PRE 14A
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant ý
Filed by a Party other than the Registrant ¨
Check the appropriate box:
ý
Preliminary Proxy Statement
¨
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
¨
Definitive Proxy Statement
¨
Definitive Additional Materials
¨
Soliciting Material  under §240.14a-12
ALIGN TECHNOLOGY, INC.

(Name of Registrant as Specified In Its Charter)
 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
ý
No fee required.
¨
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1)
Title of each class of securities to which transaction applies:
2)
Aggregate number of securities to which transaction applies:
3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
4)
Proposed maximum aggregate value of transaction:
5)
Total fee paid:
¨
Fee paid previously with preliminary materials.
¨
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
1)
Amount Previously Paid:
2)
Form, Schedule or Registration Statement No.:
3)
Filing Party:
4)
Date Filed:




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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on Wednesday, May 18, 2016
10:00 a.m.
TO OUR STOCKHOLDERS:
The 2016 Annual Meeting of Stockholders of Align Technology, Inc. (“Align”) will be held on Wednesday, May 18, 2016, at 10:00 a.m. Pacific Daylight Time at Align’s corporate headquarters located at 2560 Orchard Parkway, San Jose, California 95131.
Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting and Proxy Statement.
We are once again pleased to take advantage of the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their stockholders over the Internet. We believe that this e-proxy process expedites stockholders' receipt of proxy materials, while lowering the costs of printing and distributing our proxy materials and reducing the environmental impact of our annual meeting. On or about April [___], 2016, we mailed to our beneficial stockholders a Notice containing instructions on how to access our Proxy Statement and Annual Report and how to vote online. All other stockholders will continue to receive a paper copy of the Proxy Statement, Proxy Card and Annual Report by mail. The Notice also contains instructions on how you can (i) receive a paper copy of the Proxy Statement, Proxy Card and Annual Report if you only received a Notice by mail or (ii) elect to receive your Proxy Statement and Annual Report over the Internet if you received them by mail this year.   
Your vote is very important. Whether or not you plan to attend the Annual Meeting, we hope that you will vote as soon as possible. You may vote via the Internet or by telephone, or, if you received paper copies of the proxy materials by mail, you may also vote by mail by following the instructions on the proxy card. Voting over the Internet or by telephone or by written proxy will ensure your representation at the Annual Meeting regardless of whether you attend in person.
Thank you for your ongoing support of, and continued interest in, Align Technology, Inc.


Sincerely,

ALIGN TECHNOLOGY, INC.
Roger E. George
Vice President, Corporate and Legal Affairs, General
Counsel and Corporate Secretary






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ALIGN TECHNOLOGY, INC.
2560 Orchard Parkway
San Jose, California 95131

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Time and Date
10:00 a.m., Pacific Daylight Time, on Wednesday, May 18, 2016
 
 
Place
Corporate Headquarters, 2560 Orchard Parkway, San Jose, California 95131
 
 
Items of Business
1.
To elect the eight (8) directors named in this proxy statement
2.
To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accountants for the fiscal year ending December 31, 2016
3.
To conduct an advisory (non-binding) vote on executive compensation
4.
To amend Article V of our Amended and Restated Certificate of Incorporation to eliminate the “for cause” requirement for stockholder removal of a director
5.
To amend Article V of our Amended and Restated Certificate of Incorporation to eliminate the supermajority vote requirement for stockholder removal of a director
6.
To approve our amended and restated 2005 Incentive Plan
7.
 To consider such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof

 
 
Adjournments and Postponements
Any action on the items of business described above may be considered at the annual meeting at the time and on the date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed.
 
 
Record Date
Only stockholders who owned shares of our common stock at the close of business on March 24, 2016 are entitled to vote.
 
 
Meeting Admission
All stockholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting. Registration will begin at 9:30 a.m. If you attend, please know that you may be asked to present valid picture identification, such as a driver’s license or passport. Stockholders holding stock in brokerage accounts (“street name” holders) will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date. Cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting. 
 
 
Voting
Your vote is very important. Regardless of whether you plan to attend the Annual Meeting, we hope you will vote as soon as possible. You may vote your shares over the Internet or by telephone. If you received a paper copy of a proxy card by mail, you may submit your proxy for the annual meeting by completing, signing, dating and returning your proxy card in the pre-addressed envelope provided. For specific instructions on how to vote your shares, please refer to the section entitled General Information - How do I vote?  in the proxy statement.


This notice of annual meeting and proxy statement and form of proxy are being distributed and made available on the Internet on or about April [___], 2016.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 18, 2016. The proxy statement and Align Technology, Inc.'s Annual Report on Form 10-K are available electronically at http://www.viewproxy.com/aligntech/2016.





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PROXY STATEMENT SUMMARY
This summary highlights selected information contained in this Proxy Statement. It does not contain all the information you should consider and as such we urge you to carefully read the Proxy Statement in its entirety prior to voting. For additional information, please review the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
MEETING AGENDA AND VOTING RECOMMENDATIONS
Item
Voting Standard
Vote Recommendation
Page Reference
1 -
Annual Election of Directors
Majority of votes cast
FOR each nominee
6
2 -
Ratification of Independent Registered Public Accounting Firm
Majority of votes cast
FOR
18
3 -
Advisory Vote on Named Executive Officer Compensation
Majority of votes cast
FOR
21
4 -
Amendment to our Amended and Restated Certificate of Incorporation to eliminate the "for cause" requirement for stockholder removal of a director
66 2/3 of outstanding voting stock
FOR
23
5 -
Amendment to our Amended and Restated Certificate of Incorporation to eliminate the supermajority vote requirement for stockholder removal of a director
66 2/3 of outstanding voting stock
FOR
25
6 -
Amendment and Restatement of 2005 Incentive Plan
Majority of votes cast
FOR
27

DIRECTOR NOMINEES
You are being asked to vote on the election of these 8 directors. Each member of our Board of Directors is elected annually by majority voting. All directors other than Mr. Prescott and Mr. Hogan are independent.
 
 
 
 
Committee Memberships*
Name
Age
Director Since
Primary Occupation
Independent?
AC
CC
NCGC
TC
Joseph M. Hogan
58
2015
President & CEO, Align Technology, Inc.
No
 
 
 
 
Joseph Lacob
60
1997
Managing Partner & CEO of The Golden State Warriors
Yes
 
 
C
X
C. Raymond Larkin (1)
67
2004
Principal of Group Outcome LLC
Yes
 
 
X
 
George J. Morrow
64
2006
Retired, EVP of Worldwide Sales & Marketing, Amgen, Inc.
Yes
 
C
 
 
Thomas M. Prescott
60
2002
Retired President & CEO, Align Technology, Inc.
No
 
 
 
X
Andrea L. Saia
58
2013
Retired, Global Head of Vision Care, Novartis AG
Yes
X
X(2)
 
X(2)
Greg J. Santora
64
2004
Retired, CFO, Shopping.com
Yes
C
X
 
 
Warren S. Thaler
53
2004
President, Gund Investment Corporation
Yes
X
 
X
X
(1)
Mr. Larkin is Chairman of the Board of Directors
(2)
Ms. Saia's tenure as a member of the Compensation Committee and Technology Committee will commence immediately following the Annual Meeting subject to her continued membership on the Board.
*AC = Audit; CC = Compensation; NCCG = Nominating and Corporate Governance; X = Member; C = Chair



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CORPORATE GOVERNANCE HIGHLIGHTS
We recognize the importance of corporate governance as a component of providing long-term stockholder value. Since the last Annual Meeting of Stockholders, we have continued to review and update our corporate governance practices to ensure that our policies are aligned with stockholder interests and corporate governance best practices. 
INDEPENDENCE
Recent Change?
BEST PRACTICES
Recent Change?
6 of 8 director nominees are independent
 
Double-trigger for all cash compensation arrangements in the event of a change of control for all executives, including our CEO
þ
Independent Chairman of the Board has strong role with significant governance responsibilities
 
Stock ownership requirements for directors and executives that are reviewed annually
 
The Audit, Compensation and Nominating and Governance Committees are each comprised wholly of independent directors
 
The Board amended our Insider Trading Policy to prohibit officers, directors and employees from engaging in hedging transactions or pledging Align's securities as collateral for loans
þ
Independent directors meet regularly in executive session without management present
 
The Board determined to eliminate our Stockholder Rights Plan ("Poison Pill") by not renewing it when it expired in November 2015
þ
ACCOUNTABILITY
 
RISK OVERSIGHT
 
Annual election of directors
 
Board oversight of our overall risk management infrastructure
 
Majority voting in uncontested elections
 
Committee oversight of certain risks related to each committee's area of responsibility
 
Annual performance self-evaluations by Board and committees
 
 
 
If approved by the requisite vote of stockholders, the Board approved an amendment to our Amended and Restated Certificate of Incorporation to eliminate the requirement that directors can only be removed "for cause"
þ
 
 
If approved by the requisite vote of stockholders, the Board approved an amendment to our Amended and Restated Certificate of Incorporation to eliminate the supermajority voting requirement to remove a director
þ
 
 


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FISCAL 2015 PERFORMANCE HIGHLIGHTS
Fiscal 2015 was a year of continued solid performance for Align, set forth below are a few highlights.
Strong Revenue Growth

2015 revenues were $845.5 million, an 11% increase from 2014. This revenue growth reflects growth across all customer channels and geographies, as well as the expansion of our customer base and increased utilization by existing doctors.

Record Invisalign Shipments and Strong Growth Trend

In 2015, we shipped a record 583.2 thousand Invisalign cases, an increase of 22% compared to 2014. This reflects 32.5% volume growth from our International doctors and 17.7% volume growth from our North American doctors. These growth rates are due to continued adoption and utilization from international doctors and a solid rebound in North America, both driven by investments in territory coverage and sales and marketing programs. Product and technology innovation is also a key growth driver, and as a result, in 2015 we continued to see increased clinical confidence in Invisalign treatment for our customers worldwide.


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Operating Margin
Full year operating income of $188.6 million, or 22.3% of revenue, includes 1.6 points of impact from the Additional Aligner policy we adopted in July 2015 and foreign exchange rates on a constant currency basis. Effective July 18, 2015, we no longer distinguish between mid-course corrections and case refinements providing doctors the ability to order additional aligners to address either treatment need at no charge, subject to certain requirements. While the policy change was largely immaterial to our cash flows, it did impact the timing at which we recognize revenue. We estimate that 2015 reported revenues and pre tax income were lower by approximately $14 million due to this change.

* Operating Margin for 2013 is Non-GAAP. A reconciliation of GAAP to non-GAAP can be found in Appendix A to this Proxy Statement.

Stock Repurchased in 2015
We generated $238.0 million of cash flow from operations in 2015 from which we repurchased 1.7 million shares, returning approximately $102 million to our stockholders. This reduced our average diluted shares outstanding by 1.0%, which approximated our 2015 annual net burn rate of 1.27%.


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FISCAL 2015 EXECUTIVE COMPENSATION HIGHLIGHTS

CEO Succession

On March 26, 2015, we announced that, effective June 1, 2015, Thomas M. Prescott would retire as President and Chief Executive Officer, and that Joseph M. Hogan would become our new President and Chief Executive Officer. The Board conducted an exhaustive and thoughtful search, looking both externally and internally to identify the best possible individual to lead Align into its next chapter of innovation and growth. With the appointment of Mr. Hogan, the Board believes it fulfilled its goal, selecting the best candidate to bring Align continued success.

Pay for performance

Over 65% of annual target compensation for our named executive officers is paid through equity, providing direct alignment with returns to stockholders and incentives to drive long-term business success. The compensation package for our new CEO is designed to motivate him to successfully implement our business strategy and create sustainable long-term value for stockholders by providing the opportunity to build significant ownership and share in these gains if our stock increases on an absolute basis (RSUs) and if we perform well relative to the Nasdaq Composite (MSUs) on total stockholder returns over a three-year performance period.

The table below highlights the 2015 compensation for our current CEO, Joe Hogan (at target and not adjusting downwards based on the number of months Mr. Hogan was employed by Align), and the average named executive officer (excluding the CEO). It also shows the delivery of cash versus equity and the significant portion of compensation that is performance-based. See further explanation in the Executive Summary of the Compensation Discussion & Analysis on page 37 of the Proxy Statement.
COMPENSATION ELEMENT:
DESCRIPTION:
Salary
Annual base pay
Actual Cash Incentive (bonus)
Cash-based Incentive Compensation; annual performance-based bonus
Restricted Stock Units
Other equity whose value increases with stock price
Market Stock Units
Performance-based equity using 3-year relative stock price
Other Compensation
Includes limited perquisites and other personal benefits


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ALIGN TECHNOLOGY, INC.
2560 Orchard Parkway
San Jose, California 95131
 _______________________________ 
PROXY STATEMENT FOR THE
2016 ANNUAL MEETING OF STOCKHOLDERS
__________________________________ 
GENERAL INFORMATION

Q:
Why am I receiving these materials?
A:
Our Board of Directors (the “Board”) is providing these materials to you in connection with its solicitation of proxies for use at Align’s 2016 Annual Meeting of Stockholders, which will take place on Wednesday, May 18, 2016 at 10:00 a.m. local time, at our corporate headquarters located at 2560 Orchard Parkway, San Jose, California 95131 (referred to in this proxy statement as the “Annual Meeting”). As a stockholder, you are invited to attend the Annual Meeting and are requested to vote on the items of business described in this proxy statement.

Q:
What information is contained in these materials?
A:
The proxy materials include our proxy statement for the Annual Meeting and our 2015 Annual Report on Form 10-K. If you received a paper copy of these materials by mail, the proxy materials also include a proxy card for the Annual Meeting. If you received a notice of the Internet availability of the proxy materials instead of a paper copy of the proxy materials, see "How do I vote?" below. The information in this proxy statement contains important information regarding our Annual Meeting. Specifically, it identifies the proposals on which you are being asked to vote, provides information you may find useful in determining how to vote and describes the voting procedures.

Q: Why did I receive a notice in the mail regarding the Internet availability of the proxy materials instead of a paper copy of the full set of proxy materials?

A:
This year, we are once again pleased to be using the SEC rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing to many of our stockholders a notice of the Internet availability of the proxy materials instead of a paper copy of the proxy materials. All stockholders receiving the notice will have the ability to access the proxy materials over the Internet and request a paper copy of the proxy materials by mail. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the notice of the Internet availability of the proxy materials. In addition, the notice contains instructions on how you may request to access proxy materials in printed form by mail or electronically on an ongoing basis.

Q: Why didn't I receive a notice in the mail about the Internet availability of the proxy materials?

A:
We provide some of our stockholders with paper copies of the proxy materials instead of a notice of the Internet availability of the proxy material.

Q: Can I vote my shares by filling out and returning the Notice of Internet Availability of Proxy Materials?

A: No. The Notice only identifies the items to be voted on at the Annual Meeting. You cannot vote by marking the Notice and returning it. The Notice provides instructions on how to cast your vote.

Q:
Who can vote at the Annual Meeting?
A:
If you are a stockholder of record or a beneficial owner who owned our common stock at the close of business on March 24, 2016, the record date for the Annual Meeting, you are entitled to vote at the Annual Meeting. As of the record date, _________________of our common stock were issued and outstanding and no shares of our preferred stock were issued and outstanding.

Q:
What is the difference between holding shares directly or as a beneficial owner, in street name?
A:
Most of our stockholders hold their shares as a beneficial owner through a brokerage firm, bank or other nominee. As summarized below, there are some differences between shares held of record and those owned beneficially.

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Stockholder of Record: If on March 24, 2016, the record date, your shares were registered directly in your name with our transfer agent, Computershare Limited, then you are considered the stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy.
Beneficial Owner: If on March 24, 2016, the record date, your shares were held on your behalf in an account with a brokerage firm, bank or other nominee, you are considered the beneficial owner of those shares held in street name. If you are a beneficial owner, these proxy materials are being forwarded to you by the organization considered the stockholder of record of your shares. As a beneficial owner, you have the right to direct your nominee on how to vote the shares held in your account. Your nominee has enclosed or provided voting instructions for you to use in directing it on how to vote your shares. Please note that as a beneficial owner, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from the organization that holds your shares and is the stockholder of record, giving you the right to vote the shares at the Annual Meeting.

Q:
How do I vote?
A:
Voting by Mail. Stockholders who received a paper copy of a proxy card by mail may submit proxies by completing, signing and dating their proxy card and mailing it in the accompanying pre-addressed envelope. Proxy cards submitted by mail must be received prior to the closing of the polls at the Annual Meeting in order for the votes to be recorded.
Voting via the Internet. Stockholders who received a notice of the Internet availability of the proxy materials by mail may submit proxies over the Internet by following the instructions on the Notice. Stockholders who received a paper copy of a proxy card by mail may submit proxies over the Internet by following the instructions on the proxy card. Most of Align’s stockholders who hold shares beneficially in street name may vote by accessing the website specified in the voting instructions provided by their broker or other nominee. A number of banks and brokerage firms are participating in a program provided through Broadridge Investor Communication Solutions that offers the means to grant proxies to vote shares through the Internet. If your shares are held in an account with a broker or bank participating in the Broadridge Investor Communication Solutions program, you may grant a proxy to vote those shares via the Internet by contacting the website shown on the instruction form received from your broker or bank. Your vote must be received by 8:59 p.m. Pacific Time, on May 17, 2016.
Voting by Telephone. Stockholders of record may submit proxies by following the “Vote by Telephone” instructions on their proxy cards or on the notice of Internet availability, as applicable, until 8:59 p.m. Pacific Time, on May 17, 2016.
Voting in Person at the Annual Meeting. Shares held in your names as the stockholder of record may be voted in person at the Annual Meeting. If, however, you are the beneficial owner of shares held in street name, and if you wish to vote at the Annual Meeting, you will need to bring a legal proxy from your broker or other nominee authorizing you to vote your shares. Even if you plan to attend the Annual Meeting, we recommend that you also vote by proxy as described below so that your vote will be counted if you later decide not to attend the meeting.

Q:
What if I don’t give specific voting instructions?
A:
In the election of directors, you may vote “FOR,” “AGAINST” or “ABSTAIN.” If you elect to “ABSTAIN” in the election of directors, the abstention will not impact the election of directors. In tabulating the voting results for the election of directors, only "FOR" and "AGAINST" votes are counted.
For the other items of business, you may vote "FOR", "AGAINST" or "ABSTAIN". For these other items of business, if you elect to abstain, the abstention will have the same effect as an "AGAINST" vote.
If you indicate your choice on your proxy on a particular matter to be acted upon, the shares will be voted as indicated.
If you are a stockholder of record and you return a signed proxy card but do not indicate how you wish to vote, the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this proxy statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting. If you do not return the proxy card, your shares will not be voted and will not be deemed present for the purpose of determining whether a quorum exists.
If you are a beneficial owner and the organization holding your account does not receive instructions from you as to how to vote those shares, under the rules of various national and regional securities exchanges, that organization may exercise discretionary authority to vote on routine proposals (the ratification of the appointment of PricewaterhouseCoopers LLP as our independent public accountants) but may not vote on non-routine proposals (each of the other five proposals). We encourage you to provide instructions to your broker regarding the voting of your shares.
If you do not provide voting instructions to your broker and the broker has indicated that it does not have discretionary authority to vote on a particular proposal, your shares will be considered “broker non-votes” with regard to that matter. Broker non-votes will be considered as represented for purposes of determining a quorum but generally will not be considered

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as entitled to vote with respect to a particular proposal. Broker non-votes are not counted for purposes of determining the number of votes cast with respect to a particular proposal. Thus, a broker non-vote will make a quorum more readily obtainable, but the broker non-vote will not otherwise affect the outcome of the vote on a proposal that requires the affirmative vote of a majority of the shares present and entitled to vote.


Q:
Can I change or revoke my vote?
A:
Subject to any rules your broker or other nominee may have, you may change your proxy instructions at any time before your proxy is voted at the Annual Meeting.
If you are a stockholder of record, you may either:
Sign and return another proxy bearing a later date prior to the time we take the vote at the Annual Meeting;
Submit a timely and valid Internet or telephone vote on a later date but prior to the time we take the vote at the Annual Meeting;
provide written notice of the revocation to:
Corporate Secretary
Align Technology, Inc.
2560 Orchard Parkway
San Jose, California 95131
prior to the time we take the vote at the Annual Meeting; or

attend the Annual Meeting and vote in person. Your attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically so request.
If you are a beneficial owner of shares held in street name, you may either:
submit new voting instructions to your broker or other nominee; or
if you have obtained a legal proxy from your broker or other nominee giving you the right to vote your shares at the Annual Meeting, attend the Annual Meeting and vote in person.

