Executive Officers and Corporate Governance
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15
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Item 11.
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Executive Compensation
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19
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Item 12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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40
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PART IV
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Item 15.
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Exhibits
and Financial Statement Schedules
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44
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Signatures
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47
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Item 1A. Risk
Factors
Our short
and long-term success is subject to many factors that are beyond our control.
Investors and prospective investors should consider carefully the following risk
factors, in addition to other information contained in this report. This Annual
Report on Form 10-K contains forward-looking statements, which are subject to a
variety of risks and uncertainties. We have identified our known,
significant risk factors below.
The
following risk factors speak as of the original filing date of our Annual Report
on Form 10-K, April 2, 2009.
Risks
Related to Our Business
We
have a history of losses.
We have
reported losses in each of the last several fiscal years and have an accumulated
deficit of $125.9 million as of January 2, 2009. Although the Company expects to
achieve positive net earnings in 2009, STAAR’s history of losses reflects a
number of challenges that the Company must continue to overcome and there can be
no assurance that it will be successful in doing so. Among the risks
and uncertainties are those described in this “Risk Factors”
section.
We
have only limited working capital and limited access to financing.
Our cash
requirements continue to exceed the level of cash generated by operations and we
expect to continue to seek additional resources to support and expand our
business, such as debt or equity financing. Because of our history of losses and
negative cash flows, our ability to obtain adequate financing on satisfactory
terms is limited. Our ability to raise financing through sales of equity
securities depends on general market conditions and the demand for STAAR’s
common stock. We may be unable to raise adequate capital through sales of equity
securities, and if our stock has a low market price at the time of such sales
our existing stockholders could experience substantial dilution. An inability to
secure additional financing could jeopardize our ability to continue
operations.
The
report of our Independent Registered Public Accounting Firm contains an
explanatory paragraph expressing substantial doubt about our ability to continue
as a “going concern.”
Because
of our limited capital resources and the $4.9 million judgment entered against
the Company in March 2009, coupled with a history of losses and negative cash
flows, our independent registered public accounting firm has modified its
opinion on our financial statements for fiscal year 2008 with a statement that
substantial doubt exists regarding STAAR’s ability to continue as a “going
concern.” While STAAR’s use of cash has declined in recent periods, and
the company believes it is close to generating sufficient cash from sales to
support its operations, its current cash resources are not sufficient to satisfy
the March 2009 court judgment or to provide reserves against other contingencies
that might arise in the next twelve months, especially if the global recession
causes sales to fall below projected levels.
Substantial
doubt about STAAR’s ability to continue as a going concern could affect our
relationships with suppliers or customers. In accordance with Generally
Accepted Accounting Principles in the U.S., STAAR’s balance sheet generally
states the book value of STAAR’s assets, which does not necessarily represent
the value that could be realized from the assets if STAAR could not continue as
a going concern.
We
are subject to a $4.9 million judgment and face additional
litigation.
On March
23, 2009, a California court entered judgment against STAAR for approximately
$2.2 million in compensatory damages and $2.7 million in punitive damages in
Parallax Medical Systems, Inc.
v. STAAR Surgical Company, a case alleging that STAAR willfully and
negligently interfered with the prospective business of a former regional
manufacturer’s representative. While STAAR intends to vigorously contest
this outcome through post-trial proceedings and, if necessary, appeal the cost
of satisfying the judgment or posting a bond for appeal exceeds STAAR’s current
capital resources. The court has stayed the execution of judgment and
collection of damages until after the completion of post-trial motions and the
deadline to file notice of appeal, which is a period of approximately three
months. If STAAR is unable to obtain additional capital to satisfy the judgment
or post an appeal bond before the expiration of the stay, STAAR could be
required to petition for protection under federal bankruptcy laws, which could
further impair its financial position and liquidity, and would likely result in
a default of its other debt obligations.
Another
lawsuit similar to the Parallax case, Moody v. STAAR Surgical
Company, is currently scheduled for trial in the Superior Court of
California, County of Orange, on May 25, 2009. STAAR believes that the
evidence to be presented in Moody does not support
liability for intentional or negligent interference, and some facts differ in
the two cases. However, the allegedly improper conduct of STAAR is the
same in the two cases and Moody will also be tried
before a jury. Moody is also seeking punitive damages. Accordingly, the
risk that a jury could render a verdict in Moody in a
range similar to or greater than the Parallax judgment cannot be
eliminated. An adverse judgment in the Moody case would further reduce
STAAR’s liquidity and capital resources. See “Item 3: Legal
Proceedings.”
Future
legal costs may be material.
In recent
periods, STAAR has incurred increased expenses for legal fees, in
particular fees related to the defense of the lawsuits by former regional
manufacturers’ representatives and STAAR’s related cross-complaints that are
described under “Item 3:
Legal Proceedings.” While STAAR maintains insurance coverage for a
number of litigation risks, including the cost of defending product liability
claims, such insurance does not cover those lawsuits or some other types of
commercial disputes. The defense of litigation, including fees of external legal
counsel, expert witnesses and related costs, is expensive and may be difficult
to project accurately. In general, such costs are unrecoverable even if STAAR
ultimately prevails in litigation, and could represent a significant portion of
STAAR’s limited capital resources. To defend lawsuits, STAAR also finds it
necessary to divert officers and other employees from their normal business
functions to gather evidence, give testimony and otherwise support litigation
efforts. STAAR expects to experience higher than normal litigation costs
until the lawsuits by former regional manufacturer’s representatives are
decided, which could include the need to appeal and defend a new
trial.
STAAR may
also in the future find it necessary to file lawsuits to recover damages or
protect its interests. The cost of such litigation could also be significant and
unrecoverable, which may also deter STAAR from aggressively pursuing even
legitimate claims.
Default
under the Senior Promissory Note could result in an acceleration of our
indebtedness or increased interest costs or both.
Among the
events of default in the Senior Promissory Note (“the Note”) held by Broadwood
Partners, L.P. is any judgment in excess of $500,000 against the Company that
“shall remain unpaid.” Because STAAR is not required to pay the Parallax judgment until the
expiration of the stay 40 days after final judgment, and because the amount to
be paid pursuant to the judgment will not be fixed until final judgment is
rendered on or before May 22, 2009, STAAR believes that as of the date of this
Report the Parallax
judgment should not be deemed “unpaid” and that an event of default under
the Senior Promissory Note would not have occurred. To avoid dispute over this
matter and to secure the lender’s temporary waiver of remedies for an event of
default during the stay of the Parallax judgment, STAAR and
Broadwood entered into a Temporary Waiver Agreement on April 2,
2009.
Under the
Temporary Waiver Agreement, if, prior to the expiration of the stay, STAAR does
not satisfy the Parallax judgment or secure an additional stay pending appeal,
an event of default will occur under the Note. The event of default
would cause an increase of the interest rate from 7% to a maximum of 20% and, if
the holder delivers written notice of default, the entire $5 million principal
amount and accrued interest of the note will become immediately due and
payable. The Temporary Waiver Agreement also provides that if STAAR
secures a further stay of judgment pending appeal, but does not satisfy the
judgment before the expiration of the original stay period, the Note will not
become immediately due and payable but the increased default interest rate will
apply unless and until the Parallax judgment is
satisfied an all other pending and undecided material litigation is resolved. If
applicable, the increased interest rate will result in a $650,000 per year
increase in interest on the Note. An event of default under the Note
leading to either the increased rate of interest or to the Note becoming
immediately due and payable will harm STAAR’s financial condition and results of
operations.
We
may have limited ability to fully use our recorded tax loss
carryforwards.
We have
accumulated approximately $119.5 million of tax loss carryforwards as of January
2, 2009 to be used in future periods if we become profitable. If we were to
experience a significant change in ownership, Internal Revenue Code Section 382
may restrict the future utilization of these tax loss carryforwards even if we
become profitable and these tax loss carryforwards will begin to expire between
2020 and 2028.
FDA
compliance issues have harmed our reputation and we expect to devote significant
resources to maintaining compliance in the future.
The
Office of Compliance of the FDA’s Center for Devices and Radiological Health
regularly inspects STAAR’s facilities to determine whether we are in compliance
with the FDA Quality System Regulations relating to such things as manufacturing
practices, validation, testing, quality control, product labeling and complaint
handling, and in compliance with FDA Medical Device Reporting regulations and
other FDA regulations. The FDA also regularly inspects for compliance with
regulations governing clinical investigations.
Based on
the results of the FDA inspections of STAAR’s Monrovia, California facilities in
2005, 2006 and 2009, STAAR believes that it is substantially in compliance with
the FDA’s Quality System Regulations and Medical Device Reporting regulations.
However, between December 29, 2003 and July 5, 2005 we received Warning Letters
and other correspondence indicating that the FDA found STAAR’s Monrovia,
California facility in violation of applicable regulations, warning of possible
enforcement action and suspending approval of new implantable devices. The FDA’s
findings of compliance deficiencies during that period harmed our reputation in
the ophthalmic industry, affected our product sales and delayed FDA approval of
the ICL.
On June
26, 2007 STAAR received a Warning Letter from the FDA citing four areas of
noncompliance noted by the FDA’s Bioresearch Monitoring branch during its
inspection of STAAR’s clinical study procedures, practices, and documentation
related to the TICL. The Office of Device Evaluation cited the same
deficiencies in a letter placing an integrity hold on the TICL application.
While BIMO’s oversight covers clinical research, rather than the manufacturing,
quality and device reporting issues that have been STAAR’s greatest focus in its
recent compliance initiatives, STAAR believes that the negative publicity from
the BIMO observations and Warning Letter has made it more difficult for STAAR to
overcome the harm to its reputation resulting from past FDA
proceedings.
STAAR’s
ability to continue its U.S. business depends on the continuous improvement of
its quality systems and its compliance with FDA regulations. Accordingly, for
the foreseeable future STAAR’s management expects its strategy to include
devoting significant resources and attention to those efforts. STAAR cannot
ensure that its efforts will be successful. Any failure to demonstrate
substantial compliance with FDA regulations can result in enforcement actions
that terminate, suspend or severely restrict our ability to continue
manufacturing and selling medical devices. Please see the related risks
discussed under the headings “We are subject to extensive
government regulation, which increases our costs and could prevent us from
selling our products” and “We are subject to federal and state
regulatory investigations.”
FDA
Approval of the Toric ICL, which could have a significant U.S. market, has been
significantly delayed.
Part of
STAAR’s strategy to increase U.S. sales of refractive products has been a plan
to introduce the Toric ICL, or TICL, a variant of the ICL that corrects both
astigmatism and myopia in a single lens and that is currently marketed outside
the U.S. STAAR believes the TICL also has a significant potential market in the
U.S. and could accelerate growth of the overall refractive product line.
STAAR submitted a supplemental premarket approval application (PMA) for the TICL
in April 2006. In August 2007 the FDA placed an integrity hold on the PMA
and suspended its consideration of the PMA until STAAR completes specified
actions to satisfy FDA concerns regarding deficiencies in STAAR’s oversight of
past clinical activities. The actions include engaging an independent
third party auditor to conduct a 100% data audit of patient records along with a
clinical systems audit to ensure accuracy and completeness of data before
submitting amendments to the application for the FDA’s review. After
resubmission of the application, approval of the TICL will remains in the
discretion of the FDA. Neither the approval, nor its timing, is
certain. If STAAR is required to conduct additional clinical studies to
secure approval of the TICL, significant further delays and costs would likely
result.
Global
recession could reduce sales of our ICLs and TICLs.
The
global economy is currently in recession. Since at least mid-2008 consumer
spending has decreased in the U.S. as credit has become less available,
unemployment has increased, and consumer confidence has declined.
Refractive
surgery is an elective procedure generally not covered by health
insurance. Patients must pay for the procedure, frequently through
installment financing arrangements. They can defer the choice to have
refractive surgery if they lack the disposable income to pay for it or do not
feel their income is secure in the current economic climate. Laser
refractive surgery has experienced a significant decrease in demand in the U.S.
beginning in the second quarter of 2008. Visian ICL sales have not been as
badly affected and generally increased during the 2008 fiscal year; however
during the fourth fiscal quarter of 2008 U.S. ICL sales were flat and
international Visian ICL and TICL sales declined slightly as compared to the
same period as prior year. If the global recession becomes more severe or
continues for a protracted period, Visian ICL sales could continue to grow
slowly or decline. Because the Visian ICL is STAAR’s fastest growing and
highest margin product, restricted growth or a decline in its sales could
materially harm STAAR’s business.
Because
cataracts generally affect the elderly, most sales of IOLs and other products
used in cataract surgery are reimbursed by government entities worldwide.
Accordingly, these sales are generally unaffected by economic downturns or
recessions. However, if the global recession becomes more severe or
continues for a protracted period, STAAR’s customers could slow their payments
or delay, reduce or forgo inventory purchases. If STAAR’s customers face
financial difficulty, they could further slow or default in payment, increasing
our collection risk.
Negative
publicity concerning complications of laser eye surgery could reduce the demand
for our refractive products as well.
Negative
publicity about laser eye surgery has recently appeared in the U.S. and some
other refractive surgery markets. For example, on April 25, 2008, the FDA
Ophthalmic Devices Panel held a public meeting to discuss reports of medical
complications and customer satisfaction following refractive surgery. The
resulting publicity broadened public awareness of the potential complications of
refractive surgery and potential patient dissatisfaction, in particular as a
result of LASIK and other corneal laser-based procedures. These concerns
may have been a factor in the steep decline in demand for such procedures during
2008. Concerns about complications of refractive laser eye surgery could
encourage more patients and doctors to select the Visian ICL as an alternative,
but could also decrease patient interest in all refractive surgery, including
Visian ICL. Depending on the nature and severity of future negative publicity
about refractive surgery, the growth of ICL sales in the U.S. could be limited
or sales could decline as a result. Because nearly all candidates for refractive
surgery can achieve acceptable vision through the use of spectacles or contact
lenses, for most patients the decision to have refractive surgery is a lifestyle
choice that depends on high confidence in achieving a satisfactory
outcome.
Our
core domestic IOL business has suffered declining sales.
The
foldable silicone IOL was once our largest source of sales. Since we introduced
the product, however, competitors have introduced IOLs employing a variety of
designs and materials. Over the years these products have taken an increasing
share of the IOL market, while the market share for STAAR silicone IOLs has
decreased. In particular, many surgeons now choose lenses made of acrylic
material rather than silicone for their typical patients. In addition, our
competitors have begun to offer multifocal or accommodating lenses that claim to
reduce the need for cataract patients to use reading glasses; the market for
these “presbyopic” lenses is expected to grow as a segment of the cataract
market. Our competitors also introduced IOLs with advanced aspheric optics
earlier than STAAR. During fiscal year 2008 STAAR’s U.S. cataract sales declined
9% over the comparable period of the prior year. Our newer line of IOLs made of
our proprietary biocompatible Collamer material, and our newly introduced
aspheric lenses, while intended to reverse the trend of declining domestic
cataract product sales, may not permit us to recover the market share lost over
the last several years.
We
have restructured our U.S. sales force but the changes may not reverse the
decline in our U.S. sales of cataract products.
From 2007
through early 2009 STAAR comprehensively reorganized its U.S. sales force.
STAAR intends these changes to provide greater efficiency and better
coordination of its sales efforts as it seeks to reverse the long-term decline
in U.S. IOL sales by promoting its new lens designs and delivery systems.
In the fourth quarter of 2008 STAAR significantly reduced the rate of decline in
its U.S. IOL sales, but has not yet seen an increase in these sales. If
our restructured sales force does not perform as anticipated we may suffer
continued poor performance in U.S. sales and further harm to our business and
financial condition.
Strikes,
slow-downs or other job actions by doctors can reduce sales of cataract-related
products.
In many
countries where STAAR sells its products, doctors, including ophthalmologists,
are employees of the government, government-sponsored enterprises or large
health maintenance organizations. In recent years employed doctors who object to
salary limitations, working rules, reimbursement policies or other conditions
have sought redress through strikes, slow-downs and other job actions. These
actions often result in the deferral of non-essential procedures, such as
cataract surgeries, which affects sales of our products. For example, in fiscal
year 2006, strikes and slow-downs by doctors in Germany were partly responsible
for a drop in sales by our wholly owned subsidiary Domilens GmbH, which
distributes ophthalmic products in Germany. Such problems could occur again in
Germany or other regions and, depending on the importance of the affected region
to STAAR’s business, the length of the action and its pervasiveness, job actions
by doctors can materially reduce our sales revenue and earnings.
Our
sales are subject to significant seasonal variation.
We
generally experience lower sales during the third quarter due to the effect of
summer vacations on elective procedures. In particular, because sales activity
in Europe drops dramatically in July and August, and European sales have
recently accounted for a greater proportion of our total sales, this seasonal
variation in our results has become even more pronounced.
We
could experience losses due to product liability claims.
We have
been subject to product liability claims in the past and may experience such
claims in the future. Product liability claims against us may exceed the
coverage limits of our insurance policies or cause us to record a loss in excess
of our deductible. A product liability claim in excess of applicable insurance
could have a material adverse effect on our business, financial condition and
results of operations. Even if any product liability loss is covered by an
insurance policy, these policies have retentions or deductibles that provide
that we will not receive insurance proceeds until the losses incurred exceed the
amount of those retentions or deductibles. To the extent that any losses are
below these retentions or deductibles, we will be responsible for paying these
losses. The payment of retentions or deductibles for a significant amount of
claims could have a material adverse effect on our business, financial
condition, and results of operations.
Any
product liability claim would divert managerial and financial resources and
could harm our reputation with customers. We cannot assure you that we will not
have product liability claims in the future or that such claims would not have a
material adverse effect on our business.
We
compete with much larger companies.
Our
competitors, including Alcon, AMO, and Bausch & Lomb have much greater
financial resources than we do and some of them have large international markets
for a full suite of ophthalmic products. Their greater resources for research,
development and marketing, and their greater capacity to offer comprehensive
products and equipment to providers, make it difficult for us to compete. We
have lost significant market share to some of our competitors.
The
global nature of our business may result in fluctuations and declines in our
sales and profits.
Our
products are sold in approximately 50 countries. Sales from international
operations make up a significant portion of our total sales. For the fiscal year
ended January 2, 2009 sales from international operations were 75% of our total
sales. The results of operations and the financial position of certain of our
foreign operations are reported in the relevant local currencies and then
translated into U.S. dollars at the applicable exchange rates for inclusion in
our consolidated financial statements, exposing us to translation risk. In
addition, we are exposed to transaction risk because some of our expenses are
incurred in a different currency from the currency in which our sales are
received. Our most significant currency exposures are to the Euro, the Swiss
Franc, the Australian dollar, and the Japanese Yen. The exchange rates between
these and other local currencies and the U.S. dollar may fluctuate
substantially. We have not attempted to offset our exposure to these risks by
investing in derivatives or engaging in other hedging transactions.
