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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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◻ | Preliminary Proxy Statement | ||
◻ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
⌧ | Definitive Proxy Statement | ||
◻ | Definitive Additional Materials | ||
◻ | Soliciting Material under §240.14a-12 |
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◻ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||||
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780 Dedham Street, Suite 800Canton, MA 02021
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100 Technology Center Drive, Suite 300 |
Stoughton, MA 02072 |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 2016MAY 20, 2021
To the Shareholders of Collegium Pharmaceutical, Inc.:
The 20162021 Annual Meeting of Shareholders (the "2016 Annual Meeting"“Annual Meeting”) of Collegium Pharmaceutical, Inc., a Virginia corporation (the "Company," "we," "us,"“Company,” “we,” “us,” or "our"“our”), will be held virtually via live webcast on Thursday, June 9, 2016,May 20, 2021, at 12:10:00 p.m.a.m. (Eastern Time) at the offices of Pepper Hamilton LLP, 19th Floor, High Street Tower, 125 High Street, Boston, MA 02110,, for the following purposes:
1. | To elect four directors to terms expiring in 2022; |
2. | To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement; |
3. | To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and |
4. | To transact such other business as may properly be brought before the Annual Meeting or any adjournment or postponement thereof. |
Our board of directors unanimously recommends that you vote "FOR"“FOR” the election of our board of directors'its director nominees (Proposal 1) and "FOR"“FOR” Proposals 2 and 3.
The meeting can be accessed by visiting www.meetingcenter.io/277168861, where you will be able to listen to the proposalmeeting live, submit questions and vote online. There will be no physical location for shareholders to ratify Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016 (Proposal 2).attend.
Instead of mailing a printed copy of our proxy materials to all of our shareholders, we provide access to these materials via the Internet. This reduces the amount of paper necessary to produce these materials as well as the costs associated with mailing these materials to all shareholders. Accordingly, on or about April 29, 2016,7, 2021, we will begin mailing a Notice of Internet Availability of Proxy Materials (the "Notice"“Notice”) to all shareholders of record on our books at the close of business on April 20, 2016,March 31, 2021, the record date for the 2016 Annual Meeting, and will post our proxy materials on the website referenced in the Notice. As more fully described in the Notice, shareholders may choose to access our proxy materials on the website referred to in the Notice or may request to receive a printed set of our proxy materials. In addition, the Notice and website provide information regarding how you may request to receive proxy materials in printed form by mail, or electronically by email, on an ongoing basis.
If you are a shareholder of record, you may vote in one of the following ways:
● | Vote over the Internet, by going to www.envisionreports.com/COPI (have your Notice or proxy card in hand when you access the website); |
● | Vote by telephone, by calling the toll-free number 1-800-652-8683 (have your Notice or proxy card in hand when you call); |
● | Vote by mail, if you received (or requested and received) a printed copy of the proxy materials, by returning the enclosed proxy card (signed and dated) in the envelope provided; or |
● | Attend the Annual Meeting at www.meetingcenter.io/277168861 and vote online during the live webcast. |
If your shares are held in "street“street name,"” meaning that they are held for your account by a broker, bank or other nominee, you will receive instructions from the holder of record that you must follow for your shares to be voted.
Whether or not you plan to attend the 2016 Annual Meeting, in person, we urge you to take the time to vote your shares.
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| By Order of the Board of Directors, | |
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| /s/ SHIRLEY KUHLMANN | |
| Shirley Kuhlmann | |
| Executive Vice President, General Counsel & Secretary | |
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Stoughton, Massachusetts | | |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 57 | |||||
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 60 | |||||
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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS | 60 | |||||
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SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR | 61 | |||||
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DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS | 61 | |||||
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100 Technology Center Drive, Suite 300 |
Stoughton, MA 02072 |
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 2016MAY 20, 2021
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2016 2021
ANNUAL MEETING TO BE HELD ON THURSDAY, JUNE 9, 2016
MAY 20, 2021
Copies of this proxy statement and the form of proxy card, and the Annual Report on Form 10-K for the fiscal year ended December 31, 20152020 (the "2015“2020 Annual Report"Report”) are available without charge at www.envisionreports.com/COPI, by telephone at 1-866-641-4276, or by notifying our Corporate Secretary, in writing, at Collegium Pharmaceutical, Inc., 780 Dedham Street,100 Technology Center Drive, Suite 800, Canton,300, Stoughton, MA 02021.02072.
The board of directors ("Board"(“Board”) of Collegium Pharmaceutical, Inc. ("(“Company," "we," "us,"” “we,” “us,” or "our"“our”) is soliciting the enclosed proxy for use at its 2016 annual meeting2021 Annual Meeting of shareholders (the "2016 Annual Meeting"“Annual Meeting”) to be held virtually via live webcast on May 20, 2021 at the offices of Pepper Hamilton LLP, 19th Floor, High Street Tower, 125 High Street, Boston, MA 02110, on June 9, 2016 at 12:10:00 p.m. (Easterna.m. (Eastern Time). The meeting can be accessed by visiting www.meetingcenter.io/277168861. There will be no physical location for shareholders to attend.
On April 29, 2016,7, 2021, we mailed a Notice of Internet Availability of Proxy Materials (the "Notice"“Notice”) to our shareholders (other than those who previously requested electronic or paper delivery of proxy materials), directing shareholders to a website where they can access our proxy materials, including this proxy statement and the 20152020 Annual Report, and view instructions on how to vote online or by telephone. If you would prefer to receive a paper copy of our proxy materials, please follow the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive access to those materials via e-mail unless you elect otherwise.
We are an "emerging growth company" under applicable federal securities laws and therefore permitted to take advantage of certain reduced public company reporting requirements. As an emerging growth company, we provide in this proxy statement the scaled disclosure permitted under the Jumpstart Our Business Startups Act of 2012, including the compensation disclosures required of a "smaller reporting company," as that term is defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 as amended (the "Exchange Act"). In addition, as an emerging growth company, we are not required to conduct votes seeking approval, on an advisory basis, of the compensation of our named executive officers or the frequency with which such votes must be conducted. We will remain an "emerging growth company" until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.0 billion; (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the preceding three-year period; and (iv) December 31, 2020.
The following questions and answers present important information pertaining to the 2016 Annual Meeting:
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Q: How can I participate in the Annual Meeting?
A: This year our Annual Meeting will be a completely virtual meeting conducted via live webcast. There will be no physical meeting location. We have adopted a virtual format for the Annual Meeting to make participation accessible for shareholders from any geographic location with Internet connectivity. We have worked to offer the same participation opportunities as would be provided at an in-person meeting while further enhancing the online experience available to all shareholders regardless of their location.
To participate in the virtual meeting, visit www.meetingcenter.io/277168861. The password for the meeting is COPI2021. You will need to enter the 16-digit control number included on your Notice or on your proxy card. The meeting will begin promptly at 10:00 a.m. ET on May 20, 2021. We encourage you to access the meeting prior to the start time leaving ample time for the check in.
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong WiFi connection wherever they intend to participate in the meeting. Participants should also give themselves plenty of time to log in prior to the start of the meeting.
This year’s shareholders question and answer session will include questions submitted in advance of, and questions submitted live during, the Annual Meeting. Questions may be submitted through www.meetingcenter.io/277168861. We will post questions and answers if applicable to our business on our Investor Relations website shortly after the meeting.
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A:You may vote on the following matters:
1. | The election of four directors to terms expiring in 2022; |
2. | The approval, on an advisory basis, of the compensation of our named executive officers; |
3. | The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and |
4. | Any other business that may properly come before the Annual Meeting and any adjournment or postponement thereof. |
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If you own your shares directly (i.e., you are a "registered shareholder"“registered shareholder”): your proxy is being solicited directly by us, and you can vote by mail, telephone or Internet, or you can vote in person if you attendat the 2016 Annual Meeting.
If you wish to vote by mail,, please do the following: (i) sign and date the proxy card, (ii) mark the boxes indicating how you wish to vote, and (iii) return the proxy card in the prepaid envelope provided. If you sign your proxy card but do not indicate how you wish to vote, the proxies will vote your shares"FOR" “FOR” the director nominees"FOR" the ratification of Deloitte & Touche LLP as our independent registered public accounting firm, and “FOR” Proposals, 2 and 3, and, in their discretion, on any other matter that properly comes before the 2016 Annual Meeting. Unsigned proxy cards will not be counted.
If you wish to vote by telephone or over the Internet, you will find instructions on the proxy card that you should follow. There may be costs associated with telephonic or electronic access, such as usage charges from Internet access providers and telephone companies that must be paid by the shareholder. The telephone and Internet voting procedures are designed to authenticate a shareholder'sshareholder’s identity to allow a shareholder to vote his, her or its shares and confirm that his, her or its instructions have been properly recorded. Voting by telephone or over the Internet authorizes the named proxies to vote your shares in the same manner as if you had submitted a validly executed proxy card.
If you wish to vote in person at the meeting, written ballotsyou will need to access the meeting by visiting www.meetingcenter.io/277168861, where you will be passed outable to anyone who wantslisten to vote at the meeting.meeting live, submit questions and vote. The password for the meeting is COPI2021, and you will need the 16-digit control number provided on your proxy card or Notice.
If you hold your shares through a broker, bank or other nominee: a voting instruction card has been provided to you by your broker, bank or other nominee describing how to vote your shares. If you receive a voting instruction card, you can vote by completing and returning the voting instruction card.Please be sure to mark your voting choices on your voting instruction card before you return it. You may also be able to vote by telephone or via the Internet. Please refer to the instructions provided with your voting instruction card for information about voting in these ways. See also "Will“Will my shares be voted if I do not return my proxy?"” below.
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If you wish to vote in person at the meeting, written ballotsyou will be passed outneed to anyone who wantsregister in advance to vote atattend the meeting. However, if you are the beneficial owner of shares held in street name
through a bank, broker or other nominee,Annual Meeting online and you may not vote your shares at the 2016 Annual Meeting unless you obtain a "legal proxy"“legal proxy” from the bank, broker or nominee that holds your shares, giving you the right to vote the shares at the 2016 Annual Meeting. To register to attend the Annual Meeting online, you must submit proof of your legal proxy reflecting your holdings along with your name and email address to Computershare Trust Company, N.A. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m. (Eastern Time) on May 19, 2021. You will receive a confirmation of your registration by email after we receive your registration materials. Requests for registration should be directed by (i) email to legalproxy@computershare.com, with a forward of the email from your broker or attachment of an image of your legal proxy, or (ii) by mail to Computershare Trust Company, N.A., Collegium Pharmaceutical, Inc. Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001.
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If your shares are held in "street“street name,"” your brokerage firm may under certain circumstances vote your shares if you do not timely return your voting instructions. Brokers can vote their customers'customers’ unvoted shares on discretionary matters but cannot vote such shares on non-discretionary matters. If you do not timely return voting instructions to your brokerage firm to vote your shares, your brokerage firm may, on discretionary matters, either vote your shares or leave your shares unvoted.
Proposal 1 election(election of directors, is adirectors) and Proposal 2 (the advisory vote on the compensation of our named executive officers) are non-discretionary matter.matters. If you do not instruct your brokerage firm how to vote with respect to this proposal,these proposals, your brokerage firm may not vote with respect to this proposalthese proposals and those shares that would have otherwise been entitled to be voted will be treated as "broker“broker non-votes." "Broker non-votes"” “Broker non-votes” are shares that are held in "street name"“street name” by a bank or brokerage firm that indicates on its proxy that it does not have or did not exercise discretionary authority to vote on a particular matter.
Proposal 2, ratification3 (ratification of the selectionappointment of our independent registered public accounting firm,firm) is considered a discretionary matter, and your brokerage firm will be able to vote on this proposal even if it does not timely receive instructions from you, so long as it holds your shares in its name. We encourage you to timely provide voting instructions to your brokerage firm or other nominee. This ensures that your shares will be voted at the 2016 Annual Meeting
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according to your instructions. You should receive directions from your brokerage firm or other nominee about how to submit your voting instructions to them.
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1. | Vote over the Internet or by telephone as instructed above. Only your latest Internet or telephone vote is counted. You may not revoke or change your vote over the Internet or by telephone after 11:59 p.m., Eastern Time, on May 19, 2021. |
2. | Sign a new proxy and submit it by mail to Computershare Trust Company, N.A., 250 Royall Street, Canton, MA 02021, Attention: Proxy Tabulation, who must receive the proxy card no later than May 19, 2021. Only your latest dated proxy will be counted. |
3. | Attend the Annual Meeting and vote as instructed above. Attending the Annual Meeting alone will not revoke your Internet vote, telephone vote or proxy submitted by mail, as the case may be. |
4. | Give our Corporate Secretary written notice before or at the meeting that you want to revoke your proxy. If your shares are held in “street name,” you should contact your broker, bank or nominee for information on how to change your voting instructions. You may also vote in person at the Annual Meeting, which will have the effect of revoking any previously submitted voting instructions, if you obtain a “legal proxy” from your broker, bank or nominee as described in the answer to the question “How do I vote my shares?” above. |
If your shares are held in "street name," you should contact your broker, bank or nominee for information on how to change your voting instructions. You may also vote in person at the 2016 Annual Meeting, which will have the effect of revoking any previously submitted voting instructions, if you obtain a "legal proxy" from your broker, bank or nominee as described in the answer to the question "How do I vote my shares?" above.
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The fourthe votes cast in an uncontested election. Because the number of nominees properly nominated for the Annual Meeting is the same as the number of directors to be elected at the Annual Meeting, the election of directors is an uncontested election. As a result, a nominee for director tomust receive the highesta greater number of votes FORcast “FOR” election willthan votes cast “AGAINST” such nominee’s election to be elected as directors. Thisto the Board (or re-elected, in the case of any nominee who is called a plurality.an incumbent director). To approve Proposal 2 or Proposal 3, the votes cast “FOR” must exceed the votes cast “AGAINST” such proposal.
Proposals 1 is aand 2 are non-discretionary matter.matters. Therefore, if your shares are held by your brokerage firm in "street name"“street name” and you do not timely provide voting instructions with respect to your shares, your brokerage firm cannot vote your shares on Proposal 1. Sharessuch Proposals. Broker non-votes – shares held in "street name"“street name” by banks, brokerage firms, or nominees who indicate on their proxies that they do not have authority to vote the shares on Proposal 1such proposals – will not be counted as votes FOR“FOR” or WITHHELD“AGAINST” these proposals. If you “ABSTAIN” from any nominee.voting on Proposals 1 or 2, your shares will not be voted “FOR” or “AGAINST” such proposal and will also not be counted as votes cast or shares voting on the proposal. As a result, such "broker non-votes"“broker non-votes” and abstentions will have no effect on the voting on Proposal 1. You may:
Proposal 2—Ratification of Selection of Independent Registered Public Accounting Firm2.
To approve Proposal 2 is an advisory vote and the votes cast FORresults of this vote will not be binding on the ratification must exceedBoard or the votes cast AGAINSTCompany. However, the ratification. Board values the opinions of our shareholders, and will consider the outcome of the vote when making future decisions on the compensation of our named executive officers and our executive compensation philosophy, policies and procedures.
Proposal 23 is considered a discretionary matter. If your shares are held by your brokerage firm in "street name"“street name” and you do not timely provide voting instructions with respect to your shares, your brokerage firm may vote your unvoted shares on Proposal 2.3. If you ABSTAIN“ABSTAIN” from voting on Proposal 2,3, your shares will not be voted FOR“FOR” or AGAINST
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“AGAINST” the proposal and will also not be counted as votes cast or shares voting on the proposal. As a result, voting to ABSTAIN“ABSTAIN” will have no effect on the outcome of Proposal 2.3.
Although shareholder approval of our audit committee's selection of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2016Proposal 3 is not
required, we believe that it is advisable to give shareholders an opportunity to ratify this selection.appointment. If this proposal is not approved at the 2016 Annual Meeting, the audit committee will reconsider its selectionappointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.2021.
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A:If you would like a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 20152020 that we filed with the SEC, we will send you one without charge. Please write to:
Collegium Pharmaceutical, Inc.780 Dedham Street, Suite 800Canton, MA 02021
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100 Technology Center Drive, Suite 300 |
Stoughton, MA 02072 |
Attn: Investor Relations
All of our SEC filings are also available free of charge under the heading "SEC Filings"“SEC Filings” in the "Investors"“Investors” section of our website at www.collegiumpharma.com.
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PROPOSAL 1:
ELECTION OF DIRECTORS
Our Articles of Incorporation historically provided that the Board iswould be divided into three classes of directors, with oneeach class of our directors standing for election each year,elected every three years for a three-year term. Directors
In 2020, after considering the advantages and disadvantages of declassification, including feedback from shareholders, the Board recommended, and our shareholders approved, an amendment and restatement of our Articles of Incorporation that declassifies the Board on a phased basis over three years. This phased declassification will proceed as follows:
At the Annual Meeting, (a) Rita Balice-Gordon, who was appointed by our Board effective September 24, 2020 to fill a vacancy resulting from an increase in the number of directors, and (b) Garen Bohlin, Gwen Melincoff and Theodore Schroeder, who were formerly designated as Class III directors, will stand for election for a one-year term expiring in 2022;
At our 2022 annual meeting of shareholders, (a) the four directors referenced above and (b) John Fallon, M.D. and John Freund, M.D., who were formerly designated as Class I directors, will stand for election for a one-year term expiring in 2023; and
At our 2023 annual meeting of shareholders, and at each classannual meeting thereafter, all directors will stand for election for one-year terms.
Upon the recommendation of the nominating and corporate governance committee, each of Dr. Balice-Gordon, Mr. Bohlin, Ms. Melincoff and Mr. Schroeder have been nominated to serve as directors, and each has agreed to stand for election. If the director nominees are elected at the Annual Meeting, then each nominee will serve for a one-year term expiring at the 2022 annual meeting of shareholders heldand until his or her successor is duly elected and qualified.
Our nominating and corporate governance committee is aware that some institutional investors and some institutional shareholder advisory firms have policies and standards regarding “overboarding,” which refers to a director who sits on multiple boards, due to concerns that “overboarded” directors face excessive time commitments and challenges in fulfilling their duties. In evaluating whether Mr. Schroeder should continue to serve on the yearBoard, our nominating and corporate governance committee carefully considered the number of other boards on which he serves, as well as his contribution to the Board and his attendance, preparedness and engagement at Board and committee meetings, all of which have been exemplary. Furthermore, and consistent with our commitment to corporate governance that reflects our values, our Nominating and Corporate Governance took into account Mr. Schroeder’s commitment to resolve his “overboarded” status by no later than December 31, 2021. After taking these different considerations into account, and in whichreliance upon Mr. Schroeder’s commitment to aligning his board responsibilities with accepted standards, the termnominating and corporate governance committee determined to nominate him for their class expires andcontinued service on our Board.
Elected directors hold office until their death, resignation or removal or their successors are duly elected and qualified. In accordance with our articles of incorporation and bylaws, our directors may fill existing vacancies on our Board (including vacancies resulting from an increase in the number of directors) by appointment. Pursuant to the Virginia Stock Corporation Act, the term of office of a director elected by our Board to fill a vacancy expires at the next shareholders'shareholders’ meeting at which directors are elected. Once the appointed director receives the requisite shareholder vote at the annual meeting, he or she will serve for the remainder of the full term of that class and until such director's successor is elected and qualified, or until such director's earlier death, resignation or removal.
Our Board currently consists of eight directors, divided into the following three classes:
Two of our Class I directors, John G. Freund, M.D. and David Hirsch, M.D., Ph.D., have been nominated to serve as Class I directors and have agreed to stand for election. In addition, John A. Fallon, M.D. has been nominated to serve as a Class I director and has agreed to stand for election at the 2016 Annual Meeting. Patrick Heron, who is currently a Class I director, will not stand for re-election at the 2016 Annual Meeting. If the nominees for Class I directors are elected at the 2016 Annual Meeting, then each nominee will serve for a three-year term expiring at the 2019 annual meeting of shareholders and until his successor is duly elected and qualified.
Theodore R. Schroeder, who was appointed by our Board on January 22, 2016 to fill a vacancy resulting from an increase in the number of directors, has been nominated to serve as a Class III director and has agreed to stand for election. If Mr. Schroeder is elected at the 2016 Annual Meeting, he will serve for the remaining two years of the three-year term of office of a Class III director that will expire at the 2018 annual meeting of shareholders and until his successor is duly elected and qualified.
Our directors are elected by a pluralitymajority of the votes cast. Pursuant to our bylaws, a majority of votes cast means that if the votes cast “FOR” such nominee’s election exceed the votes cast “AGAINST” such nominee’s election, such nominee is elected.
If a choice is specified on the proxy card by a shareholder, the shares will be voted as specified. If no contrary indication is made, proxies are to be voted "FOR" Messr.“FOR” Dr. Balice-Gordon, Mr. Bohlin, Ms. Melincoff and Mr. Schroeder, and Drs. Fallon, Freund and Hirsch, or, in the event thatif any such individual is not a candidate or is unable to serve as a director at the time of the election (which is not currently expected), for any nominee who is designated by our Board to fill the vacancy.
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Recommendation of our Board
OUR BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE (I) FOR THE ELECTION OF DRS. FALLON, FREUNDDR. BALICE-GORDON, MR. BOHLIN, MS. MELINCOFF AND HIRSCH AS CLASS I DIRECTORS AND (II) FOR THE ELECTION OF MR. SCHROEDER AS A CLASS III DIRECTOR, IN EACH CASE,DIRECTORS AT THE 2016 ANNUAL MEETING.