Q:
What are we voting on and what vote is required to approve each item?
A:
The proposals that will be presented at the Annual meeting, our Board's voting recommendations and the vote required and the way the vote is calculated for the proposals is as follows:
 



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PROPOSAL
  
Vote Required
  
Board's Voting Recommendation
Broker Discretionary Voting Allowed?
Proposal 1 — To Elect Eight (8) Director Nominees
  
A nominee must receive more "for" votes than "against" votes and the number of votes "for" must be the majority of the required quorum
  
FOR
NO
 
 
 
Proposal 2 — To Ratify the Appointment of PwC as the Company’s Independent Registered Public Accounting Firm for Fiscal 2016
  
Majority of Shares Entitled to Vote and Present in Person or Represented by Proxy
  
FOR
YES
 
 
 
Proposal 3 — To Consider an Advisory Vote to Approve the Compensation of our Named Executive Officers
  
Majority of Shares Entitled to Vote and Present in Person or Represented by Proxy
  
FOR
NO
 
 
 
 
 
 
Proposal 4 — Amendment to our Amended and Restated Certificate of Incorporation to eliminate the "for cause" requirement for stockholder removal of a director

 
66 2/3% of the Outstanding Shares of Voting Stock, meaning Common Shares Outstanding
 
FOR
NO
 
 
 
 
 
 
Proposal 5 — Amendment to our Amended and Restated Certificate of Incorporation to eliminate the supermajority vote requirement for stockholder removal of a director

 
66 2/3% of the Outstanding Shares of Voting Stock, meaning Common Shares Outstanding
 
FOR
NO
 
 
 
 
 
 
Proposal 6 — Amendment and Restatement of 2005 Equity Plan

 
Majority of Shares Entitled to Vote and Present in Person or Represented by Proxy
 
FOR
NO
 
 
 
 
 
 
We will also consider any other business that properly comes before the Annual Meeting. As of April [___], 2016, we are not aware of any other matters to be submitted for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, the persons named in the proxy cards will vote the shares they represent using their best judgment.


Q:
What constitutes a quorum?
A:
A quorum, which is a majority of the outstanding shares of our common stock as of the record date, must be present or represented by proxy in order to hold the Annual Meeting and to conduct business. As of the record date, ___________________ shares of common stock, representing the same number of votes, were outstanding. That means that we need the holders of at least _______________shares of common stock to be represented for us to have a quorum. Your shares will be counted as present at the Annual Meeting if you attend the Annual Meeting in person. Your shares will be considered present and represented by proxy if you submit a properly executed proxy card or vote via the Internet or by telephone. Under the General Corporation Law of the State of Delaware, abstentions and broker “non-votes” are counted as present and entitled to vote and so are included for purposes of determining whether a quorum is present at the Annual Meeting. 

Q:
Who will bear the cost of soliciting votes for the Annual Meeting?
A:
We will bear the entire cost of proxy solicitation, including the preparation, assembly, printing and mailing of proxy materials. The original solicitation of proxies by mail may be supplemented by solicitation by telephone and other means by directors, and employees of Align. None of these officers, directors or employees will receive special compensation for such services. In addition, we may reimburse brokerage firms and other custodians for their reasonable out-of-pocket expenses for forwarding these proxy materials to you. We have also retained Alliance Advisors LLC to assist us in the solicitation of proxies. Alliance Advisors LLC will solicit proxies on our behalf from individuals, brokers, bank nominees and other institutional holders in the same manner described above. Alliance Advisors LLC will receive a fee of $7,500 plus approved and reasonable out of pocket expenses for these services.



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Q:
Who will count the vote?
A:
We expect a representative from the Company will tabulate the proxies and act as inspector of the election.

Q:
What is the Company’s website address?
A.
Our website address is www.aligntech.com. We make this proxy statement, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended available on our website in the Investor Relations section, as soon as reasonably practicable after electronically filing such material with the Securities and Exchange Commission (“SEC”).
This information is also available free of charge at www.sec.gov, an Internet site maintained by the SEC that contains reports, proxy and information statements and other information regarding issuers that are filed electronically with the SEC. Stockholders may obtain free copies of the documents filed with the SEC by contacting our Investor Relations department at by sending a written request to Align Technology, Inc, 2560 Orchard Parkway, San Jose, California 95131, Attn: Investor Relations or by sending an email to investorinfo@aligntech.com.

Q:
Where can I find the voting results of the meeting?
A:
The preliminary results will be announced at the Annual Meeting. The final results will be published in a Current Report on Form 8-K, which we will file with the SEC by May 24, 2016. 

Q:  What if multiple stockholders share the same address?
A:  To reduce expenses, in some cases, we are delivering one set of voting materials to certain stockholders who share a single address, unless otherwise requested by one of the stockholders.  A separate proxy card is included in the voting materials for each of these stockholders.  If you have only received one set, you may request separate copies of the voting materials at no additional cost to you by calling us at (408) 470-1000 or by writing to us at Align Technology, Inc., 2560 Orchard Parkway, San Jose, California 95131, Attn:  Investor Relations.  You may also contact us by calling or writing if you would like to receive separate materials for future annual meetings.

Q:
Is there any information that I should know regarding future annual meetings?
A:
Stockholder proposals may be included in our proxy statement for an annual meeting so long as they are provided to us on a timely basis and satisfy the other conditions set forth in SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. For a stockholder proposal to be considered for inclusion in our proxy statement for the annual meeting to be held in 2017, we must receive the proposal at our principal executive offices, addressed to the Corporate Secretary, no later than December 3, 2016. In addition, a stockholder proposal that is not intended for inclusion in our proxy statement under Rule 14a-8 may be brought before the 2017 annual meeting so long as we receive information and notice of the proposal in compliance with the requirements set forth in our Bylaws, addressed to the Corporate Secretary at our principal executive offices, not later than March 19, 2017 nor earlier than February 17, 2017.

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PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
Our Board is elected each year at the annual meeting of stockholders.  As of the date of this proxy statement, Align's Bylaws fix the current number of directors at 9. David C. Nagel is not standing for reelection at the 2016 annual meeting and is not a nominee for election. On the recommendation of the Nominating and Governance Committee, the Board has nominated the 8 persons named below for election as directors this year, each to serve for a one-year term or until the director's successor is elected and qualified.
In the event any of the nominees is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the then current Board to fill the vacancy. As of the date of this Proxy Statement, our Board is not aware of any nominee who is unable or will decline to serve as a director.
Our Bylaws require that a director nominee will be elected only if he or she receives a majority of the votes cast with respect to his or her election in an uncontested election (that is, the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). Each of our director nominees is currently serving on the Board. If a nominee who is currently serving as a director is not re-elected, Delaware law provides that the director would continue to serve on the Board as a “holdover director.” Under our Bylaws and Corporate Governance Guidelines, each director submits an advance, contingent, irrevocable resignation that the Board may accept if stockholders do not re-elect the director. In that situation, our Nominating and Governance Committee would make a recommendation to the Board about whether to accept or reject the resignation, or whether to take other action. The Board would act on the Nominating and Governance Committee’s recommendation, and publicly disclose its decision and the rationale behind it within 90 days from the date that the election results were certified.
You may either vote “For” or “Against” any nominee you specify. Unless marked otherwise, proxies returned to us will be voted for each of the nominees named below. If you hold your shares through a bank, a broker or other holder or record you must instruct your bank, broker or other holder of record to vote so that your vote can be counted on this Proposal 1.
OUR BOARD RECOMMENDS THAT YOU VOTE “FOR” ALL NOMINEES

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Information Concerning the Nominees
Joseph M. Hogan
Age: 58
Director since 2015
No Board Committees

 
Mr. Hogan has served as our President and Chief Executive Officer and a member of our Board since June 2015. Prior to joining us, Mr. Hogan was Chief Executive Officer of ABB Ltd., a global power and automation technologies company based in Zurich, Switzerland, from 2008 to 2013. Prior to ABB, Mr. Hogan worked at General Electric Company (GE) in a variety of executive and management roles from 1985 to 2008, including eight years as Chief Executive Officer of GE Healthcare from 2000 to 2008. Mr. Hogan earned a MSBA from Robert Morris University and a B.S. in Business Administration from Geneva College.
Mr. Hogan is an accomplished chief executive with extensive experience in leading the strategic and operational aspects of large and complex, international organizations in the healthcare and technology industries. As the President and Chief Executive Officer of Align, Mr. Hogan is responsible for management's execution of operational objectives and serves as an integral connection between the Board of Directors and Align's management team, enabling alignment between the Board's strategic expectations and Align's current and future strategy and operations.
 
 
 
Joseph Lacob
Age: 60
Director since 1997
Board committees:
Nominating and Governance (Chair) and Technology
  
Mr. Lacob has served as a director of Align since August 1997 and has been a partner of Kleiner Perkins Caufield & Byers (KPCB), a venture capital firm, since May 1987. In 2011, Mr. Lacob acquired The Golden State Warriors of the National Basketball Association. He is currently the Managing Partner and CEO of the Warriors. Prior to joining KPCB in 1987, Mr. Lacob was an executive with Cetus Corporation (now Chiron), FHP International, a health maintenance organization, and the management consulting firm of Booz, Allen & Hamilton. He was previously on the board of directors of Orexigen Therapeutics, a biopharmaceutical company focused on the development of pharmaceutical product candidates for the treatment of obesity. Mr. Lacob received his B.S. in Biological Sciences from the University of California at Irvine, his Masters in Public Health from the University of California at Los Angeles and his M.B.A. from Stanford University.

Mr. Lacob has demonstrated success in his business and leadership skills, serving as a partner of KPCB since 1987. In his role at KPCB, he has gained considerable technology, health care and life sciences industry experience. During his career at KPCB, Mr. Lacob has been closely involved with investments in over fifty life science companies, including the start-up or incubation of a dozen ventures, and with KPCB's medical technology practice, which includes over thirty therapeutic and diagnostic medical device companies. With this extensive business background, Mr. Lacob also brings considerable finance and investment experience that has proven to be valuable in addressing issues that arise at Align.

 
 
 

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C. Raymond Larkin Jr.
(Chairman of the Board)
Age: 67
Director since 2004
Board committees:
Nominating and Governance
 
Mr. Larkin has served as a director of Align since March 2004. In February 2006, Mr. Larkin was appointed as Chairman of the Board. He currently is a Principal of Group Outcome L.L.C., a merchant banking firm concentrating on medical technologies. From 2001 to 2007, he served as a part time Venture Partner at Cutlass Capital, a venture capital firm. Mr. Larkin was previously Chairman and Chief Executive Officer at Eunoe, Inc., a medical device company. From 1983 to March 1998, he held various executive positions with Nellcor Puritan Bennett, Inc., a medical instrumentation company, for which he served as President and Chief Executive Officer from 1989 until 1998. Mr. Larkin also held various positions of increasing responsibility at Bentley Laboratories/American Hospital Supply from 1976 to 1983. He serves on the board of directors of Heartware, Inc., a medical device company developing implant devices for the treatment of advanced heart failure. Mr. Larkin received his B.S. in Industrial Management from LaSalle University.
 
Mr. Larkin brings with him considerable business experience in the medical device industry serving as President and CEO of a large public company. In his role as President and CEO of Nellcor Puritan Bennett, Inc., Mr. Larkin took on significant management, strategic and operational responsibilities leading that business through significant growth, including numerous mergers & acquisitions. This operational experience has proven valuable in addressing issues that have arisen at Align. With his knowledge of the medical device and health care industry, Mr. Larkin provides valuable insight to our Board. Mr. Larkin’s experience as a member of the board of directors of various public companies provides Mr. Larkin a deep understanding of the role of the board of directors and positions him well to serve as our Chairman.
George J. Morrow
Age: 64
Director since 2006
Board committees:
Compensation (Chair)
  
Mr. Morrow has served as a director of Align since February 2006. From February 2011 until January 2013, Mr. Morrow served as a consultant to Amgen Inc., a global biotechnology company. From 2003 until his retirement in February 2011, he was the Executive Vice President, Global Commercial Operations at Amgen Inc., where he also served as Executive Vice President of Worldwide Sales and Marketing between 2001 and 2003. From 1992 to 2001, Mr. Morrow held multiple leadership positions at GlaxoSmithKline Inc. and its subsidiaries, including President and Chief Executive Officer of Glaxo Wellcome Inc. He is a member of the board of directors of Vical Incorporated, a company that researches and develops biopharmaceutical products, Safeway Inc., a food and drug retailer and was a member of the board of directors of Human Genome Sciences, Inc., a biopharmaceutical discovery and development company, from March 2011 until its acquisition in August 2012 by GlaxoSmithKline plc.  Mr. Morrow holds a B.S. in Chemistry from Southampton College, Long Island University, an M.S. in Biochemistry from Bryn Mawr College and an M.B.A. from Duke University.
 
As a former executive vice president at Amgen and Glaxo, two large public companies, Mr. Morrow brings to our Board considerable business experience in the medical technology industry. As part of the executive leadership at Amgen, Mr. Morrow has recent front-line exposure to many of the issues facing public companies today, particularly on the operational, regulatory, financial and corporate governance fronts. Mr. Morrow's leadership skills and experience make him knowledgeable of the complex issues facing global companies today and give him an understanding of what makes businesses work effectively and efficiently. These skills and experience are extremely valuable to our Board and enable Mr. Morrow to be an effective Compensation Committee chairman.

 
 

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Thomas M. Prescott
Age: 60
Director since 2002
Technology Committee
  
Mr. Prescott served as our President and Chief Executive Officer until his recent retirement in June 2015. Prior to joining Align, Mr. Prescott was President and Chief Executive Officer of Cardiac Pathways, Inc. from May 1999 to August 2001 and a consultant for Boston Scientific Corporation from August 2001 to January 2002 after its acquisition of Cardiac Pathways in August 2001. Prior to Cardiac Pathways, Mr. Prescott held various sales, general management and executive roles at Nellcor Puritan Bennett, Inc. from April 1994 to May 1999, and various management positions at GE Medical Systems from October 1987 to April 1994. In addition, Mr. Prescott served in sales, marketing and management roles at Siemens AG from December 1980 to July 1986. He received his B.S. in Civil Engineering from Arizona State University and Masters in Management from Northwestern University. Mr. Prescott has served as a member of the Board since joining the Company in 2002.
 
As our former CEO, Mr. Prescott 13 years of experience at our Company, he has deep knowledge and understanding of Align and its business. Mr. Prescott’s prior experience as CEO of another publicly traded medical device company demonstrates his leadership capability and business acumen. His experience with strategic and operational issues in the life sciences industry along with his service on the board of directors of other companies in this industry gives him insight into the issues facing this industry and brings valuable expertise to our Board and our Technology Committee.
 
 
Andrea L. Saia
Age: 58
Director since 2013
Board committees: Audit
  
Ms. Saia has served as a director of Align since July 2013. Ms. Saia was previously the Global Head of Vision Care in the Alcon division of Novartis AG, from 2011 until her retirement in 2012. Prior to this role, she served as President and Chief Executive Officer of CibaVision Corporation, a subsidiary of Novartis, from 2008 to 2011. From 2005 to 2007, she relocated to Switzerland and served as President of Europe, Middle East, and Africa operations, CibaVision’s largest regional business unit. She initially joined CibaVision in 2002 as Global Head of Marketing and was promoted to President of the Global Lens Business the following year. Prior to Novartis, Ms. Saia was the Chief Marketing Officer for GCG Partners Inc. Ms. Saia also held senior management and marketing positions with global consumer products companies such as Procter & Gamble Co., Unilever, and Revlon, Inc.. Ms. Saia earned an M.B.A. from J.L. Kellogg Graduate School of Business and a B.S. in Business Administration from Miami University. Ms. Saia also serves on the board of directors of Coca-Cola Enterprises, Inc., the marketer, producer and distributor of Coca-Cola products in European markets.
                                                                                                                                                                                                                                                                                                                Ms. Saia brings to the Board extensive global business experience, a broad understanding of the healthcare, medical device and consumer products industries, strong management skills and operational expertise through her positions at Novartis. In those positions, she dealt with a wide range of issues as they rebuilt and strengthened the innovation and operating functions, and delivered industry leading sales and profit growth. The Board believes that her extensive knowledge of healthcare, medical device and consumer products industries provides her with insights that are particularly helpful and valuable to our board. In addition, Ms. Saia also serves on the board of directors of another publicly traded company, which gives her insight and perspective into current best practices at the board level and enables her to be an effective contributing member of our Board and our Audit Committee, and a strong addition to the Compensation Committee and Technology Committee.



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Greg J. Santora
Age: 64
Director since 2003
Board committees:
Audit (Chair) and Compensation
 
Mr. Santora has served as a director of Align since July 2003. Mr. Santora served as Chief Financial Officer at Shopping.com, a provider of internet-based comparison shopping resources, from December 2003 until September 2005. From 1997 through 2002, he served as Senior Vice President and Chief Financial Officer for Intuit, Inc., a provider of small business and personal finance software. Prior to Intuit, Mr. Santora spent nearly 13 years at Apple Computer in various senior financial positions including Senior Finance Director of Apple Americas and Senior Director of Internal Consulting and Audit. Mr. Santora, who began his accounting career with Arthur Andersen L.L.P., has been a CPA since 1974. He serves on the board of directors of RetailMeNot, Inc., a digital coupon site, since May 2013. In addition, he served on the board of directors of Taleo Corporation, a provider of on-demand talent management solutions until its acquisition by Oracle Corporation in April 2012. Mr. Santora holds a B.S. in Accounting from the University of Illinois and an M.B.A. from San Jose State University.
 
Mr. Santora is an experienced financial leader with over 35 years of finance and accounting experience gained through his education and work at a major accounting firm and his later positions as Chief Financial Officer of Intuit and Shopping.com. The compliance, financial reporting and audit expertise Mr. Santora gained in his senior finance and operations roles, including as chief financial officer, has proven valuable in addressing issues that have arisen at Align during Mr. Santora’s tenure as Audit Committee chairman. Mr. Santora service on the board of directors and audit committee of another publicly traded company, gives him insight and perspective into current best practices with respect to finance organizations and the audit committee function.
 
 
 
Warren S. Thaler
Age: 53
Director since 2004
Board committees:
Audit, Nominating and Governance, and Technology
  
Mr. Thaler has served as a director of Align since June 2004. Since 2001, Mr. Thaler has been President of Gund Investment Corporation, an investment firm owned by Gordon Gund with holdings in real estate as well as public and private equity securities. Since 1990, Mr. Thaler has served on the board of directors of several privately held companies owned by the Gund family. From 1990 to 2005, Mr. Thaler was on the board of directors of the Cleveland Cavaliers and Gund Arena Company and from 2001 to 2005 represented the Cleveland Cavaliers as its Alternate Governor at meetings of the National Basketball Association’s Board of Governors. Mr. Thaler received his B.A. from Princeton University and his M.B.A. from Harvard University.
 
Mr. Thaler’s demonstrated executive level management skills make him an important advisor to our Board. His success in building businesses as well as his finance and investment experience gained at Gund and through his education makes Mr. Thaler well suited for our Audit Committee. Mr. Thaler’s business background makes him a valuable component of a well rounded Board and a key member of the Board’s audit, nominating and governance, and technology committees.
There are no family relationships between any director or any of Align’s executive officers.


