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Spectrum Pharmaceuticals | 20202021 PROXY STATEMENT |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Each stockholder has one vote for each share of common stock held as of the Record Date. A list of our stockholders will be available for examination by any stockholder at the Annual Meeting and at our corporate
headquarters, located at 11500 South Eastern
Avenue, Suite 240, Henderson, Nevada 89052, for a period of ten days prior to the Annual Meeting.
10.What does it mean to be a “stockholder of record”?
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10. | What does it mean to be a “stockholder of record”? |
If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a “stockholder of record.” As a “stockholder of record,” you may vote in person at
the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares using one of the voting methods described in this Proxy Statement and the Notice.
11.What does it mean to be a “beneficial owner” of shares held in “street name”?
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11. | What does it mean to be a “beneficial owner” of shares held in “street name”? |
If, on the Record Date, your shares were held in an account at a broker, bank, or other financial institution (we refer to each of those organizations collectively as a “broker”), then you are the “beneficial owner” of shares held in “street name” and these proxy materials are being made available to you by that broker. The broker holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. You have the right to direct your broker on how to vote the shares in your account. As a beneficial owner, you are also invited to attend the Annual Meeting, but since you are not a stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid “legal
“legal proxy” from your broker, which is a
written document that will give you the legal right to vote the shares at the Annual Meeting. You must also satisfy the Annual Meeting admission criteria set out below. Under the rules that govern brokers, your broker is not permitted to vote on your behalf on any matter to be considered at the Annual Meeting (other than the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2020)2021) unless you provide specific instructions to the broker as to how to vote. As a result, we encourage you to communicate your voting decisions to your broker before the date of the Annual Meeting to ensure that your vote will be counted.
12.How many shares must be present or represented to conduct business at the Annual Meeting?
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12. | How many shares must be present or represented to conduct business at the Annual Meeting? |
The presence at the Annual Meeting of the holders of a majority of the outstanding shares of common stock, as of the Record Date, in person or by proxy and entitled to vote, will constitute a quorum, permitting us to conduct our business at the Annual Meeting. “Abstentions” and “broker non-votes” will each be counted as present at the Annual Meeting for purposes of determining the existence of a quorum at the Annual Meeting. “Broker non-votes” will result for shares that
broker who is the record holder of the shares because the broker is not instructed to vote on such matter by the beneficial owner of the shares and the broker does not have discretionary authority to vote on such matter. For further discussion on broker non-votes, please refer to “What are the voting requirements to approve the proposals?” below. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained.
13.How can I vote my shares of Spectrum stock?
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13. | How can I vote my shares of Spectrum stock? |
Stockholders of record can vote by proxy or by attending the Annual Meeting and voting in person. The persons named as proxies on the proxy card were designated by the Board and are members of our management. If you vote by proxy, you can vote over the Internet, by telephone, or by mail as described
beneficial owner “beneficial owner” of shares held in “street name,” please refer to the information forwarded by your broker to see which voting options are available to you and to see what steps you must follow if you choose to attend the Annual Meeting to vote your shares.
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20202021 PROXY STATEMENT | Spectrum Pharmaceuticals |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
®Vote by Internet: You can vote by proxy over the Internet by following the instructions provided in the Notice or the voting instruction card provided to you by your broker, if applicable. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on June 16, 2021. Our Internet voting procedures are designed to authenticate stockholders by using individual control numbers, which are located on the Notice.
®Vote by Telephone: You can vote by telephone pursuant to the instructions provided on the proxy card or by following the voting instruction card provided to you by your broker, if applicable. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on June 16, 2021.
®Vote by Mail: If you requested to receive printed proxy materials, you can vote by mail pursuant to the instructions provided on the proxy card or by following the voting instruction card provided to you by your broker, if applicable. In order to be effective, completed proxy cards must be received by 11:59 p.m. Eastern Time on June 16, 2021. If you choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the postage-prepaid envelope. If you do not have the postage-prepaid envelope, please mail your completed proxy card to the following address: Spectrum Pharmaceuticals, Inc., Proxy Services, c/o Computershare Investor Services, Post Office Box 505008, Louisville, KY 40233-9814.
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® | Vote by Internet: ®Vote in Person at the Annual Meeting:*If you satisfy the admission requirements to the Annual Meeting, as described in this Proxy Statement, you may vote your shares in person at the Annual Meeting. Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by Internet, telephone or mail so that your vote will be counted in the event you later decide not to attend the Annual Meeting. The method you use to vote will not limit your right to vote at the Annual Meeting if you decide to attend in person. If you are the “beneficial owner” of shares held in “street name,” you must obtain a legal proxy, executed in your favor by your broker, to be able to vote at the Annual Meeting. If you sign and return your proxy card but do not give voting instructions, the shares represented by that proxy will be voted as recommended by the Board.You can vote by proxy over the Internet by following the instructions provided in the Notice or the voting instruction card provided to you by your broker, if applicable. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on June 17, 2020. Our Internet voting procedures are designed to authenticate stockholders by using individual control numbers, which are located on the Notice.
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® | Vote by Telephone: If you requested to receive printed proxy materials, you can vote by telephone pursuant to the instructions provided on the proxy card or by following the voting instruction card provided to you by your broker, if applicable. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on June 17, 2020.
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® | Vote by Mail: If you requested to receive printed proxy materials, you can vote by mail pursuant to the instructions provided on the proxy card or by following the voting instruction card provided to you by your broker, if applicable. In order to be effective, completed proxy cards must be received by 11:59 p.m. Eastern Time on June 17, 2020. If you choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the postage-prepaid envelope. If you do not have the postage-prepaid envelope, please mail your completed proxy card to the following address: Spectrum Pharmaceuticals, Inc., Proxy Services, c/o Computershare Investor Services, Post Office Box 505008, Louisville, KY 40233-9814.
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® | Vote in Person at the Annual Meeting:*If you satisfy the admission requirements to the Annual Meeting, as described in this Proxy Statement, you may vote your shares in person at the Annual Meeting. Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by Internet, telephone or mail so that your vote will be counted in the event you later decide not to attend the Annual Meeting. The method you use to vote will not limit your right to vote at the Annual Meeting if you decide to attend in person. If you are the beneficial owner of your shares, you must obtain a legal proxy, executed in your favor by your broker, to be able to vote at the Annual Meeting. If you sign and return your proxy card but do not give voting instructions, the shares represented by that proxy will be voted as recommended by the Board.
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* Please also see the notice relating to COVID-19 under question 2: "When“When and where will the Annual Meeting be held?"”
YOUR VOTE IS VERY IMPORTANT. We encourage you to submit your proxy even if you plan to attend the Annual Meeting. If you properly give your proxy and submit it to us in time to vote, the individuals named as your proxy holders will vote your shares as you have directed. Whether or not you plan to attend the Annual Meeting, and regardless of the number of shares of our stock that you own, it is important that your shares be represented at the Annual Meeting.
14.How may I attend the Annual Meeting?
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14. | How may I attend the Annual Meeting? |
You are entitled to attend the Annual Meeting only if you were a stockholder of record as of the Record Date, or if you are a “beneficial owner” of shares held in “street name” who holds a valid legal proxy, executed in your favor by your broker, for the Annual Meeting. Registration will begin at 9:00 a.m. Pacific Time on the date of the Annual Meeting and seating will begin immediately after. Since seating is limited, admission to the Annual Meeting will be on a first-come, first-served basis. If you attend, please note that you should be prepared to present government-issued photo identification for admittance, such as a passport or driver’s license. If you are the “beneficial owner” of your shares, you will also need proof of ownership as of the Record Date, such as your most recent account statement prior to the Record Date, a copy of the voting instruction card provided by your broker, or similar evidence of ownership. If you do not have proof of ownership of our stock and a valid picture identification,
you may be denied admission to the
Annual Meeting. Please note that for security reasons, you and your bags may be subject to search prior to your admittance to the Annual Meeting. If you do not comply with each of the foregoing requirements, you may not be admitted to the Annual Meeting. Please also see the notice relating to COVID-19 under question 2: "When“When and where will the Annual Meeting be held?"”
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Spectrum Pharmaceuticals | 20202021 PROXY STATEMENT |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
15.Can I change my vote after I have submitted my vote?
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15. | Can I change my vote after I have submitted my vote? |
Yes. You may change your vote at any time before your proxy is voted at the Annual Meeting. If you are a stockholder of record, you may change your vote by (i) providing written notice of revocation to our Corporate Secretary at our corporate headquarters located at 11500 South Eastern Avenue, Suite 240, Henderson, Nevada 89052, (ii) by executing a subsequent proxy using any of the voting methods discussed above, or (iii) by attending the Annual Meeting and voting in person. However, simply
attending the Annual Meeting will not, by itself, revoke your proxy. If you are a “beneficial owner” of shares held in “street name” and have previously instructed your broker to vote your shares, you must follow directions received from your broker to change those instructions. Subject to any such revocation, all shares represented by properly executed proxies will be voted in accordance with the specifications therein.
16.What are the voting requirements to approve the proposals?
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16. | What are the voting requirements to approve the proposals? |
Assuming that a quorum is present at the Annual Meeting, the voting requirements to approve each of the proposals to be voted upon at the Annual Meeting are as follows:
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® | ®Election of Directors (Proposal 1) — Directors will be elected by the affirmative vote of the majority of votes cast with respect to each director’s election at the Annual Meeting, in person or by proxy. This means that only the director nominees that receive more “FOR” votes than “AGAINST” votes will be elected. If a nominee who currently serves as one of our directors is not re-elected at the Annual Meeting, under current Delaware law, such director would continue to serve on the Board as a holdover director. The Board has adopted a formal policy under which each of our directors is expected to submit an advance, contingent, irrevocable resignation that the Board may accept if our stockholders do not re-elect such director. In that situation, our Nominating and Corporate Governance Committee (“Nominating Committee”) would submit promptly a recommendation to the Board as to whether or not to accept the resignation. A properly executed proxy marked “ABSTAIN” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated and, as such, will not have an effect in determining the election results. Similarly, abstentions will have no effect on the outcome of this Proposal. The election of directors is a “non-discretionary” matter under applicable stock exchange rules, meaning that if you are the beneficial owner of your shares and do not instruct your broker how to vote with respect to the election of directors, your broker is not permitted to vote on this Proposal and your votes will be counted as broker non-votes. Broker non-votes will have no effect in determining which directors are elected at the Annual Meeting. |
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® | Advisory Vote on the Compensation of Our Named Executive Officers (Proposal 2) — Approval of the non-binding advisory resolution regarding the compensation of our named executive
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®Advisory Vote on the Compensation of Our Named Executive Officers (Proposal 2) — Approval of the non-binding advisory resolution regarding the compensation of our named executive officers, as disclosed in the Compensation Discussion and Analysis section of this Proxy Statement, will require the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will be counted toward the tabulation of votes present or represented on this Proposal and will have the same effect as votes against this Proposal. The advisory vote on compensation is a “non-discretionary” matter under applicable stock exchange rules, meaning that if you are the beneficial owner of your shares and do not instruct your broker how to vote with respect to the advisory vote on compensation, your broker is not permitted to vote on this Proposal and your votes will be counted as broker non-votes. Broker non-votes will have no effect on the outcome of this Proposal.
®Ratification of Selection of Independent Registered Public Accounting Firm (Proposal 3) — Ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021 will require the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will be counted toward the tabulation of votes present or represented on this Proposal and will have the same effect as votes against this Proposal.
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® | Amendment to the 2018 Long-Term Incentive Plan (Proposal 3) The ratification of Deloitte & Touche LLP is a “discretionary” matter under applicable stock exchange rules, meaning that if you are the beneficial owner of your shares and do not instruct— Approval of the Amendment to the Spectrum Pharmaceuticals, Inc. 2018 Long-Term Incentive Plan will require the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will be counted toward the tabulation of votes present or represented on this Proposal and will have the same effect as votes against this Proposal. The vote on the Amendment to the 2018 Long-Term Incentive Plan is a “non-discretionary” matter under applicable stock exchange rules, meaning that if you are the beneficial owner of your shares and do not instruct your broker how to vote with respect to the Amendment to the 2018 Long-Term Incentive Plan, your broker is not permitted to vote on this Proposal and your votes will be counted as broker non-votes. Broker non-votes will have no effect on the outcome of the Proposal.
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20202021 PROXY STATEMENT | Spectrum Pharmaceuticals |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
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® | Ratification of Selection of Independent Registered Public Accounting Firm (Proposal 4) — Ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020 will require the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will be counted toward the tabulation of votes present or represented on this Proposal and will have the same effect as votes against this Proposal. The ratification of Deloitte & Touche LLP is a “discretionary” matter under applicable stock exchange rules, meaning that
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if you are the beneficial owner of your shares and do not instruct your broker how to vote with respect to the ratification of Deloitte & Touche LLP, your broker may use its discretion to vote your uninstructed shares on this Proposal. A failure by your broker to vote your uninstructed shares on this Proposal will result in an abstention, which will have the same effect as a vote against this Proposal.
17.Could other matters be decided at the Annual Meeting?
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17. | Could other matters be decided at the Annual Meeting? |
As of the date this Proxy Statement was made available to stockholders, we did not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement. However, if any other matters are presented for consideration at the Annual Meeting including, among other things, consideration of a motion to adjourn the Annual
Meeting to another time or place
in order to solicit additional proxies in favor of one or more of the Proposals, the persons named as proxy holders and acting thereunder will have discretion to vote on these matters according to their best judgment to the same extent as the person delivering the proxy would be entitled to vote.
18.Who is paying for the cost of this proxy solicitation?
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18. | Who is paying for the cost of this proxy solicitation? |
The proxies being solicited hereby are being solicited by us, and the cost of soliciting proxies in the enclosed form will be borne by us. We have also retained Georgeson LLC, to aid in the solicitation. For these services, we will pay Georgeson LLC a fee of approximately $32,500$25,000 and reimburse it for certain out-of-pocket disbursements and expenses. Our officers
and other employees may, without
compensation other than their regular compensation, solicit proxies by further mailings, personal conversations, telephone, facsimile or other electronic means. We will, upon request, reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation material to the beneficial owners of stock.
19.What is the deadline to submit stockholder proposals for our 2022 Annual Meeting of Stockholders?
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19. | What is the deadline to submit stockholder proposals for our 2021 Annual Meeting of Stockholders? |
Under Rule 14a-8 of the Securities Exchange Act of 1934 (the “Exchange Act”), any stockholder desiring to include a proposal in our Proxy Statement with respect to our 20212022 Annual Meeting of Stockholders should arrange for such proposal to be delivered to us at our corporate headquarters no later than January 1,December 29, 2021, in order to be considered for inclusion in our proxy statement relating to such annual meeting. Matters pertaining to such proposals, and the eligibility of persons entitled to have such proposals included, are regulated by the Exchange Act and the rules of the SEC.
In addition, pursuant to our bylaws, any stockholder desiring to submit a proposal for action or nominate one
or more persons for election as directors at our 20212022 Annual Meeting of Stockholders pursuant to the advance notice provisions of our bylaws must submit a notice of the proposal or nomination to us between February 18, 202117, 2022 and March 20, 2021,19, 2022, or else it will
be considered untimely and ineligible to be properly brought before the Annual Meeting. In each case, the notice of the proposal or nomination must include certain information specified in our bylaws, including information concerning the nominee or proposal, as the case may be, and information about the stockholder’s ownership of and agreements relating to our capital stock. However, if our 20212022 Annual Meeting of Stockholders is not held between May 19, 202118, 2022 and August 27, 2021,26, 2022, under our bylaws,
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Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
this notice must be provided not earlier than the 120th day prior to the 20212022 Annual Meeting of Stockholders and not later than the close of business on the later of (a) the 90th day prior to the 20212022 Annual Meeting of Stockholders or (b) the 10th day following the date on which notice of the date of the 20212022 Annual Meeting of Stockholders is first mailed to stockholders or otherwise publicly disclosed, whichever first occurs.
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Spectrum Pharmaceuticals | 2021 PROXY STATEMENT |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Further, in March 2018, we amended our bylaws to permit a holder (or a group of no more than 20 holders) of at least 3% of our outstanding common stock held continuously for at least three years to nominate and include in our proxy materials director nominees not to exceed 20% of the total number of directors to be elected at an annual meeting, or if such amount is not a whole number, the closest whole number below 20%, but not less than two, provided that the nominating holder(s) and the nominee(s) satisfy the requirements set forth in our bylaws, including providing us with advance notice of the nomination. Any stockholder seeking to nominate one or more persons for election as directors at our 20212022 Annual Meeting of Stockholders pursuant to the proxy access
provisions of our bylaws must submit a notice of the nomination to us no earlier than 150 days and no later than 120 days before the anniversary of the date that we filed our proxy statement for the Annual Meeting; provided, however, thatMeeting. For our 2022
Annual Meeting of Stockholders, any such notice must be received by us at our principal executive offices not later than December 29, 2021 to be considered timely for purposes of the 2022 Annual Meeting of Stockholders. However, if the date of the 20212022 Annual Meeting of Stockholders is called for more than 30 days earlier or later than the anniversary date of the Annual Meeting, then not later than the close of business on the earlier of (i) the 10th day after public announcement of the meeting date, or (ii) the 60th day prior to the date we file our proxy statement in connection with the 2021 Annual Meeting of Stockholders. For our 2021 Annual Meeting of Stockholders, any such notice must be received by us at our principal executive offices not later than January 1, 2021 to be considered timely for purposes of the 20212022 Annual Meeting of Stockholders.