Economic,
social and political conditions, laws, practices and local customs vary widely
among the countries in which we sell our products. Our operations outside of the
U.S. are subject to a number of risks and potential costs, including lower
profit margins, less stringent protection of intellectual property and economic,
political and social uncertainty in some countries, especially in emerging
markets. Our continued success as a global company depends, in part, on our
ability to develop and implement policies and strategies that are effective in
anticipating and managing these and other risks in the countries where we do
business. These and other risks may have a material adverse effect on our
operations in any particular country and on our business as a whole. We price
some of our products in U.S. dollars, and as a result changes in exchange rates
can make our products more expensive in some offshore markets and reduce our
sales. Inflation in emerging markets also makes our products more expensive
there and increases the credit risks to which we are exposed.
The
success of our international operations depends on our successfully managing our
foreign subsidiaries.
We
conduct most of our international business through wholly owned subsidiaries.
Managing distant subsidiaries and fully integrating them into STAAR’s business
is challenging. While STAAR seeks to integrate its foreign subsidiaries fully
into its operations, direct supervision of every aspect of their operations is
impossible, and as a result STAAR relies on its local managers and staff.
Cultural factors, language differences and the local legal climate can result in
misunderstandings among internationally dispersed personnel, and increase the
risk of failing to meet U.S. and foreign legal requirements, including with
respect to the Sarbanes-Oxley Act of 2002 and the U.S. Foreign Corrupt Practices
Act. These risks have increased now that we have completed the acquisition of
STAAR Japan, Inc. The risk that unauthorized conduct may go undetected will
always be greater in foreign subsidiaries.
Our
activities involve hazardous materials and emissions and may subject us to
environmental liability.
Our
manufacturing, research and development practices involve the use of hazardous
materials. We are subject to federal, state and local laws and regulations in
the various jurisdictions in which we have operations governing the use,
manufacturing,
storage, handling and disposal of these materials and certain waste products. We
cannot completely eliminate the risk of accidental contamination or injury from
these materials. Remedial environmental actions could require us to incur
substantial unexpected costs, which would materially and adversely affect our
results of operations. If we were involved in an environmental accident or found
to be in substantial non-compliance with applicable environmental laws, we could
be held liable for damages or penalized with fines.
We
depend on key employees.
We depend
on the continued service of our senior management and other key employees. The
loss of a key employee could hurt our business. We could be particularly hurt if
any key employee or employees went to work for competitors. Our future success
depends on our ability to identify, attract, train, motivate and retain other
highly skilled personnel. Failure to do so may adversely affect our
results.
Changes
in accounting standards could affect our financial results.
The
accounting rules applicable to public companies like STAAR are subject to
frequent revision. Future changes in accounting standards could require us to
change the way we calculate income, expense or balance sheet data, which could
result in significant change to our reported results of operation or financial
condition.
We
are subject to international tax laws that could affect our financial
results.
STAAR
conducts international operations through its subsidiaries. Tax laws affecting
international operations are highly complex and subject to change. STAAR’s
payment of income tax in the different countries where it operates depends in
part on internal settlement prices and administrative charges among STAAR and
its subsidiaries. These arrangements require judgments by STAAR and are subject
to risk that tax authorities will disagree with those judgments and impose
additional taxes, penalties or interest on STAAR. In addition, transactions that
STAAR has arranged in light of current tax rules could have unforeseeable
negative consequences if tax rules change.
If
we suffer loss to our facilities due to catastrophe, our operations could be
seriously harmed.
We depend
on the continuing operation of our manufacturing facilities in California, Japan
and Switzerland, which have little redundancy or overlap among their activities.
Our facilities are subject to catastrophic loss due to fire, flood, earthquake,
terrorism or other natural or man-made disasters. Our California and Japanese
facilities are in areas where earthquakes could cause catastrophic loss. If any
of these facilities were to experience a catastrophic loss, it could disrupt our
operations, delay production, shipments and revenue and result in large expenses
to repair or replace the facility. Our insurance for property damage and
business interruption may not be sufficient to cover any particular loss, and we
do not carry insurance or reserve funds for interruptions or potential losses
arising from earthquakes or terrorism.
Most
of our products have single-site manufacturing approvals, exposing us to risks
of business interruption.
We
manufacture all of our products at our facilities in California, Switzerland,
and Japan. Most of our products are approved for manufacturing only at one of
these sites. Before we can use a second manufacturing site for an implantable
device we must obtain the approval of regulatory authorities. Because this
process is expensive we have generally not sought approvals needed to
manufacture at an additional site. If a natural disaster, fire, or other serious
business interruption struck one of our manufacturing facilities, it could take
a significant amount of time to validate a second site and replace lost product.
We could lose custom PART I ers
to competitors, thereby reducing sales, profitability and market
share.
If
we are unable to protect our information systems against data corruption,
cyber-based attacks or network security breaches, our operations could be
disrupted.
We are
significantly dependent on information technology networks and systems,
including the Internet, to process, transmit and store electronic information.
In particular, we depend on our information technology infrastructure for
electronic communications among our locations around the world and between our
personnel and our subsidiaries, customers, and suppliers. Security breaches of
this infrastructure can create system disruptions, shutdowns or unauthorized
disclosure of confidential information. If we are unable to prevent such
security breaches, our operations could be disrupted or we may suffer financial
damage or loss because of lost or misappropriated information.
Risks
Related to the Ophthalmic Products Industry
If
we recall a product, the cost and damage to our reputation could harm our
business.
Medical
devices must be manufactured to the highest standards and tolerances, and often
incorporate newly developed technology. From time to time defects or technical
flaws in medical devices may not come to light until after the products are sold
or consigned. In those circumstances, like others in our industry, we have
voluntarily recalled our products. Similar recalls could take place again.
We may also be subject to recalls initiated by manufacturers of products we
distribute. Courts or regulators can also impose mandatory recalls on us, even
if we believe our products are safe and effective. STAAR believes that in
recent years it has been less affected by recalls than most of its U.S.
competitors, but cannot eliminate the risk of a material recall in the
future. Recalls can result in lost sales of the recalled products
themselves, and can result in further lost sales while replacement products are
manufactured, especially if the replacements must be redesigned. If recalled
products have already been implanted, we may bear some or all of the cost of
corrective surgery. Recalls may also damage our professional reputation and the
reputation of our products. The inconvenience caused by recalls and related
interruptions in supply, and the damage to our reputation, could cause
professionals to discontinue using our products.
If
we fail to keep pace with advances in our industry or fail to persuade
physicians to adopt the new products we introduce, customers may not buy our
products and our sales may decline.
Constant
development of new technologies and techniques, frequent new product
introductions and strong price competition characterize the ophthalmic industry.
The first company to introduce a new product or technique to market usually
gains a significant competitive advantage. Our future growth depends, in part,
on our ability to develop products to treat diseases and disorders of the eye
that are more effective, safer, or incorporate emerging technologies better than
our competitors’ products. Sales of our existing products may decline rapidly if
one of our competitors introduces a superior product, or if we announce a new
product of our own. If we fail to make sufficient investments in research and
development or if we focus on technologies that do not lead to better products,
our current and planned products could be surpassed by more effective or
advanced products. In addition, we must manufacture these products economically
and market them successfully by persuading a sufficient number of eye-care
professionals to use them. For example, glaucoma requires ongoing treatment over
a long period; thus, many doctors are reluctant to switch a patient to a new
treatment if the patient’s current treatment for glaucoma remains effective.
This has been a challenge in selling our AquaFlow Device.
Resources
devoted to research and development may not yield new products that achieve
commercial success.
We spent
11% of our sales on research and development during the fiscal year ended
January 2, 2009, and we expect to spend approximately 7-10% of our sales for
this purpose in future periods. Development of new implantable technology, from
discovery through testing and registration to initial product launch, is
expensive and typically takes from three to seven years. Because of the
complexities and uncertainties of ophthalmic research and development, products
we are currently developing may not complete the development process or obtain
the regulatory approvals required for us to market the products successfully.
Any of the products currently under development may fail to become commercially
successful.
Changes
in reimbursement for our products by third-party payors could reduce sales of
our products or make them less profitable.
Many of
our products, in particular IOLs and products related to the treatment of
glaucoma, are used in procedures that are typically covered by health insurance,
HMO plans, Medicare, Medicaid, or other governmental sponsored programs in the
U.S. and Europe. Third party payors in both government and the private sector
continue to seek to manage costs by restricting the types of procedures they
reimburse to those viewed as most cost-effective and by capping or reducing
reimbursement rates. Whether they limit reimbursement prices for our products or
limit the surgical fees for a procedure that uses our products, these policies
can reduce the sales volume of our reimbursed products, their selling prices or
both. For example, the Centers for Medicaid and Medicare have recently reduced
the reimbursement rate for glaucoma procedures such as the implantation of our
AquaFlow Device. In some countries government insurers have sought to control
costs by limiting the total number of procedures they will reimburse. The U.S.
Congress has considered legislative proposals that would significantly change
the system of public and private health care reimbursement, and will likely
consider such changes again in the future. We are not able to predict whether
new legislation or changes in regulations will take effect at the state or
federal level, but if enacted these changes could significantly and adversely
affect our business.
We
are subject to extensive government regulation, which increases our costs and
could prevent us from selling our products.
STAAR is
regulated by regional, national, state and local agencies, including the Food
and Drug Administration, the Department of Justice, the Federal Trade
Commission, the Office of the Inspector General of the U.S. Department of Health
and Human Services and other regulatory bodies, as well as vgovernmental
authorities in those foreign countries in which we manufacture or distribute
products. The Federal Food, Drug, and Cosmetic Act, the Public Health Service
Act and other federal and state statutes and regulations govern the research,
development, manufacturing and commercial activities relating to medical
devices, including their pre-clinical and clinical testing, approval,
production, labeling, sale, distribution, import, export, post-market
surveillance, advertising, dissemination of information and promotion. We are
also subject to government regulation over the prices we charge and any rebates
we may offer to customers. Complying with government regulation substantially
increases the cost of developing, manufacturing and selling our
products.
In the
U.S., we must obtain approval from the FDA for each product that we market.
Competing in the ophthalmic products industry requires us to introduce new or
improved products and processes continuously, and to submit these to the FDA for
approval. Obtaining FDA approval is a long and expensive process, and approval
is never certain. In addition, our operations are subject to periodic inspection
by the FDA and international regulators. An unfavorable outcome in an FDA
inspection may result in the FDA ordering changes in our business practices or
taking other enforcement action, which could be costly and severely harm our
business.
Our new
products could take a significantly longer time than we expect to gain
regulatory approval and may never gain approval. If a regulatory authority
delays approval of a potentially significant product, the potential sales of the
product and its value to us can be substantially reduced. Even if the FDA or
another regulatory agency approves a product, the approval may limit the
indicated uses of the product, or may otherwise limit our ability to promote,
sell and distribute the product, or may require post-marketing studies. If we
cannot obtain timely regulatory approval of our new products, or if the approval
is too narrow, we will not be able to market these products, which would
eliminate or reduce our potential sales and earnings.
Investigations
and allegations, whether or not they lead to enforcement action or litigation,
can materially harm our business and our reputation.
Failure
to comply with the requirements of the FDA or other regulators can result in
civil and criminal fines, the recall of products, the total or partial
suspension of manufacture or distribution, seizure of products, injunctions,
whistleblower lawsuits, failure to obtain approval of pending product
applications, withdrawal of existing product approvals, exclusion from
participation in government healthcare programs and other sanctions. Any
threatened or actual government enforcement action can also generate adverse
publicity and require us to divert substantial resources from more productive
uses in our business. Enforcement actions could affect our ability to distribute
our products commercially and could materially harm our business.
From time
to time STAAR is subject to formal and informal inquiries by regulatory
agencies, which could lead to investigations or enforcement actions. Even when
an inquiry results in no evidence of wrongdoing, is inconclusive or is otherwise
not pursued, the agency generally is not required to notify STAAR of its
findings and may not inform STAAR that the inquiry has been
terminated.
STAAR
maintains a hotline for employees to report any violation of laws, regulations
or company policies anonymously, which is intended to permit STAAR to identify
and remedy improper conduct. Nevertheless, present or former employees may elect
to bring complaints including to regulators and enforcement agencies. The
relevant agency will generally be obligated to investigate such complaints to
assess their validity and obtain evidence of any violation that may have
occurred. In response to reports that its policies or applicable laws or
regulations have been violated, STAAR may find it necessary to conduct its own
intense investigations, which may be extensive. Even without a finding of
misconduct, negative publicity about investigations or allegations of misconduct
could harm our reputation with professionals and the market for our common
stock. Responding to investigations or conducting internal investigations can be
costly, time-consuming and disruptive to our business.
We
depend on proprietary technologies, but may not be able to protect our
intellectual property rights adequately.
We rely
on patents, trademarks, trade secrecy laws, contractual provisions and
confidentiality procedures and copyright laws to protect the proprietary aspects
of our technology. These legal measures afford limited protection and
may not
prevent our competitors from gaining access to our intellectual property and
proprietary information. Any of our patents may be challenged, invalidated,
circumvented or rendered unenforceable. Any of our pending patent applications
may fail to result in an issued patent or fail to provide meaningful protection
against competitors or competitive technologies. Litigation may be necessary to
enforce our intellectual property rights, to protect our trade secrets and to
determine the validity and scope of our proprietary rights. Any litigation could
result in substantial expense, may reduce our profits and may not adequately
protect our intellectual property rights. In addition, we may be exposed to
future litigation by third parties based on claims that our products infringe
their intellectual property rights. This risk is exacerbated by the fact that
the validity and breadth of claims covered by patents in our industry may
involve complex legal issues that are open to dispute. Any litigation or claims
against us, whether or not successful, could result in substantial costs and
harm our reputation. Intellectual property litigation or claims could force us
to do one or more of the following:
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cease
selling or using any of our products that incorporate the challenged
intellectual property, which would adversely affect our
sales;
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negotiate
a license from the holder of the intellectual property right alleged to
have been infringed, which license may not be available on reasonable
terms, if at all; or
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redesign
our products to avoid infringing the intellectual property rights of a
third party, which may be costly and time-consuming or impossible to
accomplish.
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We
may not successfully develop and launch replacements for our products that lose
patent protection.
Most of
our products are covered by patents that, if valid, give us a degree of market
exclusivity during the term of the patent. We have also earned revenue in the
past by licensing some of our patented technology to other ophthalmic companies.
The legal life of a patent in the U.S. is 20 years from application. Patents
covering our products will expire from this year through the next 20 years. Upon
patent expiration, our competitors may introduce products using the same
technology. As a result of this possible increase in competition, we may need to
reduce our prices to maintain sales of our products, which would make them less
profitable. If we fail to develop and successfully launch new products prior to
the expiration of patents for our existing products, our sales and profits with
respect to those products could decline significantly. We may not be able to
develop and successfully launch more advanced replacement products before these
and other patents expire.
Risks
Related to Ownership of Our Common Stock
Our
charter documents could delay or prevent an acquisition or sale of our
company.
Our
Certificate of Incorporation empowers the Board of Directors to establish and
issue a class of preferred stock, and to determine the rights, preferences and
privileges of the preferred stock. These provisions give the Board of Directors
the ability to deter, discourage or make more difficult a change in control of
our company, even if such a change in control could be deemed in the interest of
our stockholders or if such a change in control would provide our stockholders
with a substantial premium for their shares over the then-prevailing market
price for the common stock. Our bylaws contain other provisions that could have
an anti-takeover effect, including the following:
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stockholders
have limited ability to remove
directors;
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stockholders
cannot act by written consent;
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stockholders
cannot call a special meeting of stockholders;
and
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stockholders
must give advance notice to nominate
directors.
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Anti-takeover
provisions of Delaware law could delay or prevent an acquisition of our
company.
We are
subject to the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which regulates corporate acquisitions. These provisions could
discourage potential acquisition proposals and could delay or prevent a change
in control transaction. They could also have the effect of discouraging others
from making tender offers for our common stock or prevent changes in our
management.
Future
sales of our common stock could reduce our stock price.
Our Board
of Directors could issue additional shares of common or preferred stock to raise
additional capital or for other corporate purposes without stockholder approval.
In addition, the Board of Directors could designate and sell a class of
preferred stock with preferential rights over the common stock with respect to
dividends or other distributions. Sales of common or preferred stock could
dilute the interest of existing stockholders and reduce the market price of our
common stock. Even in the absence of such sales, the perception among investors
that additional sales of equity securities may take place could reduce the
market price of our common stock.
The
market price of our common stock is likely to be volatile.
Our stock
price has fluctuated widely, ranging from $1.16 to $5.98 per share during the
year ended January 2, 2009 and was $0.95 on March 30, 2009. Our stock
price could continue to experience significant fluctuations in response to
factors such as market perceptions, quarterly variations in operating results,
operating results that vary from the expectations of securities analysts and
investors, changes in financial estimates, changes in market valuations of
competitors, announcements by us or our competitors of a material nature,
additions or departures of key personnel, future sales of Common Stock and stock
volume fluctuations. Also, general political and economic conditions such as
recession or interest rate fluctuations may adversely affect the market price of
our stock.
PART
II
Item
9A. Controls and Procedures
Attached
as exhibits to this Amendment No. 1 are certifications of STAAR’s Chief
Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), which are
required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). This “Controls and Procedures” section includes
information concerning the controls and controls evaluation referred to in the
certifications. Page F-3 of STAAR’s Annual Report on Form 10-K as originally
filed on April 2, 2009, sets forth the report of BDO Seidman, LLP, our
independent registered public accounting firm, regarding its audit of STAAR’s
internal control over financial reporting. This section should be read in
conjunction with the certifications and the BDO Seidman, LLP report for a more
complete understanding of the topics presented.
Evaluation
of Disclosure Controls and Procedures
As of the
end of the period covered by this report, we carried out an evaluation, under
the supervision and with the participation of our management, including our CEO
and CFO, of the effectiveness of the design and operation of the disclosure
controls and procedures of STAAR Surgical Company and its subsidiaries (the
“Company”). Based on that evaluation, our CEO and CFO concluded, as
of the end of the period covered by our Form 10-K for the fiscal year ended
January 2, 2009, that our disclosure controls and procedures were
effective. For purposes of this statement, the term “disclosure
controls and procedures” means controls and other procedures of the Company that
are designed to ensure that information required to be disclosed by the Company
in the reports that it files or submits under the Securities Exchange Act (15
U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the
time periods specified in the Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Act is accumulated and communicated to the
issuer's management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.