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CORPORATE GOVERNANCE
Corporate Governance Policies and Practices
We are committed to implementing and following high standards of corporate governance, which we believe are important to the success of our business, creating stockholder value and maintaining our integrity in the marketplace. The Board seeks to continuously identify areas where the Company could improve its corporate governance practices to increase transparency and improve accountability. Since the last Annual Meeting of Stockholders, the Board updated its corporate governances practices by doing the following:
Termination of the Company's Stockholders Rights Plan ("Poison Pill"). The Board determined to eliminate the Company's Poison Pill by allowing it to expire in accordance with its terms in November 2015.
Approval of Anti-Hedging and Anti-Pledging Policy. The Board adopted an amendment to the Company's Insider Trading Policy to prohibit executive officers, directors and employees from engaging in hedging transactions or pledging the Company' securities as collateral for loans.
In addition to these governance initiatives, the Board is seeking shareholder approval of the following amendments to the Company's Amended and Restated Certificate of Incorporation at the Annual Meeting, as further described in "Proposal Four" and "Proposal Five".
Eliminate "for cause" requirement for stockholder removal of a director. If approved by the requisite vote of shareholders, the amendment would eliminate the “for cause” requirement for stockholder removal of a director     
Eliminate supermajority voting standard for the removal of directors by shareholders. If approved by the requisite vote of shareholders, the amendment would replace the supermajority voting requirement for the ability of shareholders to remove directors with a simple majority of votes cast.
In addition to these changes, we continue to maintain a variety of policies and practices to foster and maintain responsible corporate governance, including the following:
Declassified Board. We have a declassified Board and our bylaws provide for one-year terms for our directors. All of our directors will stand for election to one-year terms at this Annual Meeting.
Majority Voting for Election of Directors. The Board of Directors has adopted majority voting for uncontested elections of directors.
Corporate Governance Guidelines—Our Board has set out its corporate governance practices in the Corporate Governance Guidelines of Align Technology, Inc., a copy of which is available on the Investor Relations section of our website located at http://investor.aligntech.com. Selected provisions of the guidelines are detailed below.
Code of Ethics—Our Board has adopted a Code of Business Conduct and Ethics that is applicable to all directors, officers and employees of Align, including Align’s principal executive officer, principal financial officer and controller. This Code is intended to deter wrongdoing and promote ethical conduct among our directors, executive officers and employees. The Code of Business Conduct and Ethics is available on the Investor Relations section of our website located at investor.aligntech.com. Stockholders may request in writing free printed copies of our Code of Business Conduct and Ethics from Align Technology, Inc., 2560 Orchard Parkway, San Jose, California 95131, Attn: Investor Relations or by sending an email to investorinfo@aligntech.com. We will post on our website at http://investor.aligntech.com any amendments to our Code of Business Conduct and Ethics, as well as any waivers to our Code of Business Conduct and Ethics that are required to be disclosed by the rules of the SEC or the NASDAQ Stock Market LLC.
Stock Ownership Guidelines. Our Board has adopted stock ownership guidelines.
Director Stock Ownership Guidelines. The guidelines provide that each director should own shares of Align’s common stock equal in market value to $250,000. Directors are expected to attain the minimum level of target ownership within a period of five years from the effective date of the policy. Any new director will be expected to attain the minimum level of target ownership within a period of five years from the date he or she is first elected to the Board. Currently, all directors are in compliance with this policy.
Executive Officer Stock Ownership Guidelines. The target ownership guideline set for each executive is based on that person’s relative level of seniority and responsibility. For our CEO, the ratio is 5.0 times his annual base salary. For each executive officer other than our CEO, the ratio is 1.0 times his or her annual base salary. Once established, an executive officer’s target ownership guideline does not re-adjust automatically as a result of changes in his or

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her base salary or changes in the price of the company’s stock. Executive officers are required to achieve the guideline within five years of becoming an executive officer, or, in the case of persons who were executive officers at the time the guidelines were adopted, within five years of the date of adoption of the guidelines. Currently, each executive officer is in compliance with the stock ownership guidelines.

For purposes of this policy, “ownership” includes:
shares of Align common stock held directly by the director or officer or in trust for the benefit of the director or officer or his or her family member living in the same household,
50% of the gain on vested in-the-money stock options, and
shares of underlying Align restricted stock units held directly by a director or officer, whether or not yet vested.
The term “ownership” does not include unvested options to purchase common stock or shares underlying unvested market stock units.
Role of Board. The Board has responsibility for reviewing our overall performance rather than day-to-day operations. The Board’s primary responsibility is to oversee the management of Align and, in so doing, serve the best interests of Align and its stockholders. The Board selects, evaluates and provides for the succession of executive officers and, subject to oversight by the Nominating and Governance Committee, the Board nominates for election at annual stockholder meetings individuals to serve as directors of Align and elects individuals to fill any vacancies on the Board. It reviews corporate objectives and strategies, and evaluates and approves significant policies and proposed major commitments of corporate resources. It participates in decisions that have a potential major economic impact on Align. Management keeps the directors informed of Company activity through regular written reports and presentations at Board and Committee meetings.
Board Leadership Structure; Executive Sessions. We currently separate the roles of chief executive officer (CEO) and Chairman of the Board in recognition of the differences between the two roles. The CEO is responsible for setting our strategic direction and the day-to-day leadership and performance of the Company, while the Chairman of the Board provides guidance to the CEO and, in consultation with the CEO and other members of our Board, sets the agenda for Board meetings and presides over meetings of the full Board. We believe that this separation of duties allows the CEO and Chairman to most efficiently use their time and to most effectively fulfill their respective responsibilities, which are critical to the future success of the Company. While our bylaws and corporate governance guidelines do not require that our Chairman and CEO positions be separate, the Board believes that having separate positions and having an independent outside director serve as chairman is the appropriate leadership structure for Align at this time. Our Corporate Governance Guidelines provide that the independent directors of the Board will meet in executive session at least twice a year. The independent directors met in such sessions eight times in 2015.
Meetings of the Board. For the period of his or her Board service in 2015, each director attended at least 75 percent of the aggregate of the total number of meetings of the Board and the committees on which he or she serves.
Committees. During the year, the Board maintained an Audit Committee, a Compensation Committee, a Nominating and Governance Committee and a Technology Committee. Each committee has adopted a written charter that establishes practices and procedures for such committee in accordance with applicable corporate governance rules and regulations. These charters are available on the Investor Relations section of our website located at investor.aligntech.com.

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Audit Committee
 
2015 Meetings: 14

Members:

Greg J. Santora (Chair)
Andrea L. Saia
Warren S. Thaler
Oversees and monitors our accounting and financial reporting processes, our financial statement audits, and our internal accounting and financial controls.
Responsible for appointing, compensating, retaining, terminating and overseeing the work of our independent auditors.
Responsible for reviewing the auditors proposed scope, approach and independence.
Pre-approves audit and non-audit services.
Provides oversight and monitors our Internal Audit Department.
Reviews, approves and monitors our Code of Business Conduct and Ethics.
 
Oversees and reviews our risk management policies.
 
Establishes procedures for receiving, retaining and treating complaints regarding accounting, internal accounting controls or auditing matters.
 
None of the Audit Committee members are employees of Align, and our Board has determined that each member is independent within the meaning of the NASDAQ listing standards and the rules and regulations of the SEC.
 
Our Board has determined that Mr. Santora is qualified as an “audit committee financial expert” within the meaning of the rules of the SEC and has confirmed that the other members of the Audit Committee are able to read and understand financial statements.
Compensation Committee
 
2015 Meetings: 8

Members:

George Morrow (Chair) Dr. David C. Nagel (1)
Greg Santora
Ensures that the Company’s compensation programs successfully align the interest of employees, including executive officers, with those of the Company’s stockholders.
Reviews and administers all compensation arrangements for executive officers, and reviews general compensation goals and guidelines for Align’s employees and the criteria for which bonuses are to be determined.
Retains, oversees, and assesses the independence of compensation consultants and advisors.
 
Assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs.
 
May form and delegate authority to subcommittees when appropriate, although no such delegation is currently in effect.
 
None of the Compensation Committee members are employees of Align, and our Board has determined that each member is independent within the meaning of the NASDAQ listing standards.
Nominating and Governance Committee
2015 Meetings: 2

Members:

Joseph Lacob(Chair)
C. Raymond Larkin Jr.
Warren S. Thaler
Identifies, evaluates and recommends nominees to the Board.
Evaluates the composition, organization and governance of the Board and its committees.
Develops and recommends corporate governance principles applicable to Align
Technology Committee
 
2015 Meetings: 1

Members:

Dr. David C. Nagel (Chair) (1)
Joseph Lacob
Warren Thaler Thomas M. Prescott (2)
Reviews Align's technology and development activities.
Oversees and advises the Board on matters of innovation and technology.
 
(1) Dr. Nagel is not standing for reelection to the Board in 2016.
(2) Mr. Prescott was appointed to the Technology Committee in October 2015.
The Nominating and Governance Committee appointed Ms. Saia to serve on the Compensation Committee and the Technology Committee effective immediately following the Annual Meeting, subject to her continuing membership on the Board of Directors.

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Process for Identifying and Evaluating Nominees and Relevant Criteria. The Nominating and Governance Committee considers candidates for board membership suggested by Board members, management and stockholders of Align. The Nominating and Governance Committee has also retained from time to time a third-party executive search firm to identify independent director candidates. In considering candidates for director nominee, the Nominating and Governance Committee generally assembles all information regarding a candidate’s background and qualifications. While Align does not have a formal diversity policy for board membership, the Board seeks directors who represent a mix of backgrounds and experiences that will enhance the quality of the Board’s deliberations and decisions. The Nominating and Governance Committee considers, among other factors, diversity with respect to perspectives, backgrounds, skills, experience, and community involvement in its evaluation of candidates for Board membership. Such diversity considerations are discussed by the Nominating and Governance Committee in connection with the general qualifications of each potential nominee. The Nominating and Governance Committee, in its discretion, may designate one or more of its members to interview any candidate. In addition, the Nominating and Governance Committee may seek input from Align’s management or the Board, who may interview any candidate. The Nominating and Governance Committee recommends director nominees to the Board based on its assessment of overall suitability to serve on the Board in accordance with Align’s policy regarding nominations and qualifications of directors.
The Nominating and Governance Committee has specified the following minimum qualifications that it believes must be met by a nominee for apposition on the Board:
the highest personal and professional ethics and integrity;
proven achievement and competence in the nominee’s field and the ability to exercise sound business judgment;
skills and experience that are complementary to those of the existing Board;
the ability to assist and support management and make significant contributions to Align’s success; and
an understanding of the fiduciary responsibilities that is required of a member of the Board and the commitment of time and energy necessary to diligently carry out those responsibilities.
Stockholder Recommendation of Nominees. Under our Corporate Governance Guidelines, the Nominating and Governance Committee is required to consider recommendations for candidates to the Board from stockholders holding at least 1% of the total outstanding shares of Align common stock (stockholders must have held such common stock continuously for at least 12 months prior to the date of the submission of the recommendation). The Nominating and Governance Committee will consider persons recommended by Align’s stockholders in the same manner as a nominee recommended by the Board, individual board members or management.
A stockholder may also nominate a person directly for election to the Board at an annual meeting of our stockholders provided their proposal meets the requirements set forth in our bylaws and the rules and regulations of the SEC related to stockholder proposals. The process for properly submitting a stockholder proposal, including a proposal to nominate a person for election to the Board at an annual meeting, is described above in the answer to the question “Is there any information that I should know regarding future annual meetings?”
Annual meeting attendance. Align encourages, but does not require, Board members to attend the annual stockholder meeting. Last year, one director attended our annual meeting of stockholders.
The Board’s Role in Risk Oversight. Management is responsible for the day-to-day management of risks the Company faces, while the Board, as whole and through its committees, has responsibility for the oversight of risk management. In its risk management role, the Board has the responsibility to satisfy itself that the risk management processes implemented by management are adequate and functioning as designed. As a critical part of this risk management oversight role, the Board encourages management to promote a culture that actively manages risks as part of Align’s corporate strategy and day-to-day business operations. Furthermore, our Board encourages full and open communication between management and the Board. Our Chairman meets regularly with our CEO and other senior members of management to discuss strategy and risks facing the Company. Senior management attends the quarterly Board meetings and is available to address any questions or concerns raised by the Board on risk management-related and other matters. The Board regularly receives presentations from senior management on strategic matters involving our operations to enable it to understand our risk identification, risk management and risk mitigation strategies. The Board also holds strategic planning sessions with senior management to discuss strategies, key challenges, and risks and opportunities for the Company.
Our Board does not have a standing risk management committee, but rather administers this oversight function directly through our Board as a whole, as well as through various standing committees of our Board that address risks inherent in their respective areas of oversight. In particular, the Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to risk management in areas of financial risk, internal controls, and compliance with legal and regulatory requirements. The Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The Nominating and Governance Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with Board organization, membership, and structure.

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When a committee receives a report, the chairman of the committee discusses it with the full Board during the committee reports portion of the next Board meeting. This enables the Board to coordinate the risk oversight role.
The Compensation Committee’s Role in Risk Oversight. In fulfilling its role in assisting the Board in its risk oversight responsibilities, the Compensation Committee believes that the various elements of our compensation program mitigates against and does not encourage excessive risk taking and instead encourages behaviors that support sustainable value creation. The Compensation Committee annually assesses our compensation programs and has concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. To arrive at this conclusion, the Committee assessed our executive and broad-based compensation programs and determined that the following design features of our compensation programs' did not create undesired or unintentional risk of a material nature and guarded against excessive risk-taking:
our compensation program is designed to provide a balanced mix of cash and equity, annual, and longer-term incentives in order to encourage strategies and actions that are in Align’s long-term best interests;
base salaries are consistent with an employee’s responsibilities so that they are not motivated to take excessive risks to achieve a reasonable level of financial security;
we establish performance goals under our annual cash incentive plan that we believe (A) are reasonable in light of past performance and market conditions, and (B) encourage success without encouraging excessive risk taking to achieve short-term results, and, therefore, do not encourage unnecessary or excessive risk-taking;
the performance goals that determine payouts under our annual cash incentive plans are company-wide in order to encourage decision-making that is in the best long-term interests of Align and our stockholders as a whole;
under our annual cash incentive plans, achievement of performance goals at levels below full target reduces only the payout related to that goal, not the other goals, and therefore does not result in an “all-or-nothing” approach;
each performance goal under our annual cash incentive plan has a maximum cap on achievement;
the Compensation Committee has discretion over annual cash incentive program payouts;
for our executive officers, we use a portfolio of equity based incentives that incent performance over a variety of time periods with respect to several balanced goals:
Restricted Stock Units ("RSUs") retain value even in a depressed market making it less likely that employees take unreasonable risks to get, or keep, equity grant “in the money”; and
performance-based market stock units ("MSUs") measure relative stockholder return over a three-year performance cycle; and
executive officers are subject to share ownership guidelines.
Director Independence
In accordance with the NASDAQ listing standards, the Board undertook its annual review of the independence of its directors and considered whether any director had a material relationship with Align or its management that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, the Board affirmatively determined that Joseph Lacob, C. Raymond Larkin Jr., George J. Morrow, Dr. David C. Nagel, Andrea L. Saia, Greg J. Santora and Warren S. Thaler are “independent directors.” Since Mr. Prescott was employed by Align as recently as 2015 and since Mr. Hogan is currently employed by Align, neither qualifies as independent.
Stockholder Communications with Board
Stockholders may communicate directly with the non-management directors of Align by sending an email to Board@aligntech.com. Our General Counsel monitors these communications and ensures that appropriate summaries of all received messages are provided to the Board at its regularly scheduled meetings. In addition, the Chairman of the Nominating and Governance Committee has access to this email address and may monitor communications at his option. Where the nature of a communication warrants, our General Counsel may decide to obtain the more immediate attention of the appropriate committee of the Board or a non-management director, or Align’s management or independent advisors. After reviewing stockholder messages, our Board will determine whether any response is necessary or warranted.

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Director Compensation
Cash Compensation
In early 2014, the Compensation Committee requested an updated analysis of our non-employee director compensation policy from Compensia, Inc., the Committee's independent compensation advisor. Compensia undertook a detailed review of recent board compensation trends, including the form and amount of cash compensation and equity grants, chairperson retainers and stock ownership guidelines. Compensia also analyzed the Board's compensation against our compensation peer group. The analysis showed that the Board compensation practices were generally aligned with market norms and emerging best practices other than the provision of per meeting fees. After reviewing the data and analysis prepared by Compensia, the Compensation Committee approved, and the Board subsequently ratified, a revised non-employee director compensation policy. The revised policy, which became effective on July 1, 2014, eliminated per meeting fees which were replaced with the following:
Description
Current Fee
Annual Retainer for Board Membership (other than Chairman)
$
50,000

Annual Retainer for membership on the Compensation and/or Audit Committee
$
13,500

Annual Retainer for Chair of Compensation Committee and/or Audit Committee
$
27,000

Annual Retainer for membership on the Nominating and Governance Committee and/or Technology Committee
$
5,000

Annual Retainer for Chair of Nominating and Governance Committee and/or Technology Committee
$
10,000

Annual Retainer for Chairman of the Board
$
210,000

Equity Compensation. In 2015, we granted to our Chairman and each continuing non-employee director, on the date of our annual meeting of stockholders, RSUs with a market value of approximately $450,000 and $325,000, respectively. On May 13, 2015, each non-employee director was granted 5,500 RSUs. Mr. Larkin was granted an additional 2,500 RSUs for his service as Chairman of the Board. These RSUs vest 100% upon the earlier of (i) the one year anniversary of the grant date and (ii) the date of the next annual meeting of stockholders following the grant date. Assuming the continued service of the non-employee director, each of these equity awards will vest 100% on May 13, 2016.
Total Compensation. The table below summarizes the compensation paid by to our non-employee directors for the year ended December 31, 2015. Mr. Hogan, our President and Chief Executive Officer, is not included in this table because he is an employee of Align and, as such, receives no compensation for his service on the Board. The compensation received by Mr. Hogan is shown in the Summary Compensation Table on page 51.
 
Name
Fees
earned
or paid
in cash
($)
 
Stock
awards
($)(1)
 
 
Total ($)
Joseph Lacob
65,000

 
323,125

 
 
388,125

C. Raymond Larkin Jr. (2)
210,000

 
452,375

 
 
662,375

George Morrow
77,000

 
323,125

 
 
400,125

Dr. David Nagel
73,500

 
323,125

 
 
396,625

Thomas M. Prescott (3)
30,416

 
__

 
 
__

Andrea L. Saia
63,500

 
323,125

 
 
386,625

Greg Santora
90,500

 
323,125

 
 
413,625

Warren Thaler
73,500

 
323,125

 
 
396,625


(1) 
The amounts shown in this column reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of awards of RSUs. There can be no assurance that the grant date fair value amounts will ever be realized. The RSUs are time based awards and are not subject to performance or market conditions.
(2) 
Mr. Larkin is the Chairman of the Board.
(3) 
Mr. Prescott retired as our President and CEO in June 2015. As a result, until June 2015, he did not receive compensation for his service on the Board. The cash amounts shown here are for Mr. Prescott's membership on the Board and the Technology Committee commencing in June 2015 and October 2015, respectively.

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The aggregate number of stock awards outstanding at December 31, 2015 for each non-employee director is as follows:
 
Name
Option Awards
 
Stock Awards
Mr. Lacob
40,000

 
5,500

Mr. Larkin
60,000

 
7,700

Mr. Morrow
50,000

 
5,500

Dr. Nagel
60,000

 
5,500

Mr. Prescott (1)
13,125

 
356,125

Ms. Saia

 
9,066

Mr. Santora

 
5,500

Mr. Thaler

 
5,500

    
(1) Mr. Prescott's equity awards were granted to him in during his tenure as our President and CEO.

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PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee of our Board has selected PricewaterhouseCoopers LLP, independent registered public accountants (“PwC”), to audit the financial statements of Align for the year ending December 31, 2016. In making its recommendation to appoint PwC as Align’s independent registered public accountants, the Audit Committee has considered whether the provision of the non-audit services rendered by PwC is compatible with maintaining the firm’s independence.
Representatives of PwC are expected to be present at the Annual Meeting with the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
Although stockholder ratification of the selection of PwC as our independent registered public accountants is not required by our Bylaws or any other applicable law, the Audit Committee is submitting the selection of PwC to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee and the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, our Audit Committee, at its discretion, may direct the appointment of a different firm to act as our independent registered public accountants at any time during the year if it determines that such a change would be in our best interests and in the best interests of our stockholders. In addition to the selection of the firm the Audit Committee and its chairperson were directly involved in the selection of PwC’s new lead engagement partner. 
Ratification of the selection of PwC requires that the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting vote “For” this Proposal 2. An “Abstention” vote will have the same effect as an “Against” in this Proposal 2. Discretionary votes by brokers, banks and related agents on this routine proposal will be counted towards the quorum requirement and will affect the outcome of the vote.
OUR BOARD RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS ALIGN’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2016



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Fees to PricewaterhouseCoopers LLP for 2015 and 2014
The following table presents fees for professional services rendered by PwC for the audit of Align’s annual financial statements for 2015 and 2014 and fees billed for audit-related services and tax services rendered by PwC for fiscal 2015 and 2014:
 
 
2015
 
2014
Audit fees (1)
$
2,407,019

 
$
2,298,528

Audit-related fees (2)
275,557

 
147,443

Tax fees (3)
1,091,285

 
778,159

All other fees (4)
10,650

 
6,150

Total fees:
$
3,784,511

 
$
3,230,280


(1) 
Audit fees — These are fees for professional services performed by PwC for the annual audit of Align’s financial statements and review of financial statements included in Align’s quarterly filings, and services that are normally provided in connection with statutory and regulatory filings or engagements, and attest services, except those not required by statute or regulation.
(2) 
Audit-related fees — These are fees for technical advisory consultations performed by PwC that are reasonably related to the performance of the audit or review of Align’s financial statements and are not reported under “Audit fees”, including fees for due diligence services and pre-implementation assessment of controls relating to enterprise resource planning ("ERP") software system.
(3) 
Tax fees — These are fees for professional services performed by PwC with respect to tax compliance, tax advice and tax planning.
(4) 
All other fees — These consist of all other fees billed to us for professional services performed by PwC and not reported under "Audit fees," "Audit-related fees" and "Tax fees."

