PROPOSAL NO. 1
ELECTION OF DIRECTORS
General Information
The Board of Directors, divided into three classes, has eight authorized seats,
of which one is vacant. Three Class I directors are to be elected at the annual
meeting to serve a three-year term expiring at the 2010 annual meeting of
stockholders or until a successor has been elected and qualified. The remaining
four directors will continue to serve their respective terms.
Proxies cannot be voted for more than the three named nominees.
Alan J. Levy, Eric H. Halvorson and D. Keith Grossman have been nominated by the
Board of Directors to serve as Class I directors.
Shares represented by the accompanying proxy will be voted for the election of
the nominees recommended by the Board of Directors unless the proxy is marked in
such a manner so as to withhold authority to vote. In the event that any nominee
should be unavailable for election as a result of an unexpected occurrence, such
shares will be voted for the election of such substitute nominee as management
may propose. Each person nominated for election has agreed to serve if elected,
and management has no reason to believe that any nominee will be unable to
serve.
The names of the nominees and directors, their ages as of February 28, 2007 and
certain other information about them are set forth below:
Director
Name of Nominee or Director Age Principal Occupation Since
----------------------------------- --- -------------------------------- --------
Class I Directors with term expiring at the 2007 Annual Meeting:
Alan J. Levy, Ph.D.(2)(3) 69 President and Chief Executive 2000
Officer of Northstar
Neuroscience, Inc.
Eric H. Halvorson(1)(3) 57 Executive in Residence, 2003
Pepperdine University
D. Keith Grossman(1)(2) 46 Former Chief Executive Officer 2004
and President of Thoratec
Corporation
Class II Directors with term expiring at the 2008 Annual Meeting:
Robert W. Duggan 62 President, Robert Duggan & 2003
Associates
Floyd D. Loop, M.D.(3) 70 Former Chief Executive Officer, 2005
The Cleveland Clinic
Class III Directors with term expiring at the 2009 Annual Meeting:
Lonnie M. Smith 62 President, Chief Executive 1996
Officer and Chairman of the
Board of Intuitive Surgical,
Inc.
Richard J. Kramer(1) 64 President, R.J. Kramer 2000
Associates, LLC
--------------------------------------------------------------------------------
(1) member of Audit Committee
|
(2) member of Compensation Committee
(3) member of Governance and Nominating Committee
The principal occupations and positions for at least the past five years of our
directors and director nominees are described below. There are no family
relationships among any of our directors or executive officers.
3
Class I Director Nominees for Election for a Three-Year Term Expiring at the
2010 Annual Meeting of Stockholders
Alan J. Levy, Ph.D. has been President, Chief Executive Officer and a member of
the Board of Directors of Northstar Neuroscience, Inc. a medical device company
he co-founded, since 1999. From 1993 to 1998, Dr. Levy served as President and
Chief Executive Officer of Heartstream, Inc., a medical device company that was
acquired by Hewlett-Packard in 1998. Prior to joining Heartstream, he was
President of Heart Technology, Inc., a medical device company that was acquired
by Boston Scientific in 1995. Before joining Heart Technology, Dr. Levy was Vice
President of Research and New Business Development and a member of the board of
Ethicon, a division of Johnson & Johnson. Dr. Levy holds a B.S. in Chemistry
from City University of New York and a Ph.D. in Organic Chemistry from Purdue
University.
Eric H. Halvorson has been a member of our Board of Directors since our
acquisition of Computer Motion in June 2003. Mr. Halvorson joined Computer
Motion in July 2002 as a member of its Board of Directors. Mr. Halvorson is
currently Executive in Residence at Pepperdine University, where he holds a
joint teaching appointment to the undergraduate Business Division and the
Pepperdine Law School. He teaches classes in Business Law, Management Theory,
Accounting and Finance for Lawyers and Mergers and Acquisitions. From June 2003
to February 2005, Mr. Halvorson served as President and Chief Executive Officer
of The Thomas Kinkade Company, formerly Media Arts Group, Inc. Mr. Halvorson was
a Visiting Professor of Business Law and Accounting at Pepperdine University
from 2000-2003. He was the Executive Vice President and Chief Operating Officer
at Salem Communications Corporation from 1995 to 2000. Prior to becoming Chief
Operating Officer, he was the company's Vice President and General Counsel for
10 years. Mr. Halvorson is currently a director of Salem Communications
Corporation. Mr. Halvorson was a partner at Godfrey and Kahn, a law firm based
in Milwaukee, Wisconsin from 1976 until 1985. Mr. Halvorson is a Certified
Public Accountant and holds a B.S. in Accounting from Bob Jones University and a
J.D. from Duke University School of Law.