All such notices should be directed to our Corporate Secretary at our corporate headquarters located at Spectrum Pharmaceuticals, Inc., 11500 South Eastern Avenue, Suite 240, Henderson, Nevada 89052.
20.I share an address with another stockholder, and we received only one copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
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20. | I share an address with another stockholder, and we received only one copy of the proxy materials. How may I obtain an additional copy of the proxy materials? |
The SEC rules permit brokers to participate in a practice known as “householding,” which means that only one copy of the Notice and, if applicable, this Proxy Statement and the Annual Report, will be sent to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. Householding is designed to reduce printing and postage costs, and results in cost savings for us. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. If you receive a householding mailing this year and would like to have additional copies of our Notice and, if applicable, this Proxy Statement and/or the Annual Report mailed to you, or if you would like to opt out of this practice for
practice for future mailings, please contact your broker or submit your request to our Corporate Secretary, c/o Spectrum Pharmaceuticals, Inc., 11500 South Eastern Avenue, Suite 240, Henderson, Nevada 89052 or contact us by telephone at (702) 835-6300. Upon receipt of any such request, we agree to promptly deliver a copy of the Notice and, if applicable, this Proxy Statement and/or the Annual Report to you. In addition, if you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact us using the contact information set forth above. This Proxy Statement and the Annual Report are also available at www.sppirx.com/annual-meeting.htmlhttps://investor.sppirx.com/shareholder-services/annual-meeting.
21.Where can I find voting results of the Annual Meeting?
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21. | Where can I find voting results of the Annual Meeting? |
We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once they are known by us.
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20202021 PROXY STATEMENT | Spectrum Pharmaceuticals |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
22.Whom should I contact with other questions?
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22. | Whom should I contact with other questions? |
If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact our Chief Financial Officer, Kurt A. Gustafson at Spectrum
Spectrum Pharmaceuticals, Inc., 11500 South Eastern Avenue, Suite 240, Henderson, Nevada 89052, at (702) 835-6300.
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Spectrum Pharmaceuticals | 20202021 PROXY STATEMENT |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, EXECUTIVE OFFICERS AND DIRECTORS
Based on information publicly filed and provided to us by certain holders, the following table shows the amount of our common stock beneficially owned as of April 17, 202014, 2021 (unless otherwise indicated) by holders of more than 5% of the outstanding shares of common stock. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting and/or investment power with respect to our common stock, unless footnoted to the contrary. Under these rules, shares of common stock subject to any option, warrant or right that is exercisable or convertible within 60 days of April 17, 202014, 2021 are deemed beneficially owned and outstanding for computing the percentage ownership of the individual or entity holding such securities, but are not considered outstanding for computing the percentage ownership of any other person. For purposes of the following tables,table, the percentage ownership is based upon 116,465,972154,994,337 shares of our common stock, including restricted shares of our common stock, outstanding as of April 17, 2020.14, 2021.
| | Name and Address of Beneficial Owner | Shares of Common Stock Beneficially Owned | Percent of Common Stock Outstanding | Name and Address of Beneficial Owner | Shares of Common Stock Beneficially Owned | Percent of Common Stock Outstanding |
BlackRock, Inc. (1) | 18,834,593 | 16.70% | BlackRock, Inc. (1) | 27,820,979 | 17.95% |
55 East 52nd Street New York, NY 10055 | | 55 East 52nd Street New York, NY 10055 | |
The Vanguard Group (2) | 13,556,091 | 11.64% | The Vanguard Group (2) | 12,098,371 | 7.81% |
100 Vanguard Blvd. Malvern, PA 19355 | | 100 Vanguard Blvd. Malvern, PA 19355 | |
PRIMECAP Management Company (3) | 6,416,000 | 5.51% | |
177 E. Colorado Blvd. 11th Floor Pasadena, CA 91105 | | |
State Street Corporation (3) | | State Street Corporation (3) | 10,586,684 | 6.83% |
One Lincoln Street Boston, MA 02111 | | One Lincoln Street Boston, MA 02111 | |
Armistice Capital, LLC (4) | | Armistice Capital, LLC (4) | 9,592,000 | 6.19% |
510 Madison Ave. 7th Floor New York, NY 10022 | | 510 Madison Ave. 7th Floor New York, NY 10022 | |
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(1) | The information set forth herein is based solely on information contained in Amendment No. 11 to Schedule 13G filed with the SEC on February 4, 2020 by BlackRock, Inc. or BlackRock. BlackRock has sole voting power over 18,552,762 shares of our common stock and sole dispositive power over 18,834,593(1) The information set forth herein is based solely on information contained in Amendment No. 12 to Schedule 13G filed with the SEC on January 25, 2021 by BlackRock, Inc. BlackRock, Inc. has sole voting power over 26,951,475 shares of our common stock and sole dispositive power over 27,820,979 shares of our common stock. |
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(2) | The information set forth herein is based solely on information contained in Amendment No. 8 to Schedule 13G filed with the SEC on February 12, 2020 by The Vanguard Group. The Vanguard Group has sole voting power over 225,235 shares of our common stock, shared voting power over 14,974 shares of our common stock, sole dispositive power over 13,331,762 shares of our common stock, and shared dispositive power over 224,329 shares of our common stock. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 209,355 shares of our common stock as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 30,854 shares of our common stock as a result of its serving as investment manager of Australian investment offerings. |
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(3) | The information set forth herein is based solely on information contained in Amendment No. 2 to Schedule 13G filed with the SEC on February 12, 2020 by PRIMECAP Management Company (“PRIMECAP”). PRIMECAP has sole voting power over 6,416,000 shares of our common stock and sole dispositive power over 6,416,000 shares of our common stock. |
(2) The information set forth herein is based solely on information contained in Amendment No. 9 to Schedule 13G filed with the SEC on February 10, 2021 by The Vanguard Group. The Vanguard Group has shared voting power over 131,232 shares of our common stock, sole dispositive power over 11,859,708 shares of our common stock, and shared dispositive power over 238,663 shares of our common stock.
(3) The information set forth herein is based solely on information contained in Schedule 13G filed with the SEC on February 11, 2021 by State Street Corporation and SSGA Funds Management, Inc. State Street Corporation has shared voting power over 10,018,483 shares and shared dispositive power over 10,586,684 shares. SSGA Funds Management, Inc. has shared voting power over 7,918,855 shares and shared dispositive power over 7,964,234 shares. The remaining shares are held directly or indirectly through other State Street Corporation subsidiaries for which State Street Corporation is the parent holding company.
(4) The information set forth herein is based solely on information contained in Amendment No. 1 to Schedule 13G filed with the SEC on February 16, 2021 by Armistice Capital, LLC and Steven Boyd (collectively, “Armistice”). Armistice has shared voting power and shared dispositive power over 9,592,000 shares of our common stock.
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2021 PROXY STATEMENT | Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,EXECUTIVE OFFICERS AND DIRECTORS
Directors and Named Executive Officers The following table sets forth certain information regarding the beneficial ownership of our common stock as of April 17, 202014, 2021 by: (i) each of our directors and director nominees; (ii) each of our named executive officers; and (iii) all of our directors, director nominees and executive officers as a group. Unless otherwise noted, we believe that each person listed below has sole voting power and sole investment power with respect to shares shown as owned by him or her. Information as to beneficial ownership is based upon statements furnished to us or filed with the SEC by such persons. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting and/or investment power with respect to our common stock, unless footnoted to the contrary. Unless otherwise indicated, the business address of each stockholder listed below is c/o Spectrum Pharmaceuticals, Inc., 11500 South Eastern Avenue, Suite 240, Henderson, Nevada 89052. For purposes of the following table, the percentage ownership is based upon 154,994,337 shares of our common stock, including restricted shares of our common stock, outstanding as of April 14, 2021.
| | Name of Beneficial Owner | Options(1) | Shares | Total Beneficially Owned(2) | Percent of Shares Outstanding | Name of Beneficial Owner | Options/SARs(1) | Shares | Total Beneficially Owned(2) | Percent of Shares Outstanding |
Joseph W. Turgeon | 1,474,306 |
| 692,672(3) | 2,166,978(3) | 1.84% | Joseph W. Turgeon | 1,980,556 | 566,566(3) | 2,547,122(3) | 1.62% |
Kurt A. Gustafson | 910,679 |
| 372,670(4) | 1,283,349(4) | 1.09% | Kurt A. Gustafson | 1,132,554 | 412,291(4) | 1,544,845(4) | * |
Francois J. Lebel, M.D. | 164,700 |
| 309,596(5) | 474,296(5) | * | Francois J. Lebel, M.D. | 391,900 | 358,093(5) | 749,993(5) | * |
Keith M. McGahan | 263,117 |
| 292,218(6) | 555,335(6) | * | Keith M. McGahan | 468,600 | 319,143(6) | 787,743(6) | * |
Thomas J. Riga | 632,331 |
| 433,783(7) | 1,066,114(7) | * | Thomas J. Riga | 978,581 | 426,670(7) | 1,405,251(7) | * |
William L. Ashton | 28,333 |
| 16,666(8) | 44,999(8) | * | William L. Ashton | 30,000 | 41,666(8) | 71,666(8) | * |
Raymond W. Cohen | 115,000 |
| 53,850(9) | 168,850(9) | * | |
Elizabeth A. Czerepak | 10,000 |
| 10,000(10) | 20,000(10) | * | |
Nora E. Brennan | | Nora E. Brennan | 0 | 15,000(9) | 15,000(9) | * |
Seth H.Z. Fischer | | Seth H.Z. Fischer | 2,500 | 32,500(10) | 35,000(10) | * |
Jeffrey L. Vacirca, M.D. | 17,253 |
| 31,967(11) | 49,220(11) | * | Jeffrey L. Vacirca, M.D. | 20,880 | 125,967(11) | 146,847(11) | * |
Dolatrai M. Vyas | 135,000 |
| 51,069(12) | 186,069(12) | * | Dolatrai M. Vyas | 135,000 | 81,069(12) | 216,069(12) | * |
Bernice R. Welles, M.D. | 25,000 |
| 20,000(13) | 45,000(13) | * | Bernice R. Welles, M.D. | 25,000 | 50,000(13) | 75,000(13) | * |
Seth H.Z. Fischer | - | - | |
All executive officers and directors/director nominees as a group (12 persons) | 3,775,719 |
| 2,284,491(14) | 6,060,210(14) | 5.04% | |
All executive officers and directors/director nominees as a group (11 persons) | | All executive officers and directors/director nominees as a group (11 persons) | 5,165,571 | 2,428,965(14) | 7,594,536(14) | 4.74% |
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* | Represents ownership of less than 1% |
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(1) | Represents options to purchase shares of common stock that are exercisable within 60 days of April 17, 2020. |
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(2) | Shares of common stock subject to options to purchase shares of common stock that are exercisable within 60 days of April 17, 2020, are deemed beneficially owned and outstanding for computing the percentage of the person holding such securities, but are not considered outstanding for computing the percentage of any other person. |
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(3) | The number of shares includes 345,390 unvested restricted shares of our common stock subject to future vesting. |
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(4) | The number of shares includes 196,328 unvested restricted shares of our common stock subject to future vesting. |
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(5) | The number of shares includes 285,119 unvested restricted shares of our common stock subject to future vesting. |
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(6) | The number of shares includes 240,263 unvested restricted shares of our common stock subject to future vesting. |
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(7) | The number of shares includes 269,952 unvested restricted shares of our common stock subject to future vesting. |
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(8) | The number of shares includes 10,000 unvested restricted shares of our common stock subject to future vesting. |
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(9) | The number of shares includes 10,000 unvested restricted shares of our common stock subject to future vesting. |
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(10) | The number of shares includes 10,000 unvested restricted shares of our common stock subject to future vesting. |
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(11) | The number of shares includes 10,000 unvested restricted shares of our common stock subject to future vesting. |
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(12) | The number of shares includes 10,000 unvested restricted shares of our common stock subject to future vesting. |
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(13) | The number of shares includes 10,000 unvested restricted shares of our common stock subject to future vesting. |
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(14) | The number of shares includes 1,397,052 unvested restricted shares of our common stock subject to future vesting. |
* Represents ownership of less than 1%
(1) Represents options to purchase shares of common stock and shares of common stock underlying stock appreciation rights, or SARs, that are exercisable within 60 days of April 14, 2021.
(2) Shares of common stock subject to options to purchase shares of common stock and shares of common stock underlying SARs that are exercisable within 60 days of April 14, 2021, are deemed beneficially owned and outstanding for computing the percentage ownership of the person holding such securities, but are not considered outstanding for computing the percentage ownership of any other person.
(3) The number of shares includes 491,375 unvested restricted shares of our common stock subject to future vesting.
(4) The number of shares includes 241,700 unvested restricted shares of our common stock subject to future vesting.
(5) The number of shares includes 292,584 unvested restricted shares of our common stock subject to future vesting.
(6) The number of shares includes 249,180 unvested restricted shares of our common stock subject to future vesting.
(7) The number of shares includes 284,101 unvested restricted shares of our common stock subject to future vesting.
(8) The number of shares includes 30,000 unvested restricted shares of our common stock subject to future vesting.
(9) The number of shares includes 15,000 unvested restricted shares of our common stock subject to future vesting.
(10) The number of shares includes 30,000 unvested restricted shares of our common stock subject to future vesting.
(11) The number of shares includes 30,000 unvested restricted shares of our common stock subject to future vesting.
(12) The number of shares includes 30,000 unvested restricted shares of our common stock subject to future vesting.
(13) The number of shares includes 30,000 unvested restricted shares of our common stock subject to future vesting.
(14) The number of shares includes 1,723,940 unvested restricted shares of our common stock subject to future vesting.
We are not aware of any arrangements that have resulted, or may at a subsequent date result, in a change of control of Spectrum.
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Spectrum Pharmaceuticals | 20202021 PROXY STATEMENT |
EXECUTIVE OFFICERS
Each of our executive officers serves at the discretion of the Board. The determination as to which of our employees qualify as executive officers was made by the Board in accordance with the rules of the SEC. Biographical information for our executive officers as of the date this Proxy Statement was made available is set forth below. There are no family relationships between any executive officer and any other executive officer or director. There are no legal proceedings related to any of the executive officers which must be disclosed pursuant to Item 401(f) of Regulation S-K.
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| Joseph W. Turgeon |
President and Chief Executive Officer | Information regarding Mr. Turgeon is provided in this Proxy Statement under “Proposal 1 – Election of Directors”. |
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| Kurt A. Gustafson |
Executive Vice President and Chief Financial Officer | Mr.Kurt Gustafson has served as our Executive Vice President and Chief Financial Officer since June 2013. He brings to Spectrum more than 25 years of diverse experience in corporate finance, including 15 years in senior management roles leading the finance departments of multi-faceted, dynamic and growth-oriented biopharmaceutical industry organizations. Prior to joining Spectrum, Mr. Gustafson served as Vice President and Chief Financial Officer at Halozyme Therapeutics, Inc. (“Halozyme”), a publicly-tradedpublicly traded biopharmaceutical company.company, where he was responsible for finance, information technology, facilities, and human resources. Before joining Halozyme in 2009, Mr. Gustafson worked at Amgen Inc. (“Amgen”) for over 18 years, holding various positions in finance includingmost recently as Vice President, Finance, with responsibility for financial planning and cost accounting for worldwide manufacturing covering seven manufacturing sites. During his tenure at Amgen, Mr. Gustafson also served as Treasurer, VPVice President, Finance and Chief Financial Officer of Amgen International based in Switzerland.
Mr. Gustafson is currently a member of the Board of Directors of Xencor, Inc., a clinical-stageclinical stage biopharmaceutical company and is also a member of the Board of Directors of ChromaDex Inc.,Corporation, a proprietary ingredient company. |
Age: 5253 Education: B.A. in Accounting, North Park University; M.B.A., University of California, Los Angeles. |
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2021 PROXY STATEMENT | Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
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| Francois J. Lebel, M.D. |
Executive Vice President and Chief Medical Officer | Dr.Francois Lebel has served as our Executive Vice President and Chief Medical Officer since November 2018. Prior to joining Spectrum, he provided strategic leadership on eight NDA/BLAs in various therapeutic areas and on several mergers and acquisitions. Dr. Lebel has broad and deep experience in oncology drug development, medical affairs, regulatory and pharmacovigilance acquired through various roles of increasing responsibilities at Chiron (Novartis)Corporation (which was acquired by Novartis AG), Warner-Lambert (Pfizer)(which was acquired by Pfizer Inc.) and Burroughs Wellcome (GSK)(which was acquired by GlaxoSmithKline plc). From March 2013 to October 2018, heDr. Lebel served as Executive Vice President, Research and Development, and Chief Medical Officer at ZIOPHARM Oncology. He alsoOncology, Inc. (“ZIOPHARM”), a publicly traded clinical-stage biopharmaceutical company. Prior to ZIOPHARM, he held various leadership roles including Vice President of Research and Development at Baxter International and Global Head of Medical and Scientific Affairs at MedImmune.