Management
Report on Internal Control over Financial Reporting
The
Company’s management, including our CEO and CFO, is responsible for establishing
and maintaining adequate internal control over financial reporting (as such term
is defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the
Company. The Company’s internal control system was designed to
provide reasonable assurance to the Company’s management and Board of Directors
regarding the preparation and fair presentation of published consolidated
financial statements in accordance with accounting principles generally accepted
in the United States of America.
Because
of its inherent limitations, a system of internal control over financial
reporting can provide only reasonable assurance and may not prevent or detect
misstatements. Further, because of changing conditions, effectiveness of
internal control over financial reporting may vary over time. The Company’s
processes contain self-monitoring mechanisms, and actions are taken to correct
deficiencies as they are identified.
Management
has assessed the effectiveness of the Company’s internal control over financial
reporting as of January 2, 2009, based on the criteria for effective internal
control described in Internal Control — Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on
its assessment, management concluded that the Company’s internal control over
financial reporting was effective as of January 2, 2009.
BDO
Seidman LLP, the independent registered public accounting firm that audited and
reported on the consolidated financial statements of the Company contained in
this report on Form 10-K, as originally filed on April 2, 2009, was engaged to
attest to and report on the effectiveness of the Company’s internal control over
financial reporting.
Changes
in Internal Control over Financial Reporting
There was
no change during the fiscal quarter ended January 2, 2009 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART III
Item 10. Directors
and Executive Officers of the Registrant
Directors
The Board
of Directors was comprised of the following persons as of April 30,
2009:
Don
M. Bailey
Chairman
of the Board
Chairman
of the Nominating and Governance Committee
Member of
the Audit Committee
Member of
the Compensation Committee
Director
since April 2005
Age
63
Don
Bailey has served as a director and our Chairman since April 2005, and serves as
the chairman of the Nominating and Governance Committee of the Board of
Directors. Since November 26, 2007, Mr. Bailey has served as President, Chief
Executive Officer and a director of Questcor Pharmaceuticals, Inc., having
served as its interim President from May 2007 and as a director since May 2006.
In addition, he served as Chairman of the Board of Comarco, Inc., a provider of
wireless test products for the wireless industry and a maker of emergency call
box systems and mobile power products for handheld devices from 1998 until
August 31, 2007. He also served from June 1990 to April 2000 as President of
Comarco, Inc. and as its Chief Executive Officer from January 1991 to April
2000. Mr. Bailey earned his Bachelor of Science degree in Mechanical Engineering
from Drexel University 1968, his Master of Science degree in Operations Research
from the University of Southern California in 1971 and his Master of Business
Administration degree from Pepperdine University in 1986.
Barry
G. Caldwell
President
and Chief Executive Officer
Director
since May 2007
Age
58
Barry
Caldwell was elected to STAAR’s Board of Directors at its 2007 Annual Meeting,
and he has served as STAAR’s President and Chief Executive Officer since
November 27, 2007. Mr. Caldwell previously served as President, Chief Executive
Officer and director of Iridex Corporation, a worldwide provider of therapeutic
laser systems and delivery devices used to treat eye diseases and skin
conditions, from 2005 through 2007. From 1979 to 2002, Mr. Caldwell served in
various capacities with Alcon Laboratories, Inc., a leading developer,
manufacturer and marketer of ophthalmology products. His executive positions
included Vice President and General Manager of Alcon’s U.S. Surgical Division
and Vice President of Alcon Canada. From 2002 to 2005, Mr. Caldwell served on
the Boards of Directors of Laser Diagnostic Technologies (until its sale in
2004), A.R.C. Laser, Inc. and Tekia, Inc. In addition, he has served on the
Boards of Directors for three ophthalmic industry groups, AdvaMed, NAEVR and
EyeRx Coalition. He is also a former member of the Kentucky State Legislature
where he served three consecutive terms in the State’s House of Representatives.
Mr. Caldwell has a Bachelor of Arts in Political Science and English from
Georgetown College and a Juris Doctorate from the Northern Kentucky University
Chase College of Law.
David
Bailey
President,
International Operations
Director
since December 2000
Age
52
David
Bailey has served as STAAR’s President, International Operations since November
27, 2007, having previously served as our President and Chief Executive Officer
since December 28, 2000. Mr. Bailey also joined the Board of Directors on
December 28, 2000, and served as Chairman of the Board from 2001 through April
2005. Prior to joining STAAR, Mr. Bailey served as Global President of CIBA
Vision Corporation’s surgical business unit based in Atlanta, Georgia. From
April 1995 through May 1999, Mr. Bailey served on the global management boards
of both Bausch & Lomb and ChironVision. In 1993, Mr. Bailey was the European
Managing Director of Johnson & Johnson’s European professional sector, with
operating responsibility for Iolab Corporation, an ophthalmic products company
that was a subsidiary
of Johnson & Johnson at that time, including both medical devices and
pharmaceuticals. Mr. Bailey completed his formal education in the United
Kingdom, obtaining a Master’s degree from Durham University, and a Bachelor of
Arts degree with honors from York University. David Bailey and Don Bailey are
not related.
Donald
Duffy
Director
since February 2003
Chairman
of Audit Committee
Age
72
Mr. Duffy
has served as a director and as Chairman of the Audit Committee since February
2003. His previous experience includes the position of Chief Financial Officer
of Iolab Corporation, a former subsidiary of Johnson & Johnson, a position
he held from 1987 until his retirement in 1992. Prior to holding that position,
Mr. Duffy served as Chief Financial Officer of the J&J Ultrasound division
of Johnson & Johnson and Alpha Wire Corporation. Mr. Duffy also served as
the Chief Information Services Officer for the J&J Products Division of
Johnson & Johnson and held various financial positions for Johnson &
Johnson from 1962 through 1984. Mr. Duffy earned a Master of Business
Administration degree from Pace University and a Bachelor of Science degree in
accounting from the University of South Dakota.
John
C. Moore
Director
since January 2008
Member of
the Nominating and Governance Committee
Member of
the Compensation Committee
Age
64
Mr. Moore
has more than 25 years of executive experience at ophthalmic medical device
companies, where he managed R&D, operations, marketing, sales, business
development, service, and finance teams. Between April 2005 and January 2007 Mr.
Moore served as CEO of Notal Vision, an Israeli-based company that developed
comprehensive diagnostic solutions for the early detection and monitoring of
age-related macular degeneration (AMD). Mr. Moore served as the President and
CEO of Laser Diagnostic Technologies, a manufacturer of diagnostic laser
scanning ophthalmoscopes used for the early detection of glaucoma, from 2000
until it was acquired by Carl Zeiss Meditec, Inc. in 2004. Before this, Mr.
Moore was a vice president at Alcon Laboratories where he was responsible for
pursuing and executing strategic acquisitions and partnerships to broaden the
company's product portfolio. Mr. Moore also spent more than 10 years at Carl
Zeiss, Inc., a multinational company with primary businesses in optics, medical,
scientific and semiconductor products. Mr. Moore received his Bachelor of
Science degree in General Science from University of Rochester.
David
Morrison
Director
since May 2001
Chairman
of the Compensation Committee
Member of
the Audit Committee
Member of
the Nominating and Governance Committee
Age
64
Mr.
Morrison has 35 years of experience in various executive positions, both within
the United States and internationally. Between 1998 and 2003 Mr. Morrison served
as a consultant for ophthalmic companies in the U.S., Japan and Germany and for
consumer goods companies in the United Kingdom, Italy, Australia and New Zealand
through his own company, DRM Strategic Services Ltd.; he continues to provide
marketing consultation services on a limited basis for non-ophthalmic consumer
goods. Mr. Morrison was appointed President and Chief Operating Officer of
Chiron Vision following its acquisition of Iolab Corporation in 1995, and served
in that capacity until 1997. Prior to joining Chiron Vision, Mr. Morrison served
as Area Vice President for Europe for the Gillette Company and as President of
International Operations and Co-Chief Operating Officer of Cooper Vision. Mr.
Morrison earned a Bachelor of Arts degree, with honors, in economics from the
University College of Wales, Aberystwyth and received a post-graduate degree in
Industrial Administration from Bradford University.
Executive
Officers
The
following is a list of executive officers of STAAR as of April 30,
2009:
Deborah
Andrews
Vice
President and Chief Financial Officer
Age
51
Ms.
Andrews has served as Chief Financial Officer since August 2005 and as Vice
President since April 2005. She has been employed by STAAR since 1995, serving
as Principal Financial Officer from April 2005 to August 2005, Global Controller
from 2001 to 2005, Vice President, Finance, of STAAR Surgical AG (Switzerland)
from 1999 – 2001, and Assistant Controller from 1995 to 1999. She
previously served as an internal auditor for Bourns, Inc., a maker of electronic
components, from 1994 to 1995, and an auditor for KPMG Peat Marwick from
1991 – 1994. Ms. Andrews earned her Bachelor of Science degree in
Accounting from California State University, San Bernardino.
Hans-Martin
Blickensdoerfer
Vice
President, International Marketing
Age
43
Mr.
Blickensdoerfer, who joined STAAR in January 2005, has over 15 years experience
in the ophthalmic device industry. Prior to joining STAAR, Mr. Blickensdoerfer
served from January 2003 through December 2004 as Vice President of Sales and
Marketing for Milvella Ltd., an Australia-based medical device maker, where his
duties included both regional and worldwide business planning, product launches
and management of European clinical studies. He worked from 2000
through 2002 for Novartis — CIBA Vision as the Commercial Director for
Europe, the Middle East and Africa. Between 1997 and early 2000 he worked for
the Surgical Division of Bausch & Lomb, Inc. as its Area Sales Manager for
Central and Eastern Europe. Prior to that time he worked in sales and product
management positions in the Surgical Division of Chiron Vision and at Chiron
Adatomed GmbH. Mr. Blickensdoerfer received his diploma in Marketing and
International Management from the University of Mannheim in Germany. He is based
in our Nidau, Switzerland facility.
Reinhard
Pichl
Managing
Director, Domilens Vertrieb für medizinische Produkte GmbH
Age
54
Reinhard
Pichl joined STAAR’s German subsidiary, Domilens, in October 2007. Prior to
joining STAAR he worked more than eight years for Advanced Medical Optics (now
Abbott Medical Optics) and its previous parent company, Allergan, where he
served most recently as Director of Sales and Marketing for Central European
Markets. Dr. Pichl received his bachelor’s degree in chemistry and his doctorate
in inorganic and theoretical chemistry at the Technical University of Munich. He
is based in the Domilens headquarters in Hamburg, Germany.
Isamu
Kamijo
President,
STAAR Japan, Inc.
Age
61
Mr.
Kamijo joined STAAR on December 27, 2007 when STAAR acquired the remaining
interests in STAAR Japan, previously Canon Staar Co., Inc. He serves as the
President of STAAR Japan, which is the same chief executive role that he
fulfilled as Vice President of Canon Staar from 2003 through 2007. Mr. Kamijo
began working at Canon Staar at the time of its formation as a joint venture
between STAAR and the Canon companies in 1988, and became a director of Canon
Staar in 1993. Between 1972 and 1988 he worked at Canon affiliates in the U.S.,
Canada, and Europe and at Canon Marketing, Inc. in Japan. Mr. Kamijo graduated
from the high school attached to Tokyo Metropolitan University in 1969. He is
based at STAAR Japan’s headquarters in Urayasu City, Japan.
Craig
Felberg
Vice
President, Research, Development and Clinical Affairs
Age
58
Mr.
Felberg, who joined us in 2007, has over 25 years of experience in the field of
ophthalmology. Prior to joining STAAR, Mr. Felberg worked with many current and
past market leaders including Bausch & Lomb, Chiron, Iolab, Alcon and
CooperVision. Mr. Felberg has held positions including Plant Manager, Vice
President of Operations and Director of Refractive R&D Program Management.
Most recently he was responsible for the Refractive R&D project portfolio at
Bausch & Lomb, where he led the efforts to develop and deliver new and
improved laser and diagnostic systems as well as new indications for the
existing products. Mr. Felberg was also responsible for managing clinical and
regulatory
programs required to gain approval of new and improved products into worldwide
markets. Mr. Felberg received a Bachelor of Arts degree in Management from the
University of Redlands and earned a Master of Business Administration degree
from Pepperdine University.
Paul
Hambrick
Vice
President, Operations
Age
47
Mr.
Hambrick has served as our Vice President of Operations since February of 2006.
From late 2005 through February 2006 he served as Divisional Manager of
Engineering at Bio-Rad Laboratories, a manufacturer of products for life science
research and clinical diagnostics. From 2001 through 2005 Mr. Hambrick served as
General Manager and Vice President of Operations at MAS, a Fisher Scientific
Company, managing the production of in-vitro diagnostic products. From 1998 to
2001 he was Director of Manufacturing at Biosense Webster, a Johnson &
Johnson company, where he oversaw production of electrophysiology catheters.
Prior to joining Biosense Webster, Mr. Hambrick was Director of Manufacturing at
Chiron Vision with various product line responsibilities including manufacturing
of intraocular lenses, phacoemulsification systems and keratome blades. Mr.
Hambrick earned his Bachelor of Science Degree in Business Administration from
the University of La Verne in La Verne, California.
Robin
Hughes
Vice
President, Marketing
Age
45
Mr.
Hughes joined STAAR in 2007 from H Consulting, LLC, a consulting firm
specializing in marketing and strategy. Prior to founding the firm, Mr. Hughes
spent 13 years at Bausch & Lomb, most recently as Vice President of Global
Strategy and Commercialization for refractive surgery from 2002 until 2006, and
as Vice President of Marketing for Europe, Middle East and Africa (EMEA) from
2001 until 2002. Prior to these roles he held EMEA Director of Marketing
positions at Bausch & Lomb in both the Surgical and Visioncare
divisions.
Prior to
joining Bausch & Lomb in 1993, Mr. Hughes spent eight years in the
pharmaceutical industry, transitioning from sales into marketing at Merck, Inc.
He earned a Master of Business Administration degree from the Henley Management
College, Brunel University. His scientific background includes qualifications in
medical microbiology from The Royal London Hospital, and in human physiology and
cell biology from the University of Westminster.
Charles
Kaufman
Vice
President, General Counsel and Corporate Secretary
Age
54
Mr.
Kaufman has served as Vice President, General Counsel and Secretary since April
2005. From 2001 to 2005 he served as an attorney at the law firm of Sheppard,
Mullin, Richter & Hampton, LLP, where he specialized in corporate finance,
securities regulation and corporate transactions. From 1994 to 2001 Mr. Kaufman
served as an attorney at the law firm of Morrison & Foerster, LLP. Mr.
Kaufman earned his Juris Doctor Degree from the University of California at Los
Angeles, where he also received a Bachelor of Arts degree in English
Literature.
John
Santos
Vice
President, Quality Assurance, Regulatory and Clinical Affairs
Age
53
Mr.
Santos has served as our Vice President, Quality Assurance and Regulatory
Affairs, since November 2008. Mr. Santos, joined STAAR in October 1992, has over
16 years experience in the ophthalmic device industry. Prior to his current post
he was Vice President of Corporate Planning and Development from August 2001
until November 2008. Prior to that he served as Vice President Finance and Chief
Financial Officer from May 2000 to August 2001, as Vice President Controller
from March 1999 to May 2000, and as Controller from October 1992 to March 1999.
Prior to his employment at STAAR he worked for Calmar, Inc. in accounting and
finance positions. He received his Bachelors of Science in Business
Administration from California State University Fullerton and his Masters in
Business Administration from Pepperdine University.
Code
of Ethics
STAAR has
adopted a Code of Ethics applicable to the principal executive officer and
senior financial executives, including the chief financial officer and the
controller of STAAR, as well as all employees and directors of STAAR. The Code
of Ethics is published on our website, at www.staar.com, under “Investor/ Media
— Corporate Governance.” We intend to disclose future amendments to, or waivers
from, certain provisions of the Code of Ethics applicable to senior financial
executives on our website within two business days following the date of such
amendment or waiver.
Audit
Committee
STAAR’s
Board of Directors has established an Audit Committee as a standing committee of
the Board. The principal purpose of the Audit Committee is to oversee
(i) the quality and integrity of STAAR’s financial statements, (ii) the
qualifications and independence of STAAR’s independent registered public
accounting firm, and (iii) the performance of STAAR’s independent registered
public accounting firm. The Audit Committee operates under a written
charter adopted by the Board of Directors. The charter of the Audit
Committee is available on STAAR’s web site at www.staar.com, under
“Investor/Media — Corporate Governance.”
As of
April 30, 2009, the members of the Audit Committee were Donald Duffy, who serves
as the chairman of the committee, Don Bailey and David Morrison. Each member of
the Audit Committee is “independent” as that term is defined under the rules of
the SEC and the Nasdaq Marketplace Rules. STAAR has determined that each member
of the Audit Committee qualifies as an “audit committee financial expert” under
the rules of the SEC.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Exchange Act, and the SEC’s rules thereunder, require our
directors, executive officers and persons who own more than 10% of our Common
Stock to file reports of ownership and changes in ownership of our Common Stock
with the SEC and to furnish to us copies of all reports they file. The SEC has
established specific due dates for these reports and requires STAAR to report in
this Proxy Statement any failure by these persons to file or failure to file on
a timely basis.
To our
knowledge, based solely on a review of the copies of such reports received or
written representations from the reporting persons, we believe that during our
2008 fiscal year our directors, executive officers and persons who own more than
10% of our Common Stock complied with all Section 16(a) filing requirements,
except for the following: a Form 4 filed on January 10, 2008 reporting shares
granted to David Bailey; a Form 4 filed on January 10, 2008 reporting shares
granted to Barry Caldwell; a Form 4 filed on January 11, 2008 reporting shares
granted to Don Bailey; a Form 3 filed on February 7, 2008 reporting John Moore’s
status as director; a Form 4 filed on February 19, 2008 reporting a grant of
options to John Moore; a Form 4 filed on February 19, 2008 reporting options
granted to Paul Hambrick; and a Form 4 filed on May 16, 2008 reporting shares
purchased by Nicholas Curtis.