Nominees for Election to the Board
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| Age | Position | |||
| | 60 | | Director | |
| | 73 | | Director | |
Gwen Melincoff | | 69 | | Director | |
Theodore Schroeder | | 66 | | Director |
Rita Balice-Gordon, Ph.D., Director.Nominees Dr. Balice-Gordon has served as a member of our Board since September 2020. Dr. Balice-Gordon has served as the Chief Scientific Officer of Muna Therapeutics, a newly formed biotech company focused on developing novel therapeutics for Electionpatients with neurodegenerative diseases, since May 2020, and has been an entrepreneur-in-residence at Novo Seeds since August 2020. Previously, Dr. Balice-Gordon served in scientific roles of increasing responsibility at Sanofi, Inc., most recently as Global Head of Rare and Neurological Diseases. Prior to joining Sanofi, Dr. Balice-Gordon led the Board for a Three-Year Term Expiringpsychiatry and pain drug discovery portfolios as Vice President in the Neuroscience and Pain Research Unit at Pfizer, Inc. Earlier in her career, Dr. Balice-Gordon was Professor of Neuroscience and Chair of the Neuroscience Graduate Group at the 2019 Annual MeetingUniversity of ShareholdersPennsylvania Perelman School of Medicine, where she currently holds an appointment as Adjunct Professor in the Department of Neuroscience.
John A. Fallon, M.D.Dr. FallonBalice-Gordon has authored more than 100 scientific papers, received numerous accolades for her work in the field of neuroscience and has chaired or served on many NIH, national and international committees. She received her B.A. degree in Biological Sciences from Northwestern University and her Ph.D. in Neurobiology from the University of Texas at Austin.
We believe that Dr. Balice-Gordon’s scientific expertise and industry experience, including in the neurology and pain therapeutic areas, provide her with the qualifications and skills to serve as a director.
Garen Bohlin, Director. Mr. Bohlin has served as Seniora member of our Board since January 2015. Mr. Bohlin has almost 30 years’ experience serving in executive roles at several biotechnology companies, including Constellation Pharmaceuticals, Inc., where he served as an Executive Vice President from January 2010 to his retirement in April 2012.
Prior to that, Mr. Bohlin served as Chief Operating Officer at Sirtris Pharmaceuticals, Inc. (“Sirtris”), which was acquired by GlaxoSmithKline plc. Prior to joining Sirtris, Mr. Bohlin served as President and Chief Physician Executive at Blue Cross Blue ShieldOfficer of Massachusetts ("BCBS"Syntonix Pharmaceuticals, Inc. (“Syntonix”) from 2004 through 2015., which was acquired by Biogen Idec. Prior to his roleSyntonix, Mr. Bohlin spent 14 years in executive management at BCBS, Dr. Fallon served as Chief Executive Officer for clinical affairsGenetics Institute, Inc. (“Genetics Institute”), which was acquired by Wyeth. Prior to Mr. Bohlin’s tenure at the State University of New York Downstate Medical Center, including University Hospital of Brooklyn and the clinical faculty practice plan. His professional experience also includes the Partners Healthcare System,Genetics Institute, he was a partner at Arthur Andersen & Co., where he was Chairmanspent 13 years.
Since his retirement, Mr. Bohlin has served on the boards of the physician network. Dr. Fallon was also the CEOdirectors of Charter Professional Services Corporation and the founder and CEO of North Shore Health System, a large physician-hospital organization in Massachusetts. Heseveral companies. Mr. Bohlin currently serves as the lead independent director on the board of directors of Insulet Corporation (NASDAQ: PODD),Karyopharm Therapeutics, Inc. (NASDAQ GS: KPTI) (2013 to present) and Curadel Surgical Innovations, Inc, a medical devicesprivately held company and as a member of the boards of directors of Exact Sciences Corporation (NASDAQ: EXAS), a molecular diagnostics company and AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG), a specialty pharmaceutical company. Dr. Fallon is Chairman of(2020 to present). Previously, he served on the board of directors of NEHI (Network for Excellence in Health Innovation). In the past, he also served as a member ofAcusphere, Inc. (OTC: ACUS) (2005 to 2015), Tetraphase Pharmaceuticals, Inc. (NASDAQ: TTPH) (2010 to 2020), Proteon Therapeutics, Inc. (NASDAQ: PRTO) (2014 to 2020) and several not-for-profit boards, including: Alliance for Healthcare Improvement, Massachusetts Health Quality Partners, Massachusetts E-Health Collaborativeother publicly traded and Neighborhood Health Plan. He also co-chaired, with the Massachusetts Secretary of Health and Human Services, the Massachusetts Patient Centered Medical Home Initiative. Dr. Fallon practiced internal medicine for more than 20 years, fulfilled his residency at Boston City Hospital, and is Board Certified in Internal Medicine. He received a BA from the College of the Holy Cross, an MBAprivately held biotechnology companies. Mr. Bohlin graduated from the University of South FloridaIllinois with a B.S. in Accounting and a Doctor of Medicine from Tufts University School of Medicine.Finance in 1970.
We believe that Dr. Fallon'sMr. Bohlin’s perspective and experience as ana senior executive and board member in the life sciencesour industry, as well as his strong medicalboard and scientific background,audit committee experience with publicly traded and privately held biotechnology companies, provide him with the qualifications and skills to serve as a director.
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John G. Freund, M.D.,Gwen Melincoff, Director. Dr. Freund Ms. Melincoff has served as a member of our Board since February 2014. Dr. Freund founded Skyline Ventures ("Skyline")August 2017. Ms. Melincoff has over 25 years of leadership experience in 1997the biotechnology and haspharmaceutical industries. Ms. Melincoff is currently managing director at Gemini Advisors LLC, a biopharmaceutical consultancy (since 2013) and an advisor to Verge Genomics, a startup drug discovery company (since 2016) and Agent Capital (since 2017). From August 2014 to September 2016, she served as Managing DirectorVice President of Business Development at Skyline since its founding.BTG International Inc., a specialist medical products company; she also served as an advisor to Phase 1 Ventures, a startup accelerator from 2015 through 2018. From September 2004 to December 2013, Ms. Melincoff was Senior Vice President of Business Development at Shire Plc (acquired by Takeda). In addition, from 2010 to 2013, she led the Shire Strategic Investment Group, the venture capital arm of Shire Plc. Prior to joining Skyline, Dr. Freund served as Managing Director in the private equity group of Chancellor Capital Management, LLC. In 1995, Dr. Freund co-founded Intuitive Surgical, Inc.Shire Plc, Ms. Melincoff held managerial and served on its board of directors until 2000. From 1988 to 1994, Dr. Freund served in variousbusiness development positions at Acusonvarious pharmaceutical companies, including Adolor Corporation, ("Acuson"), most recently as Executive Vice President. Prior to joining Acuson, Dr. Freund was a General PartnerSterling Drug and NanoSystems (a subsidiary of Morgan Stanley Venture Partners from 1987 to 1988. From 1982 to 1988, Dr. Freund worked at Morgan Stanley & Co., where he co-founded the Healthcare Group in the Corporate Finance Department in 1983.Eastman Kodak).
Dr. FreundMs. Melincoff currently serves on the board of directors of XenoPort,Gain Therapeutics, Protalix BioTherapeutics, Inc. (NYSE: PLX) and Soleno Therapeutics (NASDAQ: XNPT) (1999SLNO) (2019 to Present), where he is currently Chairman, Tetraphase Pharmaceuticals, Inc. (NASDAQ: TTPH) (2012 to Present) and Proteon Therapeutics, Inc. (NASDAQ: PRTO) (2014 to Present)present). Dr. Freund also servesPreviously, she served as a board member or observer on the boardboards of directorsTobira Therapeutics (acquired by Allergan), DBV Technologies, AM Pharma, ArmaGen Technologies, Promethera Biosciences, Naurex Inc. (acquired by Allergan), Kamada Ltd. (NASDAQ: KMDA), Photocure ASA and Enterome. Ms. Melincoff holds a B.S. in Biology from The George Washington University and an M.S. in Management and Health Care Administration from Pennsylvania State University. Ms. Melincoff has also attained the designation of six U.S. registered investment funds managed by The Capital Group Companies. He previously served on the board of directors of several publicly traded companies, including Concert Pharmaceuticals, Inc. (NASDAQ: CNCE) (2014 to 2015), MAP Pharmaceuticals, Inc. (NASDAQ: MAPP) (2004 to 2011), and MAKO Surgical Corp. (NASDAQ: MAKO) (2008 to 2013)Certified Licensing Professional (CLP™). Dr. Freund is a memberMs. Melincoff was named one of the Advisory Board for“Top Women in Biotech 2013” by Fierce Biotech as well as being named to the Harvard Business School Healthcare Initiative.
TablePowerlist 100 of ContentsCorporate Venture Capital in 2012 and 2013.
Dr. Freund graduated from Harvard College with a B.A. in History in 1975, received an M.D. from Harvard Medical School in 1980 and an M.B.A. from Harvard Business School in 1982.
We believe that Dr. Freund'sMs. Melincoff’s extensive financeexperience in business development and investmentgeneral management in the life sciences industry and her valuable experience his experience as an executive,in corporate governance and his service on the board of directors of numerous public and privately held companies in our industryacquisitions provide himher with the qualifications and skills to serve as a director.
David Hirsch, M.D., Ph.D., Director. Dr. Hirsch has served as a member of our Board since February 2012. Since 2007, Dr. Hirsch has served as a Founder and Managing Director at Longitude Capital Management Co., LLC ("Longitude"), where he focuses on investments in biotechnology. From 2005 to 2006, Dr. Hirsch was Vice President of Pequot Capital Management ("Pequot"), where he worked in the life sciences practice. Prior to Pequot, Dr. Hirsch was an Engagement Manager in the pharmaceutical practice of McKinsey & Co. While at McKinsey & Co., he worked with many large pharmaceutical companies across a range of projects including clinical and commercial strategies, M&A evaluations, portfolio prioritization and managed care strategy.
Dr. Hirsch currently serves on the board of directors of Rapid Micro Biosystems, Inc. and previously served on the board of directors of Civitas Therapeutics, Inc. and Precision Therapeutics, Inc. Dr. Hirsch graduated from Johns Hopkins University with a B.S. in Biology in 1991 and, in 2001, received an M.D. from Harvard Medical School as well as a Ph.D. in Biology from Massachusetts Institute of Technology.
We believe that Dr. Hirsch's perspective and experience as an investor and board member in the life sciences industry, as well as his strong medical and scientific background, provide him with the qualifications and skills to serve as a director.
Nominee for Election to the Board for a Two-Year Term Expiring at the 2018 Annual Meeting of Shareholders
Theodore R. Schroeder, Director. Mr. Schroeder has served as a member of our Board since January 2016. Mr. Schroeder currently serves as President, Chief Executive Officer and as a member of the board of directors of Nabriva Therapeutics, Plc. (“Nabriva”), a public biopharmaceutical company, a position he has held since July 2018. From June 2015 to July 2018 Mr. Schroeder was the President, CEO and member of the board of Zavante Therapeutics, Inc., a private biopharmaceutical company that he co-founded.co-founded until its acquisition by Nabriva. Mr. Schroeder co-founded Cadence Pharmaceuticals, Inc., a formerly public pharmaceutical company, and served as its President and Chief Executive Officer, and as a member of the board of directors, from May 2004 until its acquisition in MayMarch 2014 by Mallinckrodt Pharmaceuticals, Inc. From August 2002 to February 2004, Mr. Schroeder served as Senior Vice President, North American Sales and Marketing, of Elan Pharmaceuticals, Inc., a neuroscience-based pharmaceutical company, and from February 2001 to August 2002, as General Manager of the Hospital Products Business Unit. From May 1999 until its acquisition by Elan Pharmaceuticals, Inc. in November 2000, Mr. Schroeder served as Senior Director of Marketing Hospital Products at Dura Pharmaceuticals, Inc., a specialty respiratory pharmaceutical and pulmonary drug delivery company. Prior to joining Dura Pharmaceuticals, Inc., Mr. Schroeder held a number of hospital-related sales and marketing positions with Bristol-Myers Squibb Company, a global pharmaceutical company.
Mr. Schroeder currently serves on the board of directors of Cidara Therapeutics, Inc. (NASDAQ: CDTX) (2014 to Present)present) and Otonomy Inc. (NASDAQ: OTIC) (August 2015 to Present)present). From August 2011 until its acquisition by Horizon Pharma, Inc. in May 2015, Mr. Schroeder served on the board of directors of Hyperion Therapeutics, Inc., a formerly public company focused on treating ultra-rare diseases. From December 2009 until its acquisition by Cubist Pharmaceuticals, Inc. in September 2013, he served on the board of directors of Trius Therapeutics, Inc., a formerly public biopharmaceutical company. From June 2010 until its acquisition by the Medicines Company in January 2013, Mr. Schroeder served on the board of directors of Incline Therapeutics, a formerly private biopharmaceutical company focused in the acute pain space. Mr. Schroeder has also currently servesserved on the board of directors and the executive committee of Biocom, a regionalCalifornia life science trade association, where he is a past Chairman and a
member of the executive committee.Board. In 2014, Mr. Schroeder was named the Ernst & Young LLP “Entrepreneur of the Year” for the San Diego region and was named a national finalist. Mr. Schroeder received a B.S. in management from Rutgers University.
We believe that Mr. Schroeder'sSchroeder’s extensive knowledge of operations, marketing, sales and general management of a life sciences company and his valuable experience in corporate governance, acquisitions, strategic planning and leadership development provide him with the qualifications and skills to serve as a director.
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Continuing in Office
Directors with Terms Expiring at the2017
2022 Annual Meeting of Shareholders (Class II)
| | | | ||
| |||||
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| |||||
| Age | Position | |||
John Fallon, M.D. | | 73 | | Director | |
John Freund, M.D. | | 67 | | Director |
Eran Nadav, Ph.D.John Fallon, M.D., Director. Dr. NadavFallon has served as a member of our Board since MarchJune 2016. Dr. Fallon served as Senior Vice President and Chief Physician Executive at Blue Cross Blue Shield of Massachusetts (“BCBS”), a health insurance company, from 2004 through 2015. Prior to his role at BCBS, Dr. Nadav is a PartnerFallon served as Chief Executive Officer for clinical affairs at the State University of New York Downstate Medical Center, including University Hospital of Brooklyn and Managing Director at TPG Biotech, the life science venture investment arm of TPG, a global private investment firm. Dr. Nadav joined TPG in 2007 with a focus on global pharmaceuticals and biotechnology investments. Dr. Nadav has leadershipclinical faculty practice plan. His professional experience in private and public companies inalso includes the healthcare sector. Dr. Nadav is currently serving asPartners Healthcare System, where he was Chairman of the Boardphysician network. Dr. Fallon was also the CEO of Trevi Therapeutics, Inc.Charter Professional Services Corporation and asthe founder and CEO of North Shore Health System, a board member of ShangPharma Corporation (a China-based CRO) and NovaSom, Inc. Dr. Nadav served as the lead investor and Chairman of the Board of Ultragenyx Pharmaceutical, Inc. (NASDAQ: RARE) from January 2012 to June 2015.large physician-hospital organization in Massachusetts. He servedserves on the board of directors of MacroGenics, Inc.Insulet Corporation (NASDAQ: MGNX) from June 2013PODD) (2012 to June 2014, andpresent), a medical devices company. Dr. Fallon was formerly the Chairman of the board of directors of Eden Springs Ltd.NEHI (Network for Excellence in Health Innovation). In the past, he also served as a member the board of directors of AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) (2014 to 2020), a European provider of drinking water solutions for the workplace, from July 2010 until August 2011.
Prior to TPG, Dr. Nadav served as Business Development Director at Eisai, aspecialty pharmaceutical company, from September 2003Exact Sciences Corporation (NASDAQ: EXAS) (2016 to August 2007. He previously worked at Johnson & Johnson Development Corporation, the venture capital arm of Johnson & Johnson, from November 1999 until July 2002.
Dr. Nadav received2019), a B.Sc. magna cum laude in Life Sciences, an M.Sc. magna cum laude and Ph.D. in Biochemistry,molecular diagnostics company, as well as several not-for-profit boards, including: Alliance for Healthcare Improvement, Massachusetts Health Quality Partners, Massachusetts E-Health Collaborative and Neighborhood Health Plan. He also co-chaired, with the Massachusetts Secretary of Health and Human Services, the Massachusetts Patient Centered Medical Home Initiative. Dr. Fallon practiced internal medicine for more than 20 years, fulfilled his residency at Boston City Hospital, and is Board Certified in Internal Medicine. He received a B.A. from the College of the Holy Cross, an M.B.A.,MBA from Tel Aviv University.the University of South Florida and a Doctor of Medicine from Tufts University School of Medicine.
We believe that Dr. Nadav'sFallon’s perspective and experience as an executive and board member in the venture capitallife sciences industry, as well as his strong medical and his years of experience in the biopharma businessscientific background, provide him with the qualifications and skills to serve as a director.
Gino Santini,John Freund, M.D., Director. Mr. SantiniDr. Freund has served as a member of our Board since July 2012February 2014. Dr. Freund founded Skyline Ventures (“Skyline”), a venture capital firm, in 1997 and has served as our lead independent directorManaging Director at Skyline since May 2015. Since December 2010, Mr. Santini has been a senior advisor providing financingits founding. Prior to joining Skyline, Dr. Freund served as Managing Director in the private equity group of Chancellor Capital Management, LLC. In 1995, Dr. Freund co-founded Intuitive Surgical, Inc. and business consulting servicesserved on its board of directors until 2000. From 1988 to venture capital, pharmaceutical and biotechnology companies. Previously, Mr. Santini held1994, Dr. Freund served in various positions at Eli Lilly and Company ("Lilly"Acuson Corporation (“Acuson”) from 1983 until his retirement from Lilly in December 2010,, most recently as SeniorExecutive Vice PresidentPresident. Prior to joining Acuson, Dr. Freund was a General Partner of Morgan Stanley Venture Partners from 1987 to 1988. From 1982 to 1988, Dr. Freund worked at Morgan Stanley & Co., where he co-founded the Healthcare Group in the Corporate Strategy and Business Development, a position he held since 2007. Mr. Santini also served as a member of Lilly's Executive Committee from January 2004 to his retirement and as President of U.S. Operations. He joined Eli Lilly and CompanyFinance Department in 1983 as a financial planning associate in Italy.1983.
Mr. SantiniDr. Freund currently serves as chairman ofon the board of directors of AMAG PharmaceuticalsSutro Biopharma, Inc. (NASDAQ: AMAG) (2012STRO) (2014 to Present)present), and as a member ofSI-Bone, Inc. (NASDAQ: SIBN) (2013 to present). Dr. Freund also serves on the board of directors of Intercept Pharmaceuticals, Inc. (NASDAQ: ICPT) (November 2015 to Present), Horizon Pharma plc (NASDAQ: HZNP) (2012 to Present) and Vitae Pharmaceuticals, Inc. (NASDAQ GS: VTAE) (2014 to Present), as
well as several privately held companies. Previously, Mr. Santinisix U.S. registered investment funds managed by The Capital Group Companies. He previously served on the board of directors of Sorin S.p.A.several publicly traded companies, including, Proteon Therapeutics, Inc. (NASDAQ: PRTO) (2014 to 2020), a company traded on the Italian Stock ExchangeTetraphase Pharmaceuticals, Inc. (NASDAQ: TTPH) (2012 to 2020), XenoPort, Inc. (NASDAQ: XNPT) (1999 to 2016), where he was Chairman, Concert Pharmaceuticals, Inc. (NASDAQ: CNCE) (2014 to 2015), MAP Pharmaceuticals, Inc. (NASDAQ: MAPP) (2004 to 2011), and MAKO Surgical Corp. (NASDAQ: MAKO) (2008 to 2013). HeDr. Freund is a member of the Advisory Board for the Harvard Business School Healthcare Initiative. Dr. Freund graduated from the University of Bologna, ItalyHarvard College with a B.S.B.A. in Mechanical EngineeringHistory in 19811975, received an M.D. from Harvard Medical School in 1980 and received an M.B.A. from Harvard Business School in 1982.
We believe that Dr. Freund’s extensive finance and investment experience, his experience as an executive, and his service on the Simon Schoolboard of Businessdirectors of numerous public and privately held companies in our industry provide him with the qualifications and skills to serve as a director.
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Continuing Directors with Terms Expiring at the
2023 Annual Meeting of Shareholders
| | | | |
Name | Age | Position | ||
Joeseph Ciaffoni | | 50 | | Director, President and Chief Executive Officer |
Michael Heffernan, R.Ph. | | 56 | | Chairman |
Gino Santini | | 64 | | Director |
Joseph Ciaffoni, Director, President and Chief Executive Officer. Mr. Ciaffoni has served as our President and Chief Executive Officer since July 2018, and prior to that, served as our Executive Vice President and Chief Operating Officer since May 2017. Prior to joining us, Mr. Ciaffoni served as President, U.S. Branded Pharmaceuticals of Endo International plc, a specialty pharmaceutical company, from August 2016 to December 2016. Before that, from April 2012 to August 2016, Mr. Ciaffoni held various positions of increasing responsibility at Biogen Idec, including Senior Vice President, Global Specialty Medicines Group, Senior Vice President, U.S. Commercial and Vice President, U.S. Neurology Field Operations and Marketing. Prior to joining Biogen Idec, Mr. Ciaffoni was Executive Vice President and Chief Operating Officer of Shionogi Inc. and President of Shionogi Pharmaceuticals from July 2008 to October 2010. Mr. Ciaffoni also previously served as Vice President, Sales for Schering-Plough (now Merck) from May 2004 to June 2008, where he was responsible for the cholesterol franchise, and has held several commercial leadership roles at Sanofi-Synthelabo (now Sanofi) from January 2002 to April 2004 and Novartis from January 1994 to December 2001. Mr. Ciaffoni received a B.A. in Communications in 1993 and an M.B.A. in 2000, both from Rutgers, The State University of Rochester in 1983.New Jersey.