Dr. Lebel brings nearly 30 years of clinical leadership experience within the biopharmaceutical industry. He has designed and managed global medical organizations to deliver results, enhance productivity and practice sound risk management.management.
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Age: 6869 Education: B.Sc. in Molecular Biology, University of Ottawa, Canada; M.DM.D. University of Ottawa, CanadaCanada. |
Other Qualifications: He completed his residency in Internal Medicine (Infectious Disease) and Medical Microbiology at McGill University and his research fellowship in infectious disease at Harvard Medical School. |
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Spectrum Pharmaceuticals | 2021 PROXY STATEMENT |
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| Keith M. McGahan |
Executive Vice President, Chief Legal Officer and Corporate Secretary | Mr.Keith McGahan has served as our Chief Legal Officer since June 2018, as Corporate Secretary since February 2018 and as Executive Vice President since June 2019. From August 2016 to June 2018, he served as our Vice President, Chief Compliance Officer and AssistantAssociate General Counsel. He brings to Spectrum more than 1620 years of diverse experience in the healthcare, medical device and pharmaceutical industry.industries. From 2015 through August 2016, Mr. McGahan served anas Executive Director and AssistantAssociate General Counsel ofat Avanir Pharmaceuticals, Inc., a pharmaceutical company focusing on research and development of cutting-edge treatments and therapies for central nervous system disorders, where he led a team in developing a comprehensive audit and monitoring program and in updating the privacy program, as well as (“Avanir”). During his tenure at Avanir, Mr. McGahan served as legal advisor on all compliance and commercial related matters. From 2012 through 2015, heMr. McGahan served as Director, Healthcare Compliance ofat Johnson & Johnson, a multinational medical devices, pharmaceutical and consumer packaged goods company, where he was responsible for executing the global compliance program. Prior to that, from 20072003 through 2011, Mr. McGahan served as the Assistant Staff Judge Advocate to the Navy Surgeon General, CounselStaff Judge Advocate to the Navy Medical Research Command as well as Staff Judge Advocate and Chief Compliance Officer of theat Naval Hospital at Camp Pendleton. |
Age: 4445 Education: B.A. in Zoology, Connecticut College; M.B.A., Pepperdine University; J.D., Seattle University School of Law; L.L.M., in Taxation, University of San Diego School of Law. |
Other Qualifications: Mr. McGahan is a Certified Compliance and Ethics Professional has earned(CCEP) and holds a Certificateprofessional certificate in Health Care Compliancehealth care compliance & Privacyprivacy from Seton Hall University, and holds a certified Six Sigma Black Belt certification from Villanova University.University and is certified by UCLA’s Anderson School of Business as an accredited public company director. |
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2021 PROXY STATEMENT | Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
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| Thomas J. Riga |
| Executive Vice President, Chief Operating Officer and Chief Commercial Officer | Mr.Thomas Riga has served as our Chief Operating Officer since December 2017, as Executive Vice President, CCO & Head of Business Development since May 2017 and as our Senior Vice President & Chief Commercial Officer since August 2014. From June 2017 to December 2017, he served as our Head of Business Development. From August 2014 to June 2017, he served as our Senior Vice President and from July 2013 to August 2014, he served as our Vice President, Corporate Accounts. During his tenure as Chief Operating Officer, Mr. Riga has led Spectrum’s focus from a specialty pharmaceutical company to a development-focused organization. The divestiture of seven marketed products infused non-dilutive capital back into the organization and enabled Spectrum to further advance its two cornerstone, value driving assets. As Chief Commercial Officer, he has led multiple product launches in the oncology market, delivering innovative cancer care.care while establishing world class partnerships with key industry stakeholders. He has consistently inspired cross-functional teams to deliver superior performance toand create value for Spectrum, and restructuredhas worked to optimize the commercial organization to advance our competitive advantage.
Mr. Riga has over 20 years of pharmaceutical leadership experience. He has management experience in various positions at Wyeth Ayerst Pharmaceuticals, Eli Lilly and Company, Amgen Inc. and Dendreon Pharmaceuticals LLC. Throughout his career he has successfully integrated leadership and strategy to create meaningful value. His executive leadership experience spans executiveacross operations, business development, sales, leadership,marketing, Six Sigma marketing,(black belt), manufacturing, and corporate accounts. Mr. Riga has obtained UCLA Corporate Governance Program Certification as a public company director. |
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Age: 4445 Education: B.S. in Biology and Chemistry, St. Lawrence University, Canton, New York.
Other Qualifications:Mr. Riga is the recipientcertified by UCLA’s Anderson School of more than 10 industry-leading Commercial and Operations leadership awards. Notably, he was recognized with the “Executive Leader/Coach of the Year” award for delivering top sales performance of Neulasta® for 3 consecutive yearsBusiness as a member of the Amgen oncology organization.an accredited public company director. |
Other Qualifications: Mr. Riga is certified by UCLA’s Anderson School of Business as an accredited public company director. |
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2020 PROXY STATEMENT | Spectrum Pharmaceuticals | 2021 PROXY STATEMENT |
PROPOSAL 1 — ELECTION OF DIRECTORS
Our Board currently consists of seven annually-elected directors. Acting upon the recommendation of our Nominating and Corporate Governance Committee, the Board nominated William L. Ashton, Elizabeth A. Czerepak,Nora E. Brennan, Seth H.Z. Fischer, Joseph W. Turgeon, Jeffrey L. Vacirca, Dolatrai M. Vyas and Bernice R. Welles for election to our Board at the Annual Meeting.
Each director will be elected to serve a one-year term expiring at the Annual Meeting of Stockholders to be held in 20212022 when his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal.
Each of the nominees has consented to serve if elected. If any of them becomes unavailable to serve as a director, our Board may designate a substitute nominee. In that case, the proxy holders will vote for the substitute nominee designated by the Board. Our Board has no reason to believe that any of the nominees will be unable to serve. There are no agreements or understandings pursuant to which any of the directors was selected to serve as a director. There are no family relationships between any director or director nominee and any other director or director nominee or any executive officer. There are no legal proceedings related to any of the directors or director nominees which must be disclosed pursuant to Item 401(f) of Regulation S-K.
Required Vote of Stockholders The affirmative vote of a majority of the votes cast with respect to each director’s election at the Annual Meeting is required for the election of each director. This means that only the director nominees that receive more “FOR” votes than “AGAINST” votes will be elected. If a nominee who currently serves as one of our directors is not re-elected at the Annual Meeting, under current Delaware law, such director would continue to serve on the Board as a holdover director. The Board has adopted a formal policy under which each of our directors is expected to submit an advance, contingent, irrevocable resignation that the Board may accept if our stockholders do not re-elect such director. In that situation, our Nominating and Corporate Governance Committee would submit promptly a recommendation to the Board as to whether or not to accept the resignation. A properly executed proxy marked “ABSTAIN” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated and, as such, will not have an effect in determining the election results. Abstentions and broker non-votes will have no effect in determining which directors are elected at the Annual Meeting.
Proxies received in response to this solicitation will be voted “FOR” the election of Messrs. Ashton, Fischer, Turgeon, Drs. Vacirca, Vyas and Welles and Ms. CzerepakBrennan to our Board unless otherwise specified in the proxy.
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20202021 PROXY STATEMENT | Spectrum Pharmaceuticals |
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
OUR BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE FOLLOWING SEVEN NOMINEES.
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| Joseph W. Turgeon | |
Age: 6263
Director since: December 2017
Committees: None
President and
Chief Executive Officer
Education: B.S. in Microbiology and
Economics, Jacksonville University
| Professional Experience: Mr.Joseph Turgeon has served as ouris Spectrum’s President and Chief Executive Officer. He became President and Chief Executive Officer sincein December 2017. From April 2014 to December 2017, Mr. Turgeon served as our President and Chief Operating Officer from April 2014 to December 2017, and from October 2012 to April 2014, he served as our Senior Vice President and Chief Commercial Officer. PriorHe was appointed to joiningthe Spectrum Mr. Turgeon spent 22 years at Amgen Inc. (“Amgen”) as Vice President of Sales, where he built and led the sales organization across multiple areas, including oncology, inflammation and bone health.Board in December 2017. Key Qualifications: Mr. Turgeon’s qualifications to serve on the Board include his more than 30 years of experience in the pharmaceutical industry including various executive leadership roleswith proven success and accountability with operations, sales and marketing, strategic positioning, and multiple product launches. He spent 22 years at Amgen. During his 22 yearsAmgen, most recently serving as Vice President of Sales, at Amgen,where he built and led the sales organization across multiple areas, including oncology, inflammation, and bone health. He was responsible forinvolved in launching mostmany of the drugs at Amgen, as well as Amgen’swhich experienced dramatic growth during his tenure. |
President and Chief Executive Officer
Education: B.S. in Microbiology and Economics, Jacksonville University |
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| William L. Ashton | |
Age:69 70 Director since: February 2018 Committees: Audit, Nominating & Corporate Governance
Independent
Other Board Memberships:
Currently: Recro Pharma, Inc., Academy of Notre Dame, Baudax Bio, Inc.
Education: B.S. in Education, California University of Pennsylvania; M.A. in Education, University of Pittsburgh
| Professional Experience: Mr. Ashton has served as Chairman of the Board since June 2019 and has been a member of our Board since February 2018. Since 2013, he has been a principal at Harrison Consulting Group, Inc., a privately-held biopharmaceutical consulting firm. From August 2009 to June 2013, Mr. Ashton was the Senior Vice President of external affairs reporting to the President and an Assistant Professor at the University of the Sciences in Philadelphia, Pennsylvania. From August 2005 to August 2009, Mr. Ashton was the founding Dean of the Mayes College of Healthcare Business and Policy. From 1989 to 2005, Mr. Ashton held a number of positions at Amgen, including Vice President of U.S. Sales and Vice President of Commercial and Government Affairs.
Key Qualifications: Mr. Ashton’s extensive experience with pharmaceutical and biological product commercialization, including developing and leading a commercial sales force, as well as his governance experience as a board member of public and privately-held companies and his reimbursement expertise makes him well qualified to serve on our Board.
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Independent
Other Board Memberships:
Currently: Recro Pharma, Inc., Academy of Notre Dame, Baudax Bio, Inc.
Education: B.S. in Education, California University of Pennsylvania; M.A. in Education, University of Pittsburgh |
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2020Spectrum Pharmaceuticals | 2021 PROXY STATEMENT | Spectrum Pharmaceuticals |
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
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Elizabeth A. Czerepak | Nora E. Brennan |
Age: 6452 Director since: June 2019December 2020
Committees: Audit (Chair), Nominating & Corporate GovernanceCompensation
Independent
Other Board Memberships:
Currently: Scilex Holding Company and Delcath Systems, Inc.
Education:B.A. in Spanish and Mathematics Education, Marshall University;
M.B.A., Rutgers University
| Professional Experience: Since January 2019, Ms. CzerepakBrennan has served as Chief Financial Officer and Chief Business Officer at Genevant Sciences,TELA Bio, Inc., a developmentpublicly traded, commercial stage mRNA start-up based in Boston from May 2018 until January 2020.medical device company. From 2015 untilJune 2017 to April 2018, she served as Chief Financial Officer at Xeris Pharmaceuticals, Inc., a publicly traded, specialty pharmaceutical company, where she led the finance function and Executiveexecution of corporate strategy, including its initial public offering. From June 2006 until June 2017, she was employed at Integra Lifesciences Corporation (“Integra”), a publicly traded, global medical device company, where she held various senior leadership roles, including Senior Vice President, Investor Relations and Corporate Development at Altimmune, Inc., a clinical stage immunotherapeutics biotechnology company. She served as Chief Financial Officer and Chief Business Officer of Isarna Therapeutics Inc., which develops selective transforming growth factor beta inhibitors to fight cancer and to treat ophthalmic and fibrotic diseases, from 2014 to 2015.Treasurer. Prior to that she served as Chief Financial Officer, Secretary, Principal Accounting Officerjoining Integra, Ms. Brennan worked at Citigroup and Head of Human Resources at Cancer Genetics, Inc., a company that develops, commercializesJP Morgan in various finance and provides molecular and biomarker-based tests, from 2011 until 2014. From 2000 to 2009, she served as a Managing Director at JPMorgan Chase & Co. and Bear Stearns & Co., and a General Partner at Bear Stearns Health Innoventures L.P., a venture capital fund.investment banking roles. Key Qualifications: Ms. CzerepakBrennan brings to the Board more than 3520 years of experience across investment banking, pharmaceuticals and biotechnology in business development, financesectors. Ms. Brennan is an experienced life sciences executive and has held leadership roles across the healthcare and a broad diversity ofbanking industries for both private and public and private company board member roles.global companies. Her breadth of experience makes her well qualified to serve on our Board. |
Independent
Education: B.A., University of Illinois; M.B.A., University of Chicago Booth School of Business |
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18 | | 17 |
2021 PROXY STATEMENT | Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
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| Seth H.Z. Fischer | |
Age: 6364
Director since:April 2020 Committees: NoneAudit, Compensation
Independent
Other Board Memberships:
Currently: Marinus Pharmaceuticals, Inc. and Agile Therapeutics, Inc.
Education:BGS, Ohio University and served as a captain in the U.S. Air Force
| Professional Experience: Mr. Fischer currently serves as a member of the Board of Directors of Marinus Pharmaceuticals, Inc. (MRNS), Agile Therapeutics, Inc. (AGRX), and is also an advisor to MedHab, LLC. Previously, Mr.Fischer served as the Chief Executive Officer and as a Director of Vivus, Inc. (“Vivus”), a publicly traded biopharmaceutical company commercializing and developing innovative, next-generation therapies to address unmet needs in obesity, diabetes, sleep apnea and sexual health from September 2013 to December 2017. Prior to Vivus, Mr. Fischer served in various positions of increasing responsibility at Johnson & Johnson, most recently as company Group Chairman, Johnson & Johnson and Worldwide Franchise Chairman of Cordis Corporation. Prior to that, he served as company Group Chairman, North America Pharmaceuticals, which included responsibilities for Ortho-McNeil Pharmaceuticals, Janssen and Scios. Prior to that, Mr. Fischer served as President of Ortho-McNeil Pharmaceuticals. Mr. Fischer’s operating responsibilities encompassed the commercialization of products in multiple therapeutic categories including neurologic products for epilepsy and migraines and products in the analgesic, anti-infective, cardiovascular, psychiatric and women’s health areas. FromMr. Fischer serves as an advisor to MedHab, LLC and from May 2013 to May 2019, Mr. Fischer also served on the Board of Directors of BioSig Technologies, Inc. Key Qualifications: Mr. Fischer brings to the Board over 37 years of experience in the pharmaceutical industry, including 29 years in various leadership roles at Johnson & Johnson. We believe Mr. Fischer’s experience in pharmaceutical operations and commercialization in a wide range of therapeutics including in epilepsy and migraines qualifies him to serve on our Board. |
Independent
Other Board Memberships:
Currently: Marinus Pharmaceuticals, Inc. and Agile Therapeutics, Inc.
Education: BGS, Ohio University and served as a captain in the U.S. Air Force |
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2020Spectrum Pharmaceuticals | 2021 PROXY STATEMENT | Spectrum Pharmaceuticals |
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
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| Jeffrey L. Vacirca, M.D., FACP | |
Age: 5152 Director since: November 2018
Committees:Compensation Nominating & Corporate Governance,(Chair), Science, Technology & Sustainability (Chair) | Professional Experience: Since 2008, Dr. Vacirca has served as Chief Executive Officer, Managing Partner and Director of Clinical Research at New York Cancer and Blood Specialists, a cancer care center specializing in hematology/oncology and medical oncology. Since 2011, he has served as President and Co-Founder of National Translational Research Group, a group focusing on non-clinical research, and since 2012 he has served as a Medical Director and Strategic Advisor for the International Oncology Network specialty group at Amerisource Bergen, a pharmaceutical products company. Since 2018, he has served as the Medical Director of the Oncology Network Development at Mount Sinai Health Network and as an associate clinical professor at Icahn School of Medicine at Mount Sinai, New York. Key Qualifications: Dr. Vacirca’s qualifications to serve on our Board include his substantial business experience in the healthcare and pharmaceutical industry and clinical expertise in oncology. Dr. Vacirca’s substantial business experience makes him well qualified to serve on our Board. |
Independent
Other Board MembershipsMemberships: :
CurrentlyCurrently: :BeyondSpring Inc., Scientific Advisory Board of Caris Life Sciences, Medical Board Advisor for Flatiron Health, Odonate Therapeutics, Inc. (Vice Chairman, since 2016)
EducationEducation: : B.A. in Human Biology, University at Albany; M.D., St. George’s University School of MedicineMedicine.