Compensation
Committee
The
members of the Compensation Committee as of April 30, 2009 are David Morrison,
who serves as chairman of the committee, Don Bailey and John
Moore. Each member of the Compensation Committee is “independent” as
that term is defined under the Nasdaq Marketplace Rules.
The
principal purposes of the Compensation Committee are to help ensure that STAAR’s
compensation of its executive officers and those of its subsidiaries satisfies
the following requirements:
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alignment
with the compensation strategy of STAAR determined by the Board of
Directors;
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equitable
and consistent treatment of all executive
officers;
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enabling
STAAR to compete in recruiting and retaining qualified executive officers;
and
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conforming
to the requirements of all appropriate regulatory
bodies.
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The
Committee also administers STAAR’s 2003 Omnibus Equity Incentive
Plan.
The
Compensation Committee makes all decisions for the total direct compensation of
the executive officers of STAAR, including base salary, annual bonus, long-term
equity compensation and perquisites. The Compensation Committee also generally
approves company-wide pay increases and discretionary compensation that may be
allocated to non-executive employees by management.
Compensation
Committee Interlocks and Insider Participation
During
2008 David Morrison, Don Bailey, John Moore served on the Compensation
Committee. There were no Compensation Committee interlocks or insider (employee)
participation during 2008.
Compensation
Committee Report
The
Compensation Committee has reviewed and discussed with management the following
Compensation Discussion and Analysis. Based on its review and discussions with
management, the Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in STAAR’s Annual
Report on Form 10-K/A for the fiscal year ended January 2,
2009.
The
Compensation Committee
David
Morrison (Chairman)
Richard
Meier
John
Moore
March 17,
2010
Compensation
Discussion and Analysis
The
following Compensation Discussion and Analysis describes the material elements
of compensation for the executive officers of STAAR identified below in the
Summary Compensation Table, whom we refer to as our “Named Executive Officers.”
The Compensation Committee of the Board of Directors, which we refer to in this
discussion as the “Committee,” makes all decisions for the total direct
compensation — that is, the base salary, annual bonus, long-term
equity compensation and perquisites — of STAAR’s executive officers,
including the Named Executive Officers.
STAAR’s
management develops the health, welfare, retirement and paid time-off plans and
policies applicable to salaried U.S.-based employees with the advice of the
Human Resources, Finance and Legal Departments, which generally administer these
plans. The Committee (or Board) oversees these plans and policies and approves
fundamental changes outside the day-to-day decisions made by management to
maintain them. Outside the U.S. the management of our foreign subsidiaries
determines benefit plans in accordance with prevailing local standards and legal
requirements.
STAAR’s
Business Environment
Our Mission. STAAR
develops and manufactures visual implants and other innovative ophthalmic
products to improve or correct the vision of patients with cataracts and
refractive conditions, and distributes them worldwide. STAAR’s mission is to
increase stockholder value by forming economic and therapeutic partnerships with
our customers, allowing the ophthalmic surgeon to perform safer surgeries and
improve patient outcomes. As to our officers and employees, our mission is to
create an environment that is open, honest and entrepreneurial, within which
each is challenged to reach his or her full potential.
Our Values. Each
employee of STAAR is required to promote honest and ethical conduct both within
the company and in its relations with customers, business partners and
regulators.
Our Business
Opportunity. STAAR competes with much larger companies in the
ophthalmic industry and strives to maintain its competitive position through
innovation. STAAR pioneered the flexible intraocular lens, which has become the
standard of care for cataract surgery, and has been a worldwide leader in
intraocular refractive implants. For our business to grow and reward our
stockholders for investing in us, we believe our employees must devote their
efforts to developing, manufacturing, marketing and selling innovative products
that improve the vision of patients and better serve the needs of our physician
customers.
In recent
fiscal years, STAAR has devoted significant resources to thoroughly revamping
its quality and regulatory compliance systems. STAAR’s standing with the FDA and
other regulators, and its reputation with customers, depend on
maintaining a corporate culture that emphasizes regulatory compliance at all
levels, and STAAR aims for continuous improvement in the quality of its
products. In evaluating the performance of executives and employees at every
level, STAAR places a special emphasis on that contribution.
Compensation
Program Objectives and Rewards
Compensation
Philosophy. STAAR designs its compensation programs to promote
a high-performance culture that attracts, motivates and retains the key talent
necessary to optimize stockholder value in a competitive environment.
Compensation at STAAR is market-driven and is designed to motivate the behaviors
that will enable STAAR to execute an aggressive business strategy. Our
compensation program is designed to reward the named executives for meeting or
exceeding corporate financial goals and individual objectives, and for
maintaining the highest standards of business conduct. Our Compensation
Committee determines all elements of compensation for executive officers.
Management is involved only to the extent of providing performance information
and recommendations. The compensation package for all employees includes a
number of components:
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Pay
for the achievement of business and strategic goals, as measured by our
financial and operating performance, as well as individual strategic,
management and development
objectives.
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Competitive
compensation, set at levels to attract and retain key employees. We
regularly review compensation surveys in the medical device industry and
consider the results of these reviews as one factor in setting
compensation levels.
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Alignment
of employee compensation with the interests of shareholders through equity
compensation.
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STAAR
measures the success of its compensation programs by the following:
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The
overall performance of STAAR’s business and the commitment of its officers
to improving performance;
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Our
ability to attract and retain key talent;
and
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The
perception of employees that STAAR rewards dedication, skill and focus on
success of the enterprise.
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STAAR
generally seeks to pay executive officers total compensation competitive with
that paid to executives of other companies of similar size in STAAR’s
industry. Bonus programs and equity incentives can constitute a
significant portion of total compensation and are designed to reward performance
against financial and strategic objectives as well as align the interests of
executive officers with those of our stockholders.
All of
the compensation and benefits for the Named Executive Officers serve the primary
purpose of attracting, retaining and motivating the highly talented individuals
who perform the work necessary for STAAR to succeed in its mission while
upholding its values in a highly competitive marketplace. Beyond that, we design
different elements of compensation to promote individually tailored
goals.
In 2008
the Committee reviewed the Radford Global Life Sciences Survey prepared by the
Radford Survey of Executive Compensation to assess the general competitiveness
of its compensation. Comparisons with survey results are only one element
considered by the Committee in making compensation decisions. Current salaries
generally range from the 25th to
50th
percentile in the 2008 survey. The Committee believes that it has been able to
attract and retain personnel with a high level of professional skill and
experience partly because of the value its executives have placed on the
potential growth in value of their equity compensation if their efforts to
improve STAAR’s business succeed. However, current salary levels may pose a
future risk to retention of the most qualified individuals. As a result, the
Committee believes that if STAAR’s performance continues to improve it is
likely, over time, to reassess compensation levels and adjust as
appropriate.
The
Radford Global Life Sciences Survey employs a database of approximately 650
multinational life science companies. Neither STAAR nor any of its officers or
directors has engaged in any other transaction, or has any other relationship,
with the Radford Survey.
Management by Objectives.
Near the beginning of each year STAAR’s management, in consultation with
the Board, establishes company goals expressed as objectives. The objectives
usually relate to current year financial goals and milestones for significant
longer term projects. Generally, objectives do not include the basic
responsibilities of the employee’s
position. Near the beginning of each year the Committee, in consultation with
management, will generally develop individual management-by-objective goals
(“MBOs”) for each Named Executive Officer that are aligned with STAAR’s overall
short-term and long-term goals. Whenever possible, objectives should have enough
clarity and specificity to be easily measured (numbers, dates, events, etc.).
Objectives should be developed with the expectation that their achievement would
be attainable but ambitious. If there is more than one objective, they are
weighted and the sum of the weights equals 100%. Target cash bonus amounts are
developed for each employee and expressed as a percentage of base salary. The
percentage is correlated to the importance and difficulty of achieving the
objectives for that employee.
Appraisals
at every level of STAAR take into account compliance with our policies and codes
of conduct. We may accord special weight to positive or negative contributions
to STAAR’s culture of regulatory compliance.
Elements
of Compensation
The
elements of compensation that may be paid to executive officers of STAAR include
base salary, annual cash bonuses, and equity compensation in the form of
plan-based awards.
Base Salaries. We
generally negotiate base salaries at a level necessary to attract and retain the
talent STAAR needs to execute its plans. The Committee considers such factors as
its subjective assessment of the executive’s scope of responsibility, level of
experience, individual performance, and past and potential contribution to
STAAR’s business. As noted above in the context of total compensation, the
Committee will often compare base salary with market data obtained through
independent surveys as one factor in making compensation decisions.
The
Committee determines base salaries for executive officers, including the Named
Executive Officers, early each calendar year. For Named Executive Officers other
than himself, the CEO proposes any change in base salary based on:
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his
evaluation of individual performance and expected future contributions,
based on STAAR’s Professional Development
Plan;
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the
general development of STAAR’s
business;
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a
review of survey data, and
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comparison
of the base salaries of the executive officers who report directly to the
CEO to provide for internal equity.
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Annual Cash
Bonuses. The Committee has exclusive discretion to award
bonuses to STAAR’s executives, including its Named Executive Officers, as an
incentive for employee productivity and effectiveness over the course of each
fiscal year. The CEO recommends executive bonuses to the Committee based upon a
combination of the Company’s financial performance and individual performance
against the MBOs established for the year. The Committee decides based on
achievement of financial performance objectives and a subjective analysis of the
executive’s level of responsibility. The Compensation Committee also considers
other types and amounts of compensation that may be paid to the executive, such
as commissions.
When cash
bonuses are paid, the process for recommendation and determination of executive
bonus payments takes place as follows:
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Actual
achievement of financial corporate goals is calculated. This value is
expressed as a percentage between 0 and
100%.
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2.
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Actual
achievement of each executive’s MBOs is evaluated by the CEO. The CEO's
actual achievement of his MBOs is evaluated by the Committee. The
result of each individual achievement calculation is multiplied by the
value of the calculated corporate goals (above) to determine baseline
incentive awards.
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3.
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The
CEO reviews all recommendations, makes adjustments based on his or her
judgment, including adjustments to make recommendations equitable across
all employees and presents those recommendations to the Compensation
Committee.
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The
Compensation Committee reviews all calculations and recommendations,
applies its judgment, and makes adjustments to the recommendations of the
CEO, if appropriate.
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Grants
of Plan Based Awards - Equity Compensation
During
2008 and 2009 STAAR has had a single active stock plan in place for employees,
officers, directors and consultants: the STAAR Surgical Company 2003 Omnibus
Equity Incentive Plan. The terms of the 2003 Omnibus Plan are discussed below
under the heading “STAAR Surgical Company 2003 Omnibus Equity Incentive Plan.”
The 2003 Omnibus Plan makes available a broad variety of stock-based
compensation; to date the Committee has awarded equity compensation in the form
of stock options, restricted shares, and stock grants.
Long-Term
Equity Compensation.
The
Committee believes that long-term equity incentive awards serve to align the
interests of the executive officers with the interests of STAAR’s
stockholders. Long-term equity incentive awards may be granted in the
form of either stock options or restricted shares.
Stock
options. Stock options become valuable if the price of our
common stock rises after we grant the options. The Committee sets the exercise
price of a stock option on the date of grant at fair market value, which is
generally the closing price of our common stock on the Nasdaq Global Market on
that date. Under the 2003 Omnibus Plan, STAAR may not grant stock options having
an exercise price below fair market value of our common stock on the date of
grant. STAAR does not grant stock options with a so-called “reload” feature. To
encourage retention by providing a long-term incentive, the ability to exercise
an option vests over a period of three or four years.
The Board
of Directors has delegated to the Committee its authority to grant stock
options. The Committee’s policy is to award stock options to executive officers
soon after they commence employment. In making grants, the Committee weighs the
potential contribution of the executive to STAAR, but because the size of
initial awards generally depends on the level necessary to attract the executive
under prevailing market conditions, initial award amounts are negotiated by
management in consultation with the Committee, then submitted to the Committee
for approval. In determining the size of any subsequent grants, the Committee
takes into consideration STAAR’s and the individual’s performance, level of
responsibilities, competitive market practices, and the size and term of prior
option grants. These factors are guidelines, and the Committee
ultimately exercises its discretion in determining whether to award options and
the size of any award, and does not base awards on any fixed
formula
STAAR
does not backdate options or grant options retroactively. We also do not
coordinate the grant of options with the release of nonpublic information in
order to make grants before the announcement of favorable information or after
the announcement of unfavorable information.
Restricted shares. Restricted
shares are shares of common stock that STAAR grants subject to restrictions on
sale or transfer for a specified period of time. Restricted shares
are forfeited back to STAAR if the grantee’s service to STAAR terminates before
the end of the restricted period. Under this arrangement, sometimes
referred to as “reverse vesting,” when the restricted period ends the grantee
obtains full rights of ownership over the shares. Restricted stock
provides a long-term incentive by aligning the grantee’s interests with those of
the stockholders and encourages retention through the risk of forfeiture if the
grantee ceases working for STAAR during the restricted period.
Other
Equity Compensation.
Stock Grants. The
2003 Plan permits the grant of fully vested, unrestricted shares to employees
and consultants of STAAR. While the general practice of the Committee
is to use plan-based award for long-term equity compensation, it may from time
to time find it appropriate to grant unrestricted shares. As
discussed below under the caption “Plan-Based Awards to Named Executive
Officers,” due to the special circumstances in 2008 the Company awarded equity
compensation in this form.
Base
Salaries of Named Executive Officers
Salary of Chief Executive
Officer. STAAR established the base salary and incentive
compensation for STAAR’s President and Chief Executive Officer, Barry Caldwell,
through arm’s-length negotiation based on his experience and skills and
then-prevailing market conditions. STAAR and Mr. Caldwell entered into an
employment agreement on November 27, 2007, which was amended in 2008 and
provides for an annual base salary of $400,000, of which Mr. Caldwell may elect
to receive a portion in the form of restricted stock. For the second
year of the term Mr. Caldwell elected to be paid $100,000, or one fourth of his
base salary, in the form of restricted stock.
Salaries of Named Executive
Officers. Base salaries of Named Executive Officers did not
change in fiscal year 2009. The following change in base salary of
Named Executive Officers took place in fiscal year 2008.
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Hans
Blickensdoerfer. In addition to the compensation Mr.
Blickensdoerfer received for his added duties as Interim General Manager
of the Company’s German subsidiary, Domilens, in 2008
Mr. Blickensdoerfer received an increase of approximately 4% in his
salary as Vice President of International Sales (from 240,000 CHF to
250,000 CHF) as a result of the following factors with respect to the
performance of his ongoing responsibilities at STAAR Surgical A.G., the
Company’s subsidiary located in Nidau, Switzerland, during
2007. These factors were equally weighted and assigned no
numerical value:
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annual
sales from Nidau of $13.2 million, exceeding the $12.8 million
target;
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gross
profit (Nidau) of 68.5%, exceeding the target of
62%;
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strengthening
of the customer service organization through new hires and
training;
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completion
of a customer satisfaction survey;
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strengthening
the international sales organization in Asia through representative
offices in China and Singapore;
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41%
growth in ICL/TICL sales, exceeding the 2007 strategic target of
35%;
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increasing
the Company’s academic presence with 17 presentations and four courses at
the European Society of Cataract and Refractive
Surgery;
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strengthening
the clinical group; and
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recruitment
and business expansion in India.
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Annual
Cash Bonuses
No Cash Bonuses Paid in 2009.
On February 20, 2009, the Committee determined that cash
bonuses would not be awarded to executives based on 2008 performance. This
follows a similar decision regarding bonuses for U.S.-based executives made on
February 14, 2008 for bonuses based on 2007 performance. In these
periods management did not recommend cash bonuses, and the Committee concurred
with management’s recommendation, because of STAAR’s overall financial results,
notwithstanding significant progress toward improved results across all business
units and outstanding individual achievements. Additional factors considered by
the Committee in these decisions are STAAR’s need to conserve its cash resources
and uncertainty about the global economic environment in 2009.
The
review process that would normally have led to the allocation of cash bonuses or
increases in compensation was completed in February 20, 2009.
Cash Bonuses potential of Chief
Executive Officer. Mr. Caldwell’s employment agreement
provides for a performance bonus of up to 60% of annual salary, which was to be
first determined and, if awarded, to be paid in 2009 based on performance during
2008. In keeping with general suspension of cash bonuses in 2009, Mr. Caldwell
did not receive a bonus based on 2008 performance.
Cash Bonuses Paid to Named Executive
Officers During 2008 based on 2007 Performance. On February
14, 2008, the Committee approved a bonus to be paid to Hans Blickensdoerfer,
Vice President of International Sales, in the amount of 106,452 Swiss Francs
($98,258), equal to 40% of his annual base compensation, in recognition of the
excellent performance of STAAR’s international business based in Nidau,
Switzerland. Mr. Blickensdoerfer also received a discretionary payment of 37,500
Swiss Francs ($34,614) for three months of extraordinary services performed in
assisting the transition of leadership at Domilens GmbH to its new General
Manager, Reinhard Pichl. No other cash bonus was paid to a Named
Executive Officer based on 2007 performance.
Plan-based
Awards to Named Executive Officers
Plan-Based
Awards to Named Executive Officers in fiscal year 2009
In 2009,
rather than granting equity compensation in the form of stock options, the
Compensation Committee granted shares of common stock to STAAR’s executive
officers. The grants served as both incentives for the recipients to
continue their contributions to the success of the company and as recognition of
2008 performance in light of the suspension of all cash bonuses and salary
increases for executives in 2009. The stock awards, which were granted on March
30, 2009, were intended to recognize that, notwithstanding the Committee’s
decision to accept management’s recommendation to suspend cash bonuses and
salary increases, and notwithstanding uncertain worldwide economic conditions
that made conservation of cash a key priority, STAAR had made significant
progress toward improved results across all business units and individuals had
made outstanding achievements. As a result, prior year performance,
which would otherwise have served as a basis for cash bonuses, was instead used
as a factor for granting stock awards in 2009.
In
determining the stock awards the Committee considered both the overall
performance of STAAR in pursuit of corporate goals and individual
performance. STAAR’s corporate goals for 2008 - and its achievement
against them - were as follows:
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Improving cash flow.
STAAR significantly reduced its cash “burn” rate in 2008 as a result of
rising margins and cost-cutting efforts. Excluding results from
STAAR Japan (which was acquired at the beginning of fiscal year 2008),
STAAR reduced cash used in operations by 57% during fiscal year 2008 when
compared to fiscal year 2007 and established a trend of decreasing cash
usage. Including the results from STAAR Japan , STAAR reduced
its use of cash from operations by 26% over 2007. STAAR had
experienced several consecutive years of negative cash flow, and beginning
at the end of fiscal year 2007 new initiatives were adopted to move more
quickly back into the positive range. While STAAR had note yet
achieved positive cash flow in 2008, the Committee deemed the 57%
reduction in use of cash in 2008 (excluding Japan) and the trend to
positive cash flow accomplished in 2008 to have satisfied this
objective.
