UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 28, 2008
ENDOCARE, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or Other Jurisdiction of
Incorporation)
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001-15063
(Commission
File Number)
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33-0618093
(I.R.S. Employer
Identification Number) |
201 Technology Drive
Irvine, California 92618
(Address of Principal Executive Offices, including zip code)
(949) 450-5400
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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TABLE OF CONTENTS
Item 5.02(e) Compensatory Arrangements of Certain Officers.
Amendment to Mr. Davenports Employment Agreement
In connection with our Compensation Committees annual review of the compensation of our executive
officers in light of the latest peer group compensation data available (including salaries, annual
incentive compensation, long-term incentive compensation, benefits and other compensation), Craig
T. Davenport, our Chairman, CEO and President, voluntarily offered to amend his employment
agreement to reduce his target incentive from 85% of base salary to 65% of base salary. The
Compensation Committee accepted his offer and the amendment was entered into on February 28, 2008.
A copy of the amendment is attached as Exhibit 10.1.
Approval of 2008 MICP
On February 28, 2008, our Compensation Committee approved our 2008 Management Incentive
Compensation Program (MICP), an annual incentive program under which our executive officers and
other participants may earn cash and/or deferred stock units (DSUs) by achieving specific annual
performance objectives.
Similar to the 2007 MICP, all participants in the 2008 MICP have the same two performance
objectives. These performance objectives consist of one corporate objective relating to revenues
(weighted 50%) and one corporate objective relating to profitability (weighted 50%). Profitability
is measured using adjusted EBITDA, which consists of earnings before interest, taxes,
depreciation and amortization, excluding equity compensation expense. Certain legal fees and other
expenses are specifically excluded from the profitability objective, as well as any expenses that
the Compensation Committee designates in the future as expenses that should be excluded for
purposes of the 2008 MICP.
The 2008 MICP caps the amount that may be earned through overachievement of the revenue objective
by establishing a maximum achievement percentage of 125% for the revenue objective. The 2008 MICP
does not permit any additional amounts to be earned by overachieving the profitability objective.
The achievement percentages under the 2008 MICP will be determined in the first quarter of 2009.
Following that determination, the corresponding incentive payouts will be made in the form of cash
and/or the vesting of DSUs under our Employee DSU Program. A participant must remain employed by
the Company through the date of payout in order to receive any award under the 2008 MICP.
For purposes of determining achievement under the 2008 MICP, the Compensation Committee has the
authority to exclude the financial effects of any of the following transactions (proposed or
consummated) that the Compensation Committee determines should be so excluded: (a) any acquisitions
by Endocare of other companies or product lines; (b) any arrangements involving license grants by
or to Endocare that are outside of the ordinary course of business; and (c) any other transactions
that are outside of the ordinary course of business.
The target incentive amounts payable under the 2008 MICP to our executive officers are the
percentages of annual base salary that are specified in their respective employment agreements, as
follows: 65% for Mr. Davenport and 40% for Michael R. Rodriguez and Clint B. Davis.
Additional terms and conditions applicable to the 2008 MICP are described in the summary attached
as Exhibit 10.2.