Other QualificationsQualifications: : He completed his residency in Internal Medicine along with his fellowships in hematology and medical oncology at Stony Brook University Hospital. |
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2021 PROXY STATEMENT | Spectrum Pharmaceuticals |
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
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| Dolatrai M. Vyas, Ph.D. | |
Age: 7677 Director since: June 2013 Committees:
Compensation,Nominating & Corporate Governance, Science, Technology & Sustainability (Chair) | Professional Experience: Dr. Vyas has 31 years of tenure in oncology drug discovery research at Bristol-Myers Squibb Company (“BMS”), a pharmaceutical company, where he served in various positions, including most recently as a Group Director and Distinguished Research Fellow (Executive Level) in Oncology Discovery Chemistry. Dr. Vyas is considered one of the pioneers of the BMS oncology medicinal chemistry discovery efforts based on natural products derived cytotoxics. During this period, he was also involved in BMS’s pioneering research on antibody drug conjugate technology to target cytotoxics selectively to tumors. In the last 15 years of his oncology research career at BMS, he was involved in discovery and development of personalized medicine research involving small molecule molecular targeted oncology therapeutics. During his tenure at BMS, he has participated in the discovery and development of twelve small molecules and one biologic as clinical development candidates with one FDA-approved new drug application. Dr. Vyas retired from BMS in 2011 and subsequently formed a research and development consulting company in October 2011, Dinesh Vyas, LLC.LLC, serving as managing member. Key Qualifications: Dr. Vyas brings to the Board over 30 years of experience in the healthcare industry, focused on oncology drug research and development. As a result, Dr. Vyas is well qualified to serve on our Board. |
Independent
Other Board MembershipsMemberships: :
CurrentlyCurrently: : Scientific Advisory Boards of CheminPharma and Recombinant Technologies, LLC
EducationEducation: : B.Sc. with honors in Chemistry and Geology, University College Nairobi (Kenya), University of East Africa; Ph.D. in Organic Chemistry, Queens University, Kingston, Canada
Other QualificationsQualifications: : He has authored/co- authoredco-authored over 110 publications and written numerous book chapters and review articles. He is also an inventor/co-inventor on more than 40 patents. |
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Spectrum Pharmaceuticals | 20202021 PROXY STATEMENT |
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
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| Bernice R. Welles, M.D., M.B.A. | |
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Age: 6768 Director since: June 2018 Committees: Compensation, Nominating & Corporate Governance (Chair), Science, Technology & Sustainability
| Professional Experience: Dr. Welles ishas been a Partner and Managing Director with IPF Management S.A., which manages funds that provide growth capital to life science companies.companies since September 2012. Dr. Welles previously served as Chief Executive Officer at Alquest Therapeutics, Inc., a neurodegenerative drug development company, from June 2010 to 2013, and Chief Medical Officer at Enject, Inc., a medical device company, from 2009 to 2013. Prior to that she was Vice President, Development at DiObex, Inc., a venture-backed biotechnology company.company, from 2005 to 2009. Dr. Welles has venture capital experience having been Venture Partner at MPM Capital, L.P. for two yearsfrom 2003 to 2005 and extensive pharmaceutical experience having been Vice President, Product Development and Senior Director and Director, Specialty Therapeutics Unit, Medical Affairs and Clinical Scientist, Medical Affairs at Genentech, Inc. for
eight years.from 1995 to 2003. Key Qualifications: Dr. Welles has extensive experience building and leading research and development organizations, expanding company pipelines of assets, and overseeing the commercial development of innovative therapeutic products across a range of areas. Dr. Welles’ significant leadership experience in the biopharmaceutical sector, along with her experience as a physician and her expertise in drug development, makes her well qualified to serve on our Board. Dr. Welles has obtained UCLA Corporate Governance Program Certification as a public company director. |
| Independent Independent
Other Board Memberships:
Currently: American Life Science Pharmaceuticals, Inc. Education: B.A. in Music, Brandeis University; M.S. in Urban and Environmental Policy, Tufts University; M.D. from Albany Medical College; M.B.A., The Wharton School of Business, University of PennsylvaniaPennsylvania. Other Qualifications: She has Medical Licensure, State of California, Diplomate, American Board of Internal Medicine and Diplomate, Endocrinology and Metabolism. Dr. Welles has obtained UCLA Corporate Governance Program Certification as a public company director. |
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2022 | | |
20202021 PROXY STATEMENT | Spectrum Pharmaceuticals |
DIRECTOR COMPENSATION
For service in 2019,2020, directors who were not employees of the Company, whom we refer to as “non-employee directors,” received an annual retainer of $65,000. In addition, non-employee directors are entitled to receive additional retainer fees for their Board committee positions, in accordance with the fee table below. We also reimbursed non-employee directors for reasonable out-of-pocket expenses incurred with respect to their attendance at Board and committee meetings.
Non-Employee Director Fees |
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Annual Retainer (All) | $65,000 |
Additional Annual Retainer for Chairman of the Board | $20,00030,000 |
Additional Annual Retainer for Audit Committee Chairperson | $20,000 |
Additional Annual Retainer for Compensation Committee Chairperson | $20,000 |
Additional Annual Retainer for Nominating and Corporate Governance Committee Chairperson | $20,000 |
Additional Annual Retainer for Science, Technology and Sustainability Committee Chairperson | $20,000 |
Additional Annual Retainer for Audit Committee Member | $10,000 |
Additional Annual Retainer for Compensation Committee Member | $10,000 |
Additional Annual Retainer for Nominating and Corporate Governance Committee Member | $10,000 |
Additional Annual Retainer for Science, Technology and Sustainability Committee Member | $10,000 |
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Annual Grants
In June 2019,2020, each of our non-employee directors was granted options to purchase 20,00060,000 shares of our common stock at an exercise price of $8.44$2.94 per share, the closing price of our common stock on the date immediately prior to the date of grant, subject to the terms of the 2018 Long-Term Incentive Plan (the “2018 Plan”). The options vest as to 25%one-third of the shares on the dateeach of grant,June 18, 2021, 2022 and the remaining shares vest in three equal installments on each anniversary of the date of grant,2023, respectively, subject to each director’s continued service through such date. In addition, each non-employee director was also issued 10,00030,000 shares of restricted stock under the 2018 Plan. The restricted stock will vest 100% on June 18, 2020,17, 2021, subject to each director’s continued service through such date.
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Spectrum Pharmaceuticals | 20202021 PROXY STATEMENT |
The following table shows compensation for our non-employee directors for the fiscal year ended December 31, 2019.2020. Directors who were employees did not receive any compensation for their service as directors.
Non-Employee Director Compensation | | | | | | | | | | | | | | |
Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Total ($) |
William L. Ashton(3) | 115,000 | 88,200 | 111,967 | 315,167 |
Nora E. Brennan(4) | 47,500 | 70,350 | 93,256 | 211,106 |
Raymond W. Cohen(5) | 47,500 | — | — | 47,500 |
Elizabeth A. Czerepak | 100,000 | 88,200 | 111,967 | 300,167 |
Seth H.Z. Fischer(6) | 56,667 | 88,200 | 121,015 | 265,882 |
Jeffrey L. Vacirca(7) | 101,667 | 88,200 | 111,967 | 301,834 |
Dolatrai M. Vyas | 90,000 | 88,200 | 111,967 | 290,167 |
Bernice R. Welles | 100,000 | 88,200 | 111,967 | 300,167 |
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Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Total ($) |
William L. Ashton | 95,000 | 84,400 | 92,715 | 272,115 |
Raymond W. Cohen | 100,000 | 84,400 | 92,715 | 277,115 |
Elizabeth A. Czerepak(3) | 47,500 | 84,400 | 92,715 | 224,615 |
Gilles R. Gagnon(4) | 32,500 | - | - | 32,500 |
Stuart M. Krassner(5) | 57,500 | - | - | 57,500 |
Anthony E. Maida(6) | 47,500 | - | - | 47,500 |
Jeffrey L. Vacirca | 85,000 | 84,400 | 92,715 | 262,115 |
Dolatrai M. Vyas | 80,000 | 84,500 | 92,715 | 257,115 |
Bernice R. Welles | 90,000 | 84,400 | 92,715 | 267,115 |
(1)Represents the grant date fair value of restricted stock awards calculated in accordance with FASB ASC Topic 718 calculated based on closing price of our common stock on the day preceding the grant date of the restricted stock awards multiplied by the number of shares granted. Restricted stock awards are subject to time-based vesting as described above. These amounts do not represent cash payments or proceeds actually received by the directors and the actual values they realize may be materially different from these reported amounts upon their sale of the underlying shares. | |
(1)
| Represents the grant date fair value of restricted stock awards calculated in accordance with FASB ASC Topic 718 calculated based on closing price of our common stock on the day preceding the grant date of the restricted stock awards multiplied by the number of shares granted. Restricted stock awards are subject to time-based vesting as described above. These amounts do not represent cash payments or proceeds actually received by the directors and the actual values they realize may be materially different from these reported amounts upon their sale of the underlying shares.
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(2)
| Represents the grant date fair value of the stock option awards calculated in accordance with FASB ASC Topic 718, using the Black-Scholes option pricing model. Stock options are subject to time-based vesting as described above. These amounts do not represent cash payments or proceeds actually received by the directors and the actual values they realize may be materially different from these reported amounts upon their sale of the underlying shares. For fair value assumptions refer to Note 6 to our financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the SEC on March 2,(2)Represents the grant date fair value of the stock option awards calculated in accordance with FASB ASC Topic 718, using the Black-Scholes option pricing model. Stock options are subject to time-based vesting as described above. These amounts do not represent cash payments or proceeds actually received by the directors and the actual values they realize may be materially different from these reported amounts upon their sale of the underlying shares. For fair value assumptions refer to Note 5 to our financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC on March 31, 2021. (3)Our Chairman of the Board retainer increased to $30,000 from $20,000 in June 2020. Accordingly, Mr. Ashton's compensation was prorated to reflect this increase. (4) Ms. Brennan became a member of the Board in December 2020. Accordingly, her compensation was prorated to reflect her shortened tenure. (5) Mr. Cohen left the Board in April 2020. Accordingly, his compensation was prorated to reflect his shortened tenure. (6) Mr. Fischer became a member of the Board in April 2020. Accordingly, his compensation includes a prorated amount for his service on the Board from April 2020 through June 2020. (7) Dr. Vacirca was appointed as Chair of the Compensation Committee in April 2020. Accordingly, his compensation includes a prorated amount for such service from April 2020 through June 2020. |
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(3)
| Ms. Czerepak became a member of the Board in June 2019. Accordingly, her compensation was pro rated to reflect her shortened tenure. |
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(4)
| Mr. Gagnon left the Board in June 2019. Accordingly, his compensation was pro rated to reflect his shortened tenure. |
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(5)
| Dr. Krassner left the Board in June 2019. Accordingly, his compensation was pro rated to reflect his shortened tenure. |
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(6)
| Dr. Maida left the Board in June 2019. Accordingly, his compensation was pro rated to reflect his shortened tenure. |
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20202021 PROXY STATEMENT | Spectrum Pharmaceuticals |
Number of Options and Restricted Stock Awards Held by Non-Employee Directors at Fiscal Year-End 20192020 |
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Name | Stock Options (Vested and Unvested) (#) | Restricted Stock Awards (Unvested) (#) |
William L. Ashton | 46,667 | 10,000 |
Raymond W. Cohen | 130,000 | 10,000 |
Elizabeth A. Czerepak | 20,000 | 10,000 |
Gilles R. Gagnon(1) | 152,500 | - |
Stuart M. Krassner(2) | 250,000 | - |
Anthony E. Maida(3) | 203,300 | - |
Jeffrey L. Vacirca | 34,507 | 10,000 |
Dolatrai M. Vyas | 150,000 | 10,000 |
Bernice R. Welles | 40,000 | 10,000 |
(1) Mr. Gagnon left the Board in June 2019.
(2) Dr. Krassner left the Board in June 2019.
(3) Dr. Maida left the Board in June 2019.
All of our directors, including our President and Chief Executive Officer, are subject to a stock ownership policy as described in more detail under the section entitled “Corporate Governance-Stock Ownership Policy.”
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Name | Stock Options (Vested and Unvested) (#) | Restricted Stock Awards (Unvested) (#) |
William L. Ashton | 106,667 | 30,000 |
Nora E. Brennan | 30,000 | 15,000 |
Raymond W. Cohen(1) | 130,000 | — |
Elizabeth A. Czerepak(2) | — | — |
Seth H.Z. Fischer | 65,000 | 30,000 |
Jeffrey L. Vacirca | 94,507 | 30,000 |
Dolatrai M. Vyas | 210,000 | 30,000 |
Bernice R. Welles | 100,000 | 30,000 |
(1) Mr. Cohen left the Board in April 2020 however his equity will continue to vest pursuant to the terms of his Consulting Agreement with the Company.
(2) Ms. Czerepak left the Board in December 2020.
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Spectrum Pharmaceuticals | 20202021 PROXY STATEMENT |
PROPOSAL 2 — ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
As required by SEC rules, we provide our stockholders with an advisory vote to approve the compensation of our named executive officers, or a "say-on-pay" vote. This year's say-on-pay vote gives our stockholders an opportunity to express their views on our 20192020 compensation program and related decisions for our named executive officers. Our relationship with our stockholders is an important part of our Company’s success and we continue to actively engage with our stockholders. We believe that our approach to engaging openly with our investors on topics such as financial performance, corporate governance, executive compensation, and leadership structure drives increased corporate accountability, improves decision making, and enhances our corporate governance practices and disclosures each year.
The Company’s compensation program is designed and administered by the Compensation Committee of the Board, which is composed entirely of independent directors and carefully considers many different factors, as described in the Compensation Discussion and Analysis, in order to provide appropriate compensation for the Company’s executives. As discussed in the Compensation Discussion and Analysis, the compensation package for the Company’s named executive officers (who are the officers listed in the Summary Compensation Table in the Executive Compensation section) is designed to support the Company’s objectives of attracting, motivating and retaining the executive talent required to achieve our corporate objectives and increase stockholder value.
Consistent with the SEC rule implementing the requirement that the Company periodically include a say-on-pay proposal in its proxy statement, the vote on this proposal is advisory and is not binding on the Company, the Compensation Committee or the Board. The Compensation Committee and the Board value the opinions that stockholders express in their votes and to the extent there is any significant vote against the named executive officer compensation, we will consider the outcome of the vote when making future executive compensation decisions and evaluate whether any actions are necessary to address stockholder concerns expressed by such vote. It is expected that the next advisory vote on executive compensation will occur at the 20212022 Annual Meeting of Stockholders.
We encourage you to review the complete description of the Company’s executive compensation programs provided in this Proxy Statement, including the Compensation Discussion and Analysis and the accompanying compensation tables.
In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, this non- bindingnon-binding advisory stockholder vote gives you as a stockholder the opportunity to approve or not approve the compensation of the named executive officers that is disclosed in this Proxy Statement by voting for or against the following resolution (or by abstaining with respect to the resolution):
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, and the related compensation tables and narrative discussion, is hereby APPROVED.”
Required Vote of Stockholders The affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on this Proposal 2 is required for the approval thereof. Abstentions will have the same effect as votes “AGAINST” this Proposal. Broker non-votes will have no effect on the outcome of this Proposal.
Proxies received in response to this solicitation will be voted “FOR” the approval, on an advisory basis, of the compensation of our named executive officers as described in the “Compensation Discussion and Analysis” section of this Proxy Statement unless otherwise specified in the proxy.
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2021 PROXY STATEMENT | Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
PROPOSAL NO. 2 - ADVISORY VOTE ON THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THE COMPENSATION DISCUSSION AND ANALYSIS SECTION OF THIS PROXY STATEMENT.
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Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
PROPOSAL 3 — APPROVAL OF A PROPOSED AMENDMENT TO THE SPECTRUM PHARMACEUTICALS, INC. 2018 LONG-TERM INCENTIVE PLAN
At the Annual Meeting, stockholders will be asked to approve an amendment to the Spectrum Pharmaceuticals, Inc. 2018 Long-Term Incentive Plan (the “2018 Plan,” and the proposed amendments thereto, the “2018 Plan Amendment”), which was adopted, subject to stockholder approval, by the Board on March 12, 2020, upon the recommendation of the Compensation Committee of the Board (the “Compensation Committee”). The 2018 Plan Amendment would (i) increase the total number of shares of our common stock reserved for issuance under the 2018 Plan by 8.5 million shares; (ii) add a “clawback” provision whereby shares can be forfeited based on “Detrimental Conduct” (as defined below); (iii) impose a one-year minimum vesting requirement for all awards; and (iv) restrict the 2018 Plan's rules on the recycling of shares.