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In
assessing management’s success in improving cash flow over 2007, the
Committee found it useful to exclude the 2008 results from Japan because
doing so provided a more direct comparison with 2007 performance, and
because STAAR Japan’s cash use immediately after the acquisition was
affected by integration costs and did not necessarily reflect company-wide
cash management measures.1 In general, STAAR’s
management has found it useful to exclude the impact of Japan when
comparing 2008 performance to previous
periods.
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Among
the elements leading to the improved cash flow was a significant
improvement in gross margins. For the year, STAAR increased its
gross margin to 53.6% percent over 49.3% for 2007. STAAR improved its
gross margin in every quarter of 2008 except the fourth
quarter. From the first through fourth quarter of 2008 gross
margin was 43.2%, 55.8%, 57.7% and 57.1% (including
Japan).
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STAAR
reported $11,184,000 used in operating activities in 2007 and $8,228,000
used in operating activities in 2008, a reduction of $2,956,000, or
26%. Of the $8,228,000 used in 2008, STAAR Japan accounted for
$3,418,000 and the remainder of STAAR’s operations accounted for
$4,810,000 of STAAR’s cash use in 2008. Without Japan, cash use
declined by 6,374,000, or
57%.
|
|
|
·
|
Increasing U.S. sales by
reversing the decline in IOL sales and improving the growth of ICL
sales. The objective of an overall increase in U.S.
sales in 2008 was not achieved, with an overall decline of 4% reported.
Notwithstanding the overall decline, STAAR believes it made significant
progress against this objective by increasing U.S. ICL sales despite
challenging market conditions, by reducing the rate of decline in IOL
sales, and by introducing new IOLs that are expected to significantly
increase average U.S. selling prices for IOLs. In particular,
in 2008 Visian ICL sales in the U.S. grew by 18% over the prior year, even
though the industry-wide U.S. market for refractive procedures declined by
about 35% during the same period. These results compare
favorably to 2007 results, when STAAR’s U.S. ICL sales declined 1% over
the prior year and its total U.S. sales declined 13%. While
sales of IOLs in the U.S. continued to decline in 2008, the rate of
decline decreased each quarter and management had refreshed the product
line with several new products in release or soon to be released at the
time of the grants, including three lenses for which the Centers for
Medicaid and Medicare granted “New Technology IOL” status and enhanced
reimbursement. As a result, prospects for reversing the decline
in U.S. IOL sales and overall U.S. sales had significantly
improved.
|
|
|
·
|
Successfully integrating STAAR
Japan. Early in fiscal year 2008 STAAR completed the acquisition of
the remaining interests in its Japan-based joint venture, Canon Staar Co.,
Inc., which became a wholly owned subsidiary of STAAR operating under the
name “STAAR Japan, Inc.” STAAR’s management believes that the
integration proceeded smoothly, with changes resulting from STAAR’s new
ownership embraced by managers and employees of STAAR
Japan. During fiscal year 2008 STAAR Japan
contributed $12.7 million in sales, exceeding STAAR’s goal of $12
million.
|
The
Committee allocated approximately 300,000 shares of stock for the payment of
stock awards based on the number of shares outstanding in the Company’s equity
incentive pool and a determination that this level of compensation would be a
meaningful recognition of 2008 corporate achievements and help retain and
motivate valuable staff. In allocating the shares among senior
executives, including the named executive officers, the Committee used as
guidelines the following factors, none of which predominated:
|
|
·
|
Achievement
of individual objectives (as described in detail
below)
|
|
|
·
|
Contribution
to the achievement of corporate
objectives
|
|
|
·
|
Level
of management responsibility
|
|
|
·
|
Relative
salary level and cash bonus
potential
|
Award to CEO. The
Committee granted 60,000 shares of common stock to Mr. Caldwell in recognition
of the Company’s progress in achieving its corporate goals for 2008 during his
first year of leadership, in particular improving the company’s financial
condition and increasing prospects for a turnaround of the U.S. business through
substantially increased ICL sales and the refreshing of the IOL product line
with newer, higher value products. On the date of grant the
stock had a value of $57,000. While Mr. Caldwell’s Executive
Employment Agreement provides that he may earn an annual cash bonus of up to 60%
of his salary, or a potential $240,000, the 60,000 shares were the only
discretionary compensation paid to him in 2009.
Deborah
Andrews. The Committee granted 25,000 shares of common stock
to Ms. Andrews based on STAAR’s progress in achieving its corporate goals
and on the following individual factors:
|
|
·
|
improvements
in the integration of STAAR’s global financial reporting functions,
including post-acquisition reporting by STAAR Japan;
and
|
|
|
·
|
her
role in significantly reducing STAAR’s use of cash through cost-cutting
and other measures.
|
On the
date of grant the stock had a value of $23,750. While Ms. Andrews’
Employment Agreement provides that she may earn an annual cash bonus of up to
40% of her salary, or a potential $100,000, the 25,000 shares are the only
discretionary compensation paid to her in 2009 .
David Bailey. The
Committee granted 30,000 shares of common stock to David Bailey, President of
International Operations, based on STAAR’s progress in achieving its corporate
goals and on the following individual factors:
|
|
·
|
The
results delivered by STAAR’s international business, where revenue
improved by 41% in 2008 over 2007 (including
Japan).
|
|
|
·
|
An
increase of 26.3% in international ICL
sales.
|
|
|
·
|
His
role in the integration of STAAR Japan, which was a key factor in overall
international sales growth.
|
On the
date of grant the stock had a value of $28,500. While David Bailey’s
Executive Employment Agreement provides that he may earn an annual cash bonus of
up to 50% of his salary, or a potential 225,000 Swiss francs, the 30,000 shares
are the only discretionary compensation paid to him in 2009.
Hans
Blickensdoerfer. The Committee granted 30,000 shares of common
stock to Hans Blickensdoerfer, Vice President, International Marketing, based on
STAAR’s progress in achieving its corporate goals and on the following
factors:
|
|
·
|
The
increase in sales through international distributors, which is under his
management;
|
|
|
·
|
The
continued expansion of the Visian ICL into new markets worldwide, which is
also under his management.
|
While Mr.
Blickensdoerfer’s employment agreement provides that he may earn an annual cash
bonus of up to 25% of his salary, or a potential [48,750] Swiss francs, the
30,000 shares are the only discretionary compensation paid to him in
2009.
Reinhard
Pichl. The Committee granted 10,000 shares of common stock to
Reinhard Pichl, Managing Director of Domilens Vertrieb fur medizinische
Produkte, GmbH, based on STAAR’s progress in achieving its corporate goals, on
Mr. Pichl’s assumption of the leadership role at Domilens following his
appointment in October 2007, and his efforts to better integrate Domilens into
STAAR’s global business. On the date of grant the stock had a value
of $9,500. While Mr. Pichl’s employment agreement provides that he
may earn an annual cash bonus of up to 30% of his salary, or a potential 54,000
euro, the 10,000 shares are the only discretionary compensation paid to him in
2009.
Plan-Based
Awards to Named Executive Officers in Fiscal Year 2008
On
January 8, 2008, the Committee granted to Barry Caldwell, President and Chief
Executive Officer, an option to purchase 200,000 shares of common stock. This
option was provided for in the Executive Employment Agreement in connection with
his appointment as President and Chief Executive Officer on November 27, 2007,
subject to approval by the Committee at its next regular meeting. This option
was granted pursuant to the 2003 Plan, has an exercise price of $2.21 per share,
and vests in equal installments on the first three anniversaries of November 27,
2007, the date when Mr. Barry Caldwell commenced employment, and has a term
of ten years.
On
November 14, 2008, Mr. Caldwell received 64,103 shares of restricted
stock. These shares were granted as a result of Mr. Caldwell’s
election to take 25% of his salary ($100,000) in the form of stock
rather than cash during the second year of his employment with
STAAR. The shares vest in twelve equal monthly
installments. Mr. Caldwell’s election to receive stock in lieu
of cash compensation is discussed in greater detail in the proxy statement under
“Employment Agreements.”
On May
15, 2008, the Committee granted to Deborah Andrews an option to purchase 20,000
shares of Common Stock. The Committee awarded the options to ensure
that Ms. Andrews had sufficient incentives for future performance in
the role
of Chief Financial Officer because, of the 180,000 options she already held,
approximately one half were priced too high to have significant value
as incentives in the foreseeable future. The 20,000 options were granted
pursuant to the 2003 Plan, have an exercise price of $2.91 per share, vest in
three equal annual installments subject to continued service, and will expire on
May 14, 2018.
On
February 14, 2008 the Committee granted to Hans Blickensdoerfer, Vice President
of International Sales, an option to purchase 50,000 shares of common stock, in
recognition of the performance of STAAR’s international operations and his role
in stabilizing the business of Domilens during his service as its Interim
General Manager in 2007. These options were granted pursuant to the 2003 Plan,
have an exercise price of $2.30 per share, vest in three equal annual
installments subject to continued service, and will expire on February 13,
2018.
Change
in Control Arrangements
Our Named
Executive Officers will generally receive continued payments from STAAR or a
successor company if they are terminated following a change in control of STAAR.
In addition, STAAR’s 2003 Omnibus Equity Incentive Plan provides that, if STAAR
has a change in control, options vest immediately unless the surviving company
assumes the options. STAAR provides these rights to help it compete with larger,
better capitalized ophthalmic companies in attracting employees. STAAR also
recognizes the importance to the company and its stockholders of avoiding the
distraction and loss of key management personnel that may occur in connection
with rumored or actual fundamental corporate changes. Change in control rights
are intended to do the following:
|
|
·
|
Encourage
employees to remain with the company despite uncertainties while a
transaction is under consideration or pending by assuring them that, if
they are terminated as a result of a change in control, they will receive
continued pay and benefits to cover the disruption in employment;
and
|
|
|
·
|
Reinforce
the alignment of employee interest with stockholder interest by providing
that, if a major transaction occurs, vesting and exercisability of stock
options will continue, so the potential equity value of unvested or
unexercised options will not be
lost.
|
Perquisites
STAAR’s
Named Executive Officers, along with other senior management employees, may be
eligible for a limited number of perquisites intended to minimize distractions
from the executives’ attention to important STAAR business. In addition to his
base salary, Mr. Caldwell receives a housing allowance to maintain an
executive-level apartment in the vicinity of STAAR’s headquarters, and will
receive relocation assistance when he moves permanently to the area from his
home in Ft. Worth, Texas, provided the relocation takes place on or before
December 31, 2009. David Bailey is entitled, in addition to his base salary, to
an automobile allowance, a housing allowance to rent an executive apartment in
the vicinity of STAAR’s Nidau, Switzerland facility, and disability insurance
which will replace 60% of his annual salary in the event of his disability, and
payment of premiums for a life insurance policy with a death benefit of
$1,750,000.
Benefits
The Named
Executive Officers participate in a variety of retirement, health and welfare,
and paid time-off benefits designed to enable STAAR to attract and retain its
workforce in a competitive marketplace. Health and welfare and paid time-off
benefits help ensure that STAAR has a productive and focused workforce through
reliable and competitive health and other benefits. Pension and savings plans
help employees, especially long-service employees, save and prepare financially
for retirement.
STAAR’s
qualified 401(k) Plan allows employees to contribute up to 15 percent of their
base salary, up to the limits imposed by the Internal Revenue
Code — $15,500 for 2008 — on a pre- or after-tax basis.
STAAR provides a 50% percent match up to the first 2% of the employee’s
compensation, and a 25% match of the next 4% of compensation, which vest
immediately. The terms of the 401(k) Plan are described below under the caption
“Employee Benefit Plans.” Officers serving outside the U.S., where Section
401(k) of the Internal Revenue Code is largely inapplicable, receive pension
benefits based on local regulations and standards.
David
Bailey and Hans Blickensdoerfer are entitled to pension benefits under a Passive
Pension Plan that STAAR Surgical AG, STAAR’s Swiss subsidiary, maintains for its
employees. The Swiss plan is financed by employer and employee contributions,
with employers required to match employee contributions.
Each of
STAAR’s U.S.-based executive officers also receives an Executive Life Insurance
Policy with premiums paid by the Corporation. David Bailey receives a life
insurance policy with premiums paid by the corporation and providing a death
benefit of $1,750,000.
Policy Under Section 162(m) of the
Internal Revenue Code. STAAR has not formulated a policy for
qualifying compensation paid to executive officers for deductibility under
Section 162(m) of the Internal Revenue Code, and does not foresee the necessity
of doing so in the near future. Should limitations on the deductibility of
compensation become a material issue, the Compensation Committee will determine
whether such a policy should be implemented, either in general or with respect
to specific transactions.
Summary
Compensation
The
following table summarizes the compensation of the Named Executive Officers for
each of the three fiscal years ending January 2, 2009. The Named Executive
Officers are the Chief Executive Officer, Chief Financial Officer, and three
other most highly compensated executive officers ranked by their total
compensation in the table below.
| Name
and Principal Position |
|
Year
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Stock
Awards
($)(1)
|
|
|
Option
Awards
($)(1)
|
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
|
Barry
Caldwell
|
|
2008
|
|
|
300,000 |
|
|
|
— |
|
|
|
99,708 |
|
|
|
112,405 |
|
|
|
— |
|
|
|
43,957 |
(3) |
|
|
556,070 |
|
|
President
and Chief
|
|
2007
|
|
|
21,878 |
|
|
|
— |
|
|
|
100,000 |
|
|
|
— |
|
|
|
— |
|
|
|
18,750 |
|
|
|
140,628 |
|
|
Executive
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deborah
Andrews
|
|
2008
|
|
|
250,000 |
|
|
|
— |
|
|
|
— |
|
|
|
121,364 |
|
|
|
— |
|
|
|
12,357 |
|
|
|
383,721 |
|
|
Vice
President and Chief
|
|
2007
|
|
|
243,269 |
|
|
|
50,000 |
|
|
|
— |
|
|
|
127,099 |
|
|
|
— |
|
|
|
12,742 |
|
|
|
433,110 |
|
|
Financial
Officer
|
|
2006
|
|
|
225,000 |
|
|
|
67,500 |
|
|
|
— |
|
|
|
119,692 |
|
|
|
— |
|
|
|
13,326 |
|
|
|
425,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Bailey (2)
|
|
2008
|
|
|
415,363 |
|
|
|
— |
|
|
|
— |
|
|
|
167,632 |
|
|
|
— |
|
|
|
212,623 |
(3) |
|
|
795,618 |
|
|
President,
International
|
|
2007
|
|
|
415,246 |
|
|
|
80,000 |
|
|
|
125,000 |
|
|
|
239,110 |
|
|
|
— |
|
|
|
34,768 |
|
|
|
894,124 |
|
|
Operations
|
|
2006
|
|
|
400,583 |
|
|
|
80,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34,768 |
|
|
|
727,909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinhard
Pichl (2)
|
|
2008
|
|
|
292,590 |
|
|
|
— |
|
|
|
— |
|
|
|
17,443 |
|
|
|
— |
|
|
|
53,377 |
(3) |
|
|
363,410 |
|
|
Managing
Director,
|
|
2007
|
|
|
48,699 |
|
|
|
14,610 |
|
|
|
— |
|
|
|
1,246 |
|
|
|
— |
|
|
|
1,926 |
|
|
|
66,481 |
|
|
Domilens
GmbH
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hans
Blickensdoerfer (2)
|
|
2008
|
|
|
252,462 |
|
|
|
132,872 |
|
|
|
— |
|
|
|
78,214 |
|
|
|
— |
|
|
|
40,899 |
(3) |
|
|
504,447 |
|
|
Vice
President,
|
|
2007
|
|
|
304,669 |
|
|
|
58,458 |
|
|
|
— |
|
|
|
83,754 |
|
|
|
33,291 |
|
|
|
21,387 |
|
|
|
501,559 |
|
|
International
Marketing
|
|
2006
|
|
|
159,783 |
|
|
|
34,988 |
|
|
|
— |
|
|
|
62,125 |
|
|
|
33,291 |
|
|
|
9,934 |
|
|
|
300,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents
the dollar amounts associated with the named executive officers’ stock and
option grants that are recognized as stock-based compensation expense in
the 2008, 2007 and 2006 fiscal years for financial statement reporting
purposes in accordance with SFAS 123R resulting from the vesting of
restricted stock and options granted in the years 2005-2008, as
applicable. For a detailed discussion of the assumptions made in the
valuation of stock option awards, please see Note 14 of our Notes to the
Consolidated Financial Statements included in this Annual Report on Form
10-K as originally filed on April 2,
2009.
|
|
(2)
|
Amounts
are translated using the applicable average foreign currency exchange
rates for the years presented. David Bailey and Hans Blickensdoerfer are
paid in Swiss Francs and Reinhard Pichl is paid in
Euros.
|
|
(3)
|
For
each executive officer who received perquisites and personal benefits
exceeding $10,000 in 2008, perquisites and benefits are identified in the
table below. The subsequent table quantifies each perquisite paid to
each executive officer who received perquisites and personal benefits
exceeding $10,000 in 2008.
|
The
following table summarizes the elements of “All Other Compensation” listed in
the table above for 2008.
|
Name
|
|
Perquisites
and
Other
Personal
Benefits
($)
|
|
|
Insurance
Premiums
($)
|
|
|
Company
Contributions
to Retirement and
401(k)
Plans
($)
|
|
|
Total ($)
|
|
|
Barry
Caldwell
|
|
|
27,780 |
|
|
|
12,767 |
|
|
|
3,410 |
|
|
|
43,957 |
|
|
Deborah
Andrews
|
|
|
— |
|
|
|
8,232 |
|
|
|
4,
125 |
|
|
|
12,357 |
|
|
David
Bailey
|
|
|
93,487 |
|
|
|
54,542 |
|
|
|
64,594 |
|
|
|
212,623 |
|
|
Reinhard
Pichl
|
|
|
51,668 |
|
|
|
1,709 |
|
|
|
— |
|
|
|
53,377 |
|
|
Hans
Blickensdoerfer
|
|
|
— |
|
|
|
6,501 |
|
|
|
34,398 |
|
|
|
40,899 |
|
_________________
The
following table quantifies each perquisite and personal benefit paid to each
Named Executive Officer who, in 2008, received perquisites and personal benefits
exceeding $10,000 in value.