Audit Committee’s Policy of Pre-Approval of Audit and Permissible Non-Audit Services
The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accountants subject to limited discretionary authority granted to our Chief Financial Officer. These services may include audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accountants and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accountants in accordance with this pre-approval and the fees for the services performed to date. All PwC services in 2015 and 2014 were pre-approved by the Audit Committee.

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REPORT OF THE AUDIT COMMITTEE OF THE BOARD
The following is the report of the Audit Committee of the Board of Directors with respect to Align’s audited financial statements for the year ended December 31, 2015, which include the consolidated balance sheets of Align as of December 31, 2015 and 2014, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years ended December 31, 2015, and the notes thereto.
In accordance with the written charter adopted by the Board of Directors of Align, the purpose of the Audit Committee is to assist the Board of Directors in its oversight and monitoring of:

the integrity of Align’s financial statements;
Align’s compliance with legal and regulatory requirements;
the independent registered public accountant’s qualifications, independence and performance;
adequacy of Align’s internal accounting and financial controls; and
Align’s internal audit department.
The full text of the Audit Committee’s charter is available on the Investor Relations section of Align’s website (www.aligntech.com). The Audit Committee regularly reviews its charter to ensure that it is meeting all relevant audit committee policy requirements of the SEC and the NASDAQ listing standards.
In carrying out its responsibilities, the Audit Committee, among other things, is responsible for:

providing guidance with respect to Align’s relationship with the independent auditors, including having responsibility for their appointment, compensation and retention;
involved in the selection of the audit firm's lead engagement partner;
reviewing the results and audit scope;
approving audit and non-audit services;
reviewing and discussing with management the quarterly and annual financial reports;
overseeing and reviewing Align’s risk management policies; and
overseeing management’s implementation and maintenance of effective systems of internal controls.
Before selecting PricewaterhouseCoopers LLP as Align’s independent auditors, the Audit Committee carefully considered PricewaterhouseCoopers LLP’s qualifications as independent accountants. This included a review of the qualifications of the engagement team, the quality control procedures the firm has established, as well as its reputation for integrity and competence in the fields of accounting and auditing. The Audit Committee’s review also included matters to be considered under the SEC’s rules regarding auditor independence, including the nature and extent of non-audit services, to ensure that the accountants’ independence will not be impaired. In addition, the Audit Committee has received the written disclosures and the letter required from the independent accountants required by the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence. The Audit Committee of our Board of Directors has determined that the provision of services by PricewaterhouseCoopers LLP of non-audit related services is compatible with maintaining the independence of PricewaterhouseCoopers LLP as our independent accountants.

In performing its responsibilities, the Audit Committee has reviewed and discussed with management and the independent auditors the audited consolidated financial statements in Align's Annual Report on Form 10-K for the year ended December 31, 2015. The Audit Committee has also discussed with the independent accountants the matters required to be discussed by Statement on Auditing Standards No. 61 as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
Based upon this review and discussions with management and the independent accountants and the Audit Committee’s review of the representations of management and the report of the independent accountants to the Audit Committee, the Audit Committee recommended that the Board of Directors include Align’s audited consolidated financial statements in Align’s Annual Report on Form 10-K for the year ended December 31, 2015 for filing with the SEC.
Respectfully submitted by:
 
AUDIT COMMITTEE
Greg J. Santora, Chair
Andrea L. Saia
Warren S. Thaler

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PROPOSAL THREE
ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
The Board believes that an annual advisory vote to approve the compensation of our named executive officers allows our stockholders to provide us with their direct input on our compensation philosophy, policies and practices as disclosed in the proxy statement every year, and is consistent with our policy of seeking input from, and engaging in discussions with, our stockholders on these matters. Accordingly, this year, we are again requesting you approve, on an advisory basis, the compensation of our named executive officers disclosed in "Compensation Discussion and Analysis," the Summary Compensation table and the related compensation tables, notes, and narrative in this proxy statement.
As we discuss below under the caption “Executive Compensation—Compensation Discussion and Analysis,” our executive compensation program is designed to link the actions of our executive officers to business outcomes that drive value for our stockholders. We believe that the most effective way to achieve this goal is to compensate our executive officers for the achievement of specific annual financial goals, certain annual and longer-term key strategic objectives, and the realization of increased stockholder value. We believe the compensation program for our executive officers has been highly effective in achieving these objectives. Align, on a year-over-year basis, grew revenues 11% and delivered operating margins of 22.3%, despite the negative impact of foreign exchange and our Additional Aligner policy adopted during the year. Strong Invisalign case volume growth of 22.0% year over year offset much of these headwinds and enabled us to achieve revenue growth and operating margins above our original forecast. We encourage you to carefully review the “Compensation Discussion and Analysis” beginning on page 37 of this proxy statement and the compensation tables that follow for additional details on Align’s executive compensation, including Align’s compensation philosophy and objectives, as well as the processes our Compensation Committee used to determine the structure and amounts of the compensation of our named executive officers in fiscal 2015.
The following highlights key aspects of executive compensation with respect to our named executive officers in fiscal 2015:
Approximately 80% - 85% of their target total direct compensation opportunity is variable and tied to achievement of internal performance targets or Align's stock price performance;
Since Align’s achievement of internal financial performance targets was slightly above target in 2015 compared to below target in 2014, each named executive officer received a greater cash incentive award compared to fiscal 2014;
Granted long-term equity awards, including performance-based market stock units, which are earned based on a comparison of Align’s stock price performance to the NASDAQ Composite index over a three-year performance period;
All of our post-employment cash compensation arrangements in the event of a change in control of Align are "double trigger" arrangements that require both a change in control plus a qualifying termination of employment before any cash payments are made.
Previously, our former CEO had a "single trigger" pursuant to which 100% of his equity would vest immediately upon a change of control of Align. With the hiring of Mr. Hogan, however, we eliminated this 100% vesting for the CEO, and Mr. Hogan's employment agreement contains a single trigger provision equivalent to the protection given to our other NEOs whereby the vesting of equity awards is accelerated only by one year immediately upon a change of control.
Executive officers are not entitled to any tax gross-up treatment on any severance or change-of-control benefits;
Align’s compensation programs are reviewed regularly by the Compensation Committee, which has determined the Company’s compensation programs do not create inappropriate or excessive risk that is likely to have a material adverse effect on the Company; and
Align continued to demonstrate its prudent use of equity while balancing stockholder concerns with the motivation of our executive officers to achieve the Company’s business goals and create long-term stockholder value. In 2015, Align’s overall equity award adjusted burn rate (which counts each RSU and earned MSU award as 2.5 shares) was 3.5%.

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We are asking you to indicate your support for the compensation of our named executive officers as described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we are asking you to vote, on an advisory basis, “For” the following resolution at the Annual Meeting:
“RESOLVED, that the compensation paid to Align Technology, Inc.’s named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion and Analysis, compensation tables and narrative discussion set forth on pages 37 to 49 of this Proxy Statement, is hereby approved.”
This is an advisory vote, which means that this proposal is not binding on us; however, our Board and Compensation Committee values the opinions expressed by our stockholders and will carefully consider the outcome of the vote when making future compensation decisions for our executive officers. You may vote for, against or abstain from voting on this matter.
OUR BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.

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PROPOSAL FOUR
AMENDMENT OF ARTICLE V OF OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE THE “FOR CAUSE” REQUIREMENT FOR STOCKHOLDER REMOVAL OF A DIRECTOR
A Delaware court recently confirmed that a provision in a Delaware company’s organizational documents that provides that a director may only be removed “for cause” by the stockholders is not valid if the company has a nonclassified board of directors. As a result of this ruling, our Board reconsidered one of the provisions of Article V of our Amended and Restated Certificate of Incorporation relating to the removal of a director by the stockholders and determined that it is necessary to amend such provision to conform with the Delaware court’s ruling. Our Board has approved, and recommends that our stockholders approve, an amendment to Article V of our Amended and Restated Certificate of Incorporation to eliminate the “for cause” requirement prescribed by Article V for stockholder removal of a director. Article V currently provides that stockholders may remove a director only “for cause” and requires that the removal be approved by the affirmative vote of holders of at least 66 2/3% of our outstanding voting stock entitled to vote at the Annual Meeting.
Provisions of Article V Regarding Stockholder Removal of a Director
The final paragraph of Article V imposes two requirements that must be satisfied for stockholders to remove a director:
the director may be removed only by the affirmative vote of the holders of at least 66 2/3% of our outstanding voting stock entitled to vote at the Annual Meeting; and
the director may be removed only “for cause.”
Text of Article V as Proposed to be Amended by this Proposal Four
If stockholders approve this Proposal Four, but not Proposal Five (which proposes to eliminate the supermajority vote requirement for stockholder removal of a director), the final paragraph of Article V will be amended to read in its entirety as follows:
“Vacancies occurring on the Board of Directors for any reason may be filled by vote of a majority of the remaining members of the Board of Directors, even if less than a quorum, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall have been duly elected and qualified. A director or the entire Board of Directors may be removed from office at any time by the affirmative vote of 66 2/3% of the outstanding shares of voting stock of the Corporation entitled to vote at an election of directors.”
Effect of this Article V Amendment
If stockholders approve this Proposal Four, Article V will be amended to eliminate the “for cause” requirement currently applicable to any stockholder action to remove a director. Upon the effectiveness of this Article V amendment, a director will be subject to removal by stockholders:
by the affirmative vote of the holders of at least 66 2/3% of our outstanding voting stock entitled to vote at the Annual Meeting; and
such removal may be with or without cause, in accordance with the provisions of the Delaware General Corporate Law.
Text of Article V as Proposed to be Amended by this Proposal Four and Proposal Five
If stockholders approve this Proposal Four and Proposal Five, the final paragraph of Article V will be amended by both Article V amendments to read in its entirety as follows:

“Vacancies occurring on the Board of Directors for any reason may be filled by vote of a majority of the remaining members of the Board of Directors, even if less than a quorum, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall have been duly elected and qualified. A director or the entire Board of Directors may be removed from office at any time by the affirmative vote of a majority of the outstanding shares of voting stock of the Corporation entitled to vote at an election of directors.”

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Effect of both Article V Amendments under Proposal Four and Proposal Five
If stockholders approve this Proposal Four, Article V will be amended to eliminate the “for cause” requirement and, if stockholders also approve Proposal Five, the final paragraph of Article V will be further amended to eliminate the supermajority vote requirement currently applicable to any stockholder action to remove a director. Upon the effectiveness of both of these amendments, a director will be subject to removal by stockholders:

by the affirmative vote of the holders of a majority of our outstanding voting stock entitled to vote at the Annual Meeting; and
such removal may be with or without cause, in accordance with the provisions of the Delaware General Corporation Law.
Article V if this Proposal Four is not Approved but Proposal Five is Approved
If this Proposal Four is not approved by the stockholders, the current “for cause” requirement described above will remain in place and will continue to require that directors may be removed by stockholders only “for cause,” as described above. However, because Proposal Five is not subject to the approval of this Proposal Four, if Proposal Five is approved by the stockholders, stockholder removal of a director will no longer require that the removal be by the vote of the holders of 66 2/3% of the voting power of our outstanding shares of voting stock, as provided in our current Amended and Restated Certificate of Incorporation, and will instead only require the vote of the holders of a majority of the voting power of our outstanding shares of voting stock.
Vote Required to Approve this Proposal Four
Approval of the amendment of Article V of our Amended and Restated Certificate of Incorporation to eliminate the “for cause” requirement for stockholder removal of a director requires that the holders of at least 66-2/3% of our outstanding voting stock entitled to vote at the Annual Meeting vote “FOR” this Proposal Four. An abstention vote will have the same effect as an “Against” vote in this Proposal Four.
Stockholder approval of this Proposal Four is not conditioned on stockholder approval of Proposal Five.

OUR BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE AMENDMENT OF ARTICLE V OF OUR AMENDED AND RESTATED CERTIFICATE OF INCORPRATION TO ELIMINATE THE FOR CAUSE” REQUIREMENT FOR STOCKHOLDER REMOVAL OF A DIRECTOR


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PROPOSAL FIVE
AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE THE SUPER MAJORITY VOTE REQUIREMENT FOR STOCKHOLDER REMOVAL OF A DIRECTOR

Our Board has approved, and recommends that our stockholders approve, an amendment to Article V of our Amended and Restated Certificate of Incorporation to eliminate the supermajority stockholder vote requirement for stockholder removal of a director. Article V currently requires the affirmative vote of holders of at least 66 2/3% of our outstanding voting stock entitled to vote at the Annual Meeting to remove a director, and provides that stockholders may remove a director only “for cause.”
Provisions of Article V Regarding Stockholder Removal of a Director
Article V imposes two requirements that must be satisfied for stockholders to remove a director:
the director may be removed only by the affirmative vote of the holders of at least 66 2/3% of our outstanding voting stock entitled to vote at the Annual Meeting; and
the director may be removed only “for cause.”
Text of Article V as Proposed to be Amended by this Proposal Five and Proposal Four
If stockholders approve this Proposal Five and Proposal Four, the final paragraph of Article V will be amended to read in its entirety as follows:
“Vacancies occurring on the Board of Directors for any reason may be filled by vote of a majority of the remaining members of the Board of Directors, even if less than a quorum, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall have been duly elected and qualified. A director or the entire Board of Directors may be removed from office at any time by the affirmative vote of a majority of the outstanding shares of voting stock of the Corporation entitled to vote at an election of directors.”
Effect of Article V Amendments under this Proposal Five and Proposal Four
If stockholders approve this Proposal Five and Proposal Four, the final paragraph of Article V will be amended to eliminate the supermajority vote requirement and will be further amended to eliminate the “for cause” requirement currently applicable to any stockholder action to remove a director. Upon the effectiveness of both of these amendments, a director will be subject to removal by stockholders:

if the number of votes cast in favor of the director’s removal exceed the number of votes cast against the director’s removal; and
such removal may be with or without cause, in accordance with the provisions of the Delaware General Corporation Law.
Article V if this Proposal Five is not Approved but Proposal Four is Approved
If this Proposal Five is not approved by the stockholders, the current supermajority vote requirement described above will remain in place and removal of a director by the stockholders will continue to require the vote of the holders of 66 2/3% of the voting power of our outstanding shares of voting stock entitled to vote at the Annual Meeting, as provided in our current Amended and Restated Certificate of Incorporation. In addition, if this Proposal Five is not approved and Proposal Four is approved, the “for cause” requirement applicable to stockholder removal of a director, as described above, will be eliminated.

Vote Required to Approve this Proposal Five

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Approval of the amendment of Article V of our Amended and Restated Certificate of Incorporation to eliminate the supermajority stockholder vote requirement for stockholder removal of a director requires that the holders of at least 66-2/3% of our outstanding voting stock entitled to vote at the Annual Meeting vote “FOR” this Proposal Five. An abstention vote will have the same effect as an “Against” vote in this Proposal Five.
OUR BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE AMENDMENT OF ARTICLE V OF OUR AMENDED AND RESTATED CERTIFICATE OF INCORPRATION TO ELIMINATE SUPERMAJORITY VOTE REQUIREMENT FOR STOCKHOLDER REMOVAL OF A DIRECTOR



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PROPOSAL SIX

APPROVAL OF AN AMENDMENT AND RESTATEMENT OF
THE ALIGN TECHNOLOGY, INC. 2005 INCENTIVE PLAN
Our 2005 Incentive Plan, as amended and restated (the “Incentive Plan”), which was most recently amended and restated and approved by stockholders at our 2013 Annual Meeting of Stockholders, allows Align to grant stock options, restricted stock, restricted stock units, performance shares, performance units, stock appreciation rights and other stock-based and cash incentives to employees and consultants of Align and its affiliates and to members of our Board. On March 16, 2016, our Board approved an amendment and restatement of the Incentive Plan (the “Amendment”), subject to stockholder approval. The Amendment provides:
An increase by 4,500,000 shares in the number of shares authorized for issuance under the Incentive Plan, from 25,668,895 to 30,168,895 shares.
An additional restriction on the grants that non-employee directors may receive in any fiscal year, such that no non-employee directors may not be granted in any fiscal year of Align, awards exceeding the lesser of (i) awards covering 100,000 shares or (ii) awards with a grant date fair value of greater than $1,000,000.
Restrictions on the vesting of awards under the Incentive Plan, such that awards generally will vest in full no earlier than the 1-year anniversary of the grant date although up to 5% of the shares reserved in the 2015 Plan may be granted without this minimum vesting requirement.
Flexibility for the administrator to subject awards to forfeiture or recoupment provisions, and requires (i) awards be subject to recoupment under a company clawback policy and (ii) a participant to reimburse us for any payment in settlement of an award where the participant has engaged in or failed to prevent certain misconduct.
The Incentive Plan has not been materially amended with respect to any other terms or provisions. To the extent stockholders do not approve this Proposal Six, the Incentive Plan will continue as if the Amendment did not apply and was not adopted by the Board.
The Incentive Plan is designed to allow Align to deduct in full for federal income tax purposes the compensation recognized by its executive officers in connection with certain awards granted under the Incentive Plan. Section 162(m) (“Section 162(m)”) of the Internal Revenue Code of 1986, as amended (the “Code”), generally denies a corporate tax deduction for annual compensation exceeding $1 million paid to the chief executive officer and other “covered employees,” as determined under Section 162(m) and applicable guidance. However, certain types of compensation, including performance-based compensation, are generally excluded from this deductibility limit. To enable compensation in connection with stock options, stock appreciation rights and certain restricted stock awards, restricted stock units, performance shares, performance units, and other stock and cash incentives awarded under the Incentive Plan to qualify as “performance-based” within the meaning of Section 162(m), the Incentive Plan limits the sizes of such awards as further described below. By approving the Amendment, stockholders will be approving, among other things, eligibility requirements for participation in the Incentive Plan, performance measures upon which specific performance goals applicable to certain awards would be based, which are the same as those currently used in the Incentive Plan, limits on the number of shares or compensation that could be made to participants, and other material terms of the Incentive Plan and awards granted under the Incentive Plan. Notwithstanding the foregoing, Align retains the ability to grant equity awards under the Incentive Plan that do not qualify as “performance-based” compensation within the meaning of Section 162(m).
Reasons Why You Should Vote to Approve the Amendment
Long-Term Stock Ownership is a Key Component of our Compensation Objective. Our overall compensation objective is to compensate our executives and other employees in a manner that attracts and retains the caliber of individuals needed to manage and staff our business in a competitive industry. Our employees are our most valuable asset, and we strive to provide them with compensation packages that are not only competitive but also that reward personal performance, help meet our retention needs and incentivize them to manage our business as owners, thereby aligning their interests with those of our stockholders.
To achieve these objectives, we historically have provided a significant portion of our key employees’ total compensation in the form of equity awards through our equity incentive programs, the value of which depends on our stock performance. Our goal is for equity awards to continue to represent a significant portion of our employees’ total compensation. We believe this approach helps to encourage long-term focus and commitment from our employees and provides Align with an important retention tool for key employees, as awards generally are subject to vesting over an extended period of time subject to continued service with us. In addition, we believe we must continue to use equity awards to help attract, retain and motivate employees and other service providers to continue to grow our business and ultimately increase stockholder value as we compete for a limited pool of talented people and face challenges in hiring and retaining such talent.