D. Keith Grossman served as President and Chief Executive Officer of Thoratec
Corporation, a publicly held medical technology company, from January 1996 to
January 2006. Prior to Thoratec, Mr. Grossman was a Division President of Major
Pharmaceuticals, Inc. from June 1992 to September 1995. From July 1988 to June
1992, Mr. Grossman served as the Vice President of Sales and Marketing for
Calcitek, Inc., a manufacturer of implantable medical devices and a division of
Sulzermedica (formerly Intermedics, Inc.). Prior to 1988, Mr. Grossman held
various other sales and marketing management positions within the McGaw
Laboratories Division of American Hospital Supply Corporation. Mr. Grossman
remains a member of the Board of Directors of Thoratec, and also serves as a
member of the board of directors of Acorn Cardiovascular, Inc., a private
medical technology company. Mr. Grossman earned his Bachelor's Degree from Ohio
State University, and his Master's of Business Administration degree from
Pepperdine University.
RECOMMENDATION OF INTUITIVESURGICAL'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE DIRECTORS NOMINATED IN PROPOSAL
NO. 1.
Class II Directors Continuing in Office until the 2008 Annual Meeting of
Stockholders
Robert W. Duggan has been a member of our Board of Directors since our
acquisition of Computer Motion in June 2003. Prior to our acquisition of
Computer Motion, Mr. Duggan had been Chairman of the Board of Directors of
Computer Motion since 1990 and Chief Executive Officer since 1997. Mr. Duggan is
the Founder of the investment firm Robert W. Duggan & Associates. Mr. Duggan has
been a private venture investor for more than 30 years and has participated as a
director of, investor in and advisor to numerous small and large businesses in
the medical equipment, computer local and wide area network, PC hardware and
software distribution, digital encryption, consumer retail goods and outdoor
media communication industries. Mr. Duggan has also assisted in corporate
planning, capital formation and management for his various investments. He
received the
4
Congressman's Medal of Merit and in 2000 he was named a Knight of the Legion of
Honor by President Jacques Chirac. He is a member of the University of
California at Santa Barbara Foundation Board of Trustees.
Dr. Floyd D. Loop joined our board in August 2005. Dr. Loop served the Cleveland
Clinic Foundation for nearly 35 years, holding leadership positions including
Chairman of the Department of Thoracic and Cardiovascular Surgery, Chief
Executive Officer and Chairman of the Board of Governors. Dr. Loop and his
colleagues at the Cleveland Clinic were responsible for developing the use of
arterial conduits in coronary artery surgery, for innovations in valve repair
and for pioneering technical improvements for reoperations. Dr. Loop has served
as the President of the American Association for Thoracic Surgery, as a Director
of the American Board of Thoracic Surgery, and as a member of the Medicare
Payment Advisory Commission. He has received Honorary Doctor of Science degrees
from Cleveland State University, St. Louis University and Purdue University.
Dr. Loop is an internationally recognized cardiovascular surgeon, a recipient of
the American Heart Association Citation for International Service, and The
American College of Cardiology Cummings Humanitarian Award. Dr. Loop received
his undergraduate degree from Purdue University and his M.D. from The George
Washington University, Washington, D.C. His postgraduate training was at George
Washington, the US Air Force at Andrews Air Force Base and at the Cleveland
Clinic Foundation. Dr. Loop currently serves on the corporate boards of Tenet
Healthcare Corporation, Visible Assets, Inc., and Passport Health
Communications, Inc.
Class III Directors Continuing in Office until the 2009 Annual Meeting of
Stockholders
Lonnie M. Smith joined Intuitive in June 1997 from Hillenbrand Industries, where
he was Senior Executive Vice President. Mr. Smith joined Hillenbrand in 1978 and
during his tenure he was also a member of the Executive Committee, the Office of
the President and the Board of Directors. Mr. Smith has also held positions with
The Boston Consulting Group and IBM. Mr. Smith received his BSEE from Utah State
University and an MBA from Harvard Business School.
Richard J. Kramer is President of R.J. Kramer Associates, LLC, a healthcare
consulting firm he founded in January 2001. From 1989 to 2000, he served as the
President and Chief Executive Officer of Catholic Healthcare West, which
operates 48 hospitals in the western United States. From 1982 to 1989,
Mr. Kramer was Executive Vice President of Allina Health, the largest integrated
health care system in Minnesota. Mr. Kramer received a B.S. in Rehabilitation
Education from Pennsylvania State University, a M.S. in Rehabilitation
Counseling from Syracuse University, a M.S. in Hospital and Health Care
Administration from the University of Minnesota and graduate of the Advanced
Management Program (AMP) Harvard Business School. Mr. Kramer currently serves on
the board of Sutter Health and the Boys and Girls Club of Auburn.
Board Committees
Our board of directors has established an audit committee, a compensation
committee and a nominating and corporate governance committee. Our board of
directors and its committees set schedules to meet throughout the year and also
can hold special meetings and act by written consent from time to time, as
appropriate. Our board of directors has delegated various responsibilities and
authority to its committees as generally described below. The committees will
regularly report on their activities and actions to the full board of directors.
Each committee of our board of directors has a written charter approved by our
board of directors.
During 2006, our Board of Directors held four meetings and each director
attended at least 75% of those meetings. Our Board of Directors has three
standing committees: the Audit Committee, the Compensation Committee and the
Governance and Nominating Committee.