|
Name
|
|
Year
|
|
Personal Use of
Company
Car/Parking
($)
|
|
|
Company
Paid
Housing
($)
|
|
|
Executive
Relocation
($)
|
|
|
Total Perquisites
and
Other
Personal Benefits
($)
|
|
|
Barry
Caldwell
|
|
2008
|
|
|
— |
|
|
|
27,780 |
|
|
|
— |
|
|
|
27,780 |
|
|
David
Bailey
|
|
2008
|
|
|
22,153 |
|
|
|
33,229 |
|
|
|
38,105 |
|
|
|
93,487 |
|
|
Reinhard
Pichl
|
|
2008
|
|
|
6,887 |
|
|
|
— |
|
|
|
44,781 |
|
|
|
51,668 |
|
Grants
of Plan Based Awards
for
Fiscal Year Ended
January 2,
2009
The
following table provides information on stock and stock options granted in 2008
to each of STAAR’s Named Executive Officers, and estimated future payouts for
non-equity incentive plan awards under STAAR’s executive cash bonus plan. By
providing the Grant Date Fair Value of Stock and Option Awards in the table
STAAR does not imply any assurance that such values will ever be
realized.
| |
|
|
|
Estimated
Future Payouts Under
Non-Equity
Incentive Plan
Awards(1)
|
|
|
All Other
Stock Awards:
Number
of
Shares
of
Stock
or
Units
(#)
|
|
|
All
Other
Option Awards:
Number
of
Securities
Underlying
Options
(#)
|
|
|
Exercise or
Base
Price
of
Option
Awards
($ / Sh)
|
|
|
Grant
Date
Fair
Value
of
Stock
and
Option
Awards
($)
|
|
| Name |
|
Grant
Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry
Caldwell
|
|
01/08/2008
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
200,000 |
|
|
|
2.21 |
|
|
|
262,389 |
|
|
|
|
11/14/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
64,103 |
(2) |
|
|
— |
|
|
|
— |
|
|
|
100,000 |
(2) |
|
|
|
2/14/2008
|
|
|
0 |
|
|
|
240,000 |
|
|
|
240,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deborah
Andrews
|
|
5/15/2008
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
20,000 |
|
|
|
2.91 |
|
|
|
32,851 |
|
|
|
|
2/14/2008
|
|
|
0 |
|
|
|
100,000 |
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Bailey
|
|
2/14/20008
|
|
|
0 |
|
|
|
203,767 |
(3) |
|
|
203,767 |
(3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinhard
Pichl
|
|
2/14/20008
|
|
|
0 |
|
|
|
78,694 |
(3) |
|
|
78,694 |
(3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hans
Blickensdoerfer
|
|
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
50,000 |
|
|
|
2.30 |
|
|
|
65,487 |
|
| |
|
2/14/2008
|
|
|
|
|
|
|
44,150 |
(3) |
|
|
44,150 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects
targeted cash bonus for 2008 performance to be paid in 2009 under STAAR’s
cash bonus plan for executive officers. No bonuses were paid
under this plan in 2009.
|
|
(2)
|
These
shares were granted in partial consideration of Mr. Calwell’s services
during the second year of his Executive Employment Agreement, which began
on November 27, 2008. On December 14, 2008, Mr. Caldwell
elected to be paid $100,000, or one fourth of his base salary, in the form
of restricted stock. The number of shares issued reflects
$100,000 divided by $1.56, the price per share on the date of that
election.
|
|
(3)
|
Based
on the exchange rate as of February 14, 2008. Target bonus amounts
for these individuals are denominated in local currency as follows:
Mr. Bailey, 225,000 Swiss Francs; Mr. Pichl, 54,000 Euro; Mr.
Blickensdoerfer, 48,750 Swiss
Francs. |
Outstanding
Equity Awards
at
Fiscal Year-End
January
2, 2009
The
following table shows the number of shares covered by exercisable and
unexercisable options and unvested shares of restricted stock held by STAAR’s
Named Executive Officers on January 2, 2009.
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares
or
Units
of
Stock That
Have
Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units
of
Stock That
Have
Not
Vested
($)
|
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Barry
Caldwell
|
|
|
20,000 |
|
|
|
— |
|
|
|
4.79 |
|
5/15/2017
|
|
|
58,762 |
(9) |
|
|
92,255 |
|
|
|
|
|
66,667 |
|
|
|
133,333 |
(1) |
|
|
2.21 |
|
01/07/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deborah
Andrews
|
|
|
— |
|
|
|
20,000 |
(4) |
|
|
2.91 |
|
5/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
— |
|
|
|
10.63 |
|
6/15/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
— |
|
|
|
7.86 |
|
2/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000 |
|
|
|
— |
|
|
|
3.95 |
|
4/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
— |
|
|
|
4.71 |
|
8/21/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500 |
|
|
|
12,500 |
(2) |
|
|
6.92 |
|
2/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
13,333 |
|
|
|
26,667 |
(3) |
|
|
5.39 |
|
4/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Bailey
|
|
|
140,000 |
|
|
|
— |
|
|
|
3.60 |
|
2/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
40,300 |
|
|
|
— |
|
|
|
3.35 |
|
8/8/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
|
|
— |
|
|
|
3.81 |
|
1/2/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
|
|
— |
|
|
|
3.95 |
|
4/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000 |
|
|
|
— |
|
|
|
4.00 |
|
5/18/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
25,000 |
(2) |
|
|
6.92 |
|
2/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
50,000 |
(3) |
|
|
5.39 |
|
4/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000 |
|
|
|
— |
|
|
|
11.13 |
|
12/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinhard
Pichl
|
|
|
8,333 |
|
|
|
16,667 |
(5) |
|
|
3.00 |
|
11/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hans
Blickensdoerfer
|
|
|
35,000 |
|
|
|
— |
|
|
|
6.27 |
|
12/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500 |
|
|
|
12,500 |
(6) |
|
|
6.92 |
|
2/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
8,333 |
|
|
|
16,667 |
(7) |
|
|
5.39 |
|
4/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
50,000 |
(8) |
|
|
2.30 |
|
2/13/2018
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
66,667
options will vest on November 27, 2009 and the remaining 66,666 options
will vest on November 27, 2010.
|
|
(2)
|
For
Ms. Andrews, 6,250 options will vest on February 10, 2009, and the
remaining 6,250 options will vest on February 10, 2010. For Mr. Bailey,
12,500 options will vest on February 10, 2009, and the remaining 12,500
options will vest on February 10,
2010.
|
|
(3)
|
For
Ms. Andrews, 13,333 options will vest on April 3, 2009 and the remaining
13,334 options will vest on April 3, 2010. For Mr. Bailey, 25,000 options
will vest on April 3, 2009 and the remaining 25,000 options will vest on
April 3, 2010.
|
|
(4)
|
6,666
options will vest on May 15, 2009, 6,667 options will vest on May 15, 2010
and the remaining 6,667 options will vest on May 15,
2011.
|
|
(5)
|
8,333
options will vest on November 15, 2009 and the remaining 8,334 options
will vest on November 15, 2010.
|
|
(6)
|
6,250
options will vest on February 10, 2009, and the remaining 6,250 options
will vest on February 10, 2010.
|
|
(7)
|
8,333
options will vest on April 3, 2009 and the remaining 8,334 options will
vest on April 3, 2010.
|
|
(8)
|
16,666
options will vest on February 14, 2009, 16,667 will vest on February 14,
2010 and the remaining 16,667 will vest on February 14,
2011.
|
|
(9)
|
5,342
securities will vest monthly for the eleven months beginning on January
31, 2009.
|
Option
Exercises and Stock Vested as of
Fiscal
Year-End January 2, 2009
The table
below shows the number of shares of STAAR common stock acquired by Named
Executive Officers during 2008 on the exercise of options, and the number of
shares of stock subject to stock awards that vested in 2008 for each Named
Executive Officer.
| |
|
Option
Awards
|
|
|
Stock
Awards
|
|
|
Name
|
|
Number of Shares
Acquired on Exercise
(#)
|
|
|
Value Realized
on
Exercise
($)
|
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
|
Value Realized
on
Vesting
($)
|
|
|
Barry
Caldwell
|
|
|
— |
|
|
|
— |
|
|
|
39,937 |
|
|
|
99,708 |
|
|
Deborah
Andrews
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
David
Bailey
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Reinhard
Pichl
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Hans
Blickensdoerfer
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Pension
Benefits for Fiscal Year Ended
January
2, 2009
STAAR
maintains a passive pension plan (“Swiss Plan”) covering employees of its Swiss
subsidiary, including the Named Executive Officers listed below. This
plan is classified as a defined benefit plan under guidelines of the Swiss
Auditing Chamber’s Auditing Practice Committee and its Accounting Practice
Committee, and STAAR accounts for it as a defined benefit plan.
The Swiss
plan is financed by employer and employee contributions, with employers required
to match employee contributions. No other Named Executive Officer
participates in a defined benefit pension plan.
The table
below shows the present value of the pension benefits to which each person is
entitled to under the Swiss Plan. The present value assumes that the
participant will retire at age 65, the normal retirement age for men under the
plan. The present value was calculated using the assumptions set
forth in Footnote 10 to the Company’s Annual Report on Form 10-K for fiscal year
2008.
|
Name
|
|
Plan
Name
|
|
Number
of Years
Credited
Service
(#)
|
|
|
Present
Value of
Accumulated
Benefit
($)
|
|
|
Payments
During
2008
($)
|
|
|
David
Bailey
|
|
Switzerland
Plan
|
|
|
1.0 |
(1) |
|
|
95,935 |
|
|
|
— |
|
|
Hans
Blickensdoerfer
|
|
Switzerland
Plan
|
|
|
6.8 |
(1) |
|
|
215,554 |
|
|
|
— |
|
|
(1)
|
The
number of years credited to an employee under the Swiss Plan is determined
by applicable government regulations and plan formulae, and may be greater
than the actual number of years the employee has worked for the
company.
|
Change
in Control and Termination Payment and Benefit Estimates
As
of January 2, 2009
The table
below demonstrates the effect of termination and change-in-control rights held
by Named Executive Officers under their employment agreements with us. Each
column of the table shows the financial benefit that would have been received by
a Named Executive Officer, on a hypothetical basis, if one of the following
events had occurred on January 2, 2009:
|
|
·
|
termination
by STAAR without cause, or by the executive for good reason, prior to a
change in control;
|
|
|
·
|
termination
by STAAR without cause, or by the executive for good reason, following a
change in control;
|
|
|
·
|
a
change in control of STAAR, without termination of the executive;
and
|
|
|
·
|
termination
because of disability, irrespective of any change in
control;
|
We are
providing this information on a hypothetical basis in accordance with the
regulations of the SEC. In fact, no such change in control occurred on January
2, 2009, and none of the executives was terminated on that
date. There can be no assurance that a change in control would
produce the same or similar results as those described if it occurs on any other
date, or if any assumption is not correct when the actual event
occurs. Termination “for good reason” generally means that an
employer has adversely changed the terms and conditions of employment to such a
degree that the executive, under the specific terms of his or her agreement, is
entitled to voluntarily resign and to receive severance benefits.
|
|
|
|
|
Before Change in
Control
|
|
|
After Change in
Control
|
|
|
|
|
|
|
|
|
Name
|
|
Benefit
|
|
Termination
w/o Cause
or for
Good
Reason
($) (4)
|
|
|
Termination
w/o Cause
or
for Good Reason
($) (4)
|
|
|
Change in
Control
($) (1)
|
|
|
Disability
($)
|
|
|
Barry
Caldwell
|
|
Severance
|
|
|
600,000 |
|
|
|
600,000 |
|
|
|
— |
|
|
|
228,988 |
|
|
|
|
Options
and restricted stock vest immediately
|
|
|
— |
|
|
|
174,926 |
(2) |
|
|
174,926 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deborah
Andrews
|
|
Severance
|
|
|
125,000 |
|
|
|
250,000 |
|
|
|
— |
|
|
|
— |
|
|
|
|
Options
vest immediately
|
|
|
— |
|
|
|
— |
|
|
|
176,570 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Bailey
|
|
Severance
|
|
|
1,056,004 |
|
|
|
774,115 |
(3) |
|
|
— |
|
|
|
563,776 |
|
|
|
|
Options
vest immediately
|
|
|
— |
|
|
|
289,739 |
(2) |
|
|
289,739 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinhard
Pichl
|
|
Severance
|
|
|
83,811 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
Options
vest immediately
|
|
|
— |
|
|
|
— |
|
|
|
29,903 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hans
Blickensdoerfer
|
|
Severance
|
|
|
126,231 |
|
|
|
252,462 |
|
|
|
— |
|
|
|
— |
|
|
|
|
Options
vest immediately
|
|
|
— |
|
|
|
— |
|
|
|
181,896 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Assumes
that following a change in control the acquirer of surviving company has
not assumed or confirmed the executive’s outstanding options. If the
acquirer assumes options or surviving company confirms options issued
under the 2003 Omnibus Equity Incentive Plan, the options will continue to
vest in accordance with their original
terms.
|
|
(2)
|
If
the executive is terminated without cause, or resigns for good reason,
following a change in control, all unvested options will vest immediately
and will continue to be exercisable for the full term of the option,
irrespective of the termination of
employment.
|
|
(3)
|
This
amount excludes any tax “gross-up” under Mr. Bailey’s employment agreement
because of the likelihood that he is not subject to U.S. taxes as of
January 2, 2009. If he were subject to U.S. income taxes on that date, the
hypothetical value of Mr. Bailey’s severance payment on a termination on
January 2, 2009, without cause or for good reason following a change in
control, including the tax gross-up, would be
$1,290,192.
|
|
(4)
|
Except
as otherwise indicated severance payments are payable on a bi-weekly basis
during the severance period. Mr. Bailey would receive severance payments
in lump-sum if terminated by the employer without cause or by the
executive for good reason following a change of control. Mr. Caldwell
would receive his severance payment in lump-sum payable on the 60th
day following a termination regardless of a change in
control.
|
2008
Director Compensation
The chart
below summarizes 2008 compensation of each director for services as a director,
committee member or chairperson, including fees earned or paid in cash, stock
awards and option awards. The values shown for stock awards and
option awards are the dollar amounts STAAR recognized for financial statement
reporting purposes in 2008 in accordance with FAS 123R.
|
Name
|
|
Fees Earned or
Paid in Cash
($)
|
|
|
Stock Awards(1)
($)
|
|
|
Option Awards(1)
($)
|
|
|
Total
($)
|
|
|
Don
Bailey
|
|
|
— |
(2) |
|
|
81,313 |
(2) |
|
|
49,380 |
(4) |
|
|
130,693 |
|
|
David
Bailey
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Barry
Caldwell
|
|
|
— |
|
|
|
— |
|
|
|
24,942 |
(5) |
|
|
24,942 |
|
|
Donald
Duffy
|
|
|
40,000 |
|
|
|
— |
|
|
|
45,474 |
(6) |
|
|
85,474 |
|
|
David
Morrison
|
|
|
33,750 |
|
|
|
11,178 |
(3) |
|
|
45,474 |
(6) |
|
|
90,402 |
|
|
John
Moore
|
|
|
34,327 |
|
|
|
— |
|
|
|
30,355 |
(7) |
|
|
64,682 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents
the dollar amounts associated with the director’s stock awards and option
awards that we recognized as stock-based compensation expense in the 2008
fiscal year for financial statement reporting purposes in accordance with
SFAS 123R. For a detailed discussion of the assumptions made in
the valuation of stock option awards, please see Note 14 of our Notes to
the Consolidated Financial Statements included in this Annual Report on
Form 10-K as originally filed on April 2,
2009.
|
|
(2)
|
For
board fees for the fourth quarter of 2007 through the third quarter of
2009, Don Bailey elected to receive payment in the form of restricted
stock awards. Accordingly, he neither earned nor was paid cash for board
fees during 2008. On December 3, 2007, he was issued
26,415 shares of restricted stock, with a grant date fair value of
$70,000, which vested in four equal installments on January 1, 2007,
April 1, 2008, July 1, 2008 and October 1,
2008. On November 14, 2008, he was issued 44,872 shares of
restricted stock, with a grant date fair value of $70,000, one fourth of
which vested on January 1, 2009. The remaining amount of shares
vested in equal installments on April 1, 2009, July 1, 2009 and October 1,
2009. The $81,313 shown in the table is the total dollar amount
of expense with respect to these grants recognized for financial statement
reporting purposes in fiscal year 2008 in accordance with
FAS 123R. A total of 71,287 shares of stock awards awarded
to Mr. Bailey were outstanding as of the end of fiscal year 2008, of
which 37,633 were vested.
|
|
(3)
|
For
board fees for the fourth quarter of 2008 through the third quarter of
2009, Mr. Morrison elected to receive payment in the form of restricted
stock awards. On November 14, 2008, he was issued 28,846 shares of
restricted stock, with a grant date fair value of $45,000. One
fourth of the shares vested on January 1, 2009. The remaining
amount of shares vested in equal installments on April 1, 2009, July 1,
2009 and October 1, 2009. The $11,178 shown in the table is the total
dollar amount of expense with respect to this grant recognized for
financial statement reporting purposes in fiscal year 2008 in accordance
with FAS 123R. A total of 28,846 shares of stock awards
awarded to Mr. Morrison were outstanding as of the end of fiscal year
2008, of which 7,211 were vested.
|
|
(4)
|
Includes
compensation related to the following: (1) an option to purchase 20,000
shares granted on August 16, 2006, which had a grant date fair value
of $86,544 and vested in two annual installments on August 16, 2007 and
2008; and (2) an option to purchase 20,000 shares granted on May 15, 2008,
which had a grant date fair value of $32,851 and vested on May 15,
2009. As of the end of fiscal year 2008, Mr. Bailey held
outstanding option awards to purchase 100,000 shares, of which 80,000 were
vested.
|
|
(5)
|
Reflects
compensation expense recognized in 2008 for an option to purchase 20,000
shares granted on May 16, 2007. The option was granted
when Mr. Caldwell was elected as an independent director, prior to
his employment as an officer of STAAR. The option had a grant
date fair value of $60,215 and vested on May 16, 2008. As
of the end of fiscal year 2008, with respect to his former service as an
independent director, Mr. Caldwell held 20,000 options, all of which were
vested. Expense related to this option is also included in the
dollar value of option awards listed for Mr. Caldwell in the summary
compensation table.
|
|
(6)
|
Includes
compensation related to the following: (1) an option to purchase 20,000
shares granted on May 16, 2007, which had a grant date fair value of
$60,215 and vested on May 16, 2008; and (2) an option to purchase
20,000 shares granted on May 15, 2008, which had a grant date fair
value of $32,851 and vested on May 15, 2009. As of the end of
fiscal
year 2008, Mr. Duffy held outstanding option awards to purchase 60,000
shares, of which 40,000 were vested, and Mr. Morrison held outstanding
option awards to purchase 100,000 shares, of which 80,000 were
vested.
|
|
(7)
|
Includes
compensation related to the following: (1) an option to purchase 7,500
shares granted on February 14, 2008, which had a grant date fair
value of $9,823 and vested on May 16, 2008, and (2) an option to purchase
20,000 shares granted on May 15, 2008, which had a grant date fair
value of $32,851 and vested on May 15, 2009. As of the end of
fiscal year 2008, Mr. Moore held outstanding option awards to purchase
27,500 shares, of which 7,500 were
vested.
|
EMPLOYMENT
AGREEMENTS
Barry
Caldwell, President and Chief Executive Officer
On
November 27, 2007, we entered into an Executive Employment Agreement with Barry
Caldwell in connection with his appointment as President and Chief Executive
Officer. The Agreement has an initial term of one year, and will automatically
renew for successive one-year terms unless either Mr. Caldwell or STAAR gives
written notice of its intent not to renew within six months prior to the
expiration of the original term or any renewal term. The Executive Employment
Agreement was amended and restated on November 27, 2008, to provide for an
election to receive compensation in the form of stock rather than cash, and
again on December 31, 2008 to bring the agreement in conformance with the newly
implemented requirements of Section 409A of the Internal Revenue Code of 1986,
as amended. These changes are described at the end of this
discussion. Unless otherwise specified, provisions of Mr. Caldwell’s employment
agreement described in this section refer to the Amended and Restated Executive
Employment Agreement dated December 31, 2008.
