CARDIOVASCULAR SYSTEMS, INC. Reports Operating Results (10-K/A)
Cardiovascular Systems Inc. formerly known as Replidyne Inc. is headquartered in Saint Paul Minnesota. It is a medical device company focusing on developing and commercializing interventional treatment systems for vascular disease. Its initial product the Diamondback 360? Orbital Atherectomy System is a minimally invasive catheter system for the treatment of peripheral arterial disease; and a range of plaque types including calcified vessel lesions. The Diamondback 360? removes soft and calcified plaque in plaque-lined vessels through the orbital rotation of a diamond grit coated offset crown. The company refined its `orbital` technology to address the growing market need of providing a safer more effective atherectomy device. Cardiovascular Systems, Inc. has a market cap of $72.4 million; its shares were traded at around $4.96 with and P/S ratio of 1.3. Highlight of Business Operations: James E. Flaherty, Chief Administrative Officer and Secretary. Mr. Flaherty has been our Chief Administrative Officer since January 14, 2008. Mr. Flaherty was our Chief Financial Officer from March 2003 to January 14, 2008. As Chief Administrative Officer, Mr. Flaherty reports directly to our Chief Executive Officer and has responsibility for information technology, facilities, legal matters, financial analysis of business development opportunities and business operations. Prior to joining us, Mr. Flaherty served as an independent financial consultant from 2001 to 2003. Mr. Flaherty was Chief Financial Officer of Zomax Incorporated from 1997 to 2001 and was Chief Financial Officer of Racotek, Inc. from 1990 to 1996. On June 9, 2005, the Securities and Exchange Commission filed a civil injunctive action charging Zomax Incorporated with violations of federal securities law by filing a materially misstated Form 10-Q for the period ended June 30, 2000. The SEC further charged that in a conference call with analysts, certain of Zomaxs executive officers, including Mr. Flaherty, misrepresented or omitted to state material facts regarding Zomaxs prospects of meeting quarterly revenue and earnings targets, in violation of federal securities law. Without admitting or denying the SECs charges, Mr. Flaherty consented to the entry of a court order enjoining him from any violation of certain provisions of federal securities law. In addition, Mr. Flaherty agreed to disgorge $16,770 plus prejudgment interest and pay a $75,000 civil penalty.
Our employment agreement with David L. Martin, President and Chief Executive Officer, provides that his annual base salary for calendar 2008 would be $370,000 and that his base salary for subsequent years is to be determined by the Board. We offered this amount as part of a package of compensation for Mr. Martin sufficient to induce him to join our company. The compensation package for Mr. Martin is designed to provide annual cash compensation, including both base salary and potential cash incentive earnings, sufficient to induce him to join CSI combined with the equity compensation described below, although less than the annual cash compensation Mr. Martin received at his previous employer and, we believe, less than Mr. Martin likely could have obtained with other, more established employers. The equity portion of Mr. Martins compensation package, as described below, was designed to provide sufficient potential growth in value to induce Mr. Martin to join us despite the lower cash compensation. Based on the recommendation of the Compensation Committee, the Board approved an increase to Mr. Martins base salary rate from $370,000 to $395,000 for calendar 2009.
Laurence Betterley commenced employment as our Chief Financial Officer on April 14, 2008. Our employment agreement with Mr. Betterley provides that his initial annual base salary was $225,000, and that his base salary is to be subsequently adjusted at the discretion of the Board. This base salary was negotiated with Mr. Betterley as part of the compensation package offered to induce him to join our company. The base salary was set at an amount that we believed to be generally consistent with the base salaries paid by other growth stage medical device companies for similar positions. Effective January 1, 2009, the Board approved an increase to Mr. Betterleys base salary rate from $225,000 to $250,000.
Read the The complete ReportCSII is in the portfolios of Lee Ainslie of Maverick Capital, George Soros of Soros Fund Management LLC.