We believe that Mr. Santini'sCiaffoni’s perspective and experience as a senior executive at Lilly,in the pharmaceutical industry, as well as the depth of his extensive domesticoperations and international commercial, corporate strategy, business development and transactionboard experience, provide him with the qualifications and skills to serve as a director.
Terms Expiring at the2018 Annual Meeting of Shareholders (Class III)
Michael | |||||
|
Michael T. Heffernan, R.Ph., Chairman, President and Chief Executive Officer. Chairman. Mr. Heffernan has served as a member of our board of directors since October 2003 and served as our President and Chief Executive Officer andfrom October 2003 to June 2018. Since then, Mr. Heffernan has served as a member of our Board since October 2003.consultant to pharmaceutical and biotechnology companies. Mr. Heffernan has over twenty-five years of experience in the pharmaceutical and related healthcare industries. He was previously the Founder, President and Chief Executive Officer of Onset Therapeutics, LLC, a dermatology-focused company that developed and commercialized products for the treatment of skin-related illnesses and was responsible for the spin-off of the business from the Company to create PreCision Dermatology, Inc. which was acquired by Valeant Pharmaceuticals International, Inc. Mr. Heffernan has held prior positions as Co-Founder, President and Chief Executive Officer of Clinical Studies Ltd., a pharmaceutical contract research organization that was sold to PhyMatrix Corp., or PhyMatrix, and as President and Chief Executive Officer of PhyMatrix. Mr. Heffernan started his career at Eli Lilly and Company, where he served in numerous sales and marketing roles. Since March 2015,
Mr. Heffernan has servedserves on the board of directors of Veloxis Pharmaceuticals A/S (CPH: VELO)Akebia Therapeutics, Inc. (NASDAQ: AKBA) (2018 to present), Biohaven Pharmaceutical Holding Company Ltd. (NSYE: BHVN) (2020 to present), Synlogic, Inc. (NASDAQ: SYBX) (2020 to present) and he currently serves as its Chairman.Trevi Therapeutics, Inc. (NASDAQ: TRVI) (2017 to present). Mr. Heffernan previously served on the board of directors of Keryx Biopharmaceuticals, Inc., a public pharmaceutical company prior to its merger with Akebia, Ocata Therapeutics, Inc. (NASDAQ: OCAT), Cornerstone Therapeutics Inc. (now known as Chiesi USA, Inc.) (NASDAQ: CRTX), and twoVeloxis Pharmaceuticals A/S, prior to its acquisition by Asahi Kasei. Mr. Heffernan is a current member of the boards of several privately held companies. Mr. Heffernan graduated from the University of Connecticut with a B.S. in Pharmacy in 1987 and is a Registered Pharmacist.
We believe that Mr. Heffernan'sHeffernan’s perspective and experience as a senior executive in the pharmaceutical industry, as well as the depth of his operations and board experience, provide him with the qualifications and skills to serve as a director.
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Garen G. Bohlin,Gino Santini, Director. Mr. BohlinSantini has served as a member of our Board since January 2015. Mr. Bohlin had almost thirty years' experience serving in executive roles at several biotechnology companies, including Constellation Pharmaceuticals, Inc., where heJuly 2012 and has served as an Executiveour lead independent director since May 2015. Since December 2010, Mr. Santini has been a senior advisor providing financing and business consulting services to venture capital, pharmaceutical and biotechnology companies. Previously, Mr. Santini held various positions at Eli Lilly and Company (“Lilly”) from 1983 until his retirement from Lilly in December 2010, most recently as Senior Vice President of Corporate Strategy and Business Development, a position he held since 2007. Mr. Santini also served as a member of Lilly’s Executive Committee from January 20102004 to his retirement in May 2012. Prior to that, Mr. Bohlin served as Chief Operating Officer at Sirtris Pharmaceuticals, Inc. ("Sirtris"), which was acquired by GlaxoSmithKline plc. Prior to joining Sirtris, Mr. Bohlin servedand as President and Chief Executive Officer of Syntonix Pharmaceuticals, Inc. ("Syntonix"), which was acquired by Biogen Idec. Prior to Syntonix, U.S. Operations. He joined Lilly in 1983 as a financial planning associate in Italy.
Mr. Bohlin spent 14 years in executive management at Genetics Institute, Inc. ("Genetics Institute"), which was acquired by Wyeth. Prior to Mr. Bohlin's tenure at Genetics Institute, he was a partner at Arthur Andersen & Co., where he spent 13 years.
Since his retirement, Mr. Bohlin has served on the boards of directors of several companies. Mr. BohlinSantini currently serves onas a member of the board of directors of TetraphaseIntercept Pharmaceuticals, Inc. (NASDAQ: TTPH) (2010ICPT) (2015 to Present)present), Karyopharm Therapeutics, Inc. (NASDAQ GS: KPTI) (2013Horizon Pharma plc (NASDAQ: HZNP) (2012 to Present),present) and Proteon Therapeutics,Allena Pharmaceuticals, Inc. (NASDAQ: PRTO) (2014ALNA) (2012 to Present).present), as well as several privately held companies. Previously, heMr. Santini served on the board of directors of Acusphere,AMAG Pharmaceuticals Inc. (OTC: ACUS) (2005(NASDAQ: AMAG) (2012 to 2015)2020), Vitae Pharmaceuticals, Inc. (NASDAQ GS: VTAE) (2014 to 2016) and four other publiclySorin S.p.A., a company traded or privately
held biotechnology companies. Mr. Bohlinon the Italian Stock Exchange (2012 to 2015). He graduated from the University of IllinoisBologna, Italy with a B.S. in AccountingMechanical Engineering in 1981 and Financereceived an M.B.A. from the Simon School of Business at the University of Rochester in 1970.1983.
We believe that Mr. Bohlin'sSantini’s perspective and experience as a senior executive in our industry,at Lilly, as well as his boardextensive domestic and audit committeeinternational commercial, corporate strategy, business development and transaction experience, with publicly traded and privately held biotechnology companies, provide him with the qualifications and skills to serve as a director.
General
We believe that good corporate governance is important to ensure that our companyCompany is managed for the long-term benefit of our shareholders. This section describes key corporate governance practices that we have adopted. We have adopted a Code of Ethics, which applies to all of our officers, directors and employees, Corporate Governance Guidelines and charters for our audit committee, our compensation committee, and our nominating and corporate governance committee and our compliance committee. We have posted copies of our Code of Ethics and Corporate Governance Guidelines, as well as each of our committee charters, on the Corporate Governance page of the Investors section of our website, www.collegiumpharma.com, which you can access free of charge. Information contained on the website is not incorporated by reference in, or considered part of, this proxy statement. We intend to disclose on our website any amendments to, or waivers from, our Code of Ethics that are required to be disclosed by law or NASDAQ Listing Rules. We will also provide copies of these documents as well as our other corporate governance documents, free of charge, to any shareholder upon written request to Collegium Pharmaceutical, Inc., 780 Dedham Street,100 Technology Center Drive, Suite 800, Canton,300, Stoughton, MA 02021,02072, Attn: Investor Relations.
Key Corporate Governance Changes
Under the leadership of our nominating and corporate governance committee, we continually evaluate our corporate governance practices to ensure that these practices provide shareholders with the transparency, accountability and access that they deserve while enabling our management team and Board to conduct our business in a manner that is oriented towards creating long-term and sustainable growth.
In addition to the declassification of the Board of Directors beginning this year, in 2020 the Board and, as necessary, the shareholders approved the following changes:
● | elimination of the supermajority voting requirement for bylaws amendments, which now require the approval of a simple majority of outstanding shares; |
● | stock ownership guidelines applicable to all of our directors and executive officers that impose certain ownership requirements for each of these individuals; and |
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● | a Clawback Policy that enables the compensation committee to require certain officers to repay or forfeit cash and equity-based incentive compensation that the Committee determines was in excess of compensation to which such officers were entitled based on restated financial statements. |
We believe that each of these corporate governance changes represents an important step in the evolution of the Company, and taken together, accurately demonstrate our commitment to continuing to improve and enhance our governance and alignment with the interests of our shareholders.
Director Independence
The NASDAQ Listing Rules require a majority of a listed company'scompany’s board of directors to be comprised of independent directors within one year of listing.directors. In addition, the NASDAQ Listing Rules require that, subject to specified exceptions, each member of a listed company'scompany’s audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act.
Our Board undertook a review of the composition of our Board and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our Board has determined that each of our directors, with the exception of Mr.Messrs. Ciaffoni and Heffernan, is an "independent director"“independent director” as defined under the NASDAQ Listing Rules. Our Board also determined that Mr. Bohlin and Drs. FreundFallon and Nadav,Freund, who comprise our audit committee,committee; Dr. Freund and Messrs. Heron and Santini and Dr. Hirsch,Schroeder, who comprise our compensation committee,committee; and Messrs. BohlinMs. Melincoff and Santini,Drs. Balice-Gordon and Fallon, who are members ofcomprise our nominating and corporate governance committee, satisfy the independence standards for such committees established by the SEC and the NASDAQ Listing Rules, as applicable. Additionally, our Board determined that David Hirsch, M.D., who served as a director and as a member of our compensation committee until July 2020, qualified as an “independent director” as defined under the NASDAQ Listing Rules and satisfied the independence standards for such committee established by the SEC and the NASDAQ Listing Rules. In making the independence determinations set forth above, our Board considered the relationships that each such non-employee director has with our companyCompany and all other facts and circumstances our Board deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director. There are no family relationships among any of our directors or executive officers.
Board Leadership Structure and Role in Risk Oversight
Our Board separated the positions of Chief Executive Officer and Chairman of the Board effective July 1, 2018 in connection with Mr. Ciaffoni’s promotion to President and Chief Executive Officer of the Company. Mr. Heffernan, serves asour prior President and Chief Executive Officer, remains our Chairman, and Mr. Santini remains our Lead Independent Director. Our Board believes that the separation of the positions of Chief Executive Officer and Chairman of the Board, combined with a strong Lead Independent Director when we have a non-independent Chairman, reinforces the independence of the Board from management, creates an environment that encourages objective oversight of management’s performance and enhances the effectiveness of our Board in additionas a whole. Though it does not have current plans to his role asdo so, our Board may combine the roles of Chief Executive Officer. In May 2015,Officer and Chairman of the Board again in the future if it believes that would be in the best interest of the company and its shareholders.
Mr. Heffernan, our Board appointed Mr. Santini as lead independent director. As lead independent director, Mr. Santini is responsible for, among other things:
Mr. Santini currently serves as our Lead Independent Director and presides over portions of time for meetings;
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We combine the Chairman and Chief Executive Officer positions because we believe that, at this critical juncture in our development, Mr. Heffernan is best suited to oversee the development and implementation of our strategic vision, including our planned transition from a development stage company into a commercial pharmaceutical organization. Mr. Heffernan's tenure as Chairman also reflects our Board's confidence in his leadership and vision for us and recognizes his accomplishments. We believe that by creating a lead independent director position held by Mr. Santini, we have designed a governance structure that best advances our objectives while maintaining proper checks and balances on senior management, and providing the independent members of our Board with open and transparent communication regarding our strategic planning activities.
One of the key functions of our Board is informed oversight of our risk management process. Our Board does not have a standing risk management committee, but rather administers this oversight function directly through our Board as a whole, as well as through various standing committees of our Board that address risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure and our audit committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including adopting guidelines and policies to govern the process by which risk assessment and management is undertaken. The audit committee also monitors compliance with certain legal, regulatory and regulatorycybersecurity requirements. Our nominating and corporate governance committee monitors the effectivenessefficacy of our corporate governance practices, including whether they are successful in preventing illegal or improper liability-creating conduct. Our compensation committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking. Our compliance committee monitors our programs regarding compliance with laws, regulations, and industry standards that, if breached, may cause significant business, regulatory, or reputational damage.
Board Meetings
During the year ended December 31, 2015,2020, our Board held a total of six (6)five meetings. Each of our directors attended at least 75% of the aggregate number of meetings of our Board and meetings of any committee of which he or she was a member, which were held during the time in which he or she was a director or a committee member, as applicable.
Board Committees
Our Board has established an audit committee, a compliance committee, a compensation committee, and a nominating and corporate governance committee. Each committee operates under a charter that has been approved by our Board and is available on our website, www.collegiumpharma.com, under the "Investor Relations"Investors section. The information contained in, or that can be accessed through, our website is not part of this proxy statement. The table below provides the membership of each of the committees as of December 31, 2020, with further discussion on each committee and its function below the table.
| | | | | | | | |
| | | | | | | | Nominating & |
| | Audit | | Compliance | | Compensation | | Corporate Governance |
Name | | Committee | | Committee | | Committee | | Committee |
Rita Balice-Gordon, Ph.D. | | — | | — | | — | | X |
Garen Bohlin | | X* | | X | | — | | — |
John Fallon, M.D. | | X | | — | | — | | X* |
John Freund, M.D. | | X | | — | | X* | | — |
Michael Heffernan | | — | | — | | — | | — |
Gwen Melincoff | | — | | — | | — | | X |
Gino Santini | | — | | X* | | X | | — |
Theodore Schroeder | | — | | X | | X | | — |
* Committee Chairperson | | | | | | | | |
Audit Committee
Our audit committee consists of Mr. Bohlin and Drs. FreundFallon and Nadav,Freund and is chaired by Mr. Bohlin. Our audit committee met five (5) times in 2015.2020. The primary purpose of our audit committee is to assist our Board in the oversight of our accounting and financial reporting processes, the audit and integrity of our financial statements, and the qualifications and independence of our independent auditor and to prepare any reports required of the audit committee under the rules of the SEC. The audit committee has the following responsibilities, among other things:
● | hiring our independent registered public accounting firm and pre-approving the audit, audit related and permitted non-audit and tax services to be performed by our independent registered public accounting firm; |
● | reviewing and approving the planned scope of the annual audit and the results of the annual audit; |
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● | reviewing the significant accounting and reporting principles to understand their impact on our financial statements; |
● | reviewing quarterly with management its assessment of the effectiveness and adequacy of our internal control structure and procedures for financial reporting and reviewing annually with our independent registered public accounting firm the attestation to and report on the assessment made by management; |
● | reviewing with management and our independent registered public accounting firm, as appropriate, our financial reports, earnings announcements and financial information and earnings guidance provided to analysts and other third parties; |
● | reviewing with our General Counsel or outside counsel any legal matters that may have a material impact on the Company’s financial statements, accounting policies and compliance policies and programs, including corporate securities trading policies, and engaging in direct communications with our General Counsel or outside counsel on any topic as it may deem necessary from time to time; |
● | establishing procedures for the treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters and confidential submissions by our employees of concerns regarding questionable accounting or auditing matters; |
● | periodically reviewing and recommending appropriate changes to our Code of Ethics; |
● | reviewing and approving related-party transactions; and |
● | reviewing and evaluating, at least annually, our audit committee’s charter. |
Our audit committee reviews related-party transactions for potential conflicts of interests or other improprieties in accordance with our related party transactions policy. See "Certain“Certain Relationships and Related Party Transactions—Policies and Procedures for Transactions with Related Persons."”
The financial literacy requirements of the SEC require that each member of our audit committee be able to read and understand fundamental financial statements. In addition, ourOur Board has determined that Mr. Bohlin qualifies as an audit committee financial expert, as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act of 1933, as amended (the "Securities Act"“Securities Act”), and has financial sophistication in accordance with the NASDAQ Listing Rules.
Both our independent registered public accounting firm and management periodically meet privately with our audit committee.
Compliance Committee
Our compliance committee consists of Messrs. Bohlin, Santini, and Schroeder, and is chaired by Mr. Santini. Our compliance committee met three times in 2020. The compliance committee has oversight regarding government investigations and litigation relating to our compliance with laws, regulations, and industry standards and oversees management’s development and implementation of our compliance and ethics policies and practices. The functions of our compliance committee include, among other things:
● | overseeing our activities in the area of compliance with laws, regulations and industry standards, except where the oversight responsibility is with the audit committee; |
● | reviewing and monitoring significant compliance risk areas and the steps management takes to monitor, control, and report such compliance risk exposures; |
● | monitoring and assessing the development and effectiveness of our compliance program and recommending improvements as necessary or appropriate, including the allocation of sufficient funding, resources and staff to the compliance program; |
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● | periodically reviewing and recommending to the full Board any changes to our Code of Ethics, which review and recommendations will be coordinated with those of the audit committee; |
● | ensuring proper communication of significant compliance issues to the full Board; |
● | reviewing and monitoring efforts to promote an ethical culture; |
● | overseeing the mechanisms for employees to seek guidance and report concerns regarding matters of compliance with laws, regulations and industry standards; |
● | receiving and evaluating reports and assessing risk regarding internal investigations or government or regulatory actions that may indicate a significant compliance or regulatory issue within the Company that may cause significant financial or reputational damage; |
● | receiving and evaluating reports from our General Counsel regarding any data suggesting significant non-compliance with laws, regulations and industry standards that could affect the compliance program or the Company; and |
● | reviewing and evaluating at least annually our compliance committee’s charter. |
Our compensation committee consists of Dr. Freund and Messrs. Heron and Santini and Dr. Hirsch,Schroeder and is chaired by Dr. Hirsch.Freund. Prior to Dr. Freund joining the compensation committee in July 2020, the third member of the compensation committee was Dr. Hirsch, who resigned from the Board effective July 9, 2020. Our compensation committee met six (6)three times in 2015.2020. The primary purpose of our compensation committee is to review the performance and development of our management in achieving corporate goals and objectives and to assure that our executive officers are compensated effectively in a manner consistent with the strategy of our company, competitive practice, sound corporate governance principles and shareholder interests. In carrying out these responsibilities, this committee oversees, reviews and administers all of our compensation, equity and employee benefit plans and programs. The functions of our compensation committee include, among other things:
● | reviewing and approving the corporate goals and objectives relevant to executive compensation, evaluating performance in light of those goals and objectives and setting the compensation for our executive officers; |
● | reviewing and recommending the terms of employment agreements and other employment-related arrangements with our executive officers; |
● | reviewing and approving our compensation strategy for our employees; |
● | overseeing and periodically reviewing the operation of all of our employee benefit plans; |
● | reviewing and recommending to our Board the compensation of our directors; |
● | administering our equity incentive plans and benefit plans and approving the grant of equity awards to our employees and directors under these plans; |
● | reviewing and discussing with management our Compensation Discussion and Analysis and recommending to our full Board its inclusion in our periodic reports and proxy statement to be filed with the SEC; |
● | preparing the report of the compensation committee to be included in our annual proxy statement; |
● | monitoring the compliance of our directors and executive officers with our stock ownership guidelines; |
● | engaging compensation consultants or other advisors it deems appropriate to assist with its duties; and |
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● | reviewing and evaluating, at least annually, our compensation committee’s charter. |
The agenda for each meeting of the compensation committee is usually developed by the chair of the compensation committee, in consultation with our Chief Executive Officer. The compensation committee meets regularly in executive session. However, from time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the compensation committee to make presentations, to provide financial or other background information or advice or to otherwise participate in compensation committee meetings. No officer may participate in, or be present during, any deliberations or determinations of the compensation committee regarding the compensation for such officer or employee. Our Chief Executive Officer provides recommendations to our compensation committee with respect to executive and employee compensation, other than his own compensation, including with regard to individual performance levels. The compensation committee often takes into consideration Mr. Heffernan'sthe Chief Executive Officer’s input in granting annual bonusescash incentives or equity awards and setting compensation levels.
The charter of the compensation committee grants the compensation committee full access to all of our books, records, facilities and personnel, as well as authority to obtain, at our expense, advice and assistance from internal and external legal, accounting or other advisors and consultants and other external resources that the compensation committee considers necessary or appropriate in the performance of its duties. In particular, the compensation committee has the authority to retain compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant'sconsultant’s reasonable fees and other retention terms.
The Compensation Committeecompensation committee engaged Radford,W.T. Haigh & Company (“W.T. Haigh”), an independent compensation consultant, during the fiscal year ended December 31, 20152020 to provide comparative data on executive and non-employee director compensation practices in our industry and to advise on our executive, non-executive and non-employee director compensation and equity plan programs generally. The companyCompany pays the cost for Radford'sW.T. Haigh’s services. However, the compensation committee retains the sole authority to direct, terminate or engage Radford'sW.T. Haigh’s services. Compensation for all services provided by RadfordW.T. Haigh did not exceed $120,000 during the fiscal year ended December 31, 2015.2020.