Why Stockholders Should Vote to Approve the Amendment to the 2018 Plan
Equity Incentive Awards are an Important Part of Our Compensation Philosophy. Our equity compensation plans are critical to our ongoing effort to build stockholder value. As discussed in the Compensation Discussion and Analysis section of this Proxy Statement, equity incentive awards are central to our compensation program. Our Board and our Compensation Committee believe that our ability to grant equity incentive awards to new and existing employees and directors has helped us attract, retain and motivate professionals of the highest caliber with highly sought-after skill sets, who are capable of leading us in fulfilling our ambitious business objectives. The Board believes that the effective use of equity-based compensation and performance-based compensation has been integral to the Company’s success in the past and is vital to its ability to achieve continued strong performance in the future.
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◦ | As of April 7, 2020, 139 of our employees and all of our non-employee directors held outstanding equity awards. Over the past three fiscal years, we have granted equity-based incentive compensation to approximately 115 individuals on an annual average basis. We believe these broad-based grants help align incentives throughout the organization. |
The 2018 Plan Will No Longer Have Shares Available for Grant. Under our current forecasts, the 2018 Plan will run out of shares available for grant within the second quarter of fiscal year 2020, and we will not be able to continue to issue equity incentives to our employees unless our stockholders approve the 2018 Plan Amendment. During the first quarter of calendar year 2020, the Company experienced a decline in its stock price. The Company's 2020 equity grants in terms of value have been reduced from prior years. Despite this reduction in 2020 equity grants, the Company will still run out of shares available for grant. In order for the Company to maintain equity compensation to its employees and directors having a value consistent with historic grant practices, additional shares are required. The Board and the Compensation Committee continue to believe that in order to hire and retain talented professionals, its compensation practices will need to remain in line with its competitors. While we could increase cash compensation if we are unable to grant equity incentives, we anticipate that we will have difficulty attracting, retaining and motivating employees and directors if we are unable to make equity grants to them. We believe that outcome could negatively impact our ability to align employee and director compensation with the interests of stockholders.
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◦ | The Company currently maintains the 2018 Plan. As of April 7, 2020, a total of 7,462,953 shares of the Company’s common stock were subject to outstanding awards under the 2018 Plan, 5,302,488 shares of the Company's common stock were subject to outstanding awards under the 2009 Incentive Award Plan (the “2009 Plan”), and an additional 11,874 shares of the Company’s common stock were available for new awards granted under the 2018 Plan. |
Reasonable Share Request. The total number of additional shares the Company is requesting under the 2018 Plan is 8.5 million, which the Company believes will be sufficient for equity compensation awards over approximately the next 2 years, and that such number of shares is reasonable and consistent with general market practices. This view is based on several assumptions, including that our grant practices under the
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Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
PROPOSAL NO. 3 - AMENDMENT TO THE SPECTRUM PHARMACEUTICALS, INC.
2018 LONG-TERM INCENTIVE PLAN
amended 2018 Plan will be consistent with our historical practices and usage, and is dependent on a number of other factors that are difficult to predict or beyond our control, including the price of the Company’s common stock underlying future grants, our hiring activity, forfeitures of outstanding awards and other circumstances that may require us to change our equity grant practices. These underlying assumptions and factors cannot be predicted with certainty, and to the extent they change, the number of shares requested may not last for the estimated period or may last longer than the estimated period.
We Manage Our Equity Incentive Award Use Responsibly, and Dilution is Reasonable. We manage our long-term stockholder dilution by limiting the number of equity awards granted annually. Our Compensation Committee carefully monitors our annual net burn rate, which is the rate at which awards are granted as a percentage of outstanding shares of common stock, and potential stockholder dilution in order to maximize stockholder value, and the number of equity incentive awards granted is limited to the amount believed necessary to attract, retain and motivate key personnel.
Best Practices. Following engagement with our stockholders regarding our executive compensation program, the 2018 Plan Amendment includes (i) the addition of a “clawback” provision; (ii) the imposition of a one-year minimum vesting requirement for all awards; and (iii) the further restriction of the rules on recycling of shares.
Background
The 2018 Plan Amendment will (i) increase the total number of shares of our common stock reserved for issuance under the 2018 Plan from 9.5 million to 18 million (the “Share Reserve”) (both prior to and following the 2018 Plan Amendment, the Share Reserve also includes any shares that become eligible for issuance under the 2018 Plan because of forfeited awards under our 2009 Plan, as described below), and (ii) make the following key modifications, which are each geared at protecting stockholder interests, promoting effective corporate governance and reflecting the use of corporate governance best practices:
adopting a "clawback" provision whereby shares can be forfeited based on "Detrimental Conduct", a newly added defined term;
imposing a minimum vesting of a one-year period on all awards; and
providing that, to the extent withholding tax liabilities arising from an award under the 2018 Plan or the 2009 Plan, other than an option or stock appreciation right, are satisfied by the withholding of shares by the Company, such withheld shares will not be available for future awards under the 2018 Plan and the share reserve shall not be increased correspondingly.
The Board considered corporate governance best practices and guidance from its compensation consultant when approving the aforementioned modifications.
If this Proposal No. 3 is approved by our stockholders, the additional 8.5 million shares will be available for issuance in the following forms described further below: non-qualified stock options (“NSOs”), incentive stock options (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance awards, dividend equivalents, or other stock-based awards (collectively, the “Awards”).
As of April 7, 2020: (i) 7,462,953 shares were subject to outstanding awards under the 2018 Plan (this figure takes into account the type of award outstanding: shares issued pursuant to stock options will deplete the Share Reserve on a one-for-one basis; each share issued pursuant to a full value Award, such as restricted stock or restricted stock units, will deplete the Share Reserve by 1.5 shares); (ii) 11,874 shares of our common stock were available for future grants under the 2018 Plan; and (iii) 5,302,488 shares of our common stock were subject to outstanding awards under the 2009 Plan (the Share Reserve includes shares subject to outstanding awards under the 2009 Plan that are forfeited without an issuance of shares or are returned because the awards are terminated, canceled or expire unexercised).
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Spectrum Pharmaceuticals | 20202021 PROXY STATEMENT |
PROPOSAL NO. 3 - AMENDMENT TO THE SPECTRUM PHARMACEUTICALS, INC.
2018 LONG-TERM INCENTIVE PLAN
The following table summarizes the number of shares of the Company's common stock to be issued upon exercise of outstanding stock options as of April 7, 2020.
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Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options (a) | Weighted-average Exercise Price of Options (b) | Weighted-average Remaining Contractual Term (years) (c) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (d) |
Equity compensation plans approved by security holders(1) | 7,987,702(2) | $8.10 | 6.6987 | 11,874 |
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(1)
| We currently have one active stockholder-approved stock-based compensation plan, the 2018 Long- Term Incentive Plan (the “2018 Plan”). In June 2018, the 2018 Plan replaced our former 2009 Incentive Award Plan. Under the 2018 Plan, we may grant incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, performance awards, stock appreciation rights and other stock-based awards. |
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(2)
| In addition, the Company has 4,777,739 outstanding awards, other than stock options, consisting of performance restricted stock units and restricted stock awards that have not yet vested. |
The 2018 Plan was adopted in June 2018. Since the 2018 Plan’s adoption, the Company has experienced a significant decline in its stock price. Despite the fact that we have reduced the aggregate value of the 2020 equity awards, the Share Reserve has been depleted quicker than anticipated. Based on our current rate of award grants, as well as our anticipated hiring of new employees and directors, the Board believes that the existing share reserve will be exhausted within the second quarter of fiscal year 2020. Without the ability to provide equity compensation, we may be unable to attract and retain key employees or directors.
If this proposal is approved, we intend to continue to provide equity incentives to existing key employees and directors as well as to certain newly hired employees and directors. If this proposal is approved, we expect to have sufficient shares available under the 2018 Plan until our annual stockholder meeting in 2022.
The proposed increase of 8.5 million shares was determined by comparing our past equity grants to key employees, newly hired employees and directors to our current hiring and retention plan, and planned grants to key employees and directors as a retention tool.
The Board believes that (i) the increase in shares of our common stock available for issuance under the 2018 Plan is essential to permit our management to continue to provide long-term, equity-based incentives to present and future key employees and directors and (ii) the adoption of the clawback, minimum vesting and anti-recycling provisions described herein promote effective corporate governance and is responsive to feedback received from our stockholders. Accordingly, the Board believes approval of the 2018 Plan Amendment is in our best interest and the best interest of our stockholders, and recommends a vote “FOR” the approval of the 2018 Plan Amendment.
Description of the 2018 Plan
The following description of the principal terms of the 2018 Plan is a summary and is qualified in its entirety by reference to the full text of the 2018 Plan, as proposed to be amended, a copy of which is attached as Appendix A to this Proxy Statement.
Administration. The 2018 Plan is administered by a committee of the Board, designated by the Board to administer the Plan and composed of not fewer than two non-employee directors (the “Committee”). The Compensation Committee currently serves as the Committee. The Committee has the authority to establish rules and guidelines for the administration of the 2018 Plan; determine the types of Awards to be granted and the number of shares covered by such Awards; set the terms and conditions of such Awards and cancel, suspend and amend Awards. The Committee has the sole discretion to make determinations and interpret the 2018 Plan; provided, however, that the Board may act in lieu of the Committee on any matter. The Committee may not delegate to our officers or managers its authority to grant Awards or to cancel or suspend Awards for our executive officers and
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2020 PROXY STATEMENT | Spectrum Pharmaceuticals |
PROPOSAL NO. 3 - AMENDMENT TO THE SPECTRUM PHARMACEUTICALS, INC.
2018 LONG-TERM INCENTIVE PLAN
directors who file reports under Section 16 of the Exchange Act.
Eligibility. Persons eligible to receive Awards under the 2018 Plan are our employees, consultants and directors and our affiliates who, in the opinion of the Committee, are in a position to contribute to our success; provided, that ISOs may only be granted to our employees and employees of our subsidiaries. As of the date of this Proxy Statement, there are approximately 139 employees and 6 non-employee directors who are eligible to receive Awards under the 2018 Plan.
Share Reserve. If this proposal is approved, the total number of shares of common stock that may be issued under the 2018 Plan pursuant to Awards may not exceed 18 million, plus any shares that become eligible for issuance under the 2018 Plan because of Awards under the 2009 Plan that are terminated, forfeited, canceled or expire unexercised.
If any shares covered by an Award under the 2018 Plan or the 2009 Plan are terminated, forfeited, canceled or expire unexercised without delivery of shares, then the shares covered by such an Award will generally be available for granting Awards under the 2018 Plan. Awards settled in cash also do not count against the Share Reserve. Shares covered by an Award under the 2018 Plan or the 2009 Plan that are not delivered due to the net settlement or net exercise of a stock option or SAR shall not be available for issuance under the 2018 Plan, nor will shares repurchased on the open market with the proceeds of an option exercise. This means that the gross number of shares covering a SAR will count against the Share Reserve, as opposed to the net shares actually issued upon exercise thereof. Additionally, if the 2018 Plan Amendment is approved, in the event that withholding tax liabilities arising from an Award under the 2018 Plan or the 2009 Plan, other than a stock option or SAR, are satisfied by the withholding of shares by the Company, then the shares so withheld will not be available for Awards under the 2018 Plan.
In an acquisition, any Awards made and any of the shares delivered upon the assumption of or in substitution for outstanding grants made by the acquired company will not be counted against the Share Reserve. We may also make certain awards under NASDAQ rules, such as inducement awards to new hires or awards under certain plans acquired in acquisitions that will not count against the Share Reserve.
Dividend equivalents denominated in shares and Awards not denominated, but potentially payable, in shares will be counted against the Share Reserve in such amount and at such time as the dividend equivalents and such Awards are settled in shares. Awards that operate in tandem with (whether granted simultaneously with or at a different time from), or that are substituted for, other Awards or awards granted under the 2009 Plan may only be counted once against the aggregate number of shares available.
On April 7, 2020, the closing sale price of a share of our common stock on The NASDAQ Global Select Market was $2.28.
Stock Options. Stock options may be granted under the 2018 Plan pursuant to stock option agreements. The Committee establishes the vesting schedule for stock options and the method of payment for the exercise price, which may include cash, shares, or other awards. The exercise price of a stock option granted under the 2018 Plan generally may not be less than 100% of the fair market value of the common stock subject to the stock option on the date of grant and, in some cases (see “Limitations on Incentive Stock Options” below), may not be less than 110% of such fair market value. The term of stock options granted under the 2018 Plan may not exceed ten years and, in some cases (see “Limitations on Incentive Stock Options” below), may not exceed five years. If the 2018 Plan Amendment is approved, stock options granted to non-exempt employees will not be first exercisable for any shares until at least 12 months after the grant date of the stock option.
Except as otherwise provided in a participant’s stock option agreement or other written agreement with us or one of our affiliates: (i) if a participant’s service relationship with us or any of our affiliates (referred to in this Proposal 3 as “continuous service”) terminates (other than for cause and other than upon the participant’s death or disability or retirement), the participant may exercise any vested stock options for up to 90 days following the participant’s termination of continuous service; (ii) if a participant’s continuous service terminates due to such participant’s disability or death, the participant, or his or her beneficiary, as applicable, may exercise any vested stock options for up to 12 months following the participant’s termination of continuous service; (iii) if a participant’s continuous service is terminated as a result of the participant’s retirement, then the participant may exercise his or her vested options for up to six months following the participant’s termination of continuous service; and (iv) if a participant’s continuous
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Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
PROPOSAL NO. 3 - AMENDMENT TO THE SPECTRUM PHARMACEUTICALS, INC.
2018 LONG-TERM INCENTIVE PLAN
service is terminated for cause (as defined in the 2018 Plan, a participant’s stock option agreement or other written agreement with us or one of our affiliates, as applicable), all stock options held by the participant will terminate upon the participant’s termination of continuous service and the participant will be prohibited from exercising any stock option from and after such termination date. If there is a blackout period (whether under our insider trading policy, applicable law or a Committee-imposed black out period) that prohibits the buying or selling of shares during any part of the ten day period before a stock option expires, the term of the stock option will be extended until ten days beyond the end of the blackout period. In no event, however, may a stock option be exercised after its original expiration date.
Limitations on Incentive Stock Options. The aggregate fair market value, determined at the time of grant, of shares of our common stock with respect to ISOs that are exercisable for the first time by a participant during any calendar year under all of our stock plans may not exceed $100,000. The stock options or portions of stock options that exceed this limit or otherwise fail to qualify as ISOs will be treated as NSOs. Subject to certain limited exceptions, no ISO may be granted to any person who, at the time of grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any affiliate unless the following conditions are satisfied:
the exercise price of the ISO must be at least 110% of the fair market value of the common stock subject to the ISO on the date of grant; and
the term of the ISO must not exceed five years from the date of grant.
Subject to adjustment for certain changes in our capitalization, the aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of ISOs under the 2018 Plan is 18 million shares.
Stock Appreciation Rights. SARs may be granted under the 2018 Plan, each with an exercise period determined by the Committee not to exceed ten years from the date of grant. Subject to the terms of the 2018 Plan and any applicable award agreement, a SAR granted under the 2018 Plan will confer on its holder a right to receive, upon exercise of such Award, the excess of (i) the fair market value of one share of our common stock on the date of exercise over (ii) the grant price of the right as specified by the Committee. The grant price of a SAR may not be less than the fair market value of one share of our common stock on the date of grant, except that if a SAR is at any time granted in tandem with a stock option, the grant price of the SAR will not be less than the exercise price of the stock option. SARs will be subject to the same conditions upon termination of continuous service and restrictions on transfer as stock options under the 2018 Plan.
Restricted Stock and Restricted Stock Units. The Committee may award restricted stock and restricted stock units and establish the applicable restrictions, including any limitation on voting rights. The Committee may decide to include dividends or dividend equivalents as part of an award of restricted stock or restricted stock units and may accrue dividends, with or without interest, until the award is paid. The Committee establishes the manner and timing under which restrictions may lapse. If continuous service terminates during the applicable restriction period, shares of restricted stock and restricted stock units still subject to restriction will be forfeited, except as determined otherwise by the Committee.
Performance Awards and Other Stock-Based Awards. The Committee may grant performance awards, which may be denominated in cash, shares, other securities or other awards and payable to, or exercisable by, the participant upon the achievement of performance goals during performance periods, as established by the Committee. Performance criteria mean any measures, as determined by the Committee, which may be used to measure the level of performance of the Company or participant during a performance period.
Other Awards. The Committee may grant other stock-based awards that are denominated or payable in shares, under the terms and conditions as it determines. The Committee may decide to include dividends or dividend equivalents as part of a performance or other stock-based award, and may accrue dividends, with or without interest, until the award is paid.
Minimum Vesting Period. If the 2018 Plan Amendment is approved, then notwithstanding any provision to the contrary in the 2018 Plan, all award agreements shall specify a minimum one-year vesting period from the grant date of such Award.
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2020 PROXY STATEMENT | Spectrum Pharmaceuticals |
PROPOSAL NO. 3 - AMENDMENT TO THE SPECTRUM PHARMACEUTICALS, INC.
2018 LONG-TERM INCENTIVE PLAN
Limitations on Transfer. Awards are not transferable other than by will or the laws of descent and distribution unless determined otherwise by the Committee. Awards may not be pledged or otherwise encumbered.