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Reserving Shares Available for Granting Equity Awards is Important for Meeting our Future Compensation Needs. A significant portion of the compensation for our senior officers is in the form of equity compensation. In addition, approximately 801 of our regular, full-time employees hold outstanding equity awards as of March 1, 2016. If the Amendment is approved, we expect that the share reserve increase will allow us to continue to grant stock-based compensation at levels we deem appropriate for at least the next 3 years, and that we will not have to restructure our existing compensation programs for reasons that are not directly related to the achievement of our business objectives. To remain competitive without stock-based compensation arrangements, it likely will be necessary to replace components of compensation previously awarded in equity with cash. We do not believe increasing cash compensation to make up for any shortfall in equity compensation would be practical or advisable, because we believe that a combination of equity awards and cash compensation provide a more effective compensation strategy than cash alone for attracting, retaining and motivating our employees long-term and aligning employees’ and stockholders’ interests. In addition, any significant increase in cash compensation in lieu of equity awards could substantially increase our operating expenses and reduce our cash flow from operations, which could adversely affect our business results and could adversely affect our business strategy, including using cash flow for research and development of innovative new products, and improvements in the quality and performance of existing products.
We Manage Our Equity Incentive Program Carefully. We manage our long-term stockholder dilution by limiting the number of equity awards granted for each of our fiscal years and granting what we believe to be the appropriate number of equity awards needed to attract, reward and retain employees.
Overhang. As of March 1, 2016, Align had outstanding under the Incentive Plan stock options covering 467,880 shares and 2,542,151 unvested restricted stock units (including market-performance based restricted stock units assuming maximum levels of achievement). Accordingly, the approximately 3,010,031 shares subject to currently outstanding awards (commonly referred to as the “overhang”) represent approximately 3.8% of our outstanding shares of common stock. Subject to approval by our stockholders, the overhang resulting from the number of shares requested under the Amendment will be approximately 12.5% (which includes currently outstanding stock awards, plus shares available grant under our current available pool and the proposed pool).
Under the heading “Equity Compensation Plan Information” on page 36 as required by Securities and Exchange Commission rules, we provide information about shares of our common stock that may be issued under our equity compensation plans as of December, 31, 2015. To facilitate the approval of this Amendment, set forth below is certain additional information. As of March 1, 2016:
80,167,047 shares of our common stock were outstanding.
The market value of one share of our common stock was $67.86.
The number of shares remaining available for future grants, under the Incentive Plan was 3,484,132.
The weighted average exercise price of all outstanding stock options was $15.37.
The weighted average remaining contractual term for all outstanding stock options was 1.94 years.
Historical Burn Rate. We look at the rate at which we grant awards under our equity incentive programs (also known as our “burn rate”) by measuring the number of shares subject to equity awards granted in a fiscal year divided by the weighted average equivalent of shares of common stock outstanding for that fiscal year. Our 3-year average adjusted burn-rate for the Incentive Plan is 4.0% (adjusted so that each full-value award is counted as two and one half shares of stock) is below the burn rate cap published by Institutional Shareholder Services Inc. (“ISS”), a leading proxy advisory service, for companies in our industry.
Anticipated Forfeitures. We currently forecast granting awards covering approximately 6,500,000 shares over the next 3 year period (calculated using a fungible ratio of 1.9 in accordance with the terms of the Plan), which is equal to 8.1% of our common shares outstanding as of March 1, 2016. We also anticipate cancellation of options and forfeitures of restricted stock unit awards of approximately 850,000 shares over this period (calculated using a fungible ratio of 1.9), based on our historic rates. If our expectation for cancellations is accurate, our net grants (grants less cancellations) over the next 3 year period would be approximately 5,650,000 shares (calculated using a fungible ratio of 1.9), or approximately 7% of our common stock outstanding as of March 1, 2016. The proposed share reserve under the Amendment would increase the number of available shares under the Incentive Plan from 3,484,132 to 7,984,132. If the Amendment is approved our stockholders, we expect that this increase to the share reserve would meet our equity compensation needs for approximately the next 3 years.
We Strive to use Compensation and Governance Best Practices. The new 1-year minimum vesting and forfeiture provisions above will add to the already existing compensation and governance best practices we use in the Incentive Plan and will work to strengthen the connection between equity awards and long-term performance that enhances stockholder value.

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Summary of the Incentive Plan
The following is a summary of the material features of the Incentive Plan (as it is proposed to be amended by the Amendment) and its operation. This summary is qualified in its entirety by reference to the Incentive Plan itself. A copy of the Amendment is attached to this Proxy Statement as Appendix B.
Purpose. The purposes of the Incentive Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide incentives to individuals who perform services to Align and to promote the success of Align’s business.
Administration. The Incentive Plan is administered by the Board or a committee designated by the Board (in either case, the “Plan Administrator”). To make grants to certain officers and key employees of Align intended to be an exempt transaction under Rule 16b-3 of the Securities Exchange Act of 1934, as amended (“Rule 16b-3”), the members of the committee must qualify as “non-employee directors” under Rule 16b-3. In the case of awards intended to qualify for the performance-based compensation exemption under Section 162(m), administration must be by a committee consisting of two or more “outside directors” within the meaning of Section 162(m).
Subject to the terms of the Incentive Plan, the Plan Administrator has the sole discretion to select the employees, consultants, and directors who will receive awards, to determine the number of shares covered by each award, to determine the terms and conditions of awards, to modify or amend each award (subject to the restrictions of the Incentive Plan), including to accelerate vesting or waive forfeiture restrictions, and to interpret the provisions of the Incentive Plan and outstanding awards.

Eligibility. The Incentive Plan provides that nonstatutory stock options, restricted stock, restricted stock units (“RSUs”), performance shares, performance units, and stock appreciation rights (“SARs”) may be granted to employees (including officers) and consultants of Align and its affiliates and to members of the Board. Incentive stock options may be granted only to employees of Align or its parent or subsidiaries. The Plan Administrator will determine which eligible persons will be granted awards. In addition, the Plan Administrator may grant other incentives payable in cash or shares under the Incentive Plan as determined by the Plan Administrator to be in the best interests of Align and subject to any terms and conditions the Plan Administrator deems advisable. As of March 1, 2016, approximately 801 employees and 10 consultants of Align or its affiliates and 8 members of our Board were eligible to participate in the Incentive Plan.
Shares Available under the Incentive Plan. We are asking stockholders to approve an increase of 4,500,000 shares in the number of shares reserved under the Incentive Plan. If stockholders approve the Amendment, a maximum aggregate of 30,168,895 shares will be available for issuance under the Incentive Plan. If the Amendment is not approved by stockholders, approximately 25,668,895 shares will be available for issuance.
Any shares subject to options or SARs will be counted as one share for purposes of determining the available number of shares for issuance under the Incentive Plan. Any shares subject to restricted stock, RSUs or performance shares or units with a per share or unit purchase price lower than the fair market value of a share on the date of grant that were granted prior to May 16, 2013, will be counted as 1.5 shares for purposes of determining the available number of shares for issuance under the Incentive Plan. To the extent a share that was subject to an award that counted as 1.5 shares against the shares reserved under the Incentive Plan is recycled back into the Incentive Plan (as described below), the Incentive Plan will be credited with 1.5 shares. Any shares subject to restricted stock, RSUs or performance shares or units with a per share or unit purchase price lower than the fair market value of a share on the date of grant that were granted on or after May 16, 2013, will be counted as 1.9 shares for purposes of determining the available number of shares for issuance under the Incentive Plan. To the extent a share that was subject to an award that counted as 1.9 shares against the shares reserved under the Incentive Plan is recycled back into the Incentive Plan (as described below), the Incentive Plan will be credited with 1.9 shares. Shares may be authorized, but unissued, or reacquired shares of our common stock. As of March 1, 2016, the closing price of our common stock on NASDAQ was $67.86 per share.
If an award expires or becomes unexercisable without having been exercised in full or, with respect to RSUs, performance shares or units, is terminated due to failure to vest, the unpurchased shares (or for awards other than options or SARs, the unissued shares) which were subject thereto will become available for future grant or sale under the Incentive Plan (unless the Incentive Plan has terminated). Upon the exercise of a SAR settled in shares, the gross number of shares covered by the portion of the award so exercised will cease to be available under the Incentive Plan. Shares that have actually been issued under the Incentive Plan under any award will not be returned to the Incentive Plan and will not become available for future distribution under the Incentive Plan, except if shares issued pursuant to restricted stock, RSUs, performance shares or performance units are repurchased by Align or are forfeited to Align due to failure to vest, such shares will become available for future grant under the Incentive Plan. Shares used to pay the exercise or purchase price of an award and/or to satisfy the tax withholding obligations related to an award will not become available for future grant or sale under the Incentive Plan. To the extent an award under the Incentive Plan is paid out in cash rather than shares, such cash payment will not result in reducing the number of shares available for issuance under the Incentive Plan.

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Prohibition on Repricing and Exchange Programs.  The Incentive Plan prohibits any program providing participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the Administrator, exchange awards for awards of the same type, awards of a different type, and/or cash, or have the exercise price of awards repriced (i.e., increased or reduced).

Options. The exercise price of options granted under the Incentive Plan is determined by the Plan Administrator and must not be less than 100% of the fair market value of Align’s common stock on the date of grant (except as permitted under Section 424(a) of the Code). Options granted under the Incentive Plan expire as determined by the Plan Administrator, but in no event later than seven (7) years from date of grant. However, incentive stock options granted to stockholders owning more than 10% of the voting stock of Align must have an exercise price per share no less than 110% of the fair market value of a share on the date of grant and the term of such option must be no more than 5 years from the date of grant. The fair market value of Align’s common stock generally is determined by reference to the price of Align’s common stock on the determination date.
Options become exercisable at such times and under such conditions as are determined by the Plan Administrator and as are set forth in the individual option agreements. An option is exercised by giving notice to Align specifying the number of full shares to be purchased and tendering payment of the purchase price together with any applicable tax withholdings. The method of payment of the exercise price for the shares purchased upon exercise of an option will be determined by the Plan Administrator. Each option grant is evidenced by an agreement that specifies the exercise price, the term of the option, the forms of consideration for exercise, and such other terms and conditions as the Plan Administrator, in its sole discretion, will determine.
Stock Appreciation Rights. A SAR gives a participant the right to receive the appreciation in the fair market value of Align common stock between the date of grant of the SAR and the date of its exercise. The Plan Administrator, subject to the provisions of the Incentive Plan, will have complete discretion to determine the terms and conditions of SARs granted under the Incentive Plan. However, no SAR may have (i) a term of more than 7 years from the date of grant or (ii) an exercise price below 100% of the fair market value of Align’s common stock on the grant date (except as permitted under Section 424(a) of the Code).
Upon exercise of a SAR, the holder of the SAR will be entitled to receive payment from us in an amount determined by multiplying (i) the difference between the fair market value of a share on the date of exercise over the exercise price by (ii) the number of shares with respect to which the SAR is exercised. At the discretion of the Plan Administrator, such payment may be in cash, shares or a combination of both. Each SAR grant will be evidenced by an agreement that specifies the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Plan Administrator will determine.
Termination of Employment. The Incentive Plan gives the Plan Administrator the authority to vary the terms of the individual option and SAR agreements, including exercisability of the award following termination of service with Align. In the absence of a period specified in the option or SAR agreement, generally if a participant ceases to be an employee, director or consultant for any reason other than disability, death or misconduct, then the participant will have the right to exercise his or her outstanding award for 3 months (or 12 months if termination is due to death or disability) after the date of termination, but only to the extent the option or SAR is vested on the date of termination. In no event will an option or SAR be exercisable beyond its term.
Restricted Stock. Awards of restricted stock are rights to acquire or purchase shares, which vest in accordance with the terms and conditions established by the Plan Administrator in its sole discretion. Shares of restricted stock may not be transferred by the participant until vested. Unless otherwise provided by the Plan Administrator, a participant will forfeit any shares of restricted stock as to which the restrictions have not lapsed prior to the participant’s termination of service. Participants holding shares of restricted stock will have the right to vote the shares and to receive any dividends or other distributions paid on such shares; however, if dividends or other distributions are paid in the form of shares, such shares will be subject to the same restrictions as the original award. The Plan Administrator may, in its sole discretion, reduce or waive any restrictions and may accelerate the time at which any restrictions will lapse or be removed. Each restricted stock award will be evidenced by an agreement that specifies the period of restriction, the number of shares granted, and such other terms and conditions as the Plan Administrator will determine.
Restricted Stock Units. The Plan Administrator may grant RSUs under the Incentive Plan, which represent a right to receive shares at a future date as set forth in the participant’s award agreement. Each RSU granted under the Incentive Plan will be evidenced by an agreement that specifies the number of shares subject to the award and such other terms and conditions as the Plan Administrator will determine. RSUs will result in a payment to a participant only if the performance goals or other vesting criteria the Plan Administrator may establish are achieved or the awards otherwise vest. Earned RSUs will be paid, in the sole discretion of the Plan Administrator, in the form of cash, shares, or a combination of both. The Plan Administrator may establish vesting criteria in its discretion, which may be based on company-wide, divisional, business unit or individual goals, applicable

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federal or state securities laws, or any other basis, and which may include the performance goals listed below. The extent to which the vesting criteria are met will determine the number of RSUs to be paid out to the participant.
After the grant of a restricted stock unit award, the Plan Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout and may accelerate the time at which any restrictions will lapse or be removed. A participant will forfeit any unearned RSUs as of the date set forth in the award agreement.
Performance Units and Performance Shares. Performance units and performance shares also may be granted under the Incentive Plan. Each award of performance shares or units granted under the Incentive Plan will be evidenced by an agreement that specifies the performance period and other terms and conditions of the award as the Plan Administrator will determine. Performance units and performance shares will result in a payment to a participant only if the performance goals or other vesting criteria the Plan Administrator may establish are achieved or the awards otherwise vest. Earned performance units and performance shares will be paid, in the sole discretion of the Plan Administrator, in the form of cash, shares, or a combination of both. The Plan Administrator may establish performance objectives in its discretion, which may be based on company-wide, divisional, business unit or individual goals, applicable federal or state securities laws, or any other basis, and which may include the performance goals listed below. The extent to which the vesting criteria are met will determine the number and/or the value of performance units and performance shares to be paid out to the participant.
After the grant of a performance unit or performance share, the Plan Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance units or shares and accelerate the time at which any restrictions will lapse or be removed. Performance units will have an initial value established by the Plan Administrator on or before the date of grant. Performance shares will have an initial value equal to the fair market value of a share on the grant date. A participant will forfeit any performance shares or units that are unearned or unvested as of the date set forth in the award agreement.
Other Cash or Stock Awards. In addition to the awards described above, the Plan Administrator may grant other incentives payable in cash or shares under the Incentive Plan as it determines to be in the best interests of Align and subject to such other terms and conditions as it deems appropriate, including awards intended to qualify as “performance based compensation” under Section 162(m).
Performance Goals. Awards of restricted stock, RSUs, performance shares, performance units and other incentives under the Incentive Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section 162(m) and may provide for a targeted level or levels of achievement including: cash flow; cash position; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per share; economic profit; economic value added; equity or stockholder’s equity; market share; net income; net profit; net sales; operating earnings; operating income; profit before tax; ratio of debt to debt plus equity; ratio of operating earnings to capital spending; return on net assets; revenue; sales growth; share price; or total return to stockholders. The performance goals may differ from participant to participant and from award to award, may be used to measure the performance of Align as a whole, or (except with respect to stockholder return metrics) a business unit or other segment of Align, or one or more product lines or specific markets and may be measured on a growth basis or relative basis to a peer group or index. The performance goals will be calculated in accordance with Align’s financial statements, generally accepted accounting principles, or under a methodology established by the Plan Administrator prior to or at the time of issuance of an award, which is consistently applied with respect to a performance goal in the relevant performance period.
To the extent necessary to comply with the performance-based compensation provisions of Section 162(m), with respect to any award granted subject to performance goals, within the first 25% of the performance period, but in no event more than 90 days following the commencement of any performance period (or such other time as may be required or permitted by Section 162(m)), the Plan Administrator will, in writing: (i) designate one or more participants to whom an award will be made, (ii) select the performance goals applicable to the performance period, (iii) establish the performance goals, and amounts of such awards, as applicable, which may be earned for such performance period, and (iv) specify the relationship between the performance goals and the amounts of such awards, as applicable, to be earned by each participant for such performance period. Following the completion of each performance period, the Plan Administrator will certify in writing whether the applicable performance goals have been achieved for such performance period. In determining the amounts earned by a participant, the Plan Administrator may reduce or eliminate (but not increase) the amount payable at a given level of performance to take into account additional factors that the Plan Administrator may deem relevant to the assessment of individual or corporate performance for the performance period. The Plan Administrator also may determine what actual award, if any, will be paid in the event of a participant’s termination of employment (whether as a result of death or disability or otherwise, and whether prior to or following a change in control of Align) prior to the completion of a performance period or upon a change in control of Align. A participant will be eligible to receive payment pursuant to an award intended to qualify as “performance-based compensation” under Section 162(m) for a performance period only if the performance goals for such period are achieved.

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Individual Award Limitations. The Incentive Plan contains annual individual grant limits intended to satisfy Section 162(m). Specifically, the maximum number of shares or cash (as applicable) which could be issued to any one individual in any fiscal year (i) pursuant to options or SARs is 1,000,000 shares, (ii) pursuant to restricted stock awards intended to qualify as performance-based compensation under Section 162(m) is 500,000 shares, (iii) pursuant to RSUs intended to qualify as performance-based compensation under Section 162(m) is 500,000 shares, and (iv) pursuant to performance shares intended to qualify as performance-based compensation under Section 162(m) is 500,000 shares, and the maximum dollar value which could be awarded to any one individual in any fiscal year pursuant to the grant of performance units intended to qualify as performance-based compensation under Section 162(m) is $5,000,000. In addition, in connection with his or her initial service with Align, an individual may be granted additional awards of up to a maximum of (i) 1,000,000 shares covering options or SARs, (ii) 500,000 shares covering restricted stock awards intended to qualify as performance-based compensation under Section 162(m), (iii) 500,000 shares covering RSUs intended to qualify as performance-based compensation under Section 162(m), and (iv) 500,000 shares covering performance shares intended to qualify as performance-based compensation under Section 162(m). Other types of incentives payable in cash under the Incentive Plan that the Plan Administrator may determine to grant have a maximum dollar value of $5,000,000 per fiscal year for any participant. No non-employee director may be granted in any fiscal year awards exceeding the lesser of (i) awards covering 100,000 shares or (ii) awards with a grant date fair value of greater than $1,000,000 (other than any awards granted to such director while he or she was a consultant or employee of Align or its affiliates).
Non-Transferability of Awards. Awards granted under the Incentive Plan generally are not transferable, other than by will or by the laws of descent or distribution, and all rights with respect to an award granted to a participant generally will be available during a participant’s lifetime only to the participant.
Misconduct. If a participant terminates service with Align as a result of his or her misconduct (as defined in the Incentive Plan) or the participant engages in misconduct while holding an outstanding award, then all awards granted under the Incentive Plan that the participant holds will terminate immediately and the participant will have no further rights with respect to those awards.
Minimum Vesting Requirements for Awards. In general, awards will vest in full no earlier than the 1-year anniversary of the grant date. The Incentive Plan provides certain limited exceptions to this limitation.
Adjustments. In the event of any dividend or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, exchange of shares or other securities of Align, or other change in the corporate structure affecting Align’s common stock, the Plan Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be available under the Incentive Plan, will adjust the number and class of shares of our common stock that may be delivered under the Incentive Plan, and/or the number, class and price of shares of our common stock subject to each outstanding award, and the award grant limitations (including the maximum shares issuable under the Incentive Plan and the individual award limitations described above).
Dissolution or Liquidation. In the event of Align’s proposed dissolution or liquidation, the Plan Administrator will notify each participant as soon as practicable prior to the effective date of such proposed transaction. An award will terminate immediately prior to consummation of such proposed action to the extent the award has not been previously exercised.
Change in Control. In the event of our merger or change in control (as defined in the Incentive Plan), each outstanding award will be treated as the Plan Administrator determines, including, without limitation, that each award be assumed or substituted for by the successor corporation (or a parent or subsidiary of the successor corporation). If the successor corporation does not assume or substitute for the award, options and SARs will become fully vested and exercisable, all restrictions on restricted stock, RSUs and performance shares and units will lapse, and with respect to awards with performance-based vesting, all performance goals or other vesting criteria generally will be deemed achieved at 100% of target levels and all other terms and conditions met. In such event, the Plan Administrator will notify participants holding options and/or SARs that the award is fully vested and exercisable for a period of time as the Plan Administrator may determine and that the award will terminate upon expiration of such period. With respect to awards granted to non-employee directors that are assumed or substituted for, if on the date of or following such assumption or substitution such director is terminated in his or her capacity as a director other than upon his or her voluntary resignation, then he or she will fully vest in and have the right to exercise options and/or SARs as to all of the shares subject to such awards, all restrictions on restricted stock, RSUs and performance shares and units will lapse, and with respect to awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met. The Plan Administrator will not be required to treat all awards similarly in the transaction.
Forfeiture Events. All awards granted under the Incentive Plan will be subject to reduction, cancellation, forfeiture, or recoupment rights in favor of Align under our clawback policy. In addition, the Plan Administrator may provide in an award