The compensation committee is responsible for making determinations, or making recommendations to our Board, regarding compensation of executive officers, making changes to pre-approved salary ranges, salary increases, equity awards, incentive payments and pre-approved equity ranges for new hires and making material changes to benefits offered to our employees. In addition, the compensation committee makes recommendations to our Board regarding the compensation of directors and the initiation of offerings under our 2015 Employee Stock Purchase Plan. The compensation committee also administers our equity-based plans and determines whether to approve smaller increases in the number of shares reserved under our Amended and Restated 2014 Stock Incentive Plan and 2015 Employee Stock Purchase Plan than those that automatically occur each year pursuant to the "evergreen"“evergreen” provisions of such plans.
TableUnder the charter of Contents
Under our articles of incorporation,the compensation committee, the compensation committee may form and delegate any or all of its duties or responsibilities to a subcommittee of the compensation committee, to the extent consistent with our articles of incorporation, bylaws and applicable laws and rules of markets in which our securities then trade. During the fiscal year ended December 31, 2015,The compensation committee has also delegated authority for certain actions to certain of our executive officers. For example, the compensation committee has delegated the authority (i) to amend our 401(k) Retirement Plan (the "401(k) Plan"“401(k) Plan”) to the Chief Executive Officer and Chief Financial Officer and (ii) to enter into employment agreements with all employees other than employees that directly report to the Chief Executive Officer and/or are executive officers, to the Chief Executive Officer.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Messrs. Bohlin, HeffernanMs. Melincoff and Santini,Drs. Fallon and Balice-Gordon and is chaired by Mr. Santini.Dr. Fallon. Prior to September 24, 2020, when Dr. Balice-Gordon joined the Board, the third member of the committee was Dr. Freund. Our nominating and corporate governance committee met two (2)three times in 2015.2020, in addition to numerous informal meetings in connection with the recruitment of Dr. Balice-Gordon to fill the vacancy on the Board. The primary purpose of our nominating and corporate governance committee is to assist our Board by identifying individuals qualified to become members of our Board, recommending a slate of nominees to be proposed by our Board to shareholders for election to our Board, developing and recommending corporate governance principles and
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guidelines of our company and monitoring compliance therewith and to recommend directors to serve on the committees of our Board.
The functions of our nominating and corporate governance committee include, among other things:
● | assisting our Board in identifying prospective director nominees and recommending nominees for each annual meeting of shareholders to our Board; |
● | reviewing developments in corporate governance practices and developing and recommending governance principles applicable to our Board; |
● | reviewing independence of our Board; |
● | evaluating and making recommendations as to the size and composition of the Board; |
● | recommending members for each board committee of our Board; |
● | determining qualifications for service on our board; |
● | reviewing and recommending to our board any changes to our corporate governance principles and guidelines; |
● | reviewing the adequacy of our articles of incorporation and bylaws and recommending to our Board, as conditions dictate, amendments for consideration by our shareholders; and |
● | periodically reviewing and evaluating, at least annually, our nominating and corporate governance committee’s charter. |
We believe that the composition of our nominating and corporate governance committee meets the requirements for independence under current NASDAQ Listing Rules and SEC rules and regulations. Our Board has determined that Messrs. Bohlin and Santini are independent as independence is currently defined in applicable NASDAQ Listing Rules. Although the Board determined that Mr. Heffernan does not satisfy the independence standards, we are permitted to phase in our compliance with the independent nominating and corporate governance committee requirements as follows: (i) one independent member at the time of listing, (ii) a majority of independent members within 90 days of listing and (iii) all independent members within one year of listing. Prior to May 7, 2016, which is the date that is one year after our listing on The NASDAQ Global Select Market, we expect that Mr. Heffernan will resign from the nominating and corporate governance committee, and this committee will be comprised solely of the independent directors pursuant to the NASDAQ Listing Rules.
Compensation Committee Interlocks and Insider Participation
Dr. HirschFreund and Messrs. HeronSantini and SantiniSchroeder served as members of our compensation committee duringas of the close of the fiscal year ended December 31, 2015. Mr. Heron2020 and Dr. Hirsch each have relationships with us that require disclosure under Item 404served as a member of Regulation S-K under the Exchange Act. See "Certain Relationships and Related Party Transactions" for more information.compensation committee until July 9, 2020.
No member of our compensation committee is or has ever been an executive officer or employee of ours. In addition, none of our executive officers currently serves, or has served during the last completed year, on the board of directors, compensation committee or other committee serving an equivalent function, of any other entity that has, or had at the time of such executive officer’s service, one or more officers serving as a member of our Board or compensation committee.
Code of Business Conduct and Ethics for Employees, Executive Officers and Directors
Our Board has adopted a Code of Ethics applicable to all of our employees, executive officers and directors. The Code of Ethics is available on our website at www.collegiumpharma.com. Our Board is responsible for overseeing compliance with the Code of Ethics, and our Board or an appropriate committee thereof must approve any waivers of the Code of Ethics for employees, executive officers or directors. Disclosure regarding any amendments to the Code of Ethics, or any waivers of its requirements, will be made on our website.
Director Nomination Process
Identification and Evaluation of Nominees for Directors
Our nominating and corporate governance committee is of the view that the continuing service of qualified incumbents promotes stability and continuity in the board room, contributing to our Board'sBoard’s ability to work as a collective body, while providing us the benefit of the familiarity and insight into our affairs that our directors have accumulated during their tenure. Accordingly, our nominating and corporate governance committee recommends to our Board the re-nomination of incumbent directors for election who continue to satisfy our nominating and corporate
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governance committee'scommittee’s criteria for membership on our Board, whom our nominating and corporate governance committee believes continue to make important contributions to our Board and who consent to continue their service on our Board. Consistent with this policy, in considering candidates for election at our annual meeting of shareholders, the nominating and corporate governance committee will first determine the incumbent directors whose terms expire at the upcoming meeting and who consent to continue their service on our Board. If our nominating and corporate governance committee determines that an incumbent director consenting to re-nomination continues to be qualified and has satisfactorily performed his or her duties as director during the preceding term, and there exist no reasons, including considerations relating to the composition and functional needs of our Board as a whole, why in our nominating and corporate governance committee'scommittee’s view the incumbent should not be re-nominated, the nominating and corporate governance will, absent special circumstances, propose the incumbent director for nomination by our Board for re-election at our annual meeting of shareholders.
If any member of our Board does not wish to continue in service or if our Board decides not to re-nominate a member for re-election, the nominating and corporate governance committee identifieswill identify a new nominee that meets the nominating and corporate governance committee’s criteria above.for membership on our Board. The committee may, in its sole discretion, solicit recommendations for nominees from persons that the nominating and corporate governance committee believes are likely to be familiar with qualified candidates. These persons may include members of our Board, including members of the nominating and corporate governance committee, and our management team. The nominating and corporate governance committee may, in its sole discretion, determine to engage a professional search firm to assist in identifying qualified candidates. If a search firm is engaged, the nominating and corporate governance committee will set its fees and scope of engagement. The nominating and corporate
governance committee may, in its sole discretion, solicit the views of the Chief Executive Officer, other members of our senior management and other members of our Board regarding the qualifications and suitability of candidates to be nominated as directors. The nominating and corporate governance committee may, in its sole discretion, designate one or more of its members (or the entire nominating and corporate governance)governance committee) or other members of our Board to interview any proposed candidate. Based on all available information and relevant considerations, the nominating and corporate governance committee will select a candidate who, in the view of the committee, is most suited for membership on our Board. To date,Prior to 2020, except as described below in connection with the nomination of Dr. Fallon, the nominating and corporate governance committee hashad not utilized professional search firms to identify candidates to serve on our Board. The nominating and corporate governance committee may in the future choose to do so in those situations where particular qualifications are required or where existing contacts are not sufficient to identify an appropriate candidate.
The nominating and corporate governance committee engagedBoard; however, a professional search firm was engaged to identify potential candidates for directorassist in filling the Board’s most recent vacancy with experience as an executivea candidate who, in addition to bringing needed skills and board member in the life sciences industry and a strong medical and scientific background. In late 2015 and early 2016, after reviewing the candidates suggested by the search firm, the nominating and corporate governance committee recommended, and the Board approved, the nomination of Dr. Fallon for electionnew expertise to the Board, atalso increased the 2016Board’s gender diversity.
We received one director candidate recommendation from our shareholders prior to the Annual Meeting. Dr. Fallon's qualifications and areas of expertise are described under the heading "Proposal 1: Election of Directors—Nominees for Election to the Board—Nominees for Election to the Board for a Three-Year Term Expiring at the 2019 Annual Meeting of Shareholders" above.
We have not received director candidate recommendations from our shareholders. We do, however, have a formal policy regarding consideration of such recommendations. In making its selection of director nominees, the nominating and corporate governance will evaluatecommittee evaluates any candidates proposed by shareholders under criteria similar to the evaluation of other candidates and in accordance with our bylaws and as is otherwise required pursuant to the Exchange Act. However, the nominating and corporate governance committee may consider, as one of the factors in its evaluation of shareholder-recommended nominees, the size and duration of the ownership by the recommending shareholder or shareholder group in our capital stock. The nominating and corporate governance committee may also consider the extent to which the recommending shareholder intends to continue holding its interest in the Company, including, in the case of nominees recommended for election at an annual meeting of shareholders, whether the recommending shareholder intends to continue holding its interest at least through the time of such annual meeting.
Under our bylaws, shareholdersShareholders wishing to suggest a candidate for director must write to our Corporate Secretary. In order to give the nominating and corporate governance committee sufficient time to evaluate a recommended candidate and/or include the candidate in our proxy statement for the 2017 annual meeting, the recommendation must be received by our Corporate Secretary at our principal executive offices in accordance with our procedures detailed in the section below entitled "Shareholder“Shareholder Communications with Our Board.”
Shareholder nominations should be made according to the procedures set forth in our bylaws and detailed in the section below entitled “Shareholder Proposals and Director Nominations for 20172022 Annual Meeting of Shareholders."” Such submissions must state the nominee'snominee’s name and address, together with appropriate biographical information and background materials, and information with respect to the shareholder or group of shareholders making the recommendation, including the number of shares of common stock owned by such shareholder or group of shareholders, as well as other information required by our bylaws. We may require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director or that could be material to a reasonable shareholder'sshareholder’s understanding of the independence, or lack thereof, of such proposed nominee.
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Director Qualifications
The nominating and corporate governance committee has adopted guidelines and procedures for identifying and evaluating candidates for director that provide for a fixed set of specific minimum qualifications for its candidates for membership on our Board. At a minimum, each director is expected to:
● | understand our business and relevant industries in general; |
● | regularly attend meetings of our Board and of any committees on which the director serves; |
● | review in a timely fashion and understand materials circulated to our Board regarding us or our industry; |
● | participate in meetings and decision-making processes in an objective and constructive manner; and |
● | be reasonably available, upon request, to advise our officers and management. |
The nominating and corporate governance committee will also consider factors such as the likelihood that he or she will be able to serve on our Board for a sustained period, global experience, experience as a director of a public company and knowledge of relevant industries. Due considerationour industry. Consideration will be given to our Board'sBoard’s overall balance of diversity of perspectives, backgrounds and experiences. Our nominating and corporate governance committee considers personal diversity, including gender, national origin, ethnic and racial diversity, as an additional benefit to our Board as a whole. The nominating and corporate governance further believes it is appropriate forcommittee considers the requirement that at least one member of our Board to meet the criteria for an "audit“audit committee financial expert"expert” as that phrase is defined under the regulations promulgated by the SEC, and that a majority of the members of our Board be independent as required under the NASDAQ Listing Rules. The nominating and corporate governance committee believes it is appropriate for our Chief Executive Officer to serve as a member of our Board. Our directors'directors’ performance and qualification criteria are reviewed periodically by the nominating and corporate governance committee.
In evaluating director nominees, the nominating and corporate governance committee will consider, among other things, the following factors:
● | the background and qualifications of the candidate, including information concerning the candidate required to be disclosed in our proxy statement under the rules of the SEC and any relationship between the candidate and the person or persons recommending the candidate; |
● | if the candidate satisfies certain minimum qualifications and other criteria that we have set for membership on our Board; |
● | if the candidate possesses any of the specific qualities or skills that under the nominating and corporate governance policies must be possessed by one or more members of our Board; |
● | the contribution that the candidate can be expected to make to the overall functioning of our Board; |
● | the extent to which the membership of the candidate on our Board will promote diversity among the directors; and |
● | other factors such as independence under applicable NASDAQ Listing Rules, relationships with our shareholders, competitors, customers, suppliers or other persons with a relationship to the Company. |
The nominating and corporate governance committee'scommittee’s goal is to assemble a Board that brings to the Company a variety of perspectives and skills derived from high quality business and professional experience. Moreover, the nominating and corporate governance committee is of the view that the composition of our Board, as a whole, should reflect a mix of skills and expertise that are appropriate
for our company given our circumstances and that, collectively, enables our
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Board to perform its oversight function effectively. Nominees are not discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability or any other basis proscribed by law.
Director Attendance at Annual Meetings
Our Board has a policy of encouraging director attendance at our annual meetings of shareholders, but attendance is not mandatory. Our Board and management team encourage all of our directors to attend the 2016 Annual Meeting. All of our directors attended the 2020 annual meeting of shareholders in May 2020.
Shareholder Communications with our Board
Shareholders seeking to communicate with our Board must submit their written comments to our Corporate Secretary, Collegium Pharmaceutical, Inc., 780 Dedham Street,100 Technology Center Drive, Suite 800, Canton,300, Stoughton, MA 02021.02072. The Corporate Secretary will forward such communications to each member of our Board, except in cases where, in the opinion of our Corporate Secretary it would be inappropriate to send a particular shareholder communication to a specific director, in which cases such communication will only be sent to the remaining directors (subject to the remaining directors concurring with such opinion).
Compensation of Non-Employee Directors
On August 4, 2015,Effective following the 2020 annual meeting of shareholders, our Board approved aan amended non-employee director compensation policy, which establishedwas substantively identical to our 2019 policy except that the following compensation guidelines:
| ||
Position | | Cash Fees ($) |
Annual Base Cash Retainer for Each Director | | 50,000 |
Additional Compensation for Non-Executive Chairman of the Board | | 60,000 |
Additional Compensation for Lead Independent Director | | 25,000 |
Additional Committee Chair Compensation | | |
Audit Committee | | 20,000 |
Compensation Committee | | 18,000 |
Compliance Committee | | 18,000 |
Nominating and Corporate Governance Committee | | 10,000 |
Additional Committee Membership Compensation | | |
Audit Committee | | 10,000 |
Compensation Committee | | 9,000 |
Compliance Committee | | 9,000 |
Nominating and Corporate Governance | | 5,000 |
In addition to the foregoing cash compensation, upon joining the Board, under the policy in effect in 2020, each non-employee director willwould receive (i) an initial grant of options to purchase 15,000 shares of common stock, which will vest overwith the number of stock options to be issued being calculated by dividing $225,000 by the product of (A) the average closing price of our common stock for the 30-day period ending on the trading day immediately preceding the date of grant, (B) the Black-Scholes valuation factor used for calculating stock option values pursuant to ASC Topic 718 for the most recently completed fiscal quarter (the “Valuation Factor”), and (C) 2, and (ii) a four-year period with 25%number of restricted stock units equal to one half of the grant vesting on the one-year anniversarynumber of options issued as part of the foregoing option grant, date and the remainderwith each award vesting ratably each month thereafter in equal installments over a three-year period, subject to continued service as a director;
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Valuation Factor, and (C) 2, and (ii) a number of restricted stock units equal to one half of the number of options issued as part of the foregoing grant, with each award vesting in full on the one-year anniversary of the grant date, subject to continued service as a director.
The following table sets forth in summary form information concerning the compensation that we paid or awarded for services rendered during the fiscal year ended December 31, 20152020 to our independent, non-employee directors.
| | | | | | | | |
|
| |
| |
| Option |
| |
| | Fees Earned or | | Stock | | Awards | | |
Name | | Paid in Cash ($) | | Awards ($)(1) | | ($)(2) | | Total ($) |
Rita Balice-Gordon, Ph.D. (3) | | 1,058 | | 89,330 | | 105,175 | | 195,563 |
Garen G. Bohlin | | 79,000 | | 89,236 | | 104,506 | | 272,742 |
John A. Fallon, M.D. | | 70,000 | | 89,236 | | 104,506 | | 263,742 |
John G. Freund, M.D. | | 69,008 | | 89,236 | | 104,506 | | 262,750 |
Michael T. Heffernan, R.Ph. | | 110,000 | | 89,236 | | 104,506 | | 303,742 |
David Hirsch, M.D., Ph.D. (4) | | 52,495 | | 89,236 | | 104,506 | | 246,237 |
Gwen Melincoff | | 55,000 | | 89,236 | | 104,506 | | 248,742 |
Gino Santini | | 107,000 | | 89,236 | | 104,506 | | 300,742 |
Theodore R. Schroeder | | 68,000 | | 89,236 | | 104,506 | | 261,742 |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($)(1) | Total ($) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Garen G. Bohlin | 29,815 | — | 113,687 | 143,512 | |||||||||
John G. Freund, M.D. | 7,938 | — | 139,202 | 146,640 | |||||||||
Patrick Heron | 7,047 | — | 139,202 | 146,249 | |||||||||
David Hirsch, M.D., Ph.D. | 7,830 | — | 139,202 | 147,032 | |||||||||
Eran Nadav, Ph.D. | 7,438 | — | 139,202 | 146,640 | |||||||||
Gino Santini | 31,957 | — | 139,202 | 171,159 | |||||||||
Theodore R. Schroeder(2) | — | — | — | — |
(1) | Amounts represent the grant date fair value of stock awards granted during 2020, as calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation—Stock Compensation. See Note 15 of the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for assumptions used in calculating this amount. The grant date fair value of stock awards granted during 2020 for each non-employee director were as follows; Dr. Balice-Gordon: $17.77; and all other non-employee directors: $22.05. As of December 31, 2020, the aggregate number of shares underlying stock awards held by each non-employee director were as follows; Dr. Balice-Gordon: 5,027; Mr. Bohlin: 8,754; Dr. Fallon: 4,047; Dr. Freund: 8,754; Mr. Heffernan: 4,047; Dr. Hirsch: zero; Ms. Melincoff: 8,754; Mr. Santini: 8,754; and Mr. Schroeder: 8,754. |
(2) | Amounts represent the grant date fair value of stock options granted during 2020, as calculated in accordance with FASB ASC Topic 718, Compensation—Stock Compensation. See Note 15 of the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for assumptions used in calculating this amount. The grant date fair value of option awards granted during 2020 for each non-employee director were as follows; Dr. Balice-Gordon: $10.46 per share; and all other non-employee directors: $12.91 per share. As of December 31, 2020, the aggregate number of shares underlying stock options held by each non-employee director were as follows; Dr. Balice-Gordon: 10,055 (of which none were exercisable as of December 31, 2020); Mr. Bohlin: 79,553 (of which 71,458 were exercisable as of December 31, 2020); Dr. Fallon: 56,868 (of which 48,773 were exercisable as of December 31, 2020); Dr. Freund: 65,568 (of which 57,473 were exercisable as of December 31, 2020); Mr. Heffernan: 456,707 (of which 448,612 were exercisable as of December 31, 2020); Dr. Hirsch: zero (of which none were exercisable as of December 31, 2020); Ms. Melincoff: 47,082 (of which 38,987 were exercisable as of December 31, 2020); Mr. Santini: 65,568 (of which 57,473 were exercisable as of December 31, 2020); and Mr. Schroeder 65,568 (of which 57,473 were exercisable as of December 31, 2020). |
(3) | Dr. Balice-Gordon was appointed to our Board on September 24, 2020. |
(4) | Dr. Hirsch resigned from our Board effective July 9, 2020. Following Dr. Hirsch’s resignation, 4,407 shares underlying stock awards and 17,509 shares underlying option awards were forfeited. |
In December 2020, the Board further amended the non-employee director compensation policy to adjust the terms
of such policy for service on the Board during fiscal year ended December 31, 2015 for assumptions used in calculating this amount. As of December 31, 2015, the aggregate number of shares underlying stock options held by each non-employee director were2021 as follows; Mr. Bohlin: 28,985 (of which, 6,644 were exercisable as of December 31, 2015); Dr. Freund: 15,000 (none of which were exercisable as of December 31, 2015); Mr. Heron: 15,000 (none of which were exercisable as of December 31, 2015); Dr. Hirsch: 15,000 (none of which were exercisable as of December 31, 2015); Dr. Nadav: 15,000 (none of which were exercisable as of December 31, 2015); and Mr. Santini: 15,000 (none of which were exercisable as of December 31, 2015). The compensation earned by Mr. Heffernan, as President and Chief Executive Officer, for fiscal year 2015 is included in the "Executive Compensation—Summary Compensation Table" and his outstanding stock and option awards are included under "Executive Compensation—Outstanding Equity Awards at Fiscal Year-End" below.