Limitation on Non-Employee Director Compensation. No non-employee director will receive in excess of $600,000 of compensation in any calendar year, determined by adding (i) all cash compensation to such non-employee director and (ii) the fair market value of all Awards granted to such non-employee director in such calendar year (determined as of the date of grant); provided, however, that the Board may make exceptions for individual non-employee directors (up to an additional $150,000) in extraordinary circumstances.
Adjustments. In the event of certain corporate transactions or events affecting the number or type of outstanding shares of our common stock, including, for example, a dividend or other distribution (whether in cash or stock), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares or issuance of warrants, the Committee may make adjustments as it deems appropriate. These adjustments include changing the number and type of shares to be issued under the 2018 Plan and outstanding Awards; and the grant, purchase or exercise price of outstanding Awards.
No Reload. No stock option or SAR will include terms entitling a participant to a grant of stock options or SARs upon exercise of the stock option.
Effect of Certain Corporate Transactions. Under the 2018 Plan, a “Change in Control” is defined as: (i) the acquisition, directly or indirectly, in one transaction or a series of related transactions, by any person or group (within the meaning of Section 13(d)(3) of the Exchange Act) of the beneficial ownership of our securities possessing more than 50% of the total combined voting power of all our outstanding securities; (ii) a merger or consolidation in which we are not the surviving entity, except for a transaction in which the holders of our outstanding voting securities immediately prior to such merger or consolidation hold as a result of holding our securities prior to such transaction, in the aggregate, securities possessing more than 50% of the total combined voting power of all outstanding voting securities of the surviving entity (or the parent of the surviving entity) immediately after such merger or consolidation; (iii) a reverse merger in which we are the surviving entity but in which the holders of our outstanding voting securities immediately prior to such merger hold, in the aggregate, securities possessing less than 50% of the total combined voting power of all our outstanding voting securities or of the acquiring entity immediately after such merger; or (iv) the sale, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of our assets, except for a transaction in which the holders of our outstanding voting securities immediately prior to such transaction(s) receive as a distribution with respect to our securities, in the aggregate, securities possessing more than 50% of the total combined voting power of all outstanding voting securities of the acquiring entity immediately after such transaction(s). The Company presently intends that all award agreements will provide for single trigger vesting acceleration upon a Change in Control.
Claims Resolution. The 2018 Plan imposes a six-month window within which a claim must be asserted after a specific event giving rise to the claim, and prohibits any lawsuits from being commenced more than one year after a claim denial. Any decisions of the Committee that relate to the interpretation and administration of the 2018 Plan or any Awards will be upheld in any judicial or arbitration proceeding unless clearly affected by fraud.
Cancellation Right. Subject to applicable law, if the fair market value for shares subject to any stock option award or SAR is more than 50% below their exercise price for more than 90 consecutive business days, the Committee can unilaterally declare such stock option award or SAR terminated.
Clawbacks. If this proposal is approved, the 2018 Plan will include a provision whereby, in the event the Committee determines that a participant has committed any “Detrimental Conduct” (as defined below), then (1) no additional shares subject to any outstanding Award granted to the participant shall become vested and/or exercisable, (2) the participant shall forfeit the right to receive the shares underlying any award agreement, to exercise any vested but unexercised portion of an Award, and to vest in any unvested portion of an Award, and (3) the participant shall pay the Company any gains realized by the participant from any Award within one year prior to and including the last day of participant’s status as an director, employee, or consultant, or at any time after the end of such service.
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◦ | “Detrimental Conduct” shall mean the participant’s serious misconduct or unethical behavior, including any of the following acts (i) any violation of a restrictive covenant agreement (e.g., non-disclosure, non-solicitation, etc.), (ii) any conduct that could result in separation from service with the Company for cause, |
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Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
PROPOSAL NO. 3 - AMENDMENT TO THE SPECTRUM PHARMACEUTICALS, INC.
2018 LONG-TERM INCENTIVE PLAN
(iii) the commission of a serious criminal act (e.g., a felony of any kind or a misdemeanor involving fraud, theft, or breach of fiduciary duty), (iv) breach of a fiduciary duty, (v) intentional violation, or grossly negligent disregard of the Company’s policies, rules, or procedures, or (vi) the participant taking or maintaining trading positions that result in a need to restate financial results in a subsequent reporting period or that results in a significant financial loss to the Company.
Amendments. The Board must seek stockholder approval of material amendments to the 2018 Plan as required by applicable law. The Committee may waive conditions or amend the term of Awards, or otherwise amend or suspend Awards already granted subject to certain conditions.
Term. The 2018 Plan terminates on the ten-year anniversary of its approval by the Board, but no such termination will affect any outstanding grants under the Plan.
Certain Federal Income Tax Consequences
The following discussion of certain of the U.S. federal income tax consequences of awards under the 2018 Plan is based on current U.S. federal tax laws and regulations and does not purport to be a complete discussion. This description may differ from the actual tax consequences incurred by any individual recipient of an Award. Moreover, existing law is subject to change by new legislation, by new regulations, by administrative pronouncements and by court decisions or by new or clarified interpretations or applications of existing laws, regulations, administrative pronouncements or court decisions. Any such change may affect the federal income tax consequences described below. The following summary of the federal income tax consequences in respect of the 2018 Plan is for general information only. Interested parties should consult their own tax advisors as to specific tax consequences, including the application and effect of foreign, state and local laws.
Non-Qualified Stock Options. The grant of a NSO does not result in taxable income to the optionee or a deduction for us at the time it is granted. Instead, an optionee exercising a NSO will generally realize taxable compensation at that time in the amount of the difference between the NSO price and the then fair market value of the shares, and income tax withholding requirements apply upon exercise (for optionees who are employees). Generally, we will be allowed a deduction for federal income tax purposes in an amount equal to the taxable compensation realized by the optionee in the year of exercise. The optionee’s tax basis in the option shares is equal to the NSO price paid for the shares plus the amount includable in income upon exercise. At sale, appreciation (or depreciation) after the date of exercise is treated as either short-term or long-term capital gain (or loss) depending upon how long the shares have been held.
Incentive Stock Options. An optionee is not taxed at the time an ISO is granted. The tax consequences upon exercise and later disposition of the underlying shares generally depend upon whether the optionee was an employee of ours or our subsidiary at all times from the date of grant until three months preceding exercise (one year in the case of the optionee’s disability) and on whether the optionee holds the shares for more than one year after exercise and two years after the date of grant of the ISO.
If the optionee satisfies both the employment rule and the holding rule for income tax purposes, the optionee will not recognize income upon exercise of the ISO and we will not be allowed an income tax deduction at any time. The difference between the ISO exercise price and the amount realized upon disposition of the shares by the optionee will constitute either a long-term capital gain or a long-term capital loss.
If the optionee meets the employment rule, but fails to observe the holding rule (a “disqualifying disposition”), the optionee generally recognizes the excess of the fair market value of the shares at the date of exercise over the ISO exercise price as ordinary income in the year of the disqualifying disposition. Upon disposition of the shares, any excess of the sales price over the fair market value at the date of exercise will be recognized by the optionee as capital gain (long-term or short-term depending on the length of time the shares were held after the stock option was exercised). If the sales price on disposition of the shares is less than the fair market value on the date of exercise, then the ordinary income recognized by the optionee is generally limited to the excess of the sales price over the ISO exercise price. In both situations, the tax deduction we are allowed will be limited to the ordinary income recognized by the optionee. Under current Internal Revenue Service (the “IRS”) guidelines, we are not required to withhold any federal income tax in the event of a disqualifying disposition. Different consequences may apply for an optionee
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2020 PROXY STATEMENT | Spectrum Pharmaceuticals |
PROPOSAL NO. 3 - AMENDMENT TO THE SPECTRUM PHARMACEUTICALS, INC.
2018 LONG-TERM INCENTIVE PLAN
subject to the alternative minimum tax.
Restricted Stock. Upon the grant of restricted stock, a participant will not recognize taxable income and we will not be allowed a tax deduction. Rather, on the date when the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of the shares on that date (less the price paid, if any, for such shares). Alternatively, a participant may file with the IRS a “section 83(b) election” no later than 30 days after the date of grant of restricted stock, as a result of which the participant will recognize taxable ordinary income at the time of the grant, generally in an amount equal to the fair market value of the shares on the date of grant, less any amount paid for the grant. The amount recognized by the participant is subject to income tax withholding requirements (for participants who are employees). At the time the participant recognizes income with respect to the restricted stock, we are generally entitled to a deduction in an equal amount. Upon the sale of any shares that are delivered to the participant pursuant to an Award, the participant will realize capital gain (or loss) measured by the difference between the amount realized and the fair market value of the shares on the date the shares were vested pursuant to the Award.
Restricted Stock Unit Awards, Performance Awards and Other Stock-Based Awards. A participant who receives a restricted stock unit award, performance award or other stock-based award which includes a performance and/or vesting requirement or other restriction that must be satisfied prior to payment will not recognize any income for federal income tax purposes at the time of the grant of such Award and we are not entitled to a deduction at that time.
When any part of a restricted stock unit award, performance award or other stock-based award is paid (in the case of cash) or delivered (in the case of shares) to the participant, the participant will realize compensation taxable as ordinary income in an amount equal to the cash paid or the fair market value of shares delivered.
Income tax withholding requirements (for participants who are employees) generally apply to amounts that are recognized as ordinary income and we generally will be entitled to a deduction in the same amount and at the same time that the participant recognizes ordinary income. Upon the sale of any shares that are delivered to the participant pursuant to an Award, the participant will realize either long-term or short-term capital gain (or loss), depending on how long the shares were held, equal to the difference between the amount realized and the fair market value of the shares on the date the shares were vested or delivered to the participant pursuant to the Award.
Impact of Section 409A. Section 409A of the Code generally applies to deferred compensation. Generally speaking, “deferred compensation” is compensation earned currently, the payment of which is deferred to a later taxable year, and an amount is “vested” on the date that the participant’s right to receive the amount is no longer conditioned on the participant’s performance of services or upon the occurrence of an event (such as a change in control) or the achievement of performance goals that are substantially related to the purpose of the compensation.
Stock options, restricted stock awards, restricted stock unit awards, performance share awards, and other stock-based awards available under the 2018 Plan are designed either to be exempt from the requirements of Code Section 409A or to satisfy its requirements. Vested Awards subject to Code Section 409A that fail to satisfy its requirements will subject the Award holder to immediate taxation, an interest penalty, and an additional 20% tax on the amount underlying the Award.
Limitations on Our Section 162(m) Deduction. Section 162(m) of the Code limits our deduction for compensation in excess of $1,000,000 paid during a taxable year to our Chief Executive Officer, Chief Financial Officer and our three other highest-paid executive officers, including any person who was described above for any taxable year beginning after December 31, 2016 (collectively, the “Covered Employees”). As a result of Section 162(m), we may not be entitled to a compensation deduction with respect to all or some Awards granted to Covered Employees.
Required Vote of Stockholders
The affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on this Proposal 3 is required for the approval thereof. Abstentions will have the same effect as votes “AGAINST” this Proposal. Broker non-votes will have no effect on the outcome of this Proposal.
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Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
PROPOSAL NO. 3 - AMENDMENT TO THE SPECTRUM PHARMACEUTICALS, INC.
2018 LONG-TERM INCENTIVE PLAN
Proxies received in response to this solicitation will be voted “FOR” the approval of the Amendment to the Spectrum Pharmaceuticals, Inc. 2018 Long-Term Incentive Plan unless otherwise specified in the proxy.
Board Recommendation
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSAL TO APPROVE AN AMENDMENT OF THE SPECTRUM PHARMACEUTICALS, INC. 2018 LONG-TERM INCENTIVE PLAN.
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2020 PROXY STATEMENT | Spectrum Pharmaceuticals |
PROPOSAL 43 —RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board is responsible for the appointment, remuneration, retention and oversight of the work of our independent registered public accounting firm. The Audit Committee has selected Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020,2021, and has further directed that management submit its selection of our independent registered public accounting firm for ratification by our stockholders at the Annual Meeting. Deloitte & Touche LLP served as our independent registered public accounting firm for the fiscal year ended December 31, 2019.2020.
Although ratification by our stockholders is not a prerequisite to the Audit Committee’s ability to make this selection of our independent registered public accounting firm, it believes that requesting stockholder ratification represents an important corporate governance practice. Accordingly, our stockholders are being asked to ratify, confirm and approve the selection of Deloitte & Touche LLP as our independent registered public accounting firm to conduct the annual audit of our consolidated financial statements and, if required, our internal control over financial reporting for the fiscal year ending December 31, 2020.2021. If our stockholders do not ratify our selection of Deloitte & Touche LLP, this selection will be reconsidered by the Audit Committee; however, since this is a non-binding vote, the Audit Committee may still retain Deloitte & Touche LLP for these fiscal year 20202021 services. Conversely, if our stockholders ratify the appointment of Deloitte & Touche LLP, the Audit Committee will continue to conduct an ongoing assessment of their scope of engagement, pricing and work quality, among other factors, and will retain the right to replace Deloitte & Touche LLP at any time.
There will be representatives from Deloitte & Touche LLP present at the Annual Meeting. They maywill have the opportunity to provide a statement regarding their engagement with the Company, and will be available to answer appropriate questions from stockholders.
Required Vote of Stockholders The affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on this Proposal 43 is required for the approval thereof. Abstentions will have the same effect as votes “AGAINST” this Proposal.
Proxies received in response to this solicitation will be voted “FOR” the ratification of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20202021 unless otherwise specified in the proxy.
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020.2021.
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2021 PROXY STATEMENT | Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
PROPOSAL NO. 43 – RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Independent Registered Public Accounting Firm Fees The following table summarizes aggregate fees billed to us for professional services rendered by Deloitte & Touche LLP in its capacity as our principal independent registered public accounting firm for the fiscal years ended December 31, 20192020 and 2018:2019:
| | | | Year Ended December 31, | | Year Ended December 31, |
| | 2019 | 2018 | | 2020 | | 2019 |
Audit Fees | |
| $1,123,430 |
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| $1,008,500 |
| Audit Fees | $861,000 | | | $1,123,430 | |
Audit-Related Fees | | 112,350 | | 48,375 | Audit-Related Fees | $21,600 | | | $112,350 | |
Tax Fees | | 233,681 | | 312,125 | Tax Fees | $249,467 | | | $233,681 | |
Total | |
| $1,469,461 |
| |
| $1,369,000 |
| Total | $1,132,067 | | | $1,469,461 | |
The fees billed to us during or related to the fiscal years ended December 31, 20192020 and 20182019 consist solely of audit fees, audit-related fees, and tax fees, as follows:
Audit Fees.
Represents the aggregate fees billed to us by our principal independent registered public accounting firm for (i) professional services rendered for the audit of our annual consolidated financial statements and our internal control over financial reporting included in our Form 10-K, and (ii) reviews of our consolidated financial statements included in our Form 10-Q filings for each fiscal quarter.quarter, and (iii) services that are normally provided in connection with registration statements.
Audit-Related Fees.
Represents the aggregate fees billed to us by our principal independent registered public accounting firm for assurance and related services that are reasonably related to the performance of the audit and review of our consolidated financial statements that are not already reported in Audit Fees. These services include accounting consultations and attestation services that are not required by statute and the preparation of consents with respect to registration statements on Form S-8.
Tax Fees.
Represents the aggregate fees billed to us by our principal independent registered public accounting firm for professional services rendered for the filing of tax returns and other tax compliance matters, as well as tax advice for certain business events.
All Other Fees.
We did not incur any other fees to Deloitte & Touche LLP as our principal independent registered public accounting firm during the fiscal years ended December 31, 20192020 and 2018.2019.
Policy on Audit Committee Pre-approval of Audit and Permissible Non-audit Services of Independent Auditor
All audit and non-audit services by our independent registered public accounting firm were pre-approved by our Audit Committee. For audit services, Deloitte & Touche LLP provides the Audit Committee with an audit plan, including proposed fees in advance of the annual audit. The Audit Committee approves the plan and fees for the audit. Pursuant to its charter, the Audit Committee may establish pre-approval policies and procedures, subject to SEC and NASDAQ rules and regulations, to approve audit and non-audit services, although, it has not yet done so.
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Spectrum Pharmaceuticals | 2021 PROXY STATEMENT |
OUR CORPORATE GOVERNANCE
We are committed to a strong self-governance program. Our corporate governance practices are designed to maintain high standards of oversight, compliance, integrity and ethics, while promoting growth in long-term stockholder value. The role of our Board is to ensure that Spectrum is managed for the long-term benefit of our stockholders and other stakeholders.
Each year, we review our corporate governance and compensation policies and practices and engage with our stockholders. In our ongoing effort to ensure that our governance policies and practices consistently reflect best practices, we take suggestions from our stockholders into consideration, along with developments and evolving trends reflected in the standards established by proxy advisory firms, as well as in the policies, practices and disclosures of other public companies. In this way, we affirm our commitment to conducting business with honesty, fairness and integrity by continually evolving our programs to benefit all of our stakeholders.