Audit Committee
The Audit Committee assists the full Board of Directors in its general oversight
of our financial reporting, internal controls, and audit functions, and is
directly responsible for the appointment, compensation and
5
oversight of the work of our independent registered public accounting firm. The
members of the Audit Committee are Richard J. Kramer, Eric H. Halvorson and D.
Keith Grossman, each an independent director as defined by the listing standards
of the Nasdaq Global Select Market relating to audit committee members.
Mr. Grossman joined the Audit Committee during the fourth quarter of 2006. In
2006, the Audit Committee met eight times and each then-current member of the
Audit Committee attended all of those meetings. The Board of Directors has
adopted a written charter for the Audit Committee, a copy of which was attached
as Annex A to the proxy statement for our 2004 Annual Meeting of Stockholders.
This charter was amended in February 2007, a copy of which is included as Annex
A to this proxy statement. The Board of Directors has determined that Mr. Kramer
is an "Audit Committee Financial Expert", as defined in Item 401(h) of
Regulation S-K.
Compensation Committee
The Compensation Committee establishes our executive compensation policy,
determines the salary and bonuses of our executive officers and recommends to
the Board of Directors stock option grants for our executive officers. The
members of the Compensation Committee are Alan J. Levy, Ph.D. and D. Keith
Grossman, each an independent director as defined by the listing standards of
the Nasdaq National Market. In 2006, the Compensation Committee met two times
and both current members of the Compensation Committee attended both of those
meetings. The Board of Directors has adopted a written charter for the
Compensation Committee, a copy of which is attached as Annex B to this proxy
statement.
Governance and Nominating Committee
The Governance and Nominating Committee is responsible for matters relating to
the corporate governance of our company and the nomination of members of the
board and committees thereof. The members of the Governance and Nominating
Committee are Alan J. Levy, Ph.D., Eric H. Halvorson and Floyd Loop, M.D. each
an independent director as defined by the listing standards of the Nasdaq
National Market. In 2006, the Governance and Nominating Committee met two times
and each current member of the Governance and Nominating Committee attended both
of those meetings. A copy of the charter is attached as Annex B to the proxy
statement for our 2004 Annual Meeting of Stockholders. The Governance and
Nominating Committee operates under a charter that was amended during October
2006 and a copy of this charter is attached as Annex C to this proxy statement.
Annual Meeting Attendance
The policy of the Board of Directors is that all directors attend the annual
meeting of stockholders, absent compelling circumstances that prevent
attendance.
Nomination Process
The Governance and Nominating Committee identifies director nominees by first
evaluating the current members of the Board of Directors willing to continue in
service. Current members with skills and experience that are relevant to our
business and are willing to continue in service are considered for
re-nomination, balancing the value of continuity of service by existing members
of the Board of Directors with that of obtaining a new perspective. If any
member of the Board of Directors does not wish to continue in service or the
Committee or Board of Directors decides not to re-nominate a member for
re-election, the Committee identifies the desired skills and experience of a new
nominee consistent with the Committee's criteria for Board of Directors service.
Current members of the Board of Directors and management are polled for their
recommendations. Research may also be performed or third parties retained to
identify qualified individuals. To date, we have not engaged third parties to
identify or evaluate potential nominees; however, we may in the future choose to
do so.
6
The Governance and Nominating Committee will consider nominees recommended by
stockholders, and any such recommendations should be forwarded to the Governance
and Nominating Committee in writing at our executive offices as identified in
this proxy statement. Such recommendations should include the following
information:
such information as may be reasonably necessary to determine whether the
recommended director candidate is independent from the security holder that
has recommended the candidate;
such information as may be reasonably necessary to determine whether the
director candidate is qualified to serve on the Audit Committee; and
such information as may be reasonably necessary to determine whether the
director candidate meets the independence standards of the Nasdaq National
Market.
We will also request such other information as may reasonably be required to
determine whether each person recommended by a security holder meets the
criteria listed below and to enable us to make appropriate disclosures to the
security holders entitled to vote in the election of directors. Any
recommendations received from stockholders will be evaluated in the same manner
as potential nominees suggested by board members, management or other parties.
The Governance and Nominating Committee evaluates director candidates based upon
a number of criteria, including:
commitment to promoting the long term interests of our security holders and
independence from any particular constituency;
professional and personal reputations that are consistent with our values;
broad general business experience and acumen, which may include experience
in management, finance, marketing and accounting, across a broad range of
industries with particular emphasis on healthcare and medical device
industries, along with experience operating at a policy-making level in an
appropriate business, financial, governmental, educational, non-profit,
technological or global field;
a high level of personal and professional integrity;
adequate time to devote attention to the affairs of our company;
such other attributes, including independence, relevant in constituting a
board that also satisfies the requirements imposed by the Securities and
Exchange Commission and the Nasdaq National Market; and
board balance in light of our company's current and anticipated needs and
the attributes of the other directors and executives.
7
|