● | The fair market value of the annual equity grant to Board members was increased from $180,000 to $225,000; and |
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● | The initial equity grant and annual equity grants awarded to non-employee directors shall consist entirely of restricted stock units of the Company, with the number of such units determined by dividing $225,000 by the average closing price of our common stock for the 30-day period ending on the trading day immediately prior to the date of grant. |
Human Capital, Employee Culture and Engagement
Our employees are foundational to our current and future success, and we believe that their engagement and commitment are among our most valuable assets. As we seek to build and sustain a challenging, inspiring, and inclusive environment for our employees, have focused on safety and wellness; talent acquisition and retention; employee engagement, development, and training; diversity and inclusion; and compensation and pay equity. In May 2020, Collegium was named one of Boston Business Journal’s 2020 Best Places to Work, and in February 2021, Collegium was also recognized nationally among the 2021 Top Workplaces. Both awards are based on an anonymous employee survey concerning engagement, leadership, connection, company values, benefits, and other topics. We believe these recognitions reflect our dedication to our four Core Values: maintaining uncompromising Integrity in everything we say and do; embracing the Differences among us to make our ideas richer and better serve our patients; encouraging Expression to push ourselves to think big and make our voices heard; and being Accountable to each other, our customers and our community. We consider our employee relations to be good.
We are unwavering in our expectations that we will treat our colleagues with equal humanity, and we will be open-minded and inclusive in our dealings with one other, both because these expectations flow from our Core Values and because creating a diverse, equitable, and inclusive environment improves our performance and our business. When people feel appreciated and included, they can be more creative, innovative and successful, which in turn drives commercial success and enhances shareholder value. Leveraging the contributions of a diverse employee population creates an environment in which individual differences and capabilities are valued. Collegium therefore is committed to employing people whose diverse backgrounds contribute to innovation and allow the company to approach the complex issues that face our industry from many different perspectives. Consistent with this belief, we are committed to ensuring that our employees are treated with respect and dignity to drive a culture of inclusion that values the broad perspective of each employee and fully harnesses the contributions they can make.
As in everything we do, we are committed to continuous improvement in this area. In 2020, we:
● | launched a Diversity, Inclusion and Equity Council comprised of a cross-functional group of employees, and chaired by our CEO, that focuses on listening to and learning from our lived experiences and aligning on actions that we can take to improve the diversity and inclusivity of our organization. The Council is, among other activities, working to enhance our training curriculum with ongoing, mandatory diversity, equity and inclusion education. |
● | engaged in a review of our recruitment and hiring practices with the intention of improving the diversity of Collegium at all levels. While we are proud of the diversity of backgrounds and identities that our workforce exhibits, we will make the necessary investments of time, resources and engagement to make sustained improvements in this area. |
● | established a service initiative, which includes financial donations supporting local and national nonprofits with a focus on STEM initiatives, community service, and a Collegium charitable matching gift program, which enables employees to make charitable donations to any registered 501(c)(3) charity. |
The primary purpose of the audit committee is to oversee our financial reporting processes on behalf of our Board. The audit committee'scommittee’s functions are more fully described in its charter, which is available on our website at www.collegiumpharma.com.
In the performance of its oversight function, the audit committee has reviewed and discussed our audited consolidated financial statements for the fiscal year ended December 31, 20152020 with management and with Grant ThorntonDeloitte &
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Touche LLP, our independent registered public accounting firm for the fiscal year ended December 31, 2015.2020. In addition, the audit committee has discussed with Deloitte & Touche LLP the matters required to be discussed by Public Company Accounting Oversight Board ("PCAOB"(“PCAOB”) Auditing Standard No. 16,Communication1301, Communications with Audit Committees,, and all other communications required under the PCAOB. The audit committee has met with Grant Thornton LLP.Deloitte & Touche LLP, with and without management present, to discuss the results of its examination, its evaluation of our internal control over financial reporting and the overall quality of our financial reporting. The audit committee has also received and reviewed the written disclosures and the letter from Grant ThorntonDeloitte & Touche LLP required by the applicable requirements of the PCAOB Rule 3526, Communication with Audit Committees Concerning Independence, and has discussed with Grant ThorntonDeloitte & Touche LLP their independence from us.
Based on the review and discussions referenced above, the audit committee recommended to our Board that our audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2015.2020.
| | |
| Audit Committee : | |
| Garen | |
| John | |
| John Freund, M.D. |
TheThe foregoing report of the audit committee does not constitute soliciting material and will not be deemed filed, incorporated by reference into or a part of any other filing by the Company (including any future filings) under the Exchange Act, except to the extent the Company specifically incorporates such report by reference therein.
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PROPOSAL 2: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and Section 14A of the Exchange Act, we are conducting a shareholder advisory vote on the compensation paid to our named executive officers. This proposal, commonly known as “say-on-pay,” gives our shareholders the opportunity to express their views on our named executive officers’ compensation. The vote is advisory, and, therefore, it is not binding on the Board, the compensation committee, or the Company. Nevertheless, the compensation committee will take into account the outcome of the vote when considering future executive compensation decisions. At the 2019 Annual Meeting, the shareholders indicated their preference that we solicit a “say-on-pay” vote annually. The Board has adopted a policy that is consistent with that preference.
As described in detail in the “Compensation Discussion and Analysis” section of this Proxy Statement, our executive compensation program is designed to attract, motivate and retain our named executive officers who are critical to our success. Our Board believes that our executive compensation program is well tailored to retain and motivate key executives while recognizing the need to align our executive compensation program with the interests of our shareholders and our “pay-for-performance” philosophy. We encourage our shareholders to read the “Compensation Discussion and Analysis” section as well as the “Summary Compensation Table” table below and other related compensation tables and narrative disclosures, which describe our executive compensation philosophy, programs, and practices and the 2020 compensation of our named executive officers.
We are asking our shareholders to indicate their support for the compensation of our named executive officers as described herein. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our executive compensation philosophy, programs, and practices as described in this Proxy Statement.
Recommendation of our Board
OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF, ON AN ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AT THE ANNUAL MEETING.
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The following are biographical summaries of our executive officers and their ages, except for Mr. Heffernan,Ciaffoni, whose biography is included under the heading "Proposal“Proposal 1: Election of Directors"Directors” set forth above:
| | | | | |
| | Age | | Position(s) | |
Joseph Ciaffoni | | 50 | | Director, President and Chief Executive Officer | |
Paul Brannelly | | 48 | | Executive Vice President and Chief Financial Officer | |
| | 49 | | Executive Vice President and Chief Commercial Officer | |
Alison Fleming, Ph.D. | | 46 | | Executive Vice President and Chief Technical Officer | |
Shirley Kuhlmann | | 37 | | Executive Vice President and General Counsel | |
Richard Malamut, M.D. | | 61 | | Executive Vice President and Chief Medical Officer |
Paul Brannelly, Executive Vice President and Chief Financial Officer.Mr. Brannelly has served as our Executive Vice President and Chief Financial Officer since February 2015. Prior to joining us, Mr. Brannelly served as Senior Vice President, Finance and Administration, and Treasurer of Karyopharm Therapeutics Inc. (NASDAQ: KPTI) ("Karyopharm"), a biopharmaceutical company, from June 2013 to August 2014. From August 2014 to November 2014, Mr. Brannelly served as a consultant to Karyopharm. Prior to joining Karyopharm, Mr. Brannelly served as Vice President, Finance, Treasurer and Secretary at Verastem, Inc. (NASDAQ: VSTM) ("Verastem") from August 2010 to May 2013. From January 2010 to September 2011, Mr. Brannelly held the position of Chief Financial Officer at the Longwood Fund, a venture capital firm aimed at investing in, managing and building healthcare companies, where he set up the financial and operational infrastructure following the closing of its first fund and eventually served as Chief Financial Officer of its first two startup companies, Verastem and OvaScience, Inc. (NASDAQ: OVAS). From November 2005 to September 2009, he served as Vice President, Finance at Sirtris Pharmaceuticals, Inc. ("Sirtris"), a biopharmaceutical company which GlaxoSmithKline plc purchased for $720 million in 2008, where he managed the Form S-1 preparation and due diligence process for Sirtris'Sirtris’ initial public offering and managed the company'scompany’s transition to being a public company. Mr. Brannelly started his biopharmaceutical career at Dyax Corporation from September 1999 to May 2002, and subsequently moved on to positions of increasing responsibility at CombinatoRx Inc. from May 2002 to November 2005, most recentlyincluding as Vice President, Finance and Treasurer, where he led Zalicus through the initial public offering process. Mr. Brannelly graduated from the University of Massachusetts at Amherst with a B.B.A. in Accounting in 1995.
Barry S. Duke,Scott Dreyer, Executive Vice President and Chief Commercial Officer.Mr. DukeDreyer has served as our Executive Vice President and Chief Commercial Officer since March 2015.July 2018, and joined us in January 2018 as Senior Vice President, Sales, Marketing and Training. Prior to his service with us, Mr. Dreyer served as the Senior Vice President, Sales, Marketing and Commercial Operations at The Medicines Company, a biopharmaceutical company, from September 2016 to December 2017; Vice President and Chief Marketing Officer – US at Biogen, a biotechnology company, from June 2014 to September 2016; and Vice President, Business Development at Publicis Touchpoint Solutions, a healthcare commercialization company, from September 2013 to June 2014. Mr. Dreyer began his career in the pharmaceutical industry at Merck & Co., where he held roles of increasing responsibility from 1994 to 2013, including Vice President of Hospital and Oncology Sales from 2011 to 2012, and Vice President of Primary Care Sales from 2012 until 2013. Mr. Dreyer holds a B.S. in Biology from Messiah College in 1994.
Alison Fleming, Ph.D., Executive Vice President and Chief Technical Officer. Dr. Fleming has served as our Executive Vice President and Chief Technical Officer since January 2017. Prior to being our Chief Technical Officer, Dr. Fleming led our development team as our Vice President, Product Development since October 2002. Prior to joining us, Mr. DukeDr. Fleming’s academic research focused on implantable drug delivery systems for cancer therapy. Dr. Fleming is an inventor on several U.S. patents and pending patent applications and has authored numerous scientific publications and poster presentations in the field of novel drug delivery systems. In 2001, Dr. Fleming was the recipient of the Jorge Heller Journal of Controlled Release Outstanding Paper Award. Dr. Fleming graduated from the University of Massachusetts, Amherst in 1997 with a B.S. in Chemical Engineering and received a Ph.D. in Chemical and Biomolecular Engineering from Cornell University in 2002.
Shirley Kuhlmann, Executive Vice President and General Counsel. Ms. Kuhlmann has served as our Executive Vice President and General Counsel since March 2018. Prior to joining us, Ms. Kuhlmann was a corporate and securities attorney at Pepper Hamilton LLP from September 2007 until March 2018. At Pepper Hamilton, where she was made a partner effective January 2017, Ms. Kuhlmann advised private and public companies on a range of commercial
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and transactional matters, including financings, corporate governance and disclosure matters, and mergers and acquisitions and other business combination transactions. Ms. Kuhlmann holds a B.A. in Economics/Political Science from Columbia University in 2004 and a J.D. from Emory University School of Law in 2007.
Richard Malamut, M.D., Executive Vice President and Chief Medical Officer. Dr. Malamut has served as our Executive Vice President and Chief Medical Officer since April 2019. Prior to joining us, Dr. Malamut was Chief Medical Officer, Head of Research and Development and Senior Vice President for Braeburn Pharmaceuticals from June 2018 until March 2019. Prior to joining Braeburn, he was Chief Medical Officer at Avanir Pharmaceuticals from November 2016 until June 2018 and, from April 2013 until November 2016, he was Senior Vice President of SalesGlobal Clinical Development at Teva Pharmaceuticals Industries Ltd where he was responsible for Pain, Neuropsychiatry, Oncology and Marketing—U.S. BiosurgeryNew Therapeutic Entities. He also previously held roles of increasing responsibility focusing on early clinical development and translational medicine in neurology and analgesia at Sanofi, Inc. (formerly Genzyme Corporation) ("Sanofi")Bristol-Myers Squibb and AstraZeneca. Dr, Malamut earned his medical degree from October 2011 to September 2014. From September 2014 to March 2015, Mr. Duke servedHahnemann University and completed both a residency in neurology and a fellowship in neuromuscular disease. He worked as a salesboard-certified academic and marketing consultantclinical neurologist for 17 years and has more than 50 publications in the biopharmaceutical industry. Mr. Duke joined Sanofi in March 2005 as an area sales directorfields of pain medicine, neuromuscular disease, autonomic disease and was promoted to Vice President of Sales—U.S. Biosurgery in November 2007, a position he held until September 2011, when he was promoted to Vice President of Sales and Marketing—U.S. Biosurgery. Prior to Sanofi, Mr. Duke was Senior Director of National Sales at Enzon Pharmaceuticals, Inc. (NASDAQ: ENZN) ("Enzon") from November 2002 to March 2005. Prior to Enzon, Mr. Duke was Regional Sales Director at Élan Corporation, plc (now known as Élan Corporation Ltd) from March 2001 to November 2002. Over the course of his career, Mr. Duke has also held various sales positions at The Liposome Company, Inc., Astra USA, Inc., Centocor, Inc. and The Upjohn Company. Mr. Duke graduated from University of Virginia with a B.A. in Biology in 1981.neurodegenerative disease.
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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) describes our compensation strategy, philosophy, policies and practices underlying our executive compensation programs for 2020. It also provides information regarding the manner and context in which compensation was earned by and awarded to our 2020 named executive officers listed below, whom we refer to collectively as “named executive officers” or “NEOs.”
● | Joseph Ciaffoni, our President and Chief Executive Officer; |
● | Paul Brannelly, our Executive Vice President and Chief Financial Officer; |
● | Alison Fleming, Ph.D., our Executive Vice President and Chief Technical Officer; |
● | Shirley Kuhlmann, our Executive Vice President and General Counsel; and |
● | Richard Malamut, M.D., our Executive Vice President and Chief Medical Officer |
Executive Summary
2020 Performance Highlights
In 2020, and despite the impact of the COVID-19 pandemic, which among other things impaired our field organization’s ability to call on pain physicians and complete other tasks as originally planned prior to the emergence of the pandemic, we delivered a financially transformative year for the organization. Some of the key highlights include:
● | Strengthening Xtampza ER’s formulary positions, making Xtampza ER the exclusive branded ER oxycodone for more than 92 million lives and securing the path to market leadership in 2023. |
COVID-19 Impact
Although our 2020 financial and operational performance was strong, the COVID-19 pandemic had a significant impact on our business. Federal and state governments, as well as numerous foreign countries, have reacted to the pandemic by instituting quarantines, mandating business and school closures and restricting travel. The travel restrictions and “social distancing” recommendations resulting from the spread of COVID-19, as well as the closure or limited operations of many physicians’ offices, have impacted our sales professionals’ ability to travel to and meet with healthcare providers in person. In 2020, and as reported in our Annual Report for the year ended December 31, 2020, the COVID-19 pandemic and actions taken to contain it impacted revenue (due to fewer new patients beginning therapy with our products and the pandemic’s adverse impact on our ability to promote products) and decreased certain operating expenses, including travel, marketing and expenses associated with participation in congresses and other activities that have been postponed. We believe that the disruptions caused by COVID-19 will continue in the near term, and there remains substantial uncertainty as to when such disruptions will cease (or ease).
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2020 Compensation
In 2020, we continued to work to align our executive compensation programs with shareholder interests as compensation earned under these programs was substantially linked to the achievement of our corporate performance goals. In the judgment of the compensation committee, the financial and operational performance of the company, after taking into account the unforeseen and adverse impacts of the COVID-19 pandemic, created substantial value for shareholders during 2020. Accordingly, and consistent with our pay-for-performance philosophy, the payouts under these programs for 2020 were substantially at target payout levels.
Overview of Our Executive Compensation Program
We have designed our executive compensation program to motivate our management team to create long-term value for our shareholders through the achievement of strategic business objectives, while effectively managing the risks and challenges inherent to a growing specialty pharmaceutical company. Specifically, our executive compensation program is designed to promote the achievement of key strategic objectives by linking executives’ short- and long-term cash and equity incentives to the achievement of measurable performance goals. Our corporate goals for 2020 were focused on commercial execution across our portfolio, as well as expanding and enhancing our manufacturing capabilities and building organizational strength and depth.
Our executive compensation programs are designed to be competitive with our peer group to enable us to attract, motivate, reward, and retain outstanding talent. Our compensation programs are based on the following key principles:
● | Link a significant portion of executive pay with performance and the achievement of our annual and long-term strategic goals; |
● | Align our executives’ interests with those of our shareholders through equity compensation; |
● | Ensure our overall compensation is competitive in the industry and market in which we compete for executive talent; and |
● | Recognize corporate performance, individual contributions, teamwork and corporate performance. |
Say-on-Pay Voting
In 2020, the annual say-on-pay vote reflected overwhelming support of our executive compensation program – with approximately 98% of votes cast supporting such program. We look forward to continuing to receive feedback from our shareholders through the annual say-on-pay advisory vote and to incorporating the feedback we receive as we evolve our executive compensation program.
Roles and Responsibilities of Participants in our Executive Compensation Process
Role of the Compensation Committee
Our compensation committee, which consists of three independent directors, has primary responsibility for overseeing and administering a compensation program for our named executive officers. In making executive compensation decisions, our compensation committee considers a variety of factors and data, most importantly our corporate performance and individual executives’ performance, and takes into account the totality of compensation that may be paid and compensation trends amongst our peer group. Our compensation committee retains the right to hire outside advisors as needed to assist it in reviewing and revising our executive compensation programs.
The responsibilities of the compensation committee are set forth in detail starting on page 17 of this Proxy Statement and in the compensation committee charter, which can be found on our website at www.collegiumpharma.com under the caption “Investors—Corporate Governance—Committee Charters.” In particular,
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the compensation committee annually reviews the base salaries, cash incentives and equity compensation of our named executive officers and periodically reviews other elements of our compensation program.
Role of the Independent Compensation Consultant
Our compensation committee believes that independent advice is critical in developing the Company’s executive compensation programs. W.T. Haigh is currently engaged as our compensation committee’s independent compensation consultant. W.T. Haigh does not provide any other services to the Company and reports directly to the Committee. Our compensation committee assesses W.T. Haigh’s independence annually and, in accordance with applicable SEC and Nasdaq rules, confirmed that W.T. Haigh’s work did not raise any conflicts of interest and that W.T. Haigh remains independent under applicable rules.
W.T. Haigh provides guidance on trends in executive and non-employee director compensation, the development of specific executive compensation programs and the composition of the Company’s compensation peer group. W.T. Haigh also engages in other matters as needed and as directed solely by our compensation committee. In 2020, W.T. Haigh used information from the 2019 Radford Global Life Sciences survey (the “Radford survey”) and comparable executive compensation information published in publicly available proxy statements for a peer group of companies of similar size and market capitalization in the biotechnology and pharmaceutical industries to develop a competitive analysis report.
During 2020, fees paid to W.T. Haigh did not exceed $120,000 related to these services.
Role of the Chief Executive Officer
Each year our Chief Executive Officer provides an assessment of the performance of each executive officer, other than himself, during the prior year and makes recommendations to our compensation committee about the compensation of each executive. Our Chief Executive Officer’s recommendations are based on numerous factors including:
● | Company, team and individual performance; |
● | Leadership competencies; |
● | External market competitiveness; and |
● | Internal pay comparisons. |
Our Chief Executive Officer also provides a self-assessment of his achievements for the prior year. Our compensation committee reviews and considers the Chief Executive Officer’s recommendations, as well as his self-assessment, together with all of the other information presented, including the input and recommendations of W.T. Haigh, in determining the elements of compensation and target compensation levels for each named executive officer.
Executive Compensation Philosophy and Strategy
Our executive compensation programs are designed to reward the achievement of our short- and long-term strategic objectives and to drive the creation of long-term shareholder value by successfully executing our business strategy. We aim to achieve this by designing programs that are:
● | Mission and Performance Focused. Our executive compensation programs provide our executives with incentives to achieve the near- and long-term objectives of our business. All of our executive incentive compensation programs are tied directly, and meaningfully, to Company performance. None of our corporate goals entail or anticipate growth in the opioid market, and each of our corporate goals that pertain to product sales is consistent with our goal of being the leader in responsible pain management. |
● | Competitive Within Our Industry. We strive to ensure the total value of our compensation package is fully competitive within our industry and is consistent with our performance. We benchmark our executive compensation programs against a peer group of pharmaceutical companies that are of similar size and complexity, and that are representative of the companies with which we compete for talent. |
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● | Balanced for Short-Term and Long-Term Performance. We structure our executive compensation programs to emphasize the importance of achieving short-term goals while building and sustaining a foundation for long-term success. Striking the right balance between short-term and long-term incentives is a critical component of our risk management strategy, for which our Board has oversight responsibility and which is described in more detail on page17 of this Proxy Statement. |
Components of our Executive Compensation Program
Base Salary, Annual Cash Incentive, and Long-Term Equity Incentive
We strive to recognize the efforts involved in managing our business by compensating our named executive officers for the demands and risks associated with our business through three core elements that are designed to reward performance in a simple and straightforward manner:
(1) | Base Salaries; |
(2) | Annual Cash Incentives; and |
(3) | Long-Term Equity Incentives. |
Each component of our executive compensation program has different purposes and key characteristics; when combined, we believe that the components of our executive compensation program align with our executive
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compensation philosophy and objectives described above to enable us to attract, motivate and retain a strong and capable leadership team.
In 2020, the long-term equity incentive component of our executive compensation program was comprised of stock options, with an exercise price equal to the closing price of our common stock on the date of grant; restricted stock units (“RSUs”); and performance share units (“PSUs”).
The stock option component of the long-term equity incentive aligns our named executive officers’ interests with those of our shareholders by rewarding them for appreciation in our stock price in excess of the exercise price of their stock options. The stock options awarded as part of our long-term equity incentives vest over a four-year period following the grant date, subject to continued employment with the Company. We believe that this vesting schedule is consistent with our focus on long-term, sustainable growth and plays an important retention role.