Corporate Governance Guidelines
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2020 PROXY STATEMENT | Spectrum Pharmaceuticals |
CORPORATE GOVERNANCE AND BOARD MATTERS
This section describes key corporate governance guidelines and practices that we have adopted. These guidelines address, among other matters, the overall role of our Board, director qualification standards, director retirement and resignation policies, director independence standards, and committee structure and objectives. Complete copies of our Corporate Governance Guidelines, the charters of the committees of our Board and our Code of Business Conduct and Ethics described below may be viewed on our website at http://investor.sppirx.com/corporate-governance under “Investor Relations.” Alternatively, you can request a copy of any of these documents free of charge by writing to our Corporate Secretary, c/o Spectrum Pharmaceuticals, Inc., 11500 South Eastern Avenue, Suite 240, Henderson, Nevada 89052.
Corporate Governance
Our Board has adopted Corporate Governance Guidelines to ensure that our Board will haveset forth expectations for directors, director independence standards, board committee structure and functions and other policies for the necessary authority and practices in place to exercise its duties and responsibilities, to review and evaluate our business operations as needed, to make decisions that are independent of our management and to serve the best interestsgovernance of the Company and our stockholders. TheCompany. Our Corporate Governance Guidelines address matters such asare available without charge on the respective roles and responsibilities“Corporate Governance” page of the “Investor Relations” section of our website, which may be accessed by navigating to investor.sppirx.com, by clicking the “Corporate Governance” link under “Investor Relations” and then by clicking on “Corporate Governance Guidelines” under “Other Governance Documents.” Our Nominating Committee reviews the Corporate Governance Guidelines periodically and recommends changes to our Board as warranted. The references to our website in this Proxy Statement do not constitute incorporation by reference of the information contained on or available through our website, and management, the Board's leadership structure, director independence, the Board membership criteria, Board Committees, and Board, Board Committees and Chief Executive Officer annual evaluations.you should not consider it to be a part of this Proxy Statement.
CodeCodes of Business Conduct and Ethics
Our Board is committed to the highest legal and ethical standards in fulfilling its responsibilities. We have adopted a new codecodes of business conduct and ethics that servesserve as a statementstatements of corporate values, commitments and standards of professional conduct, both internally and externally. It articulates the behaviors expected of ourOur Board executive officers, and all employees are provided with a copy of both the Employee and Vendor Codes of Business Conduct and Ethics (the “Codes”). Each year, we require our Board and all employees to certify as to their understanding of and compliance with the Codes. In addition, all employees must regularly complete Workplace Harassment Prevention Training. In 2020, Spectrum placed emphasis on a number of topics,broadening our online training presence, providing employees with access to information and courses including workplace safety, conflicts of interest,the protection of confidential information, insider trading, competitionthe prevention of workplace violence, careful communication practices, information security threat awareness, sexual harassment and fair dealing,respect in the workplace, supporting human rights, environmental stewardship, emergency prevention, preparedness and response,insider trading.
We encourage employees to communicate concerns before they become problems. We believe that building and maintaining trust, respect and communication between employees and management accountability. Spectrum's foundationand between fellow employees is built on strong ethical principles and values which reflect our commitmentcritical to the overriding goal of conducting business with honesty, fairness and integrity. Copies of the Codes are posted on our website at https://www.sppirx.com/corporate-compliance.html.
The Spectrum Compliance Helpline provides confidential, secure, and anonymous reporting available 24 hours a day. Additionally, our Global Compliance Officer also provides confidential resources for employees to surface their concerns without fear of retaliation.
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2021 PROXY STATEMENT | Spectrum Pharmaceuticals |
How We Approach Environmental, Social and Governance (“ESG”) Matters
We know that our focus on and effective management of ESG issues is critical to our Company’s long-term success and preserving the health of our planet. We firmly believe that diversity of our people is our strength. We remain committed to continually strengthening diversity and inclusion in our workplace, implementing environmentally sustainable practices, and fostering an ethical culture at the core of what we do and who we do it with.
We also recognize the importance of leading by example, both through the transparency we provide on material and relevant sustainability issues and through continual assessment of our ESG practices. In 2020, we completed a comprehensive assessment to update our priority ESG issues. The assessment has provided insights into where we can make additional, meaningful impact on patients, our workplace, our communities, and the environment.
Our Board and executive management team are focused on integrating sustainable and responsible business practices into our strategy and operations. The charter of the Board’s Science, Technology and Sustainability Committee expressly delegates Board oversight of ESG matters to this committee. The Company’s policy is to take into consideration the long-term interests of the Company, its stockholders, and other stakeholders, including patients, employees, the healthcare community, regulators, suppliers, and local communities. In doing so, our responsibility strategy centers on three focus areas:
®Improving the lives of people with serious diseases
®Fostering a culture of integrity and excellence
®Building sustainable communities
Making a difference is ingrained in our corporate culture and integral to our purpose. We go to incredible lengths at Spectrum to impact the lives of patients by increasing access to medicine, providing support to patients and their caregivers, physicians, advocacy groups, communities and beyond. We know that our efforts contribute not just to Spectrum’s long-term success and sustainability but also to the broader world. Key ESG factors we believe strongly support Spectrum’s long-term sustainability include:
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Spectrum Pharmaceuticals | 20202021 PROXY STATEMENT |
Stockholder Feedback and Engagement
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Our Governance |
We employ strong corporate governance principles and practices. •Our Board is predominantly independent with a balance of skills and experience and an emphasis on independent oversight and continuous improvement. •Our Board is diverse in experience, education, talents, gender and race. •We employ an annual director assessment process that has resulted in Board refreshment, with five directors joining the Board since 2018. •We are committed to frequent and active stockholder engagement with a regular outreach program. Stockholder feedback has influenced improvements to our governance, compensation programs and ESG disclosure. •The Board actively considers matters of sustainability, with particular focus on key ESG factors important to Spectrum’s sustainability goals. |
Our Purpose and Our Focus on Ethics and Integrity |
We are committed to a corporate culture of compliance and integrity. •Ours is a culture of commitment to making a difference by (i) acquiring, developing, and commercializing novel and targeted drug products, with a primary focus on oncology, (ii) supporting patient advocacy efforts, and (iii) giving back to the community. •Integrity, honesty and doing the right thing are integral to everything we do at Spectrum and embedded in our Codes of Business Conduct and Ethics. Through our core values of people, patient focus and quality, we work to better the lives of patients and the communities where we work, live and serve. •We value the trust and reputation behind Spectrum’s name and promote high standards of integrity, conducting our affairs in an honest and ethical manner, supported by our strong Compliance and Ethics Program. |
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2021 PROXY STATEMENT | Spectrum Pharmaceuticals |
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Our Approach to Human Capital Management |
We are committed to cultivating and advancing diversity in all forms as well as building a strong culture. •Inclusion and belonging are paramount, where all Spectrum employees strive to be open and inclusive leaders and teammates. Our culture is what unifies our employees across our diverse business model and ensures we are positioned to understand the needs of patients and improve their quality of life where we can. •Spectrum places significant value on fostering and enabling growth for our employees, both personally and professionally, and we are committed to providing a safe, healthy, innovative, and diverse work environment. |
Minimizing Environmental Impacts |
We aim to conduct our business in a responsible way that minimizes environmental impacts. •We are committed to furthering sustainable practices across our business, including minimizing and, if practicable, eliminating the use of any substance or material that may cause environmental damage; reducing waste generation and disposing of all waste through safe and responsible methods; minimizing environmental risks by employing safe technologies and operating procedures; and requiring the same of our vendors and partners throughout our supply chain. |
Backing our Colleagues During COVID-19
Throughout the pandemic, we have worked to provide our people with the flexibility and resources needed to stay safe, healthy and productive. We expanded our extensive health benefits and well-being programs to provide virtual counseling, wellness coaching, meditation classes, exercise programs and more to help our people cope with the challenges and stress of the pandemic. For colleagues enrolled in one of our medical plans, we provided coverage for all out-of-pocket medical and pharmacy service costs related to COVID-19 testing and treatment. We quickly moved to remote working arrangements in all of the Company’s locations.
Decisions to reopen offices are being made on a location-by-location, floor-by-floor and colleague-by-colleague basis and are not happening all at once. As offices begin to reopen, we will implement appropriate safety protocols such as, daily health/wellness assessments, distribution of appropriate PPE, increasing janitorial servicing, and limiting the number of people in elevators and on floors where necessary. The temporary remote working arrangements will continue to be evaluated based on the federal and state regulations along with work productivity. We anticipate resuming an office work environment for selected individuals in the latter part of 2021 or based on business demands.
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We value
Stockholder Engagement
Our Board’s Commitment to Stockholder Engagement
Our Board and management recognize the feedback we receivebenefits that come from our potential investors and stockholders. During fiscal year 2019, our management team, led by the Independent Chairman of the Compensation Committee along with our Chief Financial Officer, reached out to discuss a wide variety of issuesrobust dialogue with stockholders representingand other relevant parties and we have embraced an aggregate of approximately 47% ofactive engagement strategy for many years. We engage with stockholders throughout the year in order to:
®Provide visibility and transparency into our outstanding shares. We believe thatbusiness, our approach to engaging openlyperformance and our corporate governance, ESG and compensation practices;
® Discuss with our stockholders on topics such as financial performance, corporate governance, executive compensation,the issues that are important to them, hear their expectations for us and leadership structure drives increased corporate accountability, improvesshare our views; and
® Assess emerging issues that may affect our business, inform our decision making, and enhancesenhance our corporate governance practicesdisclosures and disclosures each year.
help shape our practices. |
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FALL | è | WINTER | | INVESTOR DISCUSSION POINTS |
Conduct meetings between investorsComprehensive engagement with stockholders to gather feedback following the Annual Meeting of Stockholders and management | ð | Review feedback from investors withdiscuss developments in the Company’s business and strategy, Board and incorporate into proxy disclosures, update governance as necessary | | w Financial performance, corporate governance matters, executive compensation and priorities for the year.
| | Review stockholder feedback and Board consideration of potential changes to corporate governance, executive compensation program and proxy related matters including: board composition, diversity and succession planning. disclosures.
w Executive compensation; including fiscal year 2018 executive compensation program. |
ñé | | ò | | | ê |
SUMMER | | SPRING | | FISCAL 2018 AND 2019 ENHANCEMENTS |
Review stockholder votesfeedback and results from our annual meetingthe Annual Meeting of Stockholders, plan for Fall Engagement and trends from proxy seasonconduct targeted and responsive engagement. | | Conduct meetings between investorsstockholders and management | | w Updated executive to update stockholders and gather feedback on compensation program, lengtheningand governance changes and to discuss items on the performance unit award ("PUA") vesting period from two years to three years. Annual Meeting of Stockholders agenda.
w Amended our bylaws to implement a majority voting standard.
w Rescinded our stockholder rights plan.
w Adopted a stand-alone "clawback policy" whereby executives' shares can be forfeited based on "detrimental conduct".
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ANNUAL STOCKHOLDER MEETING | |
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Our Board of DirectorsLeadership Structure
We believe that strong, independent leadership is essential for our Board to effectively perform its primary oversight functions. It is also important for the Board to retain flexibility to determine its leadership structure
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2021 PROXY STATEMENT | Spectrum Pharmaceuticals |
Our Board is responsible for overseeing
based on the exercise of corporate power and ensuring that the Company's business and affairs are managed to meet the Company’s stated goals and objectives and that the long-term interests of the stockholders are served.
We have an Independent Chairmanparticular composition of the Board, who is appointed annually by the independent membersindividuals serving in leadership positions, the needs and opportunities of the Board. TheCompany as they change over time and the additional factors described below.
While the Board has not mandated a particular leadership structure, since 2017, the roles of Chairman and Chief Executive Officer have been separate since 2017, which we believe increases the Board’s independence from management and thus leads to better monitoring and oversight. Mr. Ashton, in his current role as Chairman, provides leadership to the Board by, among other things, working with the Chief Executive Officer and the Corporate Secretary to set Board calendars, determine agendas for Board meetings, ensure proper flow of information to Board members, facilitate effective operation of the Board and its committees, help promote Board succession planning and the orientation of new directors, address issues of director performance, and help promote senior management succession planning. Our Chief Executive Officer has primary responsibility for the operational leadership and strategic direction of the Company. Our Independent Chairman leadsCompany and for implementing the Company’s strategic direction.
Six of our Board’sseven director nominees are independent, oversightand the Audit, Compensation, Nominating and Corporate Governance, and Science, Technology and Sustainability committees are composed solely of management, ensures there is effective communication withindependent directors. Consequently, the independent directors directly oversee such critical items as the Company’s financial statements, executive compensation, the selection and evaluation of directors and the development and implementation of our stockholders, and leadscorporate governance programs.
The Board will continue to review our Board’s consideration of key governance matters. Our Board believes its leadership structure as part of the succession planning process. We believe that our leadership structure, in which the roles of Chairman and Chief Executive Officer are separate, together with independent key committees, is appropriate because it effectively allocates authority, responsibility, and oversight between managementwill continue to be effective and is the independent members ofoptimal structure for our Board.
Company and our stockholders.
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Board Composition and Diversity
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Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
Board Composition
Our Nominating Committee is committed to maintaining a Board believeswith a broad spectrum of experience and expertise that having a diverse mixwill promote the presentation and consideration of directors with complementary qualifications, expertise,different points of view, meet the Company’s evolving needs and attributes is essential to meeting its oversight responsibility.strengthen our diversity. This high level summary is not intended to be an exhaustive list of each of the Board members skills or contributions to the Board and is reflective of our current Board.
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Key director qualifications, expertise, and attributes |
| Financial Experience | 5 of 7 |
| Audit Committee Financial Expertise | 5 of 7 |
| Public Company Governance/Director Certification | 6 of 7 |
| Executive Leadership | 7 of 7 |
| Business Development and M&A | 56 of 7 |
| Quality, Regulatory or Scientific/R&D | 4 of 7 |
| Legal | 21 of 7 |
| Strategic Planning | 7 of 7 |
| Drug Development | 4 of 7 |
| Sales, Marketing & Brand Management
| 3 of 7 |
| Risk Management | 4 of 7 |
| Clinical Practice in OncologyRisk Management | 13 of 7 |
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20202021 PROXY STATEMENT | Spectrum Pharmaceuticals |
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Spectrum Pharmaceuticals | 2021 PROXY STATEMENT |
Board Independence
Our Board leadership structure supports the independence of our non-management directors. The independent directors meet in an executive session at each Board meeting, and each of the standing Board committees (discussed below) is comprised solely of and led by independent directors. In determining whether members of our Board are independent, the Board reviews a summary of our relationships with each director and other facts relevant to the analysis of whether the directors qualify as “independent directors” under the NASDAQ Listing Rules. The NASDAQ Listing Rules have objective tests and a subjective test for determining who is an "independent director." The subjective test states that an independent director must be a person who lacks a relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board has not established categorical standards or guidelines to make these subjective determinations, but considers all relevant facts and circumstances.
The Board has affirmatively determined that Messrs. Ashton and CohenFischer and Ms. CzerepakBrennan and Drs. Vacirca, Vyas, and Welles, each of whom served as members of our Board during the fiscal year ended December 31, 2019,2020, are independent directors pursuant to the NASDAQ Listing Rules. Also, the Board has affirmatively determined that Mr. Fischer, a new director nominee, if elected at the Annual Meeting, would be an independent director pursuant to the NASDAQ Listing Rules. Mr. Turgeon does not qualify as independent because of his current employment as the Company's President and Chief Executive Officer. All members of the Audit, Compensation, Nominating and Corporate Governance and Science, Technology and Sustainability Committees are independent pursuant to the NASDAQ Listing Rules. In addition, the members of the Audit Committee are independent directors pursuant to the heightened independence criteria for members of Audit Committees set forth in SEC rules.
Comprehensive AnnualOur Board Evaluation of Board Effectiveness
Each year, our Board conducts a comprehensive self-evaluation in order to assess its own effectiveness, reviews our governance practices, and identifies areas for enhancement. Our Board’s annual self-evaluation also is a key component of its director nomination process and succession planning.
The Nominating and Corporate Governance Committee, (the “Nominating Committee”), in consultation with our Independent Chairman, reviews and determines the overall process, scope, and content of our Board’s annual self-evaluation process. As provided in its charter, each of our Board’s standing committees also conducts a separate self-evaluation process annually which is led by the committee chair. Our Board’s and each committee’s self-evaluation includes a review of the Corporate Governance Guidelines and its committee charter, respectively, to consider any proposed changes.
The Nominating Committee has continued to enhance the form and scope of the Board’s self-evaluation process based on director feedback, best practices, experience, and regulatory expectations.
The Nominating Committee reviews best practices annually relating to Board and committee self-evaluation processes and makes changes to the form and scope of its evaluation so that the process continues to provide the Board with an effective mechanism to evaluate the Board’s performance and effectiveness and make changes the Board determines are necessary and appropriate.