The
original Executive Employment Agreement had provided that, of Mr. Caldwell’s
salary, $100,000 would be paid in the form of restricted stock. To more
accurately reflect the original intent of the Board of Directors, the amended
agreement provides that all of Mr. Caldwell's annual base compensation is
payable to him in cash, but that prior to any annual renewal of the Agreement
Mr. Caldwell may elect to instead receive a portion of that compensation in the
form of restricted stock to be priced on the date of election and issued on, or
as soon as practicable after, the Renewal Date. For the 2008 – 2009
annual renewal period Mr. Caldwell elected to again receive 25% of his salary,
or $100,000, in the form of restricted stock.
The
restricted stock provided in place of cash for Mr. Caldwell’s base compensation
is subject to vesting restrictions, and vests in twelve equal monthly
installments during the year after grant. The Agreement provides for a
performance bonus of up to 60% of annual salary, to be first determined and, if
awarded, to be paid in 2009 based on performance during 2008. As discussed above
under Compensation Discussion
and Analysis, in keeping with STAAR’s general suspension on executive
cash bonuses in 2009, Mr. Caldwell did not receive a cash bonus based on 2008
performance. The Agreement also provided for an initial grant in 2007 of an
option to purchase 200,000 shares of Common Stock, subject to approval by the
Compensation Committee, which occurred at its next regular meeting on January 8,
2008. The option vests, subject to continued service, in three equal
installments on the first three anniversaries of November 27, 2007, when Mr.
Caldwell commenced employment, and has a term of 10 years. Mr. Caldwell will
also be eligible to participate in equity compensation programs generally
available to similarly situated executives of the Company. Mr. Caldwell’s
Agreement also entitles him to participate in all benefit plans available to
similarly situated executives of STAAR, including executive level health and
life insurance coverage.
Mr.
Caldwell’s Agreement provides relocation assistance, including (i) reimbursement
of rent for a serviced apartment in the vicinity of the Company’s headquarters
and twice monthly round-trip airfare to Fort Worth, Texas, for a period of
twelve months, and (ii) when Mr. Caldwell relocates to a residence in Southern
California, reimbursement of expenses related to the sale of Mr. Caldwell’s
residence in Texas and purchase of a residence in Southern California and moving
costs, provided the relocation takes place on or before December 31,
2009.
If the
Company terminates Mr. Caldwell’s employment other than for cause, he will be
entitled to eighteen months’ salary from the date of termination.
Within
the period of one year after a change in control, if Mr. Caldwell’s employment
is terminated (or if he resigns during that period following a material
reduction in compensation or change in duties) he will receive 18 months’ salary
as a lump-sum payment, plus continued benefits for a 12-month period. In
addition, following such a termination all unvested options or restricted stock
will immediately vest and options will continue to be exercisable until their
expiration date. If severance payments in connection with a change in control
result in liability for excise taxes under Section 280G of the
Internal Revenue Code of 1986, as amended, Mr. Caldwell will generally receive a
“gross-up” payment in an amount sufficient to make up for the effect of the
excise tax. However, if excise taxes could be avoided by reducing total
severance payments by up to 10%, the total payments will be reduced to the
amount where excise taxes would not be incurred.
The
Agreement anticipates that the Board of Directors will nominate Mr. Caldwell for
re-election to the Board of Directors at each annual meeting, unless he elects
not to stand for election. He will not receive additional compensation for board
service.
Amended
and Restated Executive Employment Agreement dated December 31, 2008 made the
following changes to the Original Agreement to bring it in compliance with
Section 409A of the Internal Revenue Code of 1986, as amended:
|
|
·
|
If
the Company terminates Mr. Caldwell’s employment other than for cause, he
will be entitled to eighteen months’ salary from the date of termination,
payable in a lump sum. Under the Original Agreement, Mr. Caldwell was
entitled to twelve months’ continued salary following a termination of
employment other than for cause, but he was also entitled to six months’
notice of termination and continued salary for that six-month notice
period. The Restated Agreement eliminates the notice period, but does not
change the amount of compensation Mr. Caldwell would receive
following a notice of termination.
|
|
|
·
|
Within
the period of one year after a change in control, if Mr. Caldwell’s
employment is terminated (or if he resigns during that period following a
material reduction in compensation or change in duties) he will receive 18
months’ salary as a lump-sum payment, plus continued benefits for a
12-month period. In addition, following such a termination all unvested
options or restricted stock will immediately vest and options will
continue to be exercisable until their expiration date. The Restated
Agreement eliminates a provision of the Original Agreement that also made
these severance benefits applicable if Mr. Caldwell’s employment were
terminated during the 120 period preceding a change in
control.
|
|
|
·
|
Relocation
expenses that are reimbursable under the Original Agreement will be
eligible only if incurred before December 31, 2009. The Original Agreement
gave the Board of Directors the discretion to extend the availability of
the relocation assistance initially provided without amending the
Agreement.
|
David
Bailey, President, International Operations
On
November 27, 2007, we entered into an Executive Employment Agreement with David
Bailey in connection with his appointment as President, International
Operations. The Agreement replaces and supersedes the previous Employment
Agreement we entered into with Mr. Bailey as of December 19, 2000, which
governed the terms of his employment as President and Chief Executive Officer.
The agreement provides that Mr. Bailey will be based at the Company’s facility
in Nidau, Switzerland in his new capacity. However, after completing the first
year of service under the agreement, Mr. Bailey may at his election establish an
office at his principal place of residence in the United Kingdom.
Mr.
Bailey’s agreement provides for an initial term of three years, and will
automatically renew for successive one-year terms, unless either party gives
written notice of its intent not to renew at least six months before the
expiration of the original term or any renewal term.
Mr.
Bailey’s agreement provides for an annual base salary of 450,000 Swiss Francs
($415,363). However, if Mr. Bailey elects to relocate to the United Kingdom, the
base salary and automobile allowance will be converted from Swiss Francs to the
British Pound at the then prevailing exchange rate using the Financial Times
current exchange rate index. In addition Mr. Bailey will be eligible for a
performance bonus of up to 50% of annual salary, to be determined and, if
awarded, paid in 2009 based on performance during 2008. In accordance with the
general suspension of cash bonuses for executives in 2009 and U.S.-based
executives in 2008, Mr. Bailey has not received a cash bonus in either of those
years.
Under the
agreement Mr. Bailey’s outstanding options to purchase Company common stock will
continue to vest pursuant to their original terms and conditions. Mr. Bailey
will also be eligible to participate in equity compensation programs generally
available to similarly situated executives of the Company. The agreement also
entitles Mr. Bailey to receive benefits commensurate with the benefits received
under his previous employment agreement, including an automobile allowance and
executive level health, disability and life insurance coverage.
Under the
Agreement Mr. Bailey has received relocation assistance, including (i)
reimbursement of fees for tax counseling and tax-related service; (ii)
reimbursement for moving expenses of up to $25,000, (iii) a grant of 47,170
shares of common stock in lieu of any other assistance in selling his residence
in Southern California and purchasing a residence in
Europe; and (iii) of up to 3,000 Swiss Francs per month ($2,769) for a serviced
apartment in the vicinity of the Company’s headquarters in Nidau,
Switzerland.
If Mr.
Bailey’s employment is terminated by the Company other than for cause, he will
be entitled to six months’ notice plus continued salary for the longer of (i)
one year and (ii) the remaining term of the agreement. He will continue to
receive benefits through the notice period and the subsequent 12 months. Stock
options will continue to vest for 18 months following notice of termination
other than for cause.
Within
the period of 120 days prior to a change in control, or one year after a change
in control, if Mr. Bailey’s employment is terminated or he terminates employment
for any reason he will receive 18 months’ salary, plus continued benefits for a
12-month period. In addition, following such an event all unvested options or
restricted stock will immediately vest and options will continue to be
exercisable until their expiration date. In addition to severance payments
following a change in control, Mr. Bailey will receive a “gross-up” payment in
amount necessary to provide that the net amount paid after applicable income
taxes will equal 18 months’ salary.
Mr.
Bailey currently serves on the Board of Directors. The agreement provides that
the Board of Directors will nominate Mr. Bailey for re-election to the Board of
Directors at each annual meeting, unless he elects not to stand for election, or
unless either Mr. Bailey or STAAR has delivered a notice of termination or
non-renewal prior to the meeting at which such re-election would occur. He does
not receive additional compensation for board service.
Deborah
Andrews, Vice President and Chief Financial Officer
On August
17, 2005, we entered into an agreement with Deborah Andrews to act as our Chief
Financial Officer. The agreement provides for a base salary, currently $250,000,
which the Committee may adjust periodically and a performance bonus of up to 40%
of base salary, as determined by the Committee. If terminated without cause, Ms.
Andrews will receive a severance payment equal to six months’ salary. If she is
terminated as a result of a “change in control,” she will receive severance
equal to one year’s salary and immediate vesting of all unvested stock
options.
Reinhard
Pichl, Managing Director, Domilens GmbH
On
October 4, 2007 we entered into an employment agreement with Dr. Reinhard Pichl
to act as Managing Director of Domilens GmbH. The agreement, which became
effective on November 1, 2007, provides for an annual base salary of 180,000
euro and an annual performance bonus of up to 30% of base salary. The agreement
requires three full calendar months’ notice for termination without cause. The
agreement also provides for an automobile allowance and life and disability
insurance.
Hans
Blickensdoerfer, Vice President, International Marketing
On
December 16, 2004 we entered into an employment agreement with Hans
Blickensdoerfer to act as our Vice President, International
Marketing. The agreement provides for an annual salary of
195,000 Swiss francs, and an annual bonus potential of 48,750 Swiss
francs. If terminated without cause, Mr. Blickensdoerfer will receive
a severance payment equal to six months’ salary, plus a prorata amount of his
annual bonus eligibility. If Mr. Blickensdoerfer is terminated following a
change in control he will receive a severance payment equal to one year’s
salary.
Item 12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The
following table shows, as of April 24, 2009, information concerning the shares
of common stock beneficially owned by each person known by STAAR to be the
beneficial owner of more than 5% of our Common Stock (other than directors,
executive officers and depositaries). This information is based on publicly
available information filed with the SEC as of April 24, 2009.
|
Name
and Address
|
|
Shares
Beneficially
Owned
|
|
|
Percent
of Class(1)
|
|
|
Broadwood
Partners, L.P. (2)
724
Fifth Ave., 9th Floor
New
York, NY 10019
|
|
|
4,869,276 |
|
|
|
16.2 |
% |
|
Heartland
Advisors, Inc. (3)
789
North Water Street
Milwaukee,
WI 53202
|
|
|
3,356,050 |
|
|
|
11.1 |
% |
|
Pequot
Capital Management, Inc. (4)
500
Nyala Farm Road
Westport,
CT 06880
|
|
|
2,105,500 |
|
|
|
7.0 |
% |
|
Bank
of America Corporation (5)
100
North Tryon Street, Floor 25
Charlotte,
NC 28255
|
|
|
1,828,300 |
|
|
|
6.1 |
% |
|
Manning
& Napier Advisors, Inc. (6)
290
Woodcliff Drive
Fairport,
NY 14450
|
|
|
1,505,120 |
|
|
|
5.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Based
on 30,103,450 shares of common stock outstanding on the April 24, 2009.
Under Rule 13d-3 of the Securities Exchange Act of 1934, certain shares
may be deemed to be beneficially owned by more than one person(if, for
example, a person shares the power to vote or the power to dispose of the
shares). As a result, the percentage of outstanding shares of any person
as shown in this table does not necessarily reflect the person’s actual
ownership or voting power with respect to the number of shares of Common
Stock actually outstanding on April 24,
2009.
|
|
(2)
|
In
its Schedule 13D/A, filed April 22, 2009 with respect to its ownership of
STAAR securities as of March 30, 2009, Broadwood Partners, L.P. states
that it has sole voting power as to no shares, shared voting power as to
4,869,276 shares, sole dispositive power as to no shares and shared
dispositive power as to 4,869,276 shares. Broadwood Capital, Inc. states
that it has sole voting power as to no shares, shared voting power as to
4,869,276 shares, sole dispositive power as to no shares and shared
dispositive power as to 4,869,276 shares. Mr. Neal C. Bradsher states that
he has sole voting power as to 25,900 shares, shared voting power as to
4,869,276 shares, sole dispositive power as to 25,900 shares and shared
dispositive power as to 4,869,276
shares.
|
|
(3)
|
In
its Schedule 13G/A filed February 8, 2008 with respect to its ownership of
STAAR securities as of December 31, 2007, Heartland Advisors, Inc. states
that it has sole voting power as to no shares, shared voting power as to
2,943,382 shares, sole dispositive power as to no shares and shared
dispositive power as to 3,161,782 shares. William J. Nasgovitz states that
he has sole voting power as to no shares, shared voting power as to
2,943,382 shares, sole dispositive power as to no shares and shared
dispositive power as to 3,161,782
shares.
|
|
(4)
|
In
its Schedule 13G filed February 13, 2009 with respect to its ownership of
STAAR securities as of December 31, 2008, Pequot Capital Management, Inc.
states that it has sole voting power as to 2,105,500 shares, shared voting
power as to no shares, sole dispositive power as to 2,105,500 shares and
shared dispositive power as to no
shares.
|
|
(5)
|
In
its Schedule 13G/A filed February 12, 2009 with respect to securities
owned as of December 31, 2008, Bank of America Corporation states that it
has sole voting power as to no shares, shared voting power as to 1,189,000
shares, sole dispositive power as to no shares and shared dispositive
power as to 1,828,300 shares. NB Holdings Corporation states that it has
sole voting power as to no shares, shared voting power as to 1,189,000
shares, sole dispositive power as to no shares and shared dispositive
power as to 1,828,300 shares. BAC North America Holding Company states
that it has sole voting power as to no shares, shared voting power as to
1,189,000 shares, sole dispositive power as to no shares and shared
dispositive power as to 1,828,300 shares. BANA Holding Corporation states
that it has sole voting power as to no shares, shared voting power as to
1,189,000 shares, sole dispositive power as to no shares and shared
dispositive power as to 1,828,300 shares. Bank of America N.A. states that
it has sole voting power as to no shares, shared voting power as to
1,189,000 shares, sole dispositive power as to no shares and shared dispositive
power as to 1,828,300 shares. Columbia Management Group, LLC states that
it has sole voting power as to no shares, shared voting power as to
1,188,000 shares, sole dispositive power as to no shares and shared
dispositive power as to 1,828,300 shares. Columbia Management Advisors,
LLC states that it has sole voting power as to 1,188,000 shares, shared
voting power as to no shares, sole dispositive power as to 1,820,000
shares and shared dispositive power as to 8,300
shares.
|
|
(6)
|
In
its Schedule 13G filed February 12, 2009 with respect to its ownership of
STAAR securities as of December 31, 2008, Manning & Napier Advisors,
Inc. states that it has sole voting power as to 1,505,120 shares, shared
voting power as to no shares, sole dispositive power as to 1,505,120
shares and shared dispositive power as to no
shares.
|
The
following table shows, as of April 24, 2009, information with respect to the
shares of Common Stock beneficially owned by (1) each director and director
nominee, (2) each person (other than a person who is also a director or a
director nominee) who is an executive officer named in the Summary Compensation
Table below, and (3) all executive officers and directors as a
group.
|
|
|
Shares
Beneficially Owned
|
|
|
|
|
|
Name(1)
|
|
Shares
of Common
Stock
Owned(2)
(#)
|
|
|
Shares
Subject to Options
Exercisable
on or Before
June 23,
2009(3)
(#)
|
|
|
Total
(#)
|
|
|
Percent
of
Class(4)
|
|
|
Barry
Caldwell**
|
|
|
117,736 |
|
|
|
86,666 |
|
|
|
204,402 |
|
|
|
* |
|
|
David
Bailey**
|
|
|
47,766 |
|
|
|
1,127,800 |
|
|
|
1,175,566 |
|
|
|
3.9 |
% |
|
Don
Bailey**
|
|
|
71,901 |
|
|
|
100,000 |
|
|
|
171,901 |
|
|
|
* |
|
|
Donald
Duffy**
|
|
|
15,000 |
|
|
|
60,000 |
|
|
|
75,000 |
|
|
|
* |
|
|
David
Morrison**
|
|
|
59,426 |
|
|
|
100,000 |
|
|
|
159,426 |
|
|
|
* |
|
|
John
C. Moore**
|
|
|
2,000 |
|
|
|
27,500 |
|
|
|
29,500 |
|
|
|
* |
|
|
Deborah
Andrews
|
|
|
31,900 |
|
|
|
167,082 |
|
|
|
198,982 |
|
|
|
* |
|
|
Reinhard
Pichl
|
|
|
10,000 |
|
|
|
8,333 |
|
|
|
18,333 |
|
|
|
* |
|
|
Hans
Blickensdoerfer
|
|
|
47,100 |
|
|
|
87,082 |
|
|
|
134,182 |
|
|
|
* |
|
|
All
current directors and executive officers as a group (15
individuals)
|
|
|
542,529 |
|
|
|
2,079,459 |
|
|
|
2,621,988 |
|
|
|
8.7 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
business address of each person named is c/o STAAR Surgical Company, 1911
Walker Avenue, Monrovia, California
91016.