The RSU component of the long-term equity incentive further incentivizes our named executive officers to contribute to value creation, with the advantage that RSUs retain value in the face of stock price volatility common to growing pharmaceutical companies. The RSUs, like the stock option component of the long-term equity incentive, have a four-year vesting period that reinforces our focus on long-term, sustainable growth and serves as a key retention tool.
Beginning in 2019, our compensation committee added a third equity instrument – PSUs – to the long-term equity incentive for our named executive officers. PSUs granted in 2019 originally vested following a three-year performance period, subject to the satisfaction of the annual or cumulative performance criteria based on Xtampza revenue goals and the executive’s continued employment through the performance period. In 2020, we increased the mix of PSUs to further align our equity grants with our pay for performance philosophy, with performance criteria related to the relative ranking of the total stockholder return (“TSR”) and a combination of the Company’s common stock in 2020, 2021, 2022 and the cumulative three-year performance period return relative to the TSR of companies within the S&P Pharmaceutical Select
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Industry Index. In December 2020, the compensation committee approved a modification of the 2019 PSUs to align them to the 2020 PSU grants, by changing the 2020, 2021 and cumulative performance metrics from Xtampza revenue goals to relative TSR and changing the cumulative performance period to cover 2020 through 2021. In January 2021, the compensation committee approved a modification to the 2019 PSU grants to further align them to the 2020 PSU grants by changing the vesting terms to remove the three-year performance period except with respect to the cumulative performance metric. Going forward, we expect that PSU vesting will be based exclusively on relative TSR performance.
The chart below illustrates our changing mix of equity over time to continue to further align our equity grants with our pay for performance philosophy. In 2020, we increased the mix of PSUs for our chief executive officer and other executive officers. For 2021, we removed the stock options from the mix of equity for our chief executive officer and other executive officers and increased the mix of RSUs.
2018
2019
2020
2021
All NEOs
All NEOs
NEOs
Chief Executive Officer
NEOs
Chief Executive Officer
2020 Compensation Mix at Target
Our compensation mix is structured to ensure that a significant portion of the total compensation opportunity for our named executive officers is directly related to our performance and other factors that influence shareholder value. For 2020, the table below shows, for our named executive officers, the mix of fixed compensation, composed of base salary, compared to performance and stock price-variable compensation, comprised of target annual cash incentive and long-term equity incentives (valued based on the average closing price over 30 days):
We also believe our executive compensation should be structured to appropriately balance cash compensation with equity-based compensation. For 2020, the table below shows, for each of our named executive officers, the mix of cash-based compensation, comprised of base salary and target annual cash incentive, compared to equity-based compensation, comprised of the long-term equity incentives (valued based on the average closing price over 30 days).
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EXECUTIVE COMPENSATION
Peer Group Determination
Market practices are one of the considerations taken into account by our compensation committee when determining executive compensation levels and compensation program design. In evaluating market practices, we do not target a specific market percentile, nor do we seek to duplicate any particular market practice. Rather, we review external market practices as a reference point to assist us in developing programs designed to attract, motivate, and retain a strong executive team.
Our compensation committee uses a peer group to provide context for its executive compensation decision-making. Each year, the compensation committee’s independent compensation consultant reviews the external market landscape and evaluates the composition of our peer group for appropriateness. Our compensation committee reviews the information provided from internal sources as well as the information provided by our independent compensation consultant to select our peer group based on comparable companies that approximate (1) our scope of business, including revenues, scope of commercial operations, and market capitalization, (2) our employee base, and (3) a comparable pool of talent for which we compete.
When determining the 2020 peer group, our compensation committee considered pharmaceutical companies that are of similar size to the Company in terms of market capitalization, revenues and commercial expansion, and number of employees.
The peer group for determining our 2020 compensation decisions consisted of the following companies:
| | |
Acorda Therapeutics | Corcept Therapeutics | Ironwood Pharmaceuticals, Inc. |
Akebia | Dermira | Lexicon Pharmaceuticals |
AMAG Pharmaceuticals | Eagle Pharmaceuticals | Pacira Pharmaceuticals |
Amicus Therapeutics | Enanta Pharmaceuticals | Retrophin |
ANI Pharmaceuticals, Inc. | Flexion Therapeutics | Supernus Pharmaceuticals |
Anika Therapeutics | Halozyme | Vanda Pharmaceuticals |
BioDelivery Sciences International, Inc. | Heron Therapeutics | |
For each of the companies in our peer group, where available, we analyze the company’s Compensation Discussion and Analysis, Summary Compensation Table and other data publicly filed during the prior year to identify the executives at such companies whose positions are comparable to those held by our executive officers. We then compile and analyze the data for each comparable position. We also supplement the data for our peer group with published compensation surveys where appropriate. For 2020, consistent with past years, the compensation committee considered information from the Radford survey.
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Process for Determining Executive Compensation
Our Practices
Our compensation committee reviews and establishes, annually, the pay levels of each element of total compensation for our named executive officers.
Compensation decisions are based primarily on the following:
(1) | Annual Performance Reviews—Our Chief Executive Officer conducts and presents an assessment of our corporate performance and the performance reviews of the other named executive officers to the compensation committee after the end of each fiscal year. In reviewing and determining the compensation of each named executive officer, the compensation committee also considers individual factors, such as: potential for future contributions to our growth, industry experience and retention concerns. |
(2) | Peer and Industry Data—Our compensation committee considers peer and industry data provided by its independent compensation consultant, W.T. Haigh, as a reference in setting base salaries and target cash compensation, determining appropriate levels and mix of equity compensation and determining the type and portion of compensation tied to performance goals. |
(3) | Chief Executive Officer Recommendations—The compensation committee seeks input from our Chief Executive Officer for setting the salary and target cash compensation levels for the other executive officers, and also for purposes of setting annual performance metrics and target incentive amounts for awards granted to the other executive officers. |
To achieve the objectives described above, our compensation committee evaluates our compensation program with the goal of setting compensation at levels that are based on each executive’s level of experience, performance and responsibility and that are competitive with those of other companies in our industry that we compete with for executive talent. The compensation committee seeks to ensure that our executive compensation program contains an appropriate amount of compensation for each of our executive officers that is “at risk” and subject to the achievement of critical business objectives.
Process for Establishing 2020 Compensation
Peer Group Selection
Our compensation committee begins its annual review cycle with an evaluation and, if appropriate, updating of our compensation peer group. For the 2020 cycle, this review resulted in an updated peer group that is identified on page 35, under the heading “Compensation Discussion & Analysis – Peer Group Determination.”
When determining the 2020 peer group, our compensation committee considered pharmaceutical companies headquartered in the United States (or focused on United States operations) that are of similar size to the Company in terms of market capitalization, revenues and commercial expansion, and number of employees. At the time our 2020 peer group was selected in October 2019, our market capitalization was at approximately the 25th percentile of the peer group, our revenue was at approximately the 75th percentile of the peer group and our number of employees was at approximately the 45th percentile of our peer group.
Process for Determining Components of Executive Compensation
Our compensation committee reviewed market practices and compensation information from our 2020 peer group, together with information from the Radford survey, in identifying and designing the components of our 2020 executive compensation program. In particular, our compensation committee evaluated how our named executive officers’ compensation elements compare to the 25th, 50th and 75th percentiles of the Radford survey and our peer companies’ comparably situated executives. Our compensation committee reviewed this information as reference points in its overall decision making and as indicative of the types and level of compensation necessary to attract, motivate and retain our executive officers. Our compensation committee set the actual amount of each element of compensation and
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the total compensation opportunity of each executive officer based in part on its review of peer group data and in part on the other factors discussed above and below.
Base Salary Determinations
In determining the base salaries of our then-serving named executive officers, our compensation committee reviewed the base salaries of comparable executive officers in our 2020 peer group and considered our named executive officers’ compensation mix, capabilities, performance and future expected contributions. Based on this review, the 2020 base salaries for our named executive officers positioned them, on average, slightly above the market median compared to persons with comparable jobs within our 2020 peer group. Changes in the 2020 base salaries for our named executive officers as compared to 2019 are discussed on page 39, under the caption “Base Salary.”
Annual Cash Incentive Determinations
Our executive compensation programs place a heavy emphasis on performance-based compensation, and a critical component of that is our annual cash incentive program, in which all of our employees, including our named executive officers, are eligible to participate. Awards made under our annual cash incentive are directly tied to the achievement of our corporate performance goals, which are aligned with the Company’s short- and long-term strategic plans, as well as, in some cases, individual performance goals.
In setting our corporate performance goals for the annual cash incentive plans, we strive to identify a range of metrics that address both the near-term performance of our business, and the actions needed to create and sustain a solid foundation for long-term growth. We believe that our 2020 corporate performance goals align directly with the creation of near- and long-term value for our shareholders. We strive to establish challenging targets within each metric that motivate our named executive officers to achieve and exceed our corporate performance goals, while carefully considering that goals should not encourage inappropriate risk-taking.
Our compensation committee is responsible for reviewing and approving our annual corporate goals, targets and levels of payout (e.g., threshold, target and maximum) for our executive compensation programs and for reviewing and determining actual performance results at the end of the applicable performance period. Our compensation committee reviews the annual cash incentive opportunities for our named executive officers each year to ensure such opportunities are competitive. The 2020 annual cash incentives for our named executive officers are discussed on page 40.
Long-Term Equity Incentive Determinations
Long-term equity incentive awards granted to our named executive officers annually are designed to incentivize our executives to contribute to our Company’s long-term growth and success.
The size of each named executive officer’s long-term equity incentive award is based on the executive’s individual performance, potential future contributions and market competitiveness, as well as other factors. In determining long-term equity incentive awards, our compensation committee reviews the long-term equity incentive grant practices of our peer group as well as the 50th and 75th percentile ranges of long-term equity incentive awards of companies participating in the Radford survey. On average, annual long-term equity incentive grant values for our named executive officers serving at the beginning of 2020 position their overall compensation at or around the median values of our peer group in cases where there are comparable positions at the peer companies.
Long-term equity incentive grants are made following the completion of the internal performance reviews of our executive officers as well as our external market review of equity practices of our peer group, including the data from the Radford survey described above. In 2019, we introduced PSUs to the mix of equity instruments granted as part of our long-term equity incentives, as described in greater detail on page 40 under the caption “Long-Term Equity Incentives.” The 2020 long-term equity incentive grants issued to our named executive officers are discussed on page 40.
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2020 Executive Compensation of Our Named Executive Officers
For purposes of determining 2020 Annual Cash Incentive, the following represents a summary of our corporate performance categories and goals, achievements with respect to each category, respective relative weightings assigned to each category and actual ratings determined based on performance during 2020.
| | | | |||||
Corporate Category | | 2020 Goal | | 2020 Performance | | Relative Weighting | | 2020 Achievement Rating |
Commercial: Xtampza ER | | Net Revenue of $155.1M | | Net Revenue of $128.0M | | 40.0% | | 23.0% |
Commercial: Non-GAAP Net Income | | Non-GAAP Net Income of $137.9M | | Non-GAAP Net Income of $133.4M | | 20.0% | | 18.0% |
Operations | | Ensure supply and enhance manufacturing capacity and flexibility for Xtampza ER | | Achieved, including commercial readiness of dedicated facility for Xtampza ER manufacturing | | 30.0% | | 30.0% |
Organizational Health | | Define and nurture positive, innovative, and inclusive culture | | Achieved. | | 10.0% | | 10.0% |
Business Development | | Complete at least 1 BD transaction meeting certain criteria | | Achieved, through closing of Nucynta franchise acquisition in February 2020 | | +10.0% | | 10.0% (1) |
| | | | | | Total: | | 91.0% |
| | | | | | Total, as adjusted by Comp. Committee: | | 100.0% |
(1) | Business development goal was not part of the weighting to achieve target 100% weighting but was intended to increase the overall 2020 Achievement Rating potential by up to 10%. |
No cash incentive is available with respect to any category of corporate goal that is less than 80% of the target approved by our compensation committee.
Our compensation committee evaluated our performance against our 2020 corporate goals in early 2021, established a percentage rating for each goal based on the extent to which the goal was achieved and then determined an overall corporate rating based on the cumulative weightings of the ratings for all the goals. The compensation committee reviewed its assessment of the Company’s achievement of 2020 corporate goals with our Board. The overall percentage rating as indicated above was 91%. The compensation committee determined in its sole discretion to set the overall percentage rating at 100% of target in recognition of the Company’s strong performance, despite the adverse impact of the COVID-19 pandemic on the business, which impact was not contemplated by the 2020 corporate objectives, which were finalized and approved in early 2020, prior to the emergence of COVID-19 in the United States.
38
In January 2020, our compensation committee reviewed the base salaries of our then-serving named executive officers and determined to increase those base salaries, after taking into account individual performance; the expansion of responsibilities and scope of duties; and the competitive market for talent, as well as data provided by its independent compensation consultant, W.T. Haigh, regarding the annual base salaries of similarly situated executives of companies in the Radford survey and our 2020 peer group. The table below sets forth such increases.
| | | | | | |
| | |
| 2019 Base | | 2020 Base |
Named Executive Officer |
| Title | | Salary ($ ) | | Salary ($ ) |
Joseph Ciaffoni |
| President and Chief Executive Officer |
| 620,000 | | 657,200 |
Paul Brannelly |
| Executive Vice President and Chief Financial Officer |
| 415,000 | | 439,900 |
Alison Fleming, Ph.D. |
| Executive Vice President and Chief Technical Officer |
| 367,500 | | 378,500 |
Shirley Kuhlmann |
| Executive Vice President and General Counsel |
| 393,800 | | 411,500 |
Richard Malamut, M.D. | | Executive Vice President and Chief Medical Officer | | 311,250 | (1) | 423,300 |
(1) | The 2019 base salary represents Dr. Malamut’s base salary prorated based upon his appointment as Executive Vice President and Chief Medical Officer on April 1, 2019. |
After a review of corporate and individual performance for 2020, the compensation committee approved a corporate performance rating of 100.0% of target, as described in greater detail on page 38, under the caption “2020 Corporate Goals.” This determination determined the size of the Company-wide annual cash incentive pool, as well as informing the annual cash incentive payouts for each of our named executive officers, whose 2020 annual cash incentive payments were based on corporate and, in the case of all of our named executive officers other than Mr. Ciaffoni, individual performance ratings.
Each named executive officer has a target annual cash incentive amount, which is expressed as a percentage of his or her salary. This target is set forth in each named executive officer’s employment agreement and evaluated by our compensation committee annually based upon a review of the peer and industry data provided by W.T. Haigh. In 2020, our compensation committee determined that annual cash incentive targets for the named executive officers should be as shown below, reflecting no change from 2019 annual cash incentive targets, which percentages were selected to align our executives with similarly situated executives at peer companies and to further align our named executive officers’ compensation with Company performance and the creation of shareholder value by providing a significant percentage of performance-based compensation relative to total compensation.
| | | | |
| | | | 2020 |
| | | | Annual Cash |
| | | Incentive Target | |
Named Executive Officer | Title | | (% of Base Salary) | |
Joseph Ciaffoni | President and Chief Executive Officer | 70% | ||
Paul Brannelly | Executive Vice President and Chief Financial Officer | 50% | ||
Alison Fleming, Ph.D. | Executive Vice President and Chief Technical Officer | 50% | ||
Shirley Kuhlmann | Executive Vice President and General Counsel | 50% | ||
Richard Malamut, M.D. | | Executive Vice President and Chief Medical Officer | | 50% |
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The actual amounts, paid to our named executive officers in February 2021, for performance in 2020, are set forth in the following table:
| | | | | | |
| | | | Actual Annual | | Actual Annual |
| | | | Cash Incentive | | Cash Incentive |
Named Executive Officer | | Title | | (% of Base Salary) | | ($) |
Joseph Ciaffoni |
| President and Chief Executive Officer |
| 70% | | 460,000 |
Paul Brannelly |
| Executive Vice President and Chief Financial Officer |
| 50% | | 220,000 |
Alison Fleming, Ph.D. |
| Executive Vice President and Chief Technical Officer |
| 50% | | 189,300 |
Shirley Kuhlmann |
| Executive Vice President and General Counsel |
| 50% | | 205,800 |
Richard Malamut, M.D. | | Executive Vice President and Chief Medical Officer | | 50% | | 211,700 |
As part of the annual compensation review process, after reviewing the achievement of 2019 corporate goals for the prior fiscal year, as well as individual performance goals for our named executive officers, our compensation committee granted long-term equity awards in February 2020 to each of our then-serving named executive officers.
The 2020 long-term equity incentive awards for each named executive officer were comprised of a combination of stock options, RSUs and PSUs. Our compensation committee sought to reward the executive team’s performance in 2019, incentivize continued performance in 2020 and align equity compensation with peer practices. To do so, the compensation committee, in consultation with W.T. Haigh, first determined the value of each named executive officer’s long-term equity incentive award by reference to these factors, and then allocated the total value of such award amongst three equity instruments – stock options, RSUs, and PSUs and using a 30-day average stock price of $21.35 (for the period ending January 28, 2020) to derive the numbers of stock options, RSUs and PSUs comprising each award. The compensation committee determined that the total value of each award should be allocated among stock options, RSUs, and PSUs as follows: 25%, 25% and 50%, respectively, for Mr. Ciaffoni, and 25%, 45%, and 30%, respectively, for the other executive officers. The actual 2020 long-term equity incentive awards issued in 2020 were as set forth below.
| | | | | | | | | | |
| | |
| | | | | | | Total |
Named Executive Officer |
| Title | | Stock Options | | RSUs | | PSUs | | Equity Units |
Joseph Ciaffoni (1) |
| President and Chief Executive Officer |
| 90,000 | | 45,000 | | 90,000 | | 225,000 |
Paul Brannelly |
| Executive Vice President and Chief Financial Officer |
| 31,500 | | 28,125 | | 18,750 | | 78,375 |
Alison Fleming, Ph.D. |
| Executive Vice President and Chief Technical Officer |
| 25,000 | | 22,500 | | 15,000 | | 62,500 |
Shirley Kuhlmann |
| Executive Vice President and General Counsel |
| 27,500 | | 24,750 | | 16,500 | | 68,750 |
Richard Malamut, M.D. | | Executive Vice President and Chief Medical Officer | | 22,500 | | 20,250 | | 13,500 | | 56,250 |
The 2020 PSU awards have performance criteria related to the relative ranking of the total stockholder return (“TSR”) of the Company’s common stock in 2020, 2021, 2022 and the cumulative three-year performance period return relative to the TSR of peer companies within the S&P Pharmaceutical Select Industry Index. TSR is measured based on the 30-day average stock price on the first day of each period compared to the 30-day average stock price on the last day of each period. The PSUs subject to the annual performance criteria vest annually, subject to the satisfaction of the performance criteria and the executive’s continued employment through the performance period. The cumulative PSUs will vest following the three-year performance period, subject to the satisfaction of the performance criteria and the executive’s continued employment through the performance period. PSUs may vest in a range between 0% and 200%, based on the satisfaction of performance, and no shares will be issued if the minimum applicable performance metric is not achieved.
In January 2021, the compensation committee reviewed the performance of the 2020 performance segment of the 2019 PSU award (as amended) and 2020 PSU award. TSR performance for the 2020 performance segment was at the 40.5th percentile, resulting in an award at 81% of target. The following table shows the number of shares earned and
40
vested for each of our named executive officers for the 2019 PSU award (as amended). As noted above, the 2019 segment of the 2019 PSUs determined to be earned for 2019 performance was deemed vested in connection with amendment of the terms of the 2019 PSUs in 2021.
| | | | | | | | | | | | |
Named Executive Officer | | Title | | Total 2019 PSUs | | 2019 | | 2019 | | 2020 | | 2020 |
Joseph Ciaffoni |
| President and Chief Executive Officer |
| 45,000 | | 9,000 | | 7,119 | | 9,000 | | 7,290 |
Paul Brannelly |
| Executive Vice President and Chief Financial Officer |
| 16,000 | | 3,200 | | 2,531 | | 3,200 | | 2,592 |
Alison Fleming, Ph.D. |
| Executive Vice President and Chief Technical Officer |
| 12,800 | | 2,560 | | 2,025 | | 2,560 | | 2,074 |
Shirley Kuhlmann |
| Executive Vice President and General Counsel |
| 12,800 | | 2,560 | | 2,025 | | 2,560 | | 2,074 |
Richard Malamut, M.D. | | Executive Vice President and Chief Medical Officer | | - | | - | | - | | - | | - |
* Number of shares rounded to nearest whole share.
The following table shows the numbers of shares earned and vested for each of our named executive officers for the 2020 PSU award.
| | | | | | | | |
Named Executive Officer | | Title | | Total 2020 PSUs | | 2020 | | 2020 |
Joseph Ciaffoni |
| President and Chief Executive Officer |
| 90,000 | | 18,000 | | 14,580 |
Paul Brannelly |
| Executive Vice President and Chief Financial Officer |
| 18,750 | | 3,750 | | 3,038 |
Alison Fleming, Ph.D. |
| Executive Vice President and Chief Technical Officer |
| 15,000 | | 3,000 | | 2,430 |
Shirley Kuhlmann |
| Executive Vice President and General Counsel |
| 16,500 | | 3,300 | | 2,673 |
Richard Malamut, M.D. | | Executive Vice President and Chief Medical Officer | | 13,500 | | 2,700 | | 2,187 |
* Number of shares rounded to nearest whole share.