Board MeetingDirector Attendance
OurDuring 2020, the Board met 7 timesheld five meetings and acted by unanimous written consent 1 timefour times. All directors attended more than 75% of all Board meetings and meetings of Board committees on which they were members during fiscal year 2019. We expect each director2020. The independent, non-management directors meet separately in regularly scheduled executive sessions without members of management (except to attend eachthe extent that the non-management directors request the attendance of a member of management). A Board meeting of the Boardis typically scheduled in conjunction with our Annual Meeting, and of the committees on which he or she serves. Our policy is that every directorit is expected tothat our directors will attend the annual meetingAnnual Meeting absent good reason. In 2020, COVID-19 prevented Board members from attending the 2020 Annual Meeting of our stockholders in-person.Stockholders. The Chief
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2021 PROXY STATEMENT | Spectrum Pharmaceuticals |
Financial Officer and Chief Legal Officer attended the 2020 Annual Meeting of Stockholders in-person in Henderson, Nevada. If a director is unable to attend a meeting, he or she must notify the Board and attempt to participate in the meeting by telephone, if possible. All directors have attended at least 75% of the meetings of the full Board and the meetings of committees on which he
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or she served during fiscal year 2019. Our Board met in executive sessions without management 5 times during fiscal year 2019. All Board members attended the 2019 Annual Meeting of Stockholders.
Committees of the Board
Our Board has four standing committees: Audit; Compensation; Nominating and Corporate Governance; and Science, Technology and Sustainability. All of the standing committees of the Board are comprised entirely of independent directors. Each committee acts pursuant tohas a written charter. Copies of the Audit, Compensation, Nominatingcharter that describes its responsibilities, and Corporate Governance and Science, Technology and Sustainability Committee charters are postedeach charter is available on our website at https://www.sppirx.com/corporate-governance.html. investor.sppirx.com/corporate-governance. Each committee has the authority, as it deems appropriate, to independently engage outside legal, accounting or other advisors or consultants. In addition, each committee annually conducts a review and evaluation of its performance and reviews and reassesses its charter. The Board intends to reevaluate the composition of each of the committees at its meeting immediately following the Annual Meeting. The table below provides information about the Board committee memberships that our independent directors currently hold.
Board Committee Membership
as of December 31, 2019
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Independent Director(1) | Audit | Compensation | Nominating and Corporate Governance | Science, Technology and Sustainability |
William L. Ashton | Member | | Member | |
Raymond W. CohenNora E. Brennan | Chair | Member | Chair | | |
Elizabeth A. Czerepak | Chair | Seth H.Z. Fischer | Member | |
Joseph W. TurgeonMember | | | | |
Jeffrey L. Vacirca | | Chair | | Member | Member | Chair |
Dolatrai M. Vyas | | | Member | | MemberChair |
Bernice R. Welles | | Member | Chair | Member |
(1)The Chairman of the Board may attend each Committee meeting, except to the extent that a Committee requests to meet without the Chairman present.
Audit Committee.
At December 31, 2019,2020, the Audit Committee was comprised of Messrs. Ashton and CohenFischer and Ms. CzerepakBrennan (Chair), each of whom satisfied the NASDAQ and SEC “independence” and other rules for Audit Committee membership. The Audit Committee held 6four meetings during fiscal year 2019.2020. Our Board determined that Messrs. Ashton and CohenFischer and Ms. CzerepakBrennan were “audit committee financial experts” within the meaning of SEC rules.
The principal responsibilities of the Audit Committee include but are not limited to:
•Duly appointing and overseeing the quality and scope of work conducted by the independent registered public accounting firm;
•Reviewing independence qualifications and quality-control procedures of the independent registered public accounting firm;
•Overseeing and monitoring the Company’s internal controls over financial reporting; and
•Discussing with management and the independent registered public accounting firm, the quality of its quarterly and annual financial statements and related disclosures, prior to its filing with the SEC.
Compensation Committee.
At December 31, 2019,2020, the Compensation Committee was comprised of Dr. Vacirca (Chair), Ms. Brennan and Mr. Cohen (Chair) and Drs. Vacirca, Vyas and Welles.Fischer. The Compensation Committee held 3five meetings during 2019fiscal year 2020 and acted by unanimous written consent 5 timestwice during fiscal year 2019.2020. Our Board determined that each of the members was an “independent director” within the meaning of the NASDAQ Listing Rules.
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For additional information about the role and responsibilities of the Compensation Committee, see the “Compensation Discussion and Analysis — Role of Compensation Committee in Determining Executive Compensation” section of this Proxy Statement.
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Nominating and Corporate Governance Committee.
At December 31, 2019,2020, the Nominating Committee was comprised of Drs. Welles (Chair) and Vacirca,Vyas and Mr. Ashton and Ms. Czerepak.Ashton. Our Board determined that each of the members was an “independent director” under the NASDAQ Listing Rules. The Nominating Committee’s responsibilities include, but are not limited to: the identification and recommendation of nominees for election as directors by the stockholders; the identification and recommendation of candidates to fill any vacancies on our Board; and the recommendation of policies and standards of corporate governance. The Nominating Committee held 3five meetings during fiscal year 2019.2020 and acted by unanimous written consent one time during fiscal year 2020.
The Nominating Committee considers a number of factors when reviewing potential nominees for the Board. The factors which are considered by the Nominating Committee include the following:
•the candidate’s ability and willingness to commit adequate time to Board and committee matters;
•the fit of the candidate’s skills and personality with those of other directors and potential directors in building and maintaining an effective and collegial Board;
•the candidate’s personal and professional integrity, ethics and values;
•the candidate’s experience as a corporate officer of a publicly-held company;
•the candidate’s experience in our industry and with corporate responsibility and sustainability;
•the candidate’s experience as a Board member of another publicly-held company;
•whether the candidate would be “independent” under applicable standards;
•whether the candidate has practical and seasoned business judgment; and
•the candidate’s academic qualifications and professional credentials in an area of our operations.
The Nominating Committee has evaluated and recommended to the Board the nomination of each of the seven nominees named in this Proxy Statement for election to the Board.
For all directors, we require independence, integrity, personal and professional ethics and business judgment. Gender, race, and ethnic diversity also have been, and will continue to be, a priority for the Nominating Committee and our Board in its director nomination process. This is because the Nominating Committee and our Board believe that it is essential that the composition of our Board appropriately reflects the diversity of our Company’s team members, its customers, and the communities they serve. The Board maintains a thoughtful and deliberate refreshment process to ensure that we have the independence, diversity and deep industry expertise necessary to continue to effectively oversee the Company's business objectives. As a result of our robust evaluation and refreshment process, since 2017, we have appointed five new directors to the Board. In addition, Seth H.Z. Fischer, a new director nominee, will be standing for election at the Annual Meeting for the first time. This also best ensures the continuing success of our business through the exercise of sound judgment that diversity of experience and perspectives provides. If each director nominee is elected to the Board, after the Annual Meeting, over 70% of our Board will represent new directors being added in the past twothree years. The remaining 30% of the Board will represent incumbent directors, who have served as directors of the Company for an average of 45 1/2 years. Together, the composition of the entire Board is designed to provide the Company with informed continuity of leadership.
In selecting and making recommendations to the Board for director nominees, the Nominating Committee may consider suggestions from many sources, including our stockholders. Any such director nominations, together with appropriate biographical information and qualifications, should be submitted by the stockholder(s) to the Chairman of the Nominating Committee of our Board of Directors, c/o Spectrum Pharmaceuticals, Inc., 11500 South Eastern Avenue, Suite 240, Henderson, Nevada 89052, following the procedures set forth in the
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2021 PROXY STATEMENT | Spectrum Pharmaceuticals |
Company’s bylaws. Director nominees submitted by stockholders are subject to the same review process as director nominees submitted from other sources, such as other Board members or senior management. No director nominations by stockholders have been received as of the filing of this Proxy Statement.
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In identifying, evaluating and selecting future potential director nominees for election at each annual meeting of stockholders and nominees for directors to be elected by the Board to fill vacancies and newly created directorships, the Nominating Committee engages in a selection process. In identifying potential nominees, the Nominating Committee willmay consider as potential director nominees candidates recommended by various sources, including any member of the Board, any of our stockholders or senior management. In appropriate circumstances, the Nominating Committee may also hire a search firm to help locate qualified candidates. Once potential nominees are identified, they are initially reviewed by the Chairman of the Nominating Committee, or in the Chairman’s absence, any other member of the Nominating Committee delegated to initially review director candidates. The reviewing member of the Nominating Committee will make an initial determination in his or her own independent business judgment as to the qualifications and fit of such director candidates based on the criteria set forth above. If the reviewing member determines that it is appropriate to proceed, the Chief Executive Officer and at least one member of the Nominating Committee will interview the prospective director candidate(s). The full Nominating Committee may interview the candidates as well. The Nominating Committee will provide informal progress updates to the Board and will meet to consider and recommend final director candidates to the entire Board. Our Board determines which candidates are nominated or elected to fill a vacancy.
In addition to other nominees standing for reelection, the Nominating Committee has recommended that Seth H.Z. Fischer be nominated for election as a director. Mr. Fischer was recommended to the Nominating Committee by Mr. Ashton, Chairman of the Board.
Science, Technology and Sustainability Committee
At December 31, 2019,2020, the Science, Technology and Sustainability Committee (the "Science Committee") was comprised of Drs. VacircaVyas (Chair), VyasVacirca and Welles. The Science Committee was formed in September 2019 by the Board. The Science Committee charter was formally adopted by the Board on December 16, 2019. The first meeting of the Science Committee did not occur untilheld four meetings during 2020. The Science Committee was created to assist the Board in monitoring the state of science and technology capabilities within the Company, the general oversight of the Company’s sustainability activities and overseeing the development of key technologies and major science and medicine-driven innovation initiatives essential to the long-term success of the Company.
The principal responsibilities of the Science Committee include but are not limited to:
•monitor and review the overall quality, competitiveness, strategy, direction and effectiveness of the Company’s research and development;
•serve as a resource and provide input, as needed, regarding the scientific and technological aspects of product safety matters and efficacy of the product;Company’s products;
•identify and discuss new and emerging trends in pharmaceutical science, technology and regulation, and assure the Company makes well-informed choices in the investment of it research and development resources;
•regularly review the pipeline progress;
•assist the Company in minimizing its environmental impact through responsible practices;
•observe the evolution of science and medicine outside the Company, for possible application within the Company;
•provide aid to the Compensation Committee and management in setting any scientific pipeline performance metrics under the Company’s incentive compensation program and reviewing the performance results;
•assist the Board in identifying and comprehending significant emerging science and technology policy and public health issues and trends that may impact the Company’s overall business strategy; and
•assist the Board in its oversight of the Company’s major acquisitions and business development activities as they relate to the acquisition or development of new science and technology.technology; and
Board Leadership Structure•receive, review and opine on competitive intelligence debriefings from National and Biotech meetings (e.g. ASCO, AACR) attended by Company personnel.
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Currently, the leadership structure of the Board is such that our Chairman and Chief Executive Officer positions are separate with Mr. Ashton, a member of the Board since February 2018, serving as the Chairman of the Board and
Board/Committee Primary Areas of Risk Oversight
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Mr. Turgeon serving as our Chief Executive Officer. The Board believes that the current structure, providing for the separation of the role of the Chairman and the Chief Executive Officer is appropriate at this time because it allocates the oversight of the business and management among the directors and the executive officers. This allows our Chief Executive Officer to focus on the proper functioning of daily business operations, and our Chairman to focus on the appropriate oversight of management’s business execution and the effective governance of the Board. While the Board believes the current structure provides the most effective leadership for the Company, the Board will continue to assess this structure to best serve the interests of the Company and its stockholders.
Risk Oversight
Management is responsible for identifying our risk exposures and communicating such exposures to our Board. The Board, as a whole, actively oversees the risk management of the Company. Enterprise risks—the specific financial, operational, business and strategic risks that the Company faces, whether internal or external—are identified and prioritized by the Board and management together, and then each specific risk is responsibleassigned to the full Board or a Board committee for implementing our risk oversight responsibilities.oversight. The Board does not have a standing risk management committee, but administers this function directly, as well as through committees of the Board. For example, the Audit Committee assists the Board in its risk oversight function by reviewing and discussing with management its financial accounting policies,and compliance matters, including risks associated with:
•accounting, financial reporting, processes,tax compliance, disclosure controls and procedures, and internal controls over financial reporting. reporting;
•legal matters that may have a material impact on the Company's financial statements or involve governmental investigation or allegations of fraud or breach of fiduciary duty; and
•the ethics compliance program.
The Compensation Committee oversees management of risk relating to personnel and compensation issues, such as risks associated with:
•the Company's executive compensation plans and practices; and
•cash incentive plans, equity incentive plans, profit sharing plans, deferred compensation plans and similar programs.
The Nominating Committee assists the Board in its risk oversight function by periodically reviewing and discussing with management importantmanages risks relating to corporate governance principlesissues, including periodic evaluation as to whether identified risks are assigned to the appropriate Board committee (or to the Board) for oversight, as well as risks associated with:
•Board independence, effectiveness and practices and by considering risks related to ourorganization;
•the director nominee evaluation process. process; and
•the Company's succession planning for the Company's executive officers.
The CompensationScience Committee assists the Board in its risk oversight function by overseeing compliance with our executive compensation programs and consideringoversees management of risks relating to changing technologies and emerging science and public health issues and trends and their impact on the design of our executive compensation programsCompany's overall business strategy and arrangements. The Science, Technology and Sustainability Committee assists the Board in its risk oversight function by monitoring competitive position, including risks associated with:
•the state of science and technology capabilities within the CompanyCompany; and
•the general oversight of the Company's sustainability activities.
In addition, our compliance officerGlobal Compliance Officer monitors our corporate compliance program and our compliance with applicable laws, rules and regulations and provides reports to our Board with respect to compliance matters and any related issues. The full Board considers strategic risks and opportunities and receives reports from the committees regarding risk oversight in their areas of responsibility as necessary. We believe our Board leadership structure facilitates the division of risk management oversight responsibilities among the Board committees and enhances the Board’s effectiveness in fulfilling its oversight function with respect to different areas of our business risks and our risk mitigation practices.
Communications with the Board
Stockholders who wish to contact members of our Board may send email correspondence to: ir@sppirx.com. If stockholders would like to write to the Board, they may also send written correspondence to the following address:
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Board of Directors, c/o Spectrum Pharmaceuticals, Inc., 11500 South Eastern Avenue, Suite 240, Henderson, Nevada 89052. Stockholders should provide proof of share ownership with their correspondence. It is suggested that stockholders also include contact information. All stockholder communications will be received and processed by the Investor Relations Office, and then directed to the appropriate member(s) of the Board. In general, correspondence relating to accounting, internal accounting controls or auditing matters will be referred to the chairpersonChairperson of the Audit Committee, with a copy to the Nominating and Corporate Governance Committee. All other correspondence that is directed to the Board generally will be referred to the chairpersonChairperson of the Nominating and Corporate Governance Committee. To the extent correspondence is addressed to a specific director or requires a specific director’s attention, it will be directed to that director.
Stock OwnershipAnti-Hedging Policy
We adopted a Stock Ownership Policy that applies to our Chief Executive Officer and our non-employee directors to further align the interests of such individuals with those of our stockholders. Under the policy, the Chief Executive Officer and non-employee directors must hold and maintain, directly or indirectly (including through equity incentive plans), shares of our common stock (including vested “in-the-money” options) equivalent to at least five times his or her annual base cash salary or three times the annual cash Board retainer fee (excluding any additional fees paid
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Spectrum Pharmaceuticals | 2020 PROXY STATEMENT |
for committee assignments and service as the lead director or committee chair, if any), as applicable. The current Chief Executive Officer and non-employee directors have five years from the effective date of the policy or five years from the date on which he or she was first appointed or elected, as the case may be, to reach the required ownership level. Furthermore, within one year of his or her initial appointment or election, each such person must own and maintain some shares of our capital stock. Individuals who do not hold the required number of shares will be required to hold all shares received as an equity grant, net of shares sold or withheld to pay the exercise price of stock options or to pay withholding taxes. A copy of the Stock Ownership Policy is posted on our website at www.sppirx.com/corporate-governance.html.
Anti-Hedging Policy
We have adopted an anti-hedging policy that prohibits any of our or our subsidiaries’ directors, officers or other employees from, at any time, directly or indirectly, engaging in any kind of hedging transaction that could reduce or limit such person’s holdings, ownership or interest in or to any of our shares of common stock or other securities, including without limitation outstanding stock options, deferred share units, restricted share units, or other compensation awards the value of which are derived from, referenced to or based on the value or market price of our securities. Prohibited transactions include the purchase by a director, officer or other employee of financial instruments, including, without limitation, prepaid variable forward contracts, instruments for short sale or purchase or sale of call or put options, equity swaps, collars, or units of exchangeable funds, that are designed to or that may reasonably be expected to have the effect of hedging or offsetting a decrease in the market value of any of our securities. A copy of the anti-hedging policy is posted on our website at www.sppirx.com/corporate-governance.htmlhttps://investor.sppirx.com/corporate-governance.
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2020 PROXY STATEMENT | Spectrum Pharmaceuticals | 2021 PROXY STATEMENT |