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agreement that the participant’s rights, payments, and benefits with respect to such award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events.
Amendment and Termination of the Incentive Plan. The Plan Administrator will have the authority to amend, suspend or terminate the Incentive Plan at any time, except stockholder approval will be required for any amendment to the Incentive Plan to the extent required by any applicable laws. Any amendment, suspension or termination will not, without the written consent of the participant, impair any rights of any participant under any award previously granted. If stockholders approve the Amendment, the Incentive Plan will terminate on the 10-year anniversary of Align’s 2016 Annual Meeting of Stockholders, unless the Plan Administrator terminates it earlier pursuant to the terms of the Incentive Plan.
Number of Awards Granted to Employees, Consultants and Directors
Subject to the annual numerical limits under the Incentive Plan, the number of awards (if any) that an employee, consultant, or director may receive under the Incentive Plan is in the discretion of the Plan Administrator and therefore cannot be determined in advance. Our executive officers and non-employee members of the Board have an interest in this proposal because they are eligible to receive awards under the Incentive Plan. The following table sets forth: (a) the total number of shares subject to RSUs (including market-performance based restricted stock units assuming maximum levels of achievement), and (b) the weighted average per unit price of RSUs granted during the last fiscal year. No other types of awards, including options, were granted under the Incentive Plan during the last fiscal year.
Name of Individual or Group
Number of Shares Subject to RSUs (#)
 
Weighted Average per Unit Value of
RSUs ($)
 
 
 
 
Joseph M. Hogan
222,000
 
64.55
Thomas M. Prescott
98,000
 
56.78
David L. White
23,000
 
56.78
Raphael S. Pascaud
24,000
 
56.78
Zelko Relic
24,000
 
56.78
Roger E. George
21,400
 
56.78
All executive officers, as a group
381,320
 
61.30
All directors who are not executive officers, as a group
138,700
 
57.36
All employees who are not executive officers, as a group
559,962
 
57.16
Summary of U.S. Federal Income Tax Information
The following paragraphs are intended as a summary of the U.S. federal income tax consequences to U.S. taxpayers and Align of equity awards granted under the Incentive Plan as of the date of this filing. The summary is based on existing U.S. laws and regulations, and there can be no assurance that those laws and regulations will not change in the future. The summary does not purport to be complete and does not discuss the tax consequences upon a participant’s death, or the provisions of the tax laws of any municipality, state or foreign country in which the participant may reside. As a result, tax consequences for any particular participant may vary based on his or her individual circumstances.
Nonstatutory Stock Options. No taxable income is recognized upon the grant of a nonstatutory stock option with a per share exercise price at least equal to the fair market value of a share of the underlying stock on the date of grant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the option. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.
Incentive Stock Options. No taxable income is recognized when an incentive stock option is granted or exercised (except for purposes of the alternative minimum tax, in which case, the spread upon exercise will be an alternative minimum tax adjustment item). If the participant exercises the option and then later sells or otherwise disposes of the shares more than 2 years after the grant date and more than 1 year after the exercise date, the difference between the sale price and the exercise price will be taxed as long-term capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the 2 or 1 year holding periods described above, he or she generally will recognize ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date minus the exercise price of the option and any additional gain or loss will be capital gain or loss.

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Stock Appreciation Rights. No taxable income is recognized upon the grant of a stock appreciation right with a per share exercise price equal to the fair market value of a share of the underlying stock on the date of grant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash and the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.
Restricted Stock, Restricted Stock Units, Performance Units and Performance Shares. A participant generally will not recognize taxable income at the time an award of restricted stock, restricted stock units, performance shares or performance units are granted. Instead, he or she will recognize ordinary income in the first taxable year in which the shares underlying the award vests (that is, becomes either (i) transferable or (ii) no longer subject to a substantial risk of forfeiture). However, the recipient of a restricted stock award may elect to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the award (less any amount paid for the shares) on the date the award is granted.

Cash Payments. A participant will recognize ordinary income upon receipt of a cash payment pursuant to any award in an amount equal to the cash received.

Tax Effects for Align. Align generally will be entitled to a tax deduction in connection with an award under the Incentive Plan in an amount equal to the ordinary income recognized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). Special rules limit the deductibility of compensation paid to Align’s Chief Executive Officer and to each of its three (3) most highly compensated executive officers other than the Chief Financial Officer. Under Section 162(m), the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000. However, Align can preserve the deductibility of certain compensation in excess of $1,000,000 if the conditions of Section 162(m) are met. These conditions include stockholder approval of the Incentive Plan, setting limits on the number of awards that any individual may receive and for awards other than certain stock options, establishing performance criteria that must be met before the award actually will vest or be paid. The Incentive Plan has been designed to permit the Plan Administrator to grant awards that qualify as performance-based for purposes of satisfying the conditions of Section 162(m), thereby permitting Align to continue to receive a federal income tax deduction in connection with such awards.
Section 409A. Section 409A of the Code (“Section 409A”) sets forth requirements with respect to how an individual may elect to defer compensation and select the timing and form of distribution of the deferred compensation. Section 409A also generally provides that distributions must be made on or following the occurrence of certain events (e.g., the individual’s separation from service, a predetermined date, or the individual’s death). Section 409A imposes restrictions on an individual’s ability to change his or her distribution timing or form after the compensation has been deferred.
Awards granted under the Incentive Plan with a deferral feature will be subject to the requirements of Section 409A. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation. In addition, certain states such as California have adopted similar provisions.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECTS OF FEDERAL INCOME TAXATION LAWS UPON THE PARTICIPANT AND ALIGN WITH RESPECT TO AWARDS GRANTED UNDER THE INCENTIVE PLAN AND DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE IMPACT OF EMPLOYMENT OR OTHER TAX REQUIREMENTS, THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE EMPLOYEE OR CONSULTANT MAY RESIDE.
Vote Required and Board Recommendation
The affirmative vote of a majority of the holders of the then-outstanding shares of our common stock present in person or represented by proxy and entitled to vote at the 2016 Annual Meeting of Stockholders is required to approve the Amendment to the Align Technology, Inc. 2005 Incentive Plan, as amended and restated. Unless marked to the contrary, proxies received will be voted “FOR” approval of the Amendment and its material terms.
The Board believes it is in the best interests of Align that stockholders approve the Amendment, which will (i) increase the number of shares that are available for awards under the Incentive Plan, (ii) make awards subject to minimum vesting requirements subject to certain limited exceptions and (iii) make awards subject to reduction, cancellation, forfeiture, or recoupment under certain circumstances.

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OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THIS PROPOSAL AND RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE ALIGN TECHNOLOGY, INC. 2005 INCENTIVE PLAN (AS AMENDED AND RESTATED).





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EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 31, 2015 about our common stock that may be issued upon the exercise of options and rights granted to employees, consultants or members of our Board of Directors under all existing equity compensation plans, including the 1997 Equity Incentive Plan, the Employee Stock Purchase Plan, the 2001 Stock Incentive Plan and the 2005 Incentive Plan, each as amended, and certain individual arrangements.

Plan Category
 
Number of securities to be issued upon exercise of outstanding options, RSUs and MSUs (1)
 
Weighted average exercise price of outstanding options (2)
 
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column)(1) (2) (3)
Equity compensation plans approved by security holders
 
3,185,509
 
$15.14
 
6,550,307
Equity compensation plans not approved by security holders
 
 
 
Total
 
3,185,509
 
$15.14
 
6,550,307

(1) 
Includes 2,078,136 restricted stock units, including 611,150 market-performance based restricted stock units at target, which have an exercise price of zero.
(2) 
Includes 1,133,749 shares available for issuance under our ESPP. We are unable to ascertain with specificity the number of securities to be issued upon exercise of outstanding rights or the weighted average exercise price of outstanding rights under the ESPP.
(3) 
Our 2005 Incentive Plan, as amended, provides for the granting of incentive stock options, non-statutory stock options, restricted stock units, market stock units, stock appreciation rights, performance units and performance shares to employees, non-employee directors, and consultants.  Shares granted on or after May 16, 2013 as an award of restricted stock, restricted stock unit, market stock units, performance share or performance unit ("full value awards") are counted against the authorized share reserve as one and nine-tenths (1 9/10) shares for every one (1) share subject to the award, and any shares canceled that were counted as one and nine-tenths against the plan reserve will be returned at the same ratio.  Full value awards granted prior to May 16, 2013 were counted against the authorized share reserve as one and one half (1 1/2) share for every one (1) share subject to the award, and any shares canceled that were counted as one and one half against the plan reserve will be returned at this same ratio. As of December 31, 2015, we have a total of 23,283,379 shares authorized and reserved, of which 4,869,639 shares are available for issuance which excludes 546,933 of potentially issuable MSUs if performance targets are achieved at maximum payout.



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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis
This section explains how we compensate our named executive officers (NEOs). Our NEOs for fiscal 2015 are:
Joseph M. Hogan, our President and Chief Executive Officer
David L. White, our Chief Financial Officer
Raphael S. Pascaud, our Chief Marketing Portfolio & Business Development Officer
Zelko Relic, our Vice President, Research & Development
Roger E. George, our Vice President, Corporate and Legal Affairs and General Counsel

In accordance with the SEC’s executive compensation disclosure rules, we have also included discussion and disclosure of compensation for Thomas M. Prescott, our former President and Chief Executive Officer who retired in June 2015.

Executive Summary

CEO Transition. Mr. Hogan, our CEO, joined Align in June 2015 after the retirement of our then CEO, Thomas M. Prescott. Our board of directors conducted an extensive search for candidates to find a new CEO. The board believed that Mr. Hogan was the ideal choice as CEO due to his extensive experience in leading the strategic and operational aspects of large and complex, international organizations in the healthcare and technology industries. In designing Mr. Hogan’ compensation package, the Compensation Committee engaged its independent compensation consultant, Compensia, to examine peer CEO compensation, as well as pay packages for recently hired CEOs, and to create a compensation offer that focused on aligning Mr. Hogan’s performance directly with stockholder interests. The offer also needed to be attractive when compared to other compensation opportunities available to Mr. Hogan. Following a review and analysis of such data, the Compensation Committee recommended, and the Board approved, the following compensation package:

Annual base salary of $950,000;
A one-time signing bonus of $1,500,000;
A target annual cash incentive opportunity of 150% of annual base salary; and
An equity award of 111,000 RSUs and 111,000 MSUs.
 
More details of Mr. Hogan’s pay package can be found on page 51.

In connection with Mr. Prescott’s retirement, we entered into a Transition Agreement with him pursuant to which he received the following benefits: (i) seven months’ salary continuation through December 31, 2015 for an aggregate amount of $393,750; (ii) eligibility to receive a prorated annual bonus (5/12th) for 2015 as determined by the Board and based upon the recommendation of the Board’s Compensation Committee in accordance with Align’s standard practices; and (iii) a one-time bonus of $25,000 intended to assist with post-termination medical care costs (in lieu of any reimbursement of COBRA premiums).


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2015 Business Highlights.
In 2015, we delivered:

Net revenue growth of 11%, with net revenues of $845.5 million in 2015 compared to $761.7 million in 2014, despite negative impact of foreign exchange and the adoption of our Additional Aligner policy in July 2015. Under this policy, we no longer distinguish between mid-course corrections and case refinements providing doctors the ability to order additional aligners to address either treatment need at no charge. While this policy change was largely immaterial to our cash flows, it did impact the timing at which we recognize revenue. We estimate that 2015 reported revenues and pre tax income were lower by approximately $14 million due to this change.
585.2 thousand Invisalign cases shipped, up 22% from 478.0 cases in 2014, with 32.5% year-over-year volume growth from our International doctors and 17.7% year-over-year volume growth from our North American doctors.
Operating margins of 22.3% of our net revenues, which were negatively impacted by 1.6 points due to the adoption of the Additional Aligner policy as well as the negative impact from foreign exchange rates.
Our three-year TSR is 141% compared with the three-year Nasdaq Composite Index three-year TSR of 61%.

We also repurchased a total of 1.7 million shares under a share repurchase program, returning approximately $102 million of cash to stockholders, approximately 1.0% of our diluted shares outstanding, which approximated our 2015 annual net burn rate of 1.27%.

Our executive officers continued to demonstrate solid execution of Align's key strategic growth drivers: Market Expansion, Product Innovation and Brand Strength. In 2015:

We announced multiple innovations designed to improve clinical applicability and predictability of treatment outcome, including:

the launch of Invisalign G6 for treatment of severe crowding and bimaxillary protrusion; and
in March 2015, we announced the next generation iTero Element Intraoral Scanner with improved imaging technology that is designed to enable significantly faster scan speed, accuracy, intuitive operation, and visualization capabilities. We began shipping the iTero Element Intraoral Scanner in September 2015.
We grew our Invisalign teenage segment 21% year over year compared to 16% in 2014, demonstrating our continued progress and share gain among teenage patients.
We grew international Invisalign case shipments 32.5% year over year driven by both an increase in the number of doctors submitting cases and in the number of cases submitted per doctor in our EMEA regions as well as continued expansion of our customer base in the Asia Pacific region.
We believe the compensation program for our executive officers was instrumental in helping Align achieve continued strong execution of our strategic initiatives as well as solid financial performance.

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Alignment of Executive Compensation with Performance-Highlights
We have created long-term, sustained value for our stockholders. Our stock price increased from $56.20 to $65.85 per share during 2015, reflecting strong stock price appreciation and a one-year total stockholder return of 17%. This compares to the Nasdaq Composite Index one-year TSR of 6%. Our three-year TSR is 141% compared with the three-year Nasdaq Composite Index three-year TSR of 61%.

Stockholders indicated strong support for our executive compensation program in 2015. In 2015, we held our fourth annual stockholder advisory vote on the compensation of our named executive officers. Approximately 94% of the total votes cast at our 2015 annual meeting voted in favor of our named executive officer compensation. As we evaluated our executive compensation practices since that vote, we were mindful of the strong support our stockholders expressed for our executive compensation program. As a result, the Compensation Committee generally believes that the stockholder advisory vote affirmed stockholder support of our approach to executive compensation and they did not believe it was necessary to make any significant changes to our executive compensation program.

Our compensation program continues to emphasize performance-based pay. Our compensation program is designed to pay more when our financial and strategic performance is robust and less when it is not, providing built-in flexibility in the management of our operating expenses and enabling us to preserve strategic programs when economic conditions are unfavorable. A significant portion of our executive officers’ compensation is variable and tied to the success of our business and the individual performance of our executives. Consistent with this pay-for-performance orientation, Align believes that annual cash incentive (bonus) awards and long-term equity compensation should together represent the most significant portion of total direct compensation. As a result, a larger portion of our executive officers’ total compensation is at risk relative to Align’s other employees. We believe this is appropriate because our executive officers bear the greatest responsibility for Align’s results and can exert the greatest influence on Align’s performance. As illustrated by the charts below, in fiscal 2015, approximately 86% of our CEO’s total-target compensation and approximately 80% of our other named executive officers total-target compensation was subject to annual performance goals or tied to the value of our common stock.

    
Annual cash incentive awards reflected positive 2015 Company performance. The Committee seeks to motivate management to continuously improve the financial performance of the Company and to achieve our key strategic priorities through a cash incentive (bonus) plan that rewards higher performance with increased incentive opportunities. This provides us with a variable expense structure, allowing us to reduce our compensation costs in challenging times and reward performance when business conditions and results warrant. For fiscal 2015, we achieved a weighted average of 100.6% of our financial targets and key strategic objectives. In addition, based on an assessment of each NEOs performance during the year, individual performance multipliers ranging from 105% to 130% were awarded. As a result, the annual incentive payments for our NEOs were between 106% and 131% of their target award opportunity.
 
Equity awards are tied to the value of our common stock. Value received under our annual equity awards varies based on our stock price performance. In particular, payouts of our MSUs awarded to our executive officers vary based on the relative performance of our stock compared to the NASDAQ Composite Index. MSUs granted in 2015 are earned based on Align’s relative stockholder return over a three-year performance period, with 100% of the earned shares vesting at the end of three years. For MSUs granted in 2012 that vested in February 2015, Align stock outperformed the NASDAQ Composite Index by 70% during the applicable performance period. As a result, due to Align’s continued outstanding

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stock price performance compared to the NASDAQ Composite Index in 2015, the NEOs who were granted 2012 MSUs earned 150% of their target awards. Our Compensation Committee specifically designed our MSU award program to closely tie actual long-term performance with long-term pay, and total stockholder return has been, and is expected to continue to be, the key measurement of our performance under this program.

Compensation Policies and Practices

We endeavor to maintain compensation governance best practices:

Compensation Committee Composed Solely of Independent Directors. The Compensation Committee is composed solely of independent directors and it directly retains an independent compensation consultant.

Annual Say-on-Pay Votes. We elected to hold an annual stockholder advisory ("say-on-pay") vote, and the Compensation Committee considers the outcome of the advisory vote in making compensation decisions.

Stock Ownership Guidelines. We maintain stock ownership guidelines for our executive officers.

No “single-trigger” on Cash Compensation. All of our post-employment cash compensation arrangements in the event of a change in control of the Company are “double-trigger” arrangements that require both a change in control of the Company plus a qualifying termination of employment before any cash payments are paid.

Annual Compensation-Related Risk Assessment. Align’s executive compensation policies are structured to discourage inappropriate risk-taking by our executives. In 2015, the Compensation Committee determined to cap our annual cash bonus incentive awards at 240% of target for our executive officers in part to discourage excessive risk taking. The Compensation Risk Assessment located on page 15 of this proxy statement describes the Compensation Committee’s assessment that the risks arising from our company-wide compensation programs are reasonable, in the best interest of our stockholders, and not likely to have a material adverse effect on us.

No Hedging or Pledging Company Stock. Employees may not directly or indirectly engage in transactions intended to hedge or offset the market value of Align’s common stock owned by them.    In addition, in 2015, we amended our Insider Trading Policy to further prohibit employees from directly or indirectly pledging Align common stock as collateral for any obligation.

Carefully Manage Equity Burn Rates. We are committed to carefully managing the dilutive impact of equity compensation awards. Management and the Board regularly evaluate share utilization levels by reviewing the dilutive impact of stock compensation. Align’s overall equity-award-based gross burn rate for fiscal 2015 was 1.4% and Align's adjusted gross burn rate was 3.5%. Gross burn rate is defined as the number of equity awards granted in the year divided by shares outstanding. Adjusted gross burn rate includes a premium applied to full-value shares (e.g., RSUs and MSUs) of 2.5:1.

Executive Compensation Philosophy and Core Objectives
The objective of our executive compensation program is to encourage management to achieve our financial and strategic objectives and create value for our stockholders. We remain committed to our longstanding compensation philosophy which incorporates the following principles:

Offer competitive compensation. We seek to provide competitive compensation opportunities to attract, retain and incent superior talent.

Reward performance. A significant portion of total compensation for our NEOs is tied to the achievement of financial and strategic objectives. We believe that this supports our pay-for-performance philosophy by directly and substantially linking rewards to the achievement of measurable financial targets and a shared set of critical strategic priorities. By also rewarding individual performance, we seek to foster a meritocracy.

Link the interests of our executives with those of our stockholders. A significant portion of total compensation for our NEOs is tied to the achievement of financial and strategic objectives and is in the form of long-term equity-based compensation. This structure is designed to focus decision-making and behavior on goals that are consistent with Align’s overall strategy.


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How We Implement and Manage our Executive Compensation Programs
The table below specifies the responsible parties and their respective roles in the determination of the compensation for our NEOs:
Responsible Party
 
Roles and Responsibilities
 
 
 
Compensation Committee
 
Sets Align's overall compensation philosophy, which is reviewed and approved by the Board of Directors.
 
 
Reviews and approves our compensation programs; designs and monitors the execution of these programs.
 
 
Reviews and approves all cash based compensation arrangements for our executive officers (other than our CEO).
 
 
Reviews and recommends to our Board of Directors all cash based compensation arrangements for our CEO.
 
 
No member of the Committee is a former or current officer of Align or any of its subsidiaries. No executive officer of Align serves as a member of the Board or compensation committee of any entity that has one or more executive officers serving on Align's Board or Compensation Committee.
 