In 2020, the compensation committee also awarded additional RSUs to Dr. Fleming as a retention award. Dr. Fleming received 18,616 RSUs which vested in full on April 1, 2021. Dr. Fleming also received 7,978 RSUs that will vest upon the achievement of certain performance criteria related to Xtampza manufacturing process goals.
Employment Agreements
The Company has entered into employment agreements with each of its named executive officers. These employment agreements outline the base salary, annual cash incentive, and long-term equity incentive components of our executive compensation program, as well as the impact of termination and change of control on the executive compensation programs in which our named executive officers participate. In December 2020, the compensation committee approved amendments and restatements of each of our named executive officers’ employment agreements to enhance and standardize certain provisions, primarily relating to severance entitlements.
Compensation Risk Assessment
Our executive compensation program and policies are driven by our business environment and designed to enable us to achieve our mission and adhere to our values. The compensation committee and senior management continually evaluate the relationship between risk and reward as it relates to our executive compensation program. Our compensation committee has determined that the structure of our executive compensation programs does not put our patients, investors, other stakeholders, or the Company at any material risk.
41
Tax Deductibility of Compensation
Our intent is to maximize the deductibility of compensation. However, under certain circumstances that are in the best interest of the Company and our shareholders, the compensation committee may authorize compensation that is not deductible if it is determined to be appropriate.
Clawback Policy
We have adopted a Clawback Policy so that if the Company is required to prepare an accounting restatement due to our material non-compliance with any financial reporting requirements, then the compensation committee may require certain officers, including our named executive officers, to repay or forfeit any “erroneously awarded compensation.” “Erroneously awarded compensation” refers to the portion of cash and equity-based incentive compensation received by a covered officer during the three-year period preceding the publication of the restated financial statements that the compensation committee determines was in excess of the amount that such officer would have received had such incentive compensation been determined based on the financial results reported in the restated financial statements.
Anti-Hedging and Anti-Pledging Policy
Our insider trading policy prohibits employees, officers and directors from engaging in any hedging or monetization transactions or similar arrangements (including transactions involving zero-cost collars, prepaid variable forward sale contracts, equity swaps and exchange funds) that are designed to hedge or speculate on any change in the market value of our securities. It also explicitly prohibits employees, officers and directors from effecting short sales of our securities, which are inherently speculative in nature and contrary to the best interests of the Company and our shareholders. Our insider trading policy also prohibits employees, officers and directors from buying or selling puts or calls or other derivative securities on our securities and from pledging our securities as collateral for a loan or holding our securities in a margin account.
Stock Ownership Guidelines
In 2020 we adopted stock ownership guidelines to assist in focusing officers and non-employee directors on the long-term success of the Company and on shareholder value by requiring them to hold shares of Company common stock.
Our stock ownership guidelines apply to our Chief Executive Officer and each Executive Vice President (each a “Covered Officer”) and each non-employee director (each a “Covered Director”). The stock ownership guidelines require all Covered Officers other than our Chief Executive Officer, to hold shares of our common stock with a value equal to one times the amount of their then-current annual base salary. Our Chief Executive Officer is required to hold shares of our common stock with a value equal to three times the amount of his then-current annual base salary. Covered Directors are required to hold shares of our common stock with a value equal to three times the base cash retainer for board service (excluding committee and chair additional retainers). These ownership guidelines are calculated annually based on ownership as of January 1 of each year based on the applicable annual base salary in effect on such calculation date. The value of a share will be measured on such date based on the average closing price over the 30 calendar days preceding the date of calculation. Such calculated ownership levels will be reported to the compensation committee.
Covered Officers and Covered Directors are required to achieve the applicable level of ownership within five years of the later of the date the guidelines were adopted and the date the person first became subject to the guidelines. In the event that a Covered Officer or Covered Director does not meet the foregoing stock ownership guidelines, such individual may be required to hold 50%-100%, as determined by the compensation committee, of common stock issued following the exercise of options, the vesting of restricted stock units or the vesting of performance share units, after payment for applicable statutory withholding taxes or exercise price, until the required ownership level has been met.
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Shares that count toward satisfaction of the guidelines include (i) shares owned outright by the individual or his or her immediate family members residing in the same household, including restricted shares and shares deliverable upon settlement of vested and unvested restricted stock units and vested in-the-money options, excluding restricted stock units that remain subject to achievement of performance goals, such as performance share units; provided, however, the shares underlying performance share units for partial periods for which performance goals have been achieved but not yet vested are included and (ii) shares owned through savings plans, such as the our 401(k) plan, or acquired through the our employee stock purchase plan.
Our stock ownership guidelines may be waived, at the discretion of the compensation committee, if compliance would create undue hardship or prevent an individual from complying with a court order, as in the case of a divorce settlement. It is expected that these instances will be rare.
As of January 1, 2021, all directors and executive officers were in compliance with the ownership requirements of our stock ownership guidelines, with the exception of Dr. Balice-Gordon, who will be required to meet the ownership requirement by September 24, 2025, the fifth anniversary of her appointment to our board.
COMPENSATIONCOMMITTEEREPORT
The compensation committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K, which appears in this proxy statement, with our management. Based on this review and discussion, the compensation committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2020.
| |
| |
Compensation Committee: | |
John Freund, M.D., Chairman | |
Gino Santini | |
Theodore Schroeder |
The foregoing report of the compensation committee does not constitute soliciting material and will not be deemed filed, incorporated by reference into or a part of any other filing by the Company (including any future filings) under the Exchange Act, except to the extent the Company specifically incorporates such report by reference therein.
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Summary Compensation Table
The following table shows the annual compensation paid to or earned by (i) Michael T. Heffernan, our President and Chief Executive Officer,named executive officers, for the fiscal years ended December 31, 20152020, 2019 and 2014, and (ii) Paul Brannelly, our Executive Vice President and Chief Financial Officer, and Barry S. Duke, our Executive Vice President and Chief Commercial Officer (together, our "named executive officers"), for the fiscal year ended December 31, 2015:2018:
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Non-Equity | | | | |
|
| |
| |
| |
| Stock |
| Option |
| Incentive Plan |
| All Other |
| |
Name and | | | | Salary | | Bonus | | Awards | | Awards | | Compensation | | Compensation | | Total |
Principal Position | | Year | | ($) | | ($) | | ($) (1) | | ($) (2) | | ($) (3) | | ($) (4) | | ($) |
Joseph Ciaffoni | | 2020 | | 654,338 | | - | | 3,755,681 | | 1,154,970 | | 460,000 | | 17,650 | | 6,042,639 |
President and Chief Executive Officer | | 2019 | | 618,461 | | - | | 2,146,500 | | 859,738 | | 390,600 | | 17,329 | | 4,032,628 |
| | 2018 | | 535,577 | | 50,000 | | 1,208,339 | | 1,353,193 | | 340,900 | | 17,294 | | 3,505,303 |
| | | | | | | | | | | | | | | | |
Paul Brannelly | | 2020 | | 437,985 | | 50,000 | (5) | 1,212,421 | | 401,031 | | 220,000 | | 17,650 | | 2,339,087 |
Executive Vice President and Chief Financial Officer | | 2019 | | 413,077 | | - | | 763,200 | | 305,685 | | 214,800 | | 17,012 | | 1,713,774 |
| | 2018 | | 387,692 | | - | | 608,750 | | 739,268 | | 222,500 | | 17,294 | | 1,975,504 |
Alison Fleming, Ph.D. | | 2020 | | 377,654 | | - | | 1,537,453 | | 320,825 | | 189,300 | | 13,250 | | 2,438,482 |
Executive Vice President and Chief Technical Officer | | 2019 | | 366,154 | | - | | 610,560 | | 244,548 | | 165,400 | | 12,929 | | 1,399,591 |
| | 2018 | | 346,154 | | - | | 608,750 | | 739,268 | | 199,700 | | 15,294 | | 1,909,166 |
| | | | | | | | | | | | | | | | |
Shirley Kuhlmann | | 2020 | | 410,138 | | 50,000 | (5) | 1,061,161 | | 352,908 | | 205,800 | | 16,174 | | 2,096,181 |
Executive Vice President and | | 2019 | | 392,354 | | - | | 610,560 | | 244,548 | | 186,100 | | 15,807 | | 1,449,369 |
| | 2018 | | 297,114 | | 50,000 | | 480,600 | | 602,344 | | 171,200 | | 5,770 | | 1,607,028 |
| | | | | | | | | | | | | | | | |
Richard Malamut, M.D. | | 2020 | | 422,662 | | - | | 821,016 | | 288,743 | | 211,700 | | 17,686 | | 1,761,807 |
Executive Vice President | | 2019 | | 311,250 | | - | | 642,600 | | 765,176 | | 186,800 | | 16,996 | | 1,922,822 |
| | 2018 | | - | | - | | - | | - | | - | | - | | - |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Michael T. Heffernan, R.Ph. | 2015 | 462,241 | 375,000 | (5) | 633,984 | 1,776,999 | 238,290 | 14,168 | 3,500,682 | ||||||||||||||||
President and Chief | 2014 | 380,380 | — | — | — | 130,851 | 7,570 | 518,801 | |||||||||||||||||
Executive Officer | |||||||||||||||||||||||||
Paul Brannelly | 2015 | 289,038 | — | — | 624,009 | 111,759 | 4,161 | 1,028,967 | |||||||||||||||||
Executive Vice President and Chief Financial Officer(6) | |||||||||||||||||||||||||
Barry S. Duke | 2015 | 250,000 | — | — | 557,928 | 127,725 | 76,427 | 1,012,080 | |||||||||||||||||
Executive Vice President and Chief Commercial Officer(7) |
(1) | The amounts reflect the aggregate grant date fair value of stock awards computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 15 to our financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. |
(2) | The amounts reflect the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 15 to our financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. |
(3) | Amounts represent the annual cash incentive payments earned by our named executive officers, for the years ended December 31, 2020, 2019 and 2018, respectively, pursuant to the achievement of certain company and individual performance objectives for those years. Please see the descriptions of the annual cash incentives in the section entitled “Compensation Discussion and Analysis— 2020 Executive Compensation of Our Named Executive Officers—Non-Equity Incentive Plan Compensation.” |
(4) | This amount reflects our contributions to our 401(k) Plan and life/disability insurance. |
(5) | Amounts represent a transaction bonus paid to each of Ms. Kuhlmann and Mr. Brannelly in recognition of their efforts in connection with the closing of the Company’s acquisition of the Nucynta product assets in 2020. |
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Grants of Plan-Based Awards
The following table presents information concerning grants of equity awards to each of the named executive officers pursuant to the achievement of certain company and individual performance objectives earned in 2015 and 2014, as applicable. Please see the descriptions of the annual performance bonuses in the section below entitled "—Non-Equity Incentive Plan Compensation."
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | All Other | | All Other | | | | Grant Date |
| | | | Estimated Future Payouts | | Estimated Future Payouts | | Stock Awards: | | Option Awards: | | Exercise or | | Fair Value of | ||||||||
| | | | Under Non-Equity Incentive | | Under Equity Incentive | | Number of Shares | | Number of Securities | | Base Price of | | Stock and | ||||||||
| | | | Plan Awards (1) | | Plan Awards (2) | | of Stock or | | Underlying | | Option | | Option | ||||||||
| | | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | RSUs | | Options | | Awards | | Awards |
Name | | Grant Date | | $ | | $ | | $ | | # | | # | | # | | # (3) | | # (4) | | $/Sh (5) | | $ (6) |
Joseph Ciaffoni | | | | 138,000 | | 460,000 | | 782,000 | | | | | | | | | | | | | | |
President and Chief Executive Officer | | 2/5/2020 | | | | | | | | 9,000 | | 18,000 | | 36,000 | | | | | | - | | 479,700 |
| | 2/5/2020 | | | | | | | | 9,000 | | 18,000 | | 36,000 | | | | | | - | | 496,620 |
| | 2/5/2020 | | | | | | | | 9,000 | | 18,000 | | 36,000 | | | | | | - | | 495,900 |
| | 2/5/2020 | | | | | | | | 18,000 | | 36,000 | | 72,000 | | | | | | - | | 1,120,320 |
| | 2/5/2020 | | | | | | | | | | | | | | 45,000 | | | | - | | 960,300 |
| | 2/5/2020 | | | | | | | | | | | | | | | | 90,000 | | 21.34 | | 1,154,970 |
| | 12/14/2020 | (7) | | | | | | | 18,000 | | 36,000 | | 72,000 | | | | | | - | | 202,841 |
| | | | | | | | | | | | | | | | | | | | | | |
Paul Brannelly | | | | 66,000 | | 220,000 | | 374,000 | | | | | | | | | | | | | | |
Executive Vice President and Chief Financial | | 2/5/2020 | | | | | | | | 1,875 | | 3,750 | | 7,500 | | | | | | - | | 99,938 |
| | 2/5/2020 | | | | | | | | 1,875 | | 3,750 | | 7,500 | | | | | | - | | 103,463 |
| | 2/5/2020 | | | | | | | | 1,875 | | 3,750 | | 7,500 | | | | | | - | | 103,313 |
| | 2/5/2020 | | | | | | | | 3,750 | | 7,500 | | 15,000 | | | | | | - | | 233,400 |
| | 2/5/2020 | | | | | | | | | | | | | | 28,125 | | | | - | | 600,188 |
| | 2/5/2020 | | | | | | | | | | | | | | | | 31,250 | | 21.34 | | 401,031 |
| | 12/14/2020 | (7) | | | | | | | 6,400 | | 12,800 | | 25,600 | | | | | | - | | 72,121 |
| | | | | | | | | | | | | | | | | | | | | | |
Alison Fleming, Ph.D. | | | | 56,790 | | 189,300 | | 321,810 | | | | | | | | | | | | | | |
Executive Vice President and Chief Technical Officer | | 2/5/2020 | | | | | | | | 1,500 | | 3,000 | | 6,000 | | | | | | - | | 79,950 |
| | 2/5/2020 | | | | | | | | 1,500 | | 3,000 | | 6,000 | | | | | | - | | 82,770 |
| | 2/5/2020 | | | | | | | | 1,500 | | 3,000 | | 6,000 | | | | | | - | | 82,650 |
| | 2/5/2020 | | | | | | | | 3,000 | | 6,000 | | 12,000 | | | | | | - | | 186,720 |
| | 2/5/2020 | | | | | | | | - | | 7,978 | | 7,978 | | | | | | - | | 170,251 |
| | 2/5/2020 | | | | | | | | | | | | | | 41,116 | | | | - | | 877,415 |
| | 2/5/2020 | | | | | | | | | | | | | | | | 25,000 | | 21.34 | | 320,825 |
| | 12/14/2020 | (7) | | | | | | | 5,120 | | 10,240 | | 20,480 | | | | | | - | | 57,697 |
| | | | | | | | | | | | | | | | | | | | | | |
Shirley Kuhlmann | | | | 61,740 | | 205,800 | | 349,860 | | | | | | | | | | | | | | |
Executive Vice President and General Counsel | | 2/5/2020 | | | | | | | | 1,650 | | 3,300 | | 6,600 | | | | | | - | | 87,945 |
| | 2/5/2020 | | | | | | | | 1,650 | | 3,300 | | 6,600 | | | | | | - | | 91,047 |
| | 2/5/2020 | | | | | | | | 1,650 | | 3,300 | | 6,600 | | | | | | - | | 90,915 |
| | 2/5/2020 | | | | | | | | 3,300 | | 6,600 | | 13,200 | | | | | | - | | 205,392 |
| | 2/5/2020 | | | | | | | | | | | | | | 24,750 | | | | - | | 528,165 |
| | 2/5/2020 | | | | | | | | | | | | | | | | 27,500 | | 21.34 | | 352,908 |
| | 12/14/2020 | (7) | | | | | | | 5,120 | | 10,240 | | 20,480 | | | | | | - | | 57,697 |
| | | | | | | | | | | | | | | | | | | | | | |
Richard Malamut, M.D. | | | | 63,510 | | 211,700 | | 359,890 | | | | | | | | | | | | | | |
Executive Vice President and Chief Medical Officer | | 2/5/2020 | | | | | | | | 1,350 | | 2,700 | | 5,400 | | | | | | - | | 71,955 |
| | 2/5/2020 | | | | | | | | 1,350 | | 2,700 | | 5,400 | | | | | | - | | 74,493 |
| | 2/5/2020 | | | | | | | | 1,350 | | 2,700 | | 5,400 | | | | | | - | | 74,385 |
| | 2/5/2020 | | | | | | | | 2,700 | | 5,400 | | 10,800 | | | | | | - | | 168,048 |
| | 2/5/2020 | | | | | | | | | | | | | | 20,250 | | | | - | | 432,135 |
| | 2/5/2020 | | | | | | | | | | | | | | | | 22,500 | | 21.34 | | 288,743 |
Employment Agreements
We have employment and other service agreements with all of our named executive officers. The following is a summary of the material terms of each employment agreement.
Michael T. Heffernan, R.Ph.
The 2014 data in the Summary Compensation Table above reflects compensation payable to Michael T. Heffernan, our President and Chief Executive Officer, pursuant to an employment agreement dated June 13, 2012 (the "Prior Heffernan Agreement") and a new employment agreement dated August 4, 2015 (the "Current Heffernan Agreement"), which replaced the Prior Heffernan
45
(1) | Consists of potential cash payments under our annual cash incentive program for executives for 2020. Actual cash incentive payments determined in February 2021 for 2020 performance are set forth in the Summary Compensation Table above under the column entitled “Non-Equity Incentive Plan Compensation” for 2020. The “threshold” payouts reflect the annual cash incentive payment that would have been due had each of the corporate goals for 2020 been achieved at the minimum level. The “target” payouts reflect the annual cash incentive payment that would have been due had each of the corporate goals for 2020 been achieved at the target level (100%). Finally, the “maximum” payouts reflect the annual cash incentive that would have been due had each of the corporate goals for 2020 been achieved at the maximum level applicable to that goal. |
(2) | Consists of the minimum threshold, target and maximum amounts that could vest pursuant to PSUs granted to executives under our annual long-term equity incentive program. For such PSU awards, the grant date fair value, in accordance with FASB ASC Topic 718, is set forth in the Summary Compensation Table under the column “Stock Awards” for 2020. |
(3) | Consists of stock awards for executives under our annual long-term equity incentive program for executives. For such stock awards, the grant date fair value, in accordance with FASB ASC Topic 718, is set forth in the Summary Compensation Table under the column “Stock Awards” for 2020. |
(4) | Consists of options awards for executives under our annual long-term equity incentive program for executives. For such stock awards, the grant date fair value, in accordance with FASB ASC Topic 718, is set forth in the Summary Compensation Table under the column “Stock Awards” for 2020. |
(5) | The exercise price of a share of our common stock on a particular date for purposes of granting stock options is determined as the closing price as reported on The NASDAQ Global Select Market on the date of grant. |
(6) | Amounts reported reflect the aggregate grant date fair value as calculated in accordance with ASC 718. These amounts do not represent the actual amounts paid or realized by the named executive officer during 2020. The assumptions we used in valuing equity awards are described in Note 15, “Stock-based Compensation,” to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. |
(7) | Represents the incremental fair value, computed in accordance with FASB Topic 718, of the modification in December 2020 of the PSUs. See “Compensation Discussion and Analysis—Components of our Executive Compensation Program—Base Salary, Annual Cash Incentive, and Long-Term Equity Incentive” for a discussion of the amendment to the 2019 PSUs. |
Agreement. The principal compensation terms under Mr. Heffernan's employment agreements are as follows:
Upon a termination of Mr. Heffernan's employment by us without cause or by Mr. Heffernan for good reason (each as defined in the Current Heffernan Agreement) prior to a change in control of our company, Mr. Heffernan is eligible to receive (i) continuation of his base salary for twelve months (the "Heffernan Severance Period"), (ii) a lump sum payment equal to Mr. Heffernan's then-current target annual bonus, (iii) continuation of his health insurance benefits at our expense for the duration of the Heffernan Severance Period, and (iv) full vesting with respect to all unvested restricted stock, stock options and other equity incentives awarded to Mr. Heffernan, subject to his execution of and non-revocation of a general release of claims. Upon a termination of Mr. Heffernan's employment by us without cause or by Mr. Heffernan for good reason within twelve months following a change in control of our company, Mr. Heffernan is eligible to receive the benefits described in the preceding sentence, except that the Heffernan Severance Period will be eighteen months instead of twelve months. Upon a termination of Mr. Heffernan's employment with us due to his death or disability, all unvested restricted stock, stock options and other equity incentives awarded to him by us will become fully vested.
Mr. Heffernan is entitled to participate in all of our employee benefit plans, subject to the terms and conditions applicable to such plans. Further, the Current Heffernan Agreement contains customary non-solicitation and non-competition covenants, which covenants remain in effect for one year following any cessation of Mr. Heffernan's employment with us.
Paul Brannelly
On August 4, 2015, we entered into an employment agreement with Paul Brannelly, our Executive Vice President and Chief Financial Officer (the "Brannelly Agreement"). The principal compensation terms of the Brannelly Agreement are as follows:46
Additionally, Mr. Brannelly has been granted stock option awards as described below under the heading "—Outstanding Equity Awards at Fiscal Year-End."