|
|
(2)
|
Pursuant
to Rule 13d-3(a), includes all shares of common stock over which the
listed person has, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise, voting power,
which includes the power to vote, or to direct the voting of, the shares,
or investment power, which includes the power to dispose, or to direct the
disposition of, the shares. STAAR believes that each individual or entity
named has sole investment and voting power with respect to shares of
Common Stock indicated as beneficially owned by him or
her, subject to community property laws, where applicable, except where
otherwise noted. Restricted shares are listed even when unvested and
subject to forfeiture because the holder has the power to vote the
shares.
|
|
(3)
|
In
accordance with Rule 13d-3(d)(1) under the Securities Exchange Act of
1934, each listed person is deemed the beneficial owner of shares that the
person has a right to acquire by exercise of a vested option or other
right on or before June 23, 2009 (60 days after April 24,
2009).
|
|
(4)
|
Based
on 30,103,450 shares of Common Stock outstanding on the stock records as
of April 24, 2009. The percentages are calculated in accordance with Rule
13d-3(d)(1), which provides that shares not outstanding that are subject
to options, warrants, rights or conversion privileges exercisable on or
before June 23, 2009 (60 days after April 24, 2009) are deemed outstanding
for the purpose of calculating the number and percentage that each person
owns, but not deemed outstanding for the purpose of calculating the
percentage that any other listed person
owns.
|
Employee
Benefit Plans
Equity
Compensation Plan Information
The
following table summarizes information about the options and other equity
compensation under STAAR’s equity plans as of the close of business on January
2, 2009.
|
Plan
Category
|
|
Number
of Securities
to
be Issued Upon
Exercise
of
Outstanding
Options,
Warrants
and Rights
(#) (a)
|
|
|
Weighted
Average
Exercise
Price
($) (b)
|
|
|
Number
of Securities
Remaining
Available
for
Future Issuance
under
Equity
Compensation
Plans
(excluding
securities
reflected
in column
(a))(#) (c)
|
|
Equity
Compensation Plans Approved by Stockholders
|
|
|
3,799,467 |
|
|
|
5.74 |
|
|
|
928,259 |
(1) |
|
Equity
Compensation Plans Not Approved by Stockholders
|
|
|
55,000 |
(2) |
|
|
10.08 |
|
|
|
— |
|
|
TOTAL
|
|
|
3,854,467 |
|
|
|
5.80 |
|
|
|
928,259 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents
awards granted under the STAAR Surgical Company 2003 Omnibus Equity
Incentive Plan (the “2003 Omnibus Plan”) and the following prior plans
that were consolidated into the 2003 Omnibus Plan: the 1991 Stock Option
Plan of STAAR Surgical Company, the 1995 STAAR Surgical Company Consultant
Stock Plan, the 1996 STAAR Surgical Company Non-Qualified Stock Plan, the
1998 STAAR Surgical Company Stock Plan, the STAAR Surgical Company Stock
Option Plan and Agreement for Chief Executive Officer, all of which were
approved by the stockholders.
|
|
(2)
|
Represents
shares originally issued under individual grants prior to May 9, 2000,
which were not submitted to the stockholders for approval and which have
also been consolidated into the 2003 Omnibus
Plan.
|
STAAR
Surgical Company 2003 Omnibus Equity Incentive Plan
The 2003
Omnibus Plan was adopted by the Board of Directors on May 14, 2003 and approved
by the stockholders on June 25, 2003 as both a new plan and as a consolidation
of STAAR’s existing incentive plans. 4,913,629 shares of Common Stock were
originally authorized for awards under the 2003 Omnibus Plan, consisting of
1,000,000 newly available shares, and 3,913,629 shares that were already
available or subject to outstanding awards under prior plans. The following
prior plans are consolidated into the 2003 Omnibus Plan: the 1991 Stock Option
Plan of STAAR Surgical Company, the 1995 STAAR Surgical Company Consultant Stock
Plan, the 1996 STAAR Surgical Company Non-Qualified Stock Plan, the 1998 STAAR
Surgical Company Stock Plan and the STAAR Surgical Company Stock Option Plan and
Agreement for Chief Executive Officer. All of these plans had been previously
approved by STAAR’s stockholders. STAAR amended the 2003 Plan on December 31,
2009 to ensure conformance with Section 409A of the Internal Revenue Code of
1986, as amended.
The 2003
Omnibus Plan also provides that on each January 1 during the life of the plan
the number of shares of Common Stock available for awards will automatically
increase by a number of shares equal to 2% of STAAR’s outstanding Common Stock,
up to a maximum of 1,586,371 additional shares, and a maximum total of 6,500,000
shares issuable as incentives to employees, directors and consultants. The
6,500,000 maximum shares were reached on January 1, 2007, and no additional
shares will be available for issuance as incentives to employees without
stockholder approval. Shares subject to grants under the 2003 Omnibus Plan that
lapse or terminate in accordance with their terms become available for new
grants under the 2003 Omnibus Plan. As of January 2, 2009, approximately 735,000
shares were authorized and available for grants under the 2003 Omnibus
Plan.
The
Committee administers the 2003 Omnibus Plan. Employees, non-employee directors,
and consultants of STAAR and its subsidiaries are eligible to participate in the
2003 Omnibus Plan. Awards available under the 2003 Omnibus Plan include stock
options, stock appreciation rights, stock grants, restricted stock, restricted
stock units, performance awards and other stock-based awards that the Committee
may approve. Stock options under the 2003 Omnibus Plan may either be issued in a
form intended to qualify as incentive stock options (“ISOs”) within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or
“non-qualified options,” which are not intended
to satisfy Section 422 of the Code. Awards granted under the 2003 Omnibus Plan
may generally not be transferred except by will or the laws of
descent.
While the
Committee has the discretion to determine the exercise price of options under
the 2003 Omnibus Plan, all options must have an exercise price of at least 100%
of the fair market value of the Common Stock on the date of grant. No ISO may be
granted under the 2003 Omnibus Plan to any person who, at the time of the grant,
owns (or is deemed to own) stock possessing more than 10% of the total combined
voting power of STAAR or any affiliate of STAAR, unless the option exercise
price is at least 110% of the fair market value of the Common Stock on the date
of grant and the term of the option does not exceed five years from the date of
the grant. In general, stock options issued under the 2003 Omnibus Plan may not
have a term in excess of ten years from the date of grant.
The 2003
Omnibus Plan provides that if STAAR has a “change in control,” including an
acquisition by any person or entity of 25% or more of STAAR’s common stock, or
an acquisition of STAAR or substantially all of its assets, all outstanding
options will vest immediately before the change in control unless the successor
or acquirer company assumes the options by providing options of equivalent value
or, if STAAR is the surviving entity, STAAR affirms the options. In addition,
options held by non-employee directors will vest immediately prior to a change
in control, irrespective of any assumption or affirmation by an acquirer or the
surviving entity.
The 2003
Omnibus Plan will terminate on May 13, 2013, unless terminated earlier by the
Board of Directors.
401(k)
Plan
The
Company maintains a 401(k) plan (“401(k) Plan”) for the benefit of qualified
employees in North America. During the fiscal year ended January 2, 2009,
employees who participate may elect to make salary deferral contributions to the
401(k) Plan up to $15,500 of the employees’ eligible payroll, subject to annual
Internal Revenue Code maximum limitations. The Company makes a contribution of
50% of the employee’s contribution up to the first 2% of the employee’s
compensation, and 25% of the next 4% of compensation. In addition, STAAR may
make a discretionary contribution to qualified employees, in accordance with the
401(k) Plan.
PART IV
Item 15. Exhibits
and Financial Statement Schedules
|
3.1
|
Certificate
of Incorporation, as amended to date(1)
|
|
3.2
|
By-laws,
as amended to date(2)
|
|
4.1
|
Certificate
of Designation of Series A Convertible Preferred Stock (1)
|
|
†4.2
|
1991
Stock Option Plan of STAAR Surgical Company(3)
|
|
†4.3
|
1998
STAAR Surgical Company Stock Plan, adopted April 17, 1998(4)
|
|
4.4
|
Form
of Certificate for Common Stock, par value $0.01 per share(5)
|
|
†4.5
|
2003
Omnibus Equity Incentive Plan, as Amended, and form of Option
Grant and Stock Option Agreement(6)
|
|
10.3
|
Indenture
of Lease dated September 1, 1993, by and between the Company and FKT
Associates and First through Third Additions Thereto(7)
|
|
10.4
|
Second
Amendment to Indenture of Lease dated September 21, 1998, between the
Company and FKT Associates(7)
|
|
10.5
|
Third
Amendment to Indenture of Lease dated October 13, 2003, by and
between the Company and FKT Associates(8)
|
|
10.6
|
Fourth
Amendment to Indenture of Lease dated September 30, 2006, by and between
the Company and FKT Associates(1)
|
|
10.7
|
Indenture
of Lease dated October 20, 1983, between the Company and Dale E.
Turner and Francis R. Turner and First through Fifth Additions
Thereto(9)
|
|
10.8
|
Sixth
Lease Addition to Indenture of Lease dated October 13, 2003, by and
between the Company and Turner Trust UTD Dale E. Turner March 28,
1984(8)
|
|
10.9
|
Seventh
Lease Addition to Indenture of Lease dated September 30, 2006, by and
between the Company and Turner Trust UTD Dale E. Turner March 28,
1984(1)
|
|
10.10
|
Amendment
No. 1 to Standard Industrial/Commercial Multi-Tenant Lease dated
January 3, 2003, by and between the Company and California Rosen
LLC(8)
|
|
10.11
|
Lease
Agreement dated July 12, 1994, between STAAR Surgical AG and
Calderari and Schwab AG/SA(10)
|
|
10.12
|
Supplement #1
dated July 10, 1995, to the Lease Agreement of July 12, 1994,
between STAAR Surgical AG and Calderari and Schwab AG/SA(10)
|
|
10.13
|
Supplement #2
dated August 2, 1999, to the Lease Agreement of July 12, 1994,
between STAAR Surgical AG and Calderari and Schwab AG/SA(10)
|
|
10.14
|
Commercial
Lease Agreement dated November 29, 2000, between Domilens GmbH and
DePfa Deutsche Pfandbriefbank AG(10)
|
|
10.15
|
Patent
License Agreement, dated May 24, 1995, with Eye Microsurgery
Intersectoral Research and Technology Complex(11)
|
|
10.16
|
Patent
License Agreement, dated January 1, 1996, with Eye Microsurgery
Intersectoral Research and Technology Complex(12)
|
|
†10.23
|
Stock
Option Plan and Agreement for Chief Executive Officer dated
November 13, 2001, between the Company and David Bailey(13)
|
|
†10.24
|
Stock
Option Certificate dated August 9, 2001, between the Company and
David Bailey(10)
|
|
†10.25
|
Stock
Option Certificate dated January 2, 2002, between the Company and
David Bailey(10)
|
|
†10.27
|
Amended
and Restated Stock Option Certificate dated February 13, 2003,
between the Company and David Bailey(10)
|
|
†10.36
|
Offer
of Employment dated July 12, 2002, from the Company to Nick
Curtis(10)
|
|
†10.37
|
Amendment
to Offer of Employment dated February 14, 2003 from the Company to
Nick Curtis(10)
|
|
†10.42
|
Form
of Indemnification Agreement between the Company and certain officers and
directors(10)
|
|
†10.47
|
Employment
Agreement dated May 5, 2004, between the ConceptVision Australia Pty
Limited CAN 006 391 928 and Philip Butler Stoney(11)
|
|
†10.48
|
Employment
Agreement dated May 5, 2004, between the ConceptVision Australia Pty
Limited CAN 006 391 928 and Robert William Mitchell(11)
|
|
10.58
|
Loan
Agreement between Deutsche Postbank AG and Domilens GmbH dated
August 30, 2005(12)
|
|
10.59
|
Standard
Industrial/Commercial Multi Tenant Lease — Gross dated
October 6, 2005, entered into between the Company and Z & M
LLC(12)
|
|
10.61
|
Addendum
No. 1 to Commercial Leases between Domilens GmbH and DePfa Deutsche
Pfandbriefbank AG related to Domilens headquarters facilities, dated as of
December 13, 2005.
(13)
|
|
10.63
|
Promissory
Note between STAAR Surgical Company and Broadwood Partners, L.P., dated
March 21, 2007. (14)
|
|
10.64
|
Warrant
Agreement between STAAR Surgical Company and Broadwood Partners, L.P.,
dated March 21, 2007.
(14)
|
|
10.65
|
Share
Purchase Agreement dated October 25, 2007 by and between Canon Marketing
Japan Inc. and Canon Inc. as Sellers and STAAR Surgical Company as
Buyer.
(15)
|
|
†10.66
|
Executive
Employment Agreement by and between the Company and Barry G. Caldwell,
dated as of November 27, 2007. (16)
|
|
†10.67
|
Executive
Employment Agreement by and between the Company and David Bailey, dated as
of November 27, 2007.(16)
|
|
10.68
|
Senior
Promissory Note between STAAR Surgical Company and Broadwood Partners,
L.P., dated December 14, 2007. (17)
|
|
10.69
|
Warrant
Agreement between STAAR Surgical Company and Broadwood Partners, L.P.,
dated December 14, 2007.(17)
|
|
†10.70
|
Amended
and Restated Executive Employment Agreement by and between the Company and
Barry G. Caldwell, dated December 31, 2008.(6)
|
|
10.71
|
Temporary
Waiver Agreement, dated April 2, 2009, by and between Broadwood Partners,
L.P. and the Company.**
|
|
10.72
|
Amended
and Restated Senior Secured Promissory Note between the Company and
Broadwood Partners, L.P., dated April 13, 2009.(18)
|
|
10.73
|
Security
Agreement by and between the Company and Broadwood Partners, L.P., dated
April 13, 2009.(19)
|
|
10.74
|
Stock
Purchase Agreement.(19)
|
|
10.75
|
Amendment
Agreement between the Company and Broadwood Partners L.P., dated June 24,
2009.(19)
|
|
†10.76
|
Employment
Agreement effective November 22, 2002 by and between the Company and
Deborah Andrews.(20)
|
|
†10.77
|
Letter
of the Company dated April 11, 2007 to Deborah Andrews, Vice President and
Chief Financial Officer, regarding compensation.(20)
|
|
†10.78
|
Service
Agreement, dated October 4, 2007, by and between the Company and Dr.
Reinhard Pichl.(20)
|
|
†10.79
|
Employment
Agreement, dated December 16, 2004, by and between the Company and Hans
Blickensdoerfer.(20)
|
|
10.80
|
Credit
Agreement between STAAR Japan Inc. with Mizuho Bank Inc., dated October
31, 2007.(21)
|
|
10.81
|
Amended
Credit Agreement between STAAR Japan, Inc. and Mizuho Bank
Ltd., dated June 30, 2009.(21)
|
|
14.1
|
Code
of Ethics(10)
|
|
21.1
|
List
of Significant Subsidiaries*
|
|
23.1
|
Consent
of BDO Seidman, LLP**
|
|
31.1
|
Certification
Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002*
|
|
31.2
|
Certification
Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002*
|
|
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002*
|
|
*
|
Filed
herewith
|
|
**
|
Previously
filed with this Annual Report on Form 10-K when originally filed on April
2, 2009.
|
|
†
|
Management
contract or compensatory plan or arrangement
|
|
#
|
All
schedules and or exhibits have been omitted. Any omitted schedule or
exhibit will be furnished supplementally to the Securities and Exchange
Commission upon request.
|
|
(1)
|
Incorporated
by reference to the Company’s Annual Report on Form 10-K, for
the year ended December 28, 2007, as filed on March 12,
2008.
|
|
(2)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K, as filed on May
23, 2006.
|
|
(3)
|
Incorporated
by reference to the Company’s Registration Statement on Form S-8,
File No. 033-76404, as filed on March 11,
1994.
|
|
(4)
|
Incorporated
by reference to the Company’s Proxy Statement for its Annual Meeting of
Stockholders held on May 29, 1998, filed on May 1,
1998.
|
|
(5)
|
Incorporated
by reference to Exhibit 4.1 to Amendment No. 1 to the Company’s
Registration Statement on Form 8-A/A, as filed on April 18,
2003.
|
|
(6)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on January
8, 2009.
|
|
(7)
|
Incorporated
by reference to the Company’s Annual Report on Form 10-K, for the year
ended December 29, 2000, as filed on March 29, 2001.
|
|
(8)
|
Incorporated
by reference to the Company’s Annual Report on Form 10-K, for the year
ended January 2, 2004, as filed on March 17,
2004.
|
|
(9)
|
Incorporated
by reference to the Company’s Annual Report on Form 10-K, for the
year ended January 2, 1998, as filed on April 1,
1998.
|
|
(10)
|
Incorporated
by reference to the Company’s Annual Report on Form 10-K, for the
year ended December 31, 2004, as filed on March 30,
2005.
|
|
(11)
|
Incorporated
by reference to the Company’s Quarterly Report, for the period ended
April 2, 2004, as filed on May 12, 2004.
|
|
(12)
|
Incorporated
by reference to the Company’s Quarterly Report for the period ended
September 30, 2005, as filed on November 9,
2005.
|
|
(13)
|
Incorporated
by reference to the Company’s Quarterly Report for the period ended
March 31, 2006, as filed on May 10, 2006.
|
|
(14)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
March 21, 2007.
|
|
(15)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
October 31, 2007.
|
|
(16)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
December 4, 2007.
|
|
(17)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
December 19, 2007.
|
|
(18)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on April
17, 2009.
|
|
(19)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on June 25,
2009.
|
|
(20)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on October
1, 2009.
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this Amendment No. 1 to Annual Report on
Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized.
STAAR
SURGICAL COMPANY
By:
/s/ Barry G. Caldwell
Barry G.
Caldwell
President
and Chief Executive Officer
(principal
executive officer)
Date: March 23,
2010
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