 
 
Consultant to the Compensation Committee (Compensia, Inc. an independent executive compensation consulting firm retained directly by the Compensation Committee to assist it in performing its responsibilities.)
 
Compensia attends meetings of the Committee and communicates outside of meetings with its members and management with respect to the design and assessment of compensation packages for our executive officers. In 2015, Compensia provided the following services on behalf of the Committee:
 
Analyzed whether the compensation packages of our executive officers were consistent with our compensation philosophy and competitive within the market relative to our peer companies.
 
Assisted in defining the appropriate peer group of comparable companies.
 
 
Assisted in the design of our compensation programs for executives and board members, including discussing evolving compensation trends.
 
 
Reviewed the effectiveness of our compensation programs.
 
 
Provided advice on stock ownership guidelines for executive officers and directors.
 
 
Compiled and provided market data to assist in setting our compensation philosophy, plan parameters and measures.
 
 
Conducted a comprehensive review of compensation paid to the Board and provided recommendations to the Committee and the Board regarding director pay structure.
 
 
Provided updates on NASDAQ listing standards, Say-on-Pay results, and Dodd-Frank regulatory developments.
 
 
In addition, the Committee conducted a formal review of Compensia’s independence and is satisfied with the qualifications, performance and independence of Compensia. Compensia performed no other work for the Company.
 
 
 
Executive Officers (Assisted by Company Staff)
 
Management's role is to advise the Committee regarding the alignment and weighting of our performance measures under our annual cash incentive awards with our overall strategy, the impact of the design of our equity incentive awards on our ability to attract, motivate and retain highly talented executives and the competitiveness of our compensation program. Our CEO plays a significant role in setting the compensation for other NEOs. The CEO conducts performance reviews for the other NEOs, and makes recommendations to the Compensation Committee with respect to the other NEOs’ compensation. The Committee has the discretion to accept, reject, or modify the CEO's recommendations.  Any executive officer who participates in Compensation Committee meetings leaves the meetings during discussions and deliberations of individual compensation actions affecting them personally and during the Compensation Committee’s executive sessions. Ultimately all decisions regarding executive compensation are made by the Compensation Committee or in the case of CEO cash compensation, the full Board upon the recommendation of the Compensation Committee.
How We Determine Compensation
Competitive Positioning. Within the overall framework of the objectives and principles discussed above, the Compensation Committee exercises its judgment in making executive compensation decisions. The Compensation Committee takes into consideration the unique roles played by each executive officer and seeks to individually tailor their compensation to align their pay based on the factors below:

market comparison data (peer group data and survey data);
subjective elements, such as:
the scope of the executive’s role;

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the executive’s:
experience;
qualifications;
skills; and
performance during the fiscal year (see discussion below on “Role of Individual Performance”);
internal equity; and
Align’s operational and financial performance.
After reviewing these various competitive positioning factors (none of which is determinative), the Compensation Committee relies upon the judgment of its members and makes adjustments to an executive’s compensation.
The Use of Market Comparison Data. In connection with the Compensation Committee’s continuing assessment of the competitiveness of Align’s executive pay levels and practices relative to its peers, the Committee considers data gathered from: (i) compensation data from a selected peer group of companies, and (ii) published surveys with data from a broader mix of technology and life science companies.
Peer Group
The Committee reviews the Company’s peer group at least annually and makes adjustments to its compositions, taking into account changes in both the Company’s business and the businesses of the companies in the peer group. For compensation decisions that were made in fiscal 2015, the Committee, with the assistance of Compensia, selected the peer group of companies based on the following selection criteria:
Industry-medical device companies and software as a service companies (SaaS). We believe that the SaaS industry is a relevant industry for market comparison purposes due to the integral role that software systems and software development has in our products and services;

Market Capitalization-companies with a market capitalization of between approximately $1.4 billion and $13.0 billion, based upon the companies’ trading ranges at the time of selection; and

Revenue-companies with revenue of between approximately $200 million to $2.3 billion, based upon the last four quarters of revenue at the time of selection.
At the time of selection of the peer group in the third quarter of 2014, Align's rolling four quarters of revenue was approximately $687 million and its market capitalization was approximately $4.3 billion. The following table includes the companies in our peer group:
Software-as-a Service
 
Medical Device
ANSYS
 
Bio-Rad Laboratories*
athenahealth
 
Bruker*
CommVault
 
Cepheid*
Concur Technologies
 
Cooper Companies
Informatica
 
Genomic Health
j2 Global
 
Haemonetics
Medidata Solutions*
 
Illumina
MicroStrategy
 
Integra LifeSciences
NetSuite
 
Insulet
Quality Systems
 
Masimo
Rackspace Hosting
 
NuVasive
ServiceNow
 
Resmed
TIBCO Software
 
Sirona Dental Systems
 
 
Thoratec
 
 
Volcano
*
Indicates new additions to the peer group. In addition, Quality Systems, Genomic Health, Masimo and Volcano were removed from our peer group because they no longer met the market capitalization selection criteria.

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Survey Data

When peer data is not available, the Compensation Committee reviews various pay surveys, including the Radford Technology Survey. In addition, the Compensation Committee may review the data separately to understand pay differences, if any, by industry or business segment and to assess whether any changes in pay data from year to year reflect true market trends.
Role of Competitive Data and Compensation Committee’s Discretion
The Compensation Committee uses the following percentiles as a reference point for assessing appropriate base salary, target total cash compensation and equity compensation for our executive officers:
Element of Compensation
Target Percentile
Base salary
50th percentile
Target total cash compensation
65th to 75thpercentile
Equity compensation
50th to 75thpercentile
While we believe that comparisons to market data are a useful tool, we do not believe that it is appropriate to establish executive compensation levels based solely on a comparison to market data. Due to the variations between companies reporting and the roles for which compensation for these companies is ultimately disclosed, directly comparable information is not available from each peer group company with respect to each of our named executive officers. In considering market compensation data, the Compensation Committee recognizes that executives at different companies can play significantly different roles, with different responsibilities and scopes of work, even though they may hold similar titles or nominal positions. The Compensation Committee therefore uses the market data only as a reference point and incorporates flexibility into our compensation programs and in the assessment process to respond to and adjust for the evolving business environment and other subjective elements described in the competitive positioning factors above. After reviewing these various factors, the Compensation Committee relies upon the judgment of its members and makes adjustments to an executive’s compensation below or above these percentile ranges.
Role of Individual Performance. Although the Compensation Committee believes that the largest portion of each executive’s total compensation should be based on our executive officers’ success as a team and thus based on achievement of shared financial and critical strategic goals, it also believes that there should be some ability to reward individual contributions. To evaluate individual performance, individual goals are set each year for the executive officers. These include shared financial and strategic objectives as well as objectives that are directly related to each executive officer’s specific business function. Except with respect to his own performance, this assessment is based on our CEO’s recommendation to the Compensation Committee on how well the executive performed his or her job, and such assessment is largely (although not exclusively) qualitative, not quantitative, in nature. There is no specific weight given to any one individual goal or objective. This subjective evaluation of the impact of the individual contributions on actual compensation is not a formula based process resulting in a quantifiable amount of impact, but rather involves the exercise of discretion and judgment. This enables the Committee to differentiate among executives and emphasize the link between personal performance and compensation.
Role of Company Performance. The Compensation Committee believes that our executives should be rewarded based on their success as a team. Consistent with this belief, the achievement of shared financial and critical strategic goals, which we describe below under “Annual Cash Incentive Compensation” is the primary factor in determining the amount of cash incentive payments.
The Use of Tally Sheets. The Compensation Committee uses tally sheets to understand the total annual compensation of the executive officers, and to provide perspective on the executive’s wealth accumulation from our compensation programs. Compensation previously paid to the executive officers, including amounts realized under prior equity-based compensation awards, did not affect the Compensation Committee’s compensation decisions for 2015. The Compensation Committee believes that compensation should reflect the executive’s performance and the market value of his or her services, and does not want to create a disincentive for exceptional performance.
The Principal Components of Compensation of our Executive Officers
The principal components of each executive officer’s total compensation package at Align are:
base salary;
annual cash incentive awards;
long-term equity-based incentive grants; and
severance and change of control arrangements.

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Base Salary

Base salary is intended to provide a fixed, baseline level of compensation that is not contingent upon Align’s performance. Consistent with our pay-for-performance philosophy, base salaries generally represent a modest proportion of the total compensation opportunity for our executive officers. In January 2015, the Compensation Committee reviewed the base salaries of our NEOs, comparing these salaries to the base salary levels at the companies in our peer group, as well as considering the roles and responsibilities and potential performance of the NEOs and their positioning for other elements of their compensation. After this review, the Compensation Committee made the adjustments to base salary set forth in the table below. Mr. Relic’s 15% increase was made in connection with his strong individual performance as well as closing a significant gap between his salary and the salary of other members of the executive management team and moving it to more closely approximate the market 50th percentile.
Name
 
2014 Base Salary
 
2015 Base Salary
 
Percentage Increase over 2014
Joseph M. Hogan
 
N/A
 
$950,000
 
N/A
Thomas M. Prescott
 
$650,000
 
$675,000
 
3.8%
David L. White
 
$407,000
 
$424,000
 
4.2%
Raphael S. Pascaud
 
$350,000
 
$369,000
 
5.4%
Zelko Relic
 
$310,000
 
$358,000
 
15%
Roger E. George
 
$354,000
 
$370,000
 
4.5%

Mr. Hogan’s base salary of $950,000 was based on a review of peer CEO compensation, as well as pay packages for recently hired CEOs as discussed above under “CEO Transition”.

Annual Cash Incentive Compensation

Annual Cash Incentive Plan. Align uses a cash incentive compensation plan to reward our NEOs for achieving and surpassing pre-established financial goals and to a lesser extent the achievement of key strategic measures, which are expected to increase stockholder value. All of our NEOs participated in the executive bonus plan. Bonus determinations for fiscal 2015 performance were calculated using the following formula:




The Individual and Company Multipliers are each derived based on performance and are equally weighted.

Target Bonus Percentage. The target award opportunity is the amount of cash incentive compensation that our NEOs could expect to earn if Align’s financial and strategic performance goals for the year are achieved. Each executive officer is assigned a target award opportunity of 60% of his or her base salary, except for Mr. Hogan who is assigned a target award opportunity of 150% of his base salary. Prior to his retirement, Mr. Prescott’s target award opportunity was 100% of his base salary. The incentive targets of the NEOs were set by the Compensation Committee based on the scope and significance of their roles as the leaders of Align, with the CEO receiving the highest target due to his greater responsibilities. In addition, in order to appropriately encourage and reward a range of acceptable performance and contributions, our awards are structured so that the actual payout under an executive officer’s award can as low as 0% of target or up to a maximum award of 240% of target.

Individual Multiplier. The Individual Multiplier reflects each executive’s individual performance and is determined at the Compensation Committee’s discretion based on the recommendation of the CEO. This performance appraisal process is largely subjective, with much discretion exercised by our CEO and the Committee. There is no specific weight given to any one individual goal or performance criterion. The Compensation Committee considers each executive officer’s performance in light of that individual’s achievement of his or her individual goals. The assessment is based on our CEO and Compensation Committee’s determinations regarding how well the executive performed his or her job, and such assessment is qualitative, not quantitative, in nature. The CEO does not provide input to the Compensation Committee on his own performance. Individual performance that meets expectations yields a 100% multiplier, with a maximum rating of 200%.

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Company Multiplier. The Company Multiplier is the same for all executive officers. The Company Multiplier is determined based on pre-established goals under selected financial and key company strategic objectives. While management typically recommends the performance targets for bonus pool funding based on our Annual Operating Plan, the targets are ultimately approved by the Compensation Committee and reviewed by the Board of Directors. At the beginning of 2015, the Committee reviewed the structure of the executive bonus plan and determined that it was appropriate to continue to focus on (1) growth, (2) profitability, and (3) the achievement of critical strategic priorities.
The following table shows the performance metrics used in 2015 and our level of performance with respect to these metrics:
Measure/Weight/
Calculated
 
Why do we use this measure?
 
Target
(in millions)
 
Achievement
(in millions)
 
Level of Achievement of Target
 
Impact on
Company
Multiplier
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue (1)(2) (40%)
 
Improvement in this measure aligns with our overall growth strategy.
 
$881.6
 
$880.4
 
99.9%
 
 
39.8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Non-GAAP Operating income  (1) (2) (30%)
 
Directly links incentive payments to Company profitability and we want our employees (including our executives) to share in our profitability. Because profitability encompasses both revenue and expense management, the Compensation Committee believes this measure encourages a balanced, holistic approach by our executives to manage our business. The Compensation Committee considers operating profit before taxes because our executives cannot predict or directly affect our taxes or our tax rate.
 
$264.6
 
$268.2
 
101.4%
 
 
33.1%
 
Roadmap Elements (30%)

Delivering key elements of Company roadmap projects or initiatives, including meeting delivery dates and feature set requirements. (4)
 
Critical to our achievement of our multi-year strategic corporate priorities, specifically, increased adoption and frequency of use by our customers, the orthodontist and general practitioner dentist and increased consumer demand. (3)
 
100%
 
 
92.4%
 
 
92.4%
 
 
27.7%
 
COMPANY MULTIPLIER:
 
 
 
 
 
 
 
100.6%
 

(1) 
The threshold performance and the level of performance at which the funding for that particular financial performance measure will be capped as follows:

A rating of zero if achievement is below 90%. Company performance below target automatically reduces only the payout related to that goal, not the other goals, as we want executives to have the same incentive to achieve other financial goals as well as their individual performance goals even if our performance tracks below the target during the course of the year;

A rating ranging from 60% to 100% if achievement meets or exceeds the minimum performance level but does not achieve the target performance level; and

A rating of 101% to 200% if achievement meets or exceeds the target performance level.

(2) 
Adjusted Non-GAAP Operating Income was adjusted to exclude stock based compensation expense. The Compensation Committee also has the discretion to exclude the following items from Revenue and Operating Income:


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(a)
significant and/or extraordinary items that are not indicative of our core operating performance that are separately stated on our financial statements;

(b)
items identified as non-GAAP in the Company’s quarterly earnings announcements; and

(c)
other discrete items as necessary that may result in unintended gain or loss under the bonus plan.
The Compensation Committee believes that the items listed in (a) through (c) above are not indicative of our core operating performance. Appendix A to this proxy statement includes a reconciliation of adjusted Non-GAAP operating income and Revenue achievement to the most comparable GAAP measures.
(3)  
Management believes, and the Committee concurs, that the specific strategic initiatives and performance goals established for each of these strategic priorities represent confidential business information, the disclosure of which would result in meaningful competitive harm.
(4)
For each strategic performance measure, a rating ranging from 0% to 150% based on relative achievement of the particular measure.

The Committee believes that the performance objectives established for the financial and key strategic objectives represent meaningful improvements for the organization and, therefore, are reasonably difficult to attain which is in line with our pay-for-performance philosophy. Finally, the Compensation Committee reserves the right to apply judgment in the final determination of cash incentive awards and can adjust actual results (up or down) to reflect the impact of certain extraordinary items or events to more accurately reflect the overall performance of the management team.

In addition, the Board of Directors retains authority to pay additional discretionary bonuses outside the executive bonus plan if warranted by performance not measured under the plan. In 2015, the Compensation Committee did not authorize any such discretionary bonus payments outside of the executive bonus plan to our NEOs, except with respect to Mr. Hogan who received a one-time cash bonus payment in connection with commencing employment with the Company. In addition, in connection with Mr. Prescott’s retirement, he received a $25,000 cash payment intended to assist with post-termination medical care costs (in lieu of any reimbursement of COBRA premiums).

Awards to the NEOs. The Compensation Committee awarded the cash incentive awards set forth below to the NEOs for 2015 performance. These awards are also set forth in the Summary Compensation Table on page 51 under the heading “Non-Equity Incentive Plan Compensation.” Consistent with our philosophy of linking pay to performance, each executive officer's total cash compensation increased in 2015, reflecting the Company Multiplier having increased from 95% in 2014 to 100.6% in 2015. In addition, the Compensation Committee (with input from our CEO, other than with respect to himself) also performed a full evaluation of the individual performance component for each NEO and determined that each NEO should receive an Individual Performance Multiplier of between 106% to 131%, based on their respective contributions to the Company in their respective divisional or functional capacities.

Name
 
Target Incentive Award (as % of Base Salary)
 
Target Incentive Award
(in 000s)
 
Company Multiplier
 
Individual Multiplier
Actual Incentive Award
(in 000s)
 
Actual Award as % of Target
Joseph M. Hogan
 
150%
 
   $831 (1)
 
100.6%
 
115%
$960
 
115.6%
Thomas M. Prescott
 
100%
 
   $281(1)
 
100.6%
 
110%
$310
 
110.6%
David L. White
 
60%
 
$208
 
100.6%
 
105%
$268.7
 
105.6%
Raphael S. Pascaud
 
60%
 
$238
 
100.6%
 
130%
$311.3
 
130.8%
Zelko Relic
 
60%
 
$215
 
100.6%
 
115%
$248.5
 
115.7%
Roger E. George
 
60%
 
$222
 
100.6%
 
110%
$245.7
 
110.7%

(1) 
The awards for Mr. Hogan and Mr. Prescott were pro rated based on the number of months they were employed by the Company in 2015.


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Long-Term, Equity-Based Incentive Awards

We use equity compensation to align our named executive officers’ interests with those of our stockholders and to attract and retain high-caliber executives through recognition of anticipated future performance. We determine appropriate grant amounts, if any, by reviewing competitive market data, individual performance assessments and business objectives with the Compensation Committee at least annually.
Award Type
Rationale for 2015 portfolio
 
 
Why RSUs?
We believe RSUs reward retention (even in the event of a decline in Align’s share price) and provide an incentive to grow the value of Align’s stock. In addition, RSUs enable our executives to accumulate stock ownership in the Company.
 
 
Why MSUs?
We believe MSUs provide a vehicle that has more consistent value delivery compared to stock options which also aligns the long-term interests of our executive officers and stockholders by rewarding executives for Align’s performance measured in relation to other companies over a specified period. The actual number of shares of our common stock issuable under MSUs varies based on over-or under-performance of Align’s stock price compared to the NASDAQ Composite Index during the three-year performance period. If Align under-performs the NASDAQ Composite Index, the percentage at which the MSUs convert into shares of Align stock will be reduced from 100%, at a rate of two to one (two-percentage-point reduction in units for each percentage point of under-performance), with a minimum percentage of 0%. This means that no shares will vest if Align underperforms the NASDAQ Composite by 50 percentage points. If Align outperforms the NASDAQ Composite Index, the percentage at which the MSUs convert to shares will be increased from 100%, at a rate of two to one (two-percentage-point increase in units for each percentage point of over-performance), with a maximum percentage of 150%. This means that if Align outperforms the NASDAQ Composite by 25 percentage points, the maximum number of shares that will vest is 150% of the award amount. For example, if the NASDAQ Composite index increased by 10% over the performance period and our stock price increased by 30% over the performance period, then the number of shares issuable under the MSUs would be 140% of target or (130%-110%)*2=140%.

Award Type
Vesting Detail
 
 
RSUs
Typically vests over four-years with 1/4 vesting annually.
 
 
MSUs
Three year performance period beginning February 2015 and ending February 2018

Awards in 2015. Consistent with our ongoing efforts to align pay for performance, we continue to emphasize equity awards granted to our executive officers that are tied directly to performance measured in relation to other companies over a specified period. In 2015, half of the value of the equity-based awards of our NEOs were designated as “performance-based.” In making these awards, the Compensation Committee again considered the market data, as well as the other competitive positioning factors described above. Under the employment agreement entered into with Mr. Hogan in connection with his appointment as CEO, he was granted a sign-on award consisting of 111,000 restricted stock units and 111,000 market stock units. The RSUs granted to Mr. Hogan vested 25% on December 31, 2015, with an additional 25% vesting on each December 31 thereafter for full vesting on December 31, 2018. The MSUs granted to Mr. Hogan will vest at the end of a three-year performance period which commenced on June 1, 2015.

The table below sets forth the equity awarded to the NEOs for fiscal 2015:
Name
 
RSUs
 
Target MSUs (1)
Joseph M. Hogan
 
111,000
 
111,000
Thomas M. Prescott
 
49,000
 
49,000
David L. White
 
11,500
 
11,500
Raphael S. Pascaud
 
12,000
 
12,000
Zelko Relic
 
12,000
 
12,000
Roger E. George
 
10,700
 
10,700

(1) 
The number of MSUs set forth in this column represents the Target Shares; however, the actual number of MSUs to be earned, if any, is determined based on the formula set forth in the Market Stock Unit Agreement up to a maximum of 150% of the amount of the Target Shares.

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Severance and Change of Control Arrangements
Employment Agreements. Each NEO is eligible to receive benefits under certain conditions in accordance with their respective employment agreement. Each such agreement provides for benefits to the executive officer upon:
a change of control; and
termination without cause or for convenience.
In adopting the change of control provisions in these agreements, the Compensation Committee’s primary objective was to ensure that our executives have sufficient security such that they are not biased against selling the Company in the event a stockholder favorable merger and acquisition transaction is presented to the Company. If Align were to pursue a change of control transaction beneficial to Align stockholders, the Committee believes that our executive officers’ active support of the transaction through closing would be critical in ensuring the success of such a transaction.
Change of Control Only. Though the cash severance amounts payable to our executives in connection with a change of control are subject to a “double trigger” (meaning to get paid out the cash portion of their change of control arrangement, first there has to be a change of control and then the executive must be terminated without cause or for convenience within 12 months of such change of control), the Committee adopted a “single trigger” for all executive officers whereby the vesting of equity awards is accelerated by one year immediately upon a change of control.
Previously, our former CEO, had a “single trigger” pursuant to which 100% of his equity would vest immediately upon a change of control. With the hiring of Mr. Hogan, however, the Compensation Committee determined to eliminate this single trigger acceleration of 100% of the CEOs equity awards. Rather, Mr. Hogan’s employment agreement contains a single trigger provision equivalent to the protection given to our other NEOs whereby the vesting of equity awards is accelerated only by one year immediately upon a change of control.
Termination within 12 Months of a Change of Control. In the event the executive is terminated without cause or for convenience within 12 months of a change in control (“double trigger”), 100% of his or her unvested equity awards are accelerated and a cash severance payment is made. The CEO would receive a cash severance payment and 100% of his unvested equity awards would accelerate in the event he is terminated without cause or for convenience within 18 months of the change of control (“double trigger”).
Termination Unrelated to a Change of Control. For termination without cause or for convenience unrelated to a change of control, the vesting of equity awards held by an NEO (except for the CEO) is immediately accelerated by one year and a cash severance payment will be made. Our CEO would only receive a cash severance payment (no equity acceleration).
The cash severance benefits are intended to provide consideration for the employee’s service to Align and expected length of time until subsequent employment is secured. The severance provisions also assist in recruiting executives given that executive roles tend to carry higher risks. The amounts that each of our current NEOs would have been entitled to if one of the termination or change of control events mentioned above occurred on December 31, 2015 are set forth in “-Payments Upon Termination or Change of Control.”

Other Compensation Arrangements

Welfare and Other Employee Benefits. We have established a tax-qualified Section 401(k) retirement plan and a Company match for all employees, including our executive officers.
In addition, we provide health and welfare benefits to our executive officers on the same basis as all of our full-time employees in the country in which they are resident. These benefits include medical, dental and vision benefits, medical and dependent care flexible spending accounts, short-term and long-term disability insurance, accidental death, basic life insurance coverage, and our employee stock purchase plan. We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market.
Perquisites and Other Personal Benefits. Mr. Pascaud, who has his primary residence in the United Kingdom, is provided with a car in accordance with customary local practice as well as a housing allowance. In addition, executive officers are reimbursed for travel by a non-employee companion (eg., spouse) to customer events and certain other Company events where it is appropriate and in the interest of the Company for the executive to have a companion join him or her. See "Summary Compensation Table" for more information concerning these perquisites. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as where we believe it is appropriate to assist an individual executive officer in the performance of his or her duties, to make

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our executive officers more efficient and effective, and for recruitment, motivation, or retention purposes. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee.
Changes in 2016
Annual Cash Incentive Award. In March 2016, the Compensation Committee conducted a review of our Annual Cash Incentive Award plan and adopted the following formula for 2016. The pool of available funds to pay out awards to our executive officers will be based on the extent to which the Company meets or exceeds predetermined goals under selected financial metrics. Beginning in 2016, the Compensation Committee discontinued the use of key strategic initiatives as a key metric, believing that successful implementation of key strategic initiatives helped drive revenue growth and ultimately operating income which are measured separately. Consequently, the Compensation Committee selected two financial metrics, weighted as identified below, for purposes of funding the overall pool:
Revenue - 60%
Operating Income - 40%
Considered in the aggregate for 2016, these metrics are strong indicators of our overall performance and our ability to create stockholder value. These measures were balanced among propelling growth while encouraging efficiency and are aligned with our business strategies. The Committee also determined to eliminate the individual multiplier. In determining actual bonuses to be awarded to each individual NEO, bonus amounts will be adjusted upward or downward based on an executive officer's overall performance and his or her contribution to the achievement of our performance goals.
Corporate Tax Deduction on Compensation in Excess of $1 Million a Year
The Compensation Committee is responsible for addressing issues associated with Section 162(m) of the U.S. Internal Revenue Code. Section 162(m) generally disallows a tax deduction to public companies for compensation in excess of $1 million paid to the CEO or any of the three other most highly compensated officers other than the CFO. Performance-based compensation arrangements may qualify for an exemption from the deduction limit if they satisfy various requirements under Section 162(m). Although Align considers the impact of this rule when developing and implementing its executive compensation programs, Align believes that factors other than tax deductibility are important in the design of executive compensation programs and that it is important to preserve flexibility in designing such programs. Accordingly, Align has not adopted a policy that all compensation must qualify as deductible under Section 162(m). While the Compensation Committee believes that stock options granted pursuant to the Incentive Plan qualify as “performance-based,” other awards permitted by the terms of the Incentive Plan and certain other amounts paid under Align’s compensation programs (such as salary) may not qualify for exemption from Section 162(m)’s deduction limitation. For 2015, approximately $1,075,421 of Mr. Hogan’s compensation was not deductible under 162(m). The 2015 compensation for all of the other NEOs was fully deductible under 162(m) as the elements of compensation that are included under Section 162(m) did not exceed $1 million for the “covered employees” described above.






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COMPENSATION COMMITTEE OF THE BOARD REPORT
The following is the report of the Compensation Committee of the Board with respect to the year ended December 31, 2015. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with management. Based on the Compensation Committee’s review and discussion with management, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
THE COMPENSATION COMMITTEE
George J. Morrow, Chair
David C. Nagel
Greg Santora

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SUMMARY COMPENSATION TABLE FOR FISCAL YEAR ENDED 2015
The following Summary Compensation Table sets forth certain information regarding the compensation of (i) our President and Chief Executive Officer, (ii) our Chief Financial Officer, (iii) our former President and Chief Executive Officer, and (iv) our three next most highly compensated executive officers as of fiscal 2015. Information is provided for 2014 and 2013 for each NEO who was also a NEO during those years.
 
Name and Principal
Position
 
Year
 
Salary
($)
 
Bonus ($) (2)
 
Stock
Awards ($)
(3)
 
Option
Awards
($)(3)
 
Non-Equity
Incentive Plan
Compensation
($)
 
All Other
Compensation ($)
 
Total ($)
Joseph Hogan,
President & Chief Executive Officer (1)
 
2015
 
548,077

 
1,500,000

 
14,330,100

 
 
 
960,000

 
44,822

 
17,382,999

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thomas M. Prescott,
Former President & Chief Executive Officer
(1)
 
2015
 
705,000

 
25,000

 
5,564,440

 

 
310,000

 
86,405

 
6,690,845

 
2014
 
645,962

 

 
7,948,800

 

 
585,000

 
10,464

 
9,190,226

 
2013
 
615,000

 

 
4,406,900

 

 
900,000

 
11,355

 
5,933,255

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
David L. White
Chief Financial Officer
 
2015
 
438,346

 

 
1,305,940

 

 
268,700

 
9,090

 
2,022,076

 
2014
 
406,192

 

 
1,645,480

 

 
241,700

 
9,268

 
2,302,640

 
2013
 
153,846

 

 
3,239,864

 

 
159,656

 
4,978

 
3,558,344

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Raphael S. Pascaud
 
2015
 
374,317

 

 
1,362,720

 

 
311,300

 
2,298

 
2,050,635

Chief Marketing Portfolio and Business Development Officer
 
2014
 
334,007

 
125,453

 
2,371,593

 

 
228,600

 
43,278

 
3,102,931

 
2013
 

 

 

 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Zelko Relic
 
2015
 
366,231

 

 
1,362,720

 

 
248,500

 
9,090

 
1,986,541

Vice President, Research and Development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Roger E. George
 
2015
 
382,368

 

 
1,215,092

 

 
245,700

 
9,090

 
1,852,250

Vice President, Legal & Corporate Affairs
 
2014
 
351,699

 

 
2,324,904

 

 
212,000

 
8,667

 
2,897,270

 
2013
 
335,183

 

 
1,724,193

 

 
372,790

 
8,367

 
2,440,533


(1) 
Mr. Prescott retired as CEO and Mr. Hogan was appointed as CEO in June 2015. As a result, Mr. Hogan's salary and non-equity incentive plan compensation are pro rated based on the number of months he was employed by Align in the capacity of CEO. Pursuant to Mr. Prescott's Transition Agreement, he received seven month's salary continuation through December 31, 2015 for an aggregate of $393,750. His non-equity incentive plan compensation, however, was prorated based on the number of months (5/12) that he acted as our President and CEO.
(2) 
Amounts reflect (i) a one-time signing bonus for Mr. Hogan, (ii) a one-time bonus of $25,000 intended to assist Mr. Prescott with post-termination medical care cost (in lieu of any reimbursement of COBRA premiums); and (iii) a special retention bonus paid to Mr. Pascaud in connection with our previous VP, International, Richard Twomey's departure.
(3) 
The amounts shown in this column reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Assumptions used in the calculations of these amounts are included in Note 9 to our audited financial statements for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 25, 2016. This same method was used for years ended December 31, 2014 and 2013. There can be no assurance that the grant date fair value amounts will ever be realized.
Total Compensation. Total compensation as reported in the Summary Compensation table decreased significantly from 2014 to 2015 for listed officers (other than our new CEO), due to the one-time, special recognition equity awards granted in 2014 to reward contributions towards our record-setting 2013 results and strengthen retention. Total cash compensation, increased more

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modestly which is consistent with our philosophy of linking pay to performance and reflects the Company Multiplier described above having increased in 2015 to 100.6% from 95% in 2014. For additional information regarding the amounts included in the Summary Compensation Table, see “—Compensation Discussion and Analysis”.
Stock Awards. Stock awards include time-based RSUs that typically vest over a four year vesting period, as well as MSUs which are earned based on a comparison of Align’s stock price performance to the NASDAQ Composite index over a 3-year performance period.
Option Awards. We did not grant any options in the past three years.
Non-Equity Incentive Plan Compensation. The amounts shown in this column represent employee annual incentive award payments and are reported for the year in which they were earned, though they were paid in the following year. The material terms of the performance payment plan are described under “Compensation Discussion and Analysis –Annual Cash Incentive (Bonus) Compensation.”
All Other Compensation. The amounts shown in this column represent the aggregate dollar amount for each NEO for a Company 401(k) matching program, life insurance and accidental death and dismemberment premiums as well as employee discount programs for our products which are available to all employees, including our NEOs. The amounts also include housing allowances and airfare for travel companion, relocation as well as accrued vacation upon retirement of our CEO.
Name
 
Dollar
Value of
Life
Insurance
Premiums
 
Matching
contributions
under Align’s
401(k) Plan
 
 
Airfare for travel companion
 
Accrued Vacation Payout
Relocation
Mr. Hogan
 
$
1,078

 
$
7,125

 
 
$
26,562

 

$
10,057

Mr. Prescott
 
$
570

 
$
7,950

 
 

 
$
77,884


Mr. White
 
$
1,140

 
$
7,950

 
 

 


Mr. Pascaud
 
$
2,298

 

 
 

 


Mr. Relic
 
$
1,140

 
$
7,950

 
 

 


Mr. George
 
$
1,140

 
$
7,950

 
 

 




GRANTS OF PLAN-BASED AWARDS FOR FISCAL YEAR ENDED 2015
The following table shows all plan-based awards granted to the NEOs during 2015, including:
cash amounts that could have been received in 2015 by our NEOs under the terms of our performance-based cash incentive plan (CIP); and
time-vested RSUs and performance-based MSUs awards granted by the Compensation Committee to our NEOs in 2015 reflected on an individual grant basis.

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2015 Grants of Plan-Based Awards
 
 
Type
of
Award
 
Grant
Date
 
Approval
Date
 
Estimated
Future
Payouts
Under
Non-Equity
Incentive
Awards
 
 Non-equity Incentive
 
Estimated Future
Payouts Under
Equity Incentive
Awards
 
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#)
 
Grant Date
Fair value
of Options
and
Awards ($)
Name
Target
($)
 
Maximum ($)
 
Target
(#)
 
Maximum
(#)
 
Joseph M. Hogan
CIP
 
 
 
 
 
$
831,300

 
1,995,120

 
 
 
 
 
 
 
 
 
RSU
 
6/1/2015
 
3/21/2015
 
 
 
 
 
 
 
 
 
111,000

 
$
6,853,140

 
MSU
 
6/1/2015
 
3/21/2015
 
 
 
 
 
111,000

 
166,500

 
 
 
$
7,476,960

Thomas M. Prescott
CIP
 
 
 
 
 
$
281,300

 
675,120

 
 
 
 
 
 
 
 
RSU
 
2/20/2015
 
2/2/2015
 
 
 
 
 
 
 
 
 
49,000

 
$
2,783,690

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MSU
 
2/20/2015
 
2/2/2015
 
 
 
 
 
49,000

 
73,500

 
 
 
$
2,780,750

David L. White
CIP
 
 
 
 
 
$
254,000

 
609,600

 
 
 
 
 
 
 
 
RSU
 
2/20/2015
 
2/2/2015
 
 
 
 
 
 
 
 
 
11,500

 
$
653,315

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MSU
 
2/20/2015
 
2/2/2015
 
 
 
 
 
11,500

 
17,250

 
 
 
$
652,625

Raphael S. Pascaud
CIP
 
 
 
 
 
$
238,000

 
571,200

 
 
 
 
 
 
 
 
RSU
 
2/20/2015
 
2/2/2015
 
 
 
 
 
 
 
 
 
12,000

 
$
681,720

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MSU
 
2/20/2015
 
2/2/2015
 
 
 
 
 
12,000

 
18,000

 
 
 
$
681,000

Zelco Relic
CIP
 
 
 
 
 
$
215,000

 
516,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RSU
 
2/20/2015
 
2/2/2015
 
 
 
 
 
 
 
 
 
12,000

 
$
681,720

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MSU
 
2/20/2015
 
2/2/2015
 
 
 
 
 
12,000

 
18,000

 
 
 
$
681,000

Roger E. George
CIP
 
 
 
 
 
$
222,000

 
532,800

 
 
 
 
 
 
 
 
RSU
 
2/20/2015
 
2/2/2015
 
 
 
 
 
 
 
 
 
10,700

 
$
607,867

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MSU
 
2/20/2015
 
2/2/2015
 
 
 
 
 
10,700

 
16,050

 
 
 
$
607,225

Approval Date. For each NEO equity grant, except for Mr. Hogan, the Compensation Committee met on February 2, 2015 to finalize the grant of annual equity awards. Upon approval of the RSU and MSU awards for each NEO, the Compensation Committee determined that the actual date of grant would be February 20, 2015. This grant date was chosen in order to allow sufficient time for the CEO to notify each NEO and other members of the management team of the grant. In connection with Mr. Hogan joining Align as President and CEO, the Compensation Committee approved his new hire grant on March 21, 2015, with the actual date of grant of June 1, 2015.
Estimated Future Payouts under Non-Equity Incentive Plan Awards. The amounts shown under this column represent the possible dollar payouts the NEOs could have earned for 2015 at target. For 2015, the target cash incentive award for each NEO (other than the CEO and former CEO) was 60% of his base salary. For our CEO and former CEO, the target cash incentive award was 150% and 100% of his base salary, respectively, and was pro-rated based on the number of months each individual was acting in the capacity of our CEO. 
For a description of the performance objectives applicable to the receipt of these payments, see “Compensation Discussion and Analysis –Annual Cash Incentive Awards.” The actual amount paid to each NEO for 2015 performance is set forth in the Summary Compensation Table above in the column “Non-Equity Incentive Plan Compensation.”
Threshold. There is no threshold performance level. Rather, the Company's financial performance below a specific target automatically reduces only the payout related to that specific goal, not the other goals, because we want executives to have the same incentive to achieve strategic priorities as well as their individual performance goals even if our financial performance tracks below the target during the course of the year.

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Target. The target amounts assume a corporate performance percentage of 100% and that the NEO received 100% of his target.
Maximum. Although each financial objective is capped at 200% for funding the total pool available for distribution, there is no maximum amount that an NEO could receive.
Estimated Future Payouts under Equity Incentive Plan Awards. The amounts shown under this column represent potential share payouts with respect to MSUs. Each MSU vests over a three-year performance period, with 100% vesting in February 2018. The actual number of MSUs eligible to vest, will be determined based on a comparison of Align’s stock price performance relative to the performance of the NASDAQ Composite index over the three-year performance period, up to a maximum of 150% of the number of target shares. If Align under-performs the NASDAQ Composite index, the percentage at which the MSUs convert into shares of Align stock will be reduced from 100%, at a rate of two to one (two-percentage-point reduction in units for each percentage point of under-performance), with a minimum percentage of 0%. This means that no shares will vest if Align underperforms the NASDAQ Composite index by 50%. If Align outperforms the NASDAQ Composite index, the percentage at which the MSUs convert to shares will be increased from 100%, at a rate of two to one (two-percentage-point increase in units for each percentage point of over-performance), with a maximum percentage of 150%. This means that if Align outperforms the NASDAQ Composite index by 25%, the maximum number of shares that will vest is 150% of the award amount.
Stock Awards. Stock awards represent grants of RSUs under our 2005 Incentive Plan. Since RSUs are taxable to each NEO when they vest, the number of shares we issue to each named executive officer will be net of applicable withholding taxes which will be paid by Align on behalf of each NEO. The RSUs will result in payment to the NEO only if the vesting criteria are met. Each RSU granted to our NEOs vest over a four-year period, with 25% of the shares subject to the RSU vesting each anniversary of the date of grant, with full vesting in four years.
Grant Date Fair Value. The amounts shown in this column reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of awards of RSUs and MSUs. Assumptions used in the calculations of these amounts are included in Note 9 to our audited financial statements for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2016. There can be no assurance that the grant date fair value amounts will ever be realized. The RSUs are time based awards and are not subject to performance conditions. Amounts for MSUs represent the estimate of the aggregate compensation cost to be recognized over the three-year performance period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. The actual number of shares that are paid out will depend on Align’s stock price performance relative to the performance of the NASDAQ Composite index over the three-year performance period, up to a maximum of 150% of the number of target shares.
Timing of Equity Grants. The Compensation Committee, in consultation with management, our independent auditors and legal counsel, has adopted the following practices on equity compensation awards:
Align does not plan to time, nor has it timed, the release of material non-public information for the purpose of affecting the exercise price of its stock options;
consistent with the policy described in the bullet point above, all awards of equity compensation for new employees (other than new executive officers described in the next bullet point) are made on the first day of the month for those employees who started during the period between the 16th day of the month that is two months prior to the grant date and the 15th day of the month prior to the month of the grant date. For example, May 1, 2016 grants will cover new hires starting between March 16, 2016 and April 15, 2016; and
annual incentive grants are made on or about the same day for all employees (including executive officers); in each of 2015, 2014 and 2013 such date was February 20. The Compensation Committee sets the actual grant date approximately one week following approval of the size of each grant in order to provide Align managers with adequate time to inform each employee individually of their grant.

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Table of Contents

OUTSTANDING EQUITY AWARDS AT FISCAL 2015 YEAR END
The following table sets forth information regarding outstanding equity awards as of December 31, 2015 for each NEO. All vesting is contingent upon continued employment with Align. Market values and payout values in this table are calculated based on the closing market price of our common stock as reported on NASDAQ on December 31, 2015, which was $65.85 per share.

Name
Option Awards
 
Stock Awards
Number of
securities
underlying
unexercised
options (#)
Exercisable
 
Number of
securities
underlying
unexercised
options (#)
Unexercisable
 
F
o
o
t
n
o
t
e
 
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
 
Option
Exercise
Price
($)
 
Option
Expiration
Date
 
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)
 
F
o
o
t
n
o
t
e
 
Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($)