Upon a termination of Mr. Brannelly's employment by us without cause or by Mr. Brannelly for good reason (each as defined in the Brannelly Agreement) prior to a change in control of the Company, Mr. Brannelly is eligible to receive continuation of his base salary and continuation of his health insurance benefits at our expense for nine months, subject to his execution of and non-revocation of a general release of claims. Upon a termination of Mr. Brannelly's employment by us without cause or by Mr. Brannelly for good reason within twelve months following a change in control of our company, Mr. Brannelly is eligible to receive full vesting with respect to all unvested restricted stock, stock options and other equity incentives awarded to Mr. Brannelly and continuation of his base
salary and health insurance benefits at our expense for twelve months, subject to his execution of and non-revocation of a general release of claims.
Mr. Brannelly is entitled to participate in all of our employee benefit plans, subject to the terms and conditions applicable to such plans. Further, the Brannelly Agreement contains customary non-solicitation covenants, which covenants remain in effect for nine months following any cessation of Mr. Brannelly's employment with us.
Barry S. Duke
On August 4, 2015, we entered into an employment agreement with Barry S. Duke, our Executive Vice President and Chief Commercial Officer (the "Duke Agreement"). The principal compensation terms of the Duke Agreement are as follows:
Additionally, Mr. Duke has been granted stock option awards as described below under the heading "—Outstanding Equity Awards at Fiscal Year-End."
Upon a termination of Mr. Duke's employment by us without cause or by Mr. Duke for good reason (each as defined in the Duke Agreement) prior to a change in control of the Company, Mr. Duke is eligible to receive continuation of his base salary and continuation of his health insurance benefits at our expense for nine months, subject to his execution of and non-revocation of a general release of claims. Upon a termination of Mr. Duke's employment by us without cause or by Mr. Duke for good reason within twelve months following a change in control of our company, Mr. Duke is eligible to receive full vesting with respect to all unvested restricted stock, stock options and other equity incentives awarded to Mr. Duke and continuation of his base salary and health insurance benefits at our expense for twelve months, subject to his execution of and non-revocation of a general release of claims.
Mr. Duke is entitled to participate in all of our employee benefit plans, subject to the terms and conditions applicable to such plans. Further, the Duke Agreement contains customary non-solicitation covenants, which covenants remain in effect for nine months following any cessation of Mr. Duke's employment with us.
Potential Payments Upon a Termination or Change in Control
Each of our named executive officers is entitled to severance in the event of a termination by our company without cause or a resignation by such named executive officer for good reason. The details of such severance arrangements are described above in the section titled "—Employment Agreements."
Additionally, certain unvested equity grants awarded to our named executive officers will become fully vested (and exercisable as applicable) in connection with certain termination of employment events. The details of such accelerated vesting are described above in the section titled "—Employment Agreements" and below in the section titled "—Outstanding Equity Awards at Fiscal Year-End."
Non-Equity Incentive Plan Compensation
Each named executive officer's target bonus opportunity is expressed as a percentage of base salary, as described above.
For the fiscal year ending December 31, 2016, each of our named executive officers is eligible to earn a cash bonus, of which 70% of such bonus will be determined based on achievement of corporate performance goals and 30% of such bonus will be determined based on achievement of certain individual performance goals. The target amount of the annual bonuses for Messrs. Heffernan, Brannelly and Duke is 50%, 35% and 40% of base salary, respectively.
For the fiscal year ended December 31, 2015, each of our named executive officers was eligible to earn a cash bonus, of which 70% of such bonus was determined based on achievement of corporate performance goals and 30% of such bonus was determined based on achievement of certain individual performance goals. The target amount of the annual bonuses for Messrs. Heffernan, Brannelly and Duke was 50%, 35% and 40% of base salary, respectively. The applicable corporate performance goals were achieved at 97.5% of target with the applicable individual performance goals for Messrs. Heffernan, Brannelly and Duke achieved at 97.5%, 100% and 100% of target, respectively, Thus, Messrs. Heffernan, Brannelly and Duke earned an annual bonus of 97.5%, 98.25% and 98.25% of target, respectively. The amounts shown above for Messrs. Heffernan, Brannelly and Duke in the column titled "—Non-Equity Incentive Plan Compensation" represents the actual annual performance bonuses payable for the fiscal year ended December 31, 2015 to Messrs. Heffernan, Brannelly and Duke.
For the fiscal year ended December 31, 2014, Mr. Heffernan was eligible to earn a cash bonus, of which 70% of such bonus was determined based on achievement of corporate performance goals and 30% of such bonus was determined based on achievement of certain individual performance goals. The target amount of the annual bonus for Mr. Heffernan was 40% of base salary. The applicable corporate performance goals were achieved at 86% of target with the applicable individual performance goals for Mr. Heffernan achieved at 86% of target. Thus, Mr. Heffernan earned an annual bonus at 86% of target. The amount shown above for Mr. Heffernan in the column titled "—Non-Equity Incentive Plan Compensation" represents the actual annual performance bonuses payable for the fiscal year ended December 31, 2014 to Mr. Heffernan.
Equity Awards During Fiscal Years Ended December 31, 2015
On March 19, 2015, we awarded Mr. Brannelly stock options to purchase an aggregate of 102,070 shares of our common stock, with an aggregate grant date fair value computed in accordance with FASB ASC Topic 718 equal to $400,347. The options have an exercise price of $5.73. On March 19, 2015, Mr. Brannelly exercised an option to purchase 72,463 shares of common stock in exchange for $415,212.99. Such exercised shares and the unexercised option shares are subject to time-based vesting conditions as described below in the section titled "—Outstanding Equity Awards at Fiscal Year-End." Exercised but unvested option shares are subject to repurchase by us in exchange for payment of the exercise price.
On March 30, 2015, we awarded Messrs. Heffernan and Duke stock options to purchase 275,463 and 72,463 shares of our common stock, respectively, with an aggregate grant date fair value computed in accordance with FASB ASC Topic 718 equal to $1,076,993 and $283,313, respectively. The options have an exercise price of $5.73 and are subject to time-based vesting conditions as described below in the section titled "—Outstanding Equity Awards at Fiscal Year-End."
On April 2, 2015, we granted Mr. Heffernan restricted stock awards equal to 194,694 shares of our common stock, with an aggregate grant date fair value computed in accordance with FASB ASC Topic 718 equal to $633,984. The restricted stock is subject to time-based vesting conditions as described below in the section titled "—Outstanding Equity Awards at Fiscal Year-End."
On May 14, 2015, we awarded Messrs. Heffernan, Brannelly and Duke stock options to purchase 70,193, 22,929 and 27,537 shares of our common stock, respectively, with an aggregate grant date fair value computed in accordance with FASB ASC Topic 718 equal to $700,005, $228,661 and $274,615,
respectively. The options have an exercise price of $14.90 and are subject to time-based vesting conditions as described below in the section titled "—Outstanding Equity Awards at Fiscal Year-End."
Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding equity awards held by each of our named executive officers that were outstanding as of December 31, 2015. The market value of stock awards is based on the closing market price of our common stock of $27.50 per share on December 31, 2015.
| Option Awards | Stock Awards | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options (#) (Exercisable) | Number of Securities Underlying Unexercised Options (#) (Unexercisable) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | |||||||||||||||
Michael T. Heffernan, R.Ph. | 9,673 | — | — | $ | 3.31 | 11/11/2020 | — | — | ||||||||||||||
President and Chief | 3,027 | (1) | 3,917 | (1) | — | $ | 0.48 | 01/30/2023 | — | — | ||||||||||||
Executive Officer | 21,578 | (2) | 14,755 | (2) | — | $ | 5.73 | 03/30/2025 | — | — | ||||||||||||
44,839 | (3) | 194,291 | (3) | — | $ | 5.73 | 03/30/2025 | — | — | |||||||||||||
— | (4) | 70,193 | (4) | — | $ | 14.90 | 05/14/2025 | — | — | |||||||||||||
— | — | — | — | — | 81,123 | (5) | 2,230,883 | |||||||||||||||
Paul Brannelly | 5,553 | (6) | 24,054 | (6) | — | $ | 5.73 | 03/19/2025 | — | — | ||||||||||||
Executive Vice President and | — | (7) | 22,929 | (7) | — | $ | 14.90 | 05/14/2025 | — | — | ||||||||||||
Chief Financial Officer | — | — | — | — | — | 72,463 | (8) | 1,992,733 | ||||||||||||||
Barry S. Duke | — | (9) | 72,463 | (9) | — | $ | 5.73 | 03/30/2025 | — | — | ||||||||||||
Executive Vice President and | — | (10) | 27,537 | (10) | — | $ | 14.90 | 05/14/2025 | — | — | ||||||||||||
Chief Commercial Officer |
agreement, the shares will immediately become fully vested upon a termination of Mr. Heffernan's employment without cause or due to Mr. Heffernan's death or disability, or upon a resignation by Mr. Heffernan for good reason. Additionally, pursuant to Mr. Heffernan's employment agreement, the shares will immediately become fully vested upon the occurrence of a change of control.
Equity Incentive Plans
Amended and Restated 2014 Stock Incentive Plan
2020. All of our outstanding equity awards are governed by the Collegium Pharmaceutical, Inc. Amended and Restated 2014 Stock Incentive Plan (the "Plan"). We adopted the Plan, as amended and restated,Plan. The market value of stock awards is based on April 23, 2015, and it became effective immediately prior to the closing of our initial public offering in May 2015 (the "IPO"). The Plan was adopted to enhance our ability to attract, retain and motivate persons who make important contributions to us and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of our shareholders. The material terms of the Plan are described below.
The Plan permits the grant of (i) options, (ii) restricted stock awards, (iii) restricted stock units, or RSUs and (iv) performance awards, which we refer to collectively as Awards, as more fully described below.
Prior to the IPO, options to purchase common stock and awards of restricted stock were granted to various participants under the Plan.
All Awards granted under the Plan are governed by award agreements, between us and the participants. No Awards may be granted after the tenth anniversary of the Plan's adoption by our shareholders, although Awards granted before that time will remain valid in accordance with their terms.
The compensation committee of our Board administers the Plan. The compensation committee will designate each eligible individual to whom an Award is to be granted. Any of our employees, consultants, officers or other service providers, or those of our affiliates, are eligible to participate in the Plan if selected by the compensation committee. In its discretion, the compensation committee may delegate all or part of its authority and duties with respect to granting Awards to one or more individuals, provided applicable law so permits.
Subject to certain adjustments, the maximum number of shares of common stock that may be issued under the Plan in connection with Awards is 3,529,574 shares, which includes shares of common stock that were automatically added to the shares reserved for issuance under the Plan on January 1, 2016 pursuant to an "evergreen" provision contained in the Plan. Pursuant to such provision, the number of shares reserved for issuance under the Plan automatically increases on January 1st each year, starting on January 1, 2016 and continuing through January 1, 2025, by an amount equal to 4% of the outstanding sharesmarket price of our common stock of $20.03 per share on December 31,st of the immediately preceding fiscal year (or such lesser number of shares of common stock as determined by the Board). In the event of any stock dividend, recapitalization, forward stock split or reverse stock split, reorganization, division, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution or other similar corporate transaction or event that affects our common stock, the compensation committee will make appropriate adjustment in the number and kind of shares authorized by the Plan and covered under outstanding Awards as it determines appropriate and equitable. Shares of our common stock subject to Awards under the Plan that expire unexercised or are otherwise forfeited will again be available for Awards under the Plan. 2020:
An option entitles the holder to purchase from us a stated number of shares of common stock. An incentive stock option ("ISO") may only be granted to an employee of ours or our affiliates (provided applicable law so permits). The aggregate maximum number of shares that may be issued pursuant to the exercise of ISOs will be 8,100,000 shares. The compensation committee will specify the number of shares of common stock subject to each option and the exercise price for such option, provided that the exercise price may not be less than the fair market value of a share of common stock on the date the option is granted. Notwithstanding the foregoing, if ISOs are granted to any 10% shareholder, the exercise price will not be less than 110% of the fair market value of common stock on the date the option is granted. Generally, all or part of the exercise price may be paid (i) in cash, (ii) with the proceeds received from a broker-dealer whom the holder has authorized to sell all or a portion of the common stock covered by the option, (iii) with the consent of the compensation committee, in whole or in part in common stock held by the holder and valued at fair market value on the date of exercise, or (iv) by any combination of such methods. The compensation committee may, in its sole discretion, permit payment of the exercise price of an option in the form of previously acquired shares based on the fair market value of the shares on the date the option is exercised or through means of "net settlement."
| | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards | ||||||||||||||
Name and Principal Position |
| Number of Securities Underlying Unexercised Options |
| Number of Securities Underlying Unexercised Options |
| Equity incentive plan awards: |
| Option Exercise Price | | Option Expiration Date |
| Number of Shares or Units of Stock That Have Not Vested |
| Market Value of Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
Joseph Ciaffoni | | 32,411 | (1) | 32,410 | (1) | - | | 8.22 | | 5/31/2027 | | 10,533 | (3) | 210,976 | | - | | - |
President and Chief Executive Officer | | 34,375 | (1) | 15,625 | (1) | - | | 24.35 | | 1/25/2028 | | 9,375 | (3) | 187,781 | | - | | - |
| | 23,298 | (1) | 18,120 | (1) | - | | 23.85 | | 7/1/2028 | | 12,570 | (3) | 251,777 | | - | | - |
| | 39,375 | (1) | 50,625 | (1) | - | | 15.90 | | 1/25/2029 | | 81,909 | (4) | 1,640,637 | | 27,000 | (14) | 540,810 |
| | - | (1) | 90,000 | (1) | - | | 21.34 | | 2/5/2030 | | 59,580 | (5) | 1,193,387 | | 72,000 | (14) | 1,442,160 |
| | | | | | | | | | | | | | | | | | |
Paul Brannelly | | 29,607 | (2) | - | (2) | - | | 5.73 | | 3/19/2025 | | - | | - | | - | | - |
Executive Vice President and Chief Financial Officer | | 22,929 | (2) | - | (2) | - | | 14.90 | | 5/14/2025 | | - | | - | | - | | - |
| | 29,475 | (2) | - | (2) | - | | 16.15 | | 1/20/2026 | | - | | - | | - | | - |
| | 30,469 | (1) | 2,031 | (1) | - | | 15.27 | | 2/10/2027 | | 2,031 | (3) | 40,681 | | - | | - |
| | 34,375 | (1) | 15,625 | (1) | - | | 24.35 | | 1/25/2028 | | 9,375 | (3) | 187,781 | | - | | - |
| | 14,000 | (1) | 18,000 | (1) | - | | 15.90 | | 1/25/2029 | | 29,123 | (6) | 583,334 | | 9,600 | (14) | 192,288 |
| | - | (1) | 31,250 | (1) | - | | 21.34 | | 2/5/2030 | | 31,163 | (7) | 624,195 | | 15,000 | (14) | 300,450 |
| | | | | | | | | | | | | | | | | | |
Alison Fleming, Ph.D. | | 16,042 | (2) | - | (2) | - | | 5.73 | | 3/19/2025 | | - | | - | | - | | - |
Executive Vice President and Chief Technical Officer | | 10,000 | (2) | - | (2) | - | | 15.60 | | 5/18/2025 | | - | | - | | - | | - |
| | 29,475 | (2) | - | (2) | - | | 16.15 | | 1/20/2026 | | - | | - | | - | | - |
| | 30,469 | (1) | 2,031 | (1) | - | | 15.27 | | 2/10/2027 | | 2,031 | (3) | 40,681 | | - | | - |
| | 34,375 | (1) | 15,625 | (1) | - | | 24.35 | | 1/25/2028 | | 9,375 | (3) | 187,781 | | - | | - |
| | 11,200 | (1) | 14,400 | (1) | - | | 15.90 | | 1/25/2029 | | 23,299 | (8) | 466,679 | | 7,680 | (14) | 153,830 |
| | - | (1) | 25,000 | (1) | - | | 21.34 | | 2/5/2030 | | 43,546 | (9) | 872,226 | | 19,978 | (15) | 400,159 |
| | | | | | | | | | | | | | | | | | |
Shirley Kuhlmann | | 27,500 | (2) | 12,500 | (2) | - | | 24.03 | | 4/4/2028 | | 7,500 | (3) | 150,225 | | - | | - |
Executive Vice President and General Counsel | | 11,200 | (1) | 14,400 | (1) | - | | 15.90 | | 1/25/2029 | | 23,299 | (10) | 466,679 | | 7,680 | (14) | 153,830 |
| | - | (1) | 27,500 | (1) | - | | 21.34 | | 2/5/2030 | | 27,423 | (11) | 549,283 | | 13,200 | (14) | 264,396 |
| | | | | | | | | | | | | | | | | | |
Richard Malamut, M.D. | | 31,875 | (1) | 53,125 | (1) | - | | 15.12 | | 4/1/2029 | | 31,875 | (12) | 638,456 | | - | | - |
Executive Vice President | | - | (1) | 22,500 | (1) | - | | 21.34 | | 2/5/2030 | | 22,437 | (13) | 449,413 | | 10,800 | (14) | 216,324 |
All options will be exercisable in accordance with the terms of the applicable award agreement. The maximum term of an option will be determined by the compensation committee on the date of grant but will not exceed 10 years (5 years in the case of ISOs granted to any 10% shareholder). In the case of ISOs, the aggregate fair market value (determined as of the date of grant) of common stock with respect to which such ISOs become exercisable for the first time during any calendar year cannot exceed $100,000. ISOs granted in excess of this limitation will be treated as NQOs.
47
(1) | These time-based option awards vest and become exercisable over the four-year period following the grant date, with 25% of the option becoming vested and exercisable on the first anniversary of the grant date and the remaining shares underlying the option vesting in quarterly installments over the remaining three years of the four-year period, generally subject to the executive's continued employment with the company on the applicable vesting date. |
(2) | These time-based option awards vest and become exercisable over the four-year period following the grant date, with 25% of the option becoming vested and exercisable on the first anniversary of the grant date and the remaining shares underlying the option vesting in monthly installments over the remaining three years of the four-year period, generally subject to the executive's continued employment with the company on the applicable vesting date. |
(3) | These time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal installments every six months (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date, generally subject to the executive's continued employment with the company on the applicable vesting date. |
(4) | Includes 67,500 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 14,409 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on January 19, 2021. |
(5) | Includes 45,000 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 14,580 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on January 19, 2021. |
(6) | Includes 24,000 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 5,123 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on January 19, 2021. |
(7) | Includes 28,125 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 3,038 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on January 19, 2021. |
(8) | Includes 19,200 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 4,099 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on January 19, 2021. |
(9) | Includes 22,500 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date, 18,616 time-based restricted stock units that will vest on April 1, 2021, and 2,430 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units |
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were subject to forfeiture conditions until vesting was determined by the compensation committee on January 19, 2021. |
(10) | Includes 19,200 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 4,099 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on January 19, 2021. |
(11) | Includes 24,750 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 2,673 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on January 19, 2021. |
(12) | These time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date, generally subject to the executive's continued employment with the company on the applicable vesting date. |
(13) | Includes 20,250 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 2,187 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on January 19, 2021. |
(14) | These performance share units vest following annual performance periods and a three-year performance period, subject to the satisfaction of the annual and cumulative performance criteria as determined by the compensation committee. These amounts reflect a portion of the unvested PSUs that may become vested based on the actual performance over the applicable performance periods. For purposes of calculating the amounts set forth in the table and based on performance through December 31, 2020, it is assumed that the PSUs will be earned at target; however, the number of shares actually earned will depend upon actual performance over the applicable performance periods. |
(15) | Includes 12,000 performance share units that will vest following annual performance periods and a three-year performance period, subject to the satisfaction of the annual and cumulative performance criteria as determined by the compensation committee and 7,978 performance share units that will vest subject to the satisfaction of individual performance criteria as determined by the compensation committee. These amounts reflect a portion of the unvested PSUs that may become vested based on the actual performance over the applicable performance periods. For purposes of calculating the amounts set forth in the table and based on performance through December 31, 2020, it is assumed that the PSUs will be earned at target; however, the number of shares actually earned will depend upon actual performance over the applicable performance periods. |
Unless otherwise provided in an awardWe have employment and other service agreements with all of our named executive officers. In December 2020, we amended and restated these agreements to update and align the severance provisions contained therein. The following is a summary of the material terms of each employment agreement. Each executive employment agreement if a participant terminates employment with us (or our affiliates) due to death or disability, the participant's unexercised options may be exercised,provides for:
● | Base salary: The employment agreements state an initial base salary, which is subject to annual adjustments. Base salaries for fiscal year 2020 were $657,200, $439,900, $423,300, $378,500, $411,500, for Messrs. Ciaffoni and Brannelly, Drs. Malamut and Fleming, and Ms. Kuhlmann, respectively. |
● | Annual cash incentive opportunity: The employment agreements state an initial annual cash incentive opportunity, expressed as a percentage of then-current base salary. Annual cash incentive opportunities for |
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fiscal year 2020 were 70%, 50%, 50%, 50% and 50%, for Messrs. Ciaffoni and Brannelly, Drs. Malamut and Fleming, and Ms. Kuhlmann, respectively. |
● | Other Benefits: Each named executive officer is entitled to participate in all of our employee benefit plans, subject to the terms and conditions applicable to such plans. |
● | Restrictive Covenants: Each executive employment agreement contains non-competition, non-solicitation and employee no-hire covenants that apply during employment and the 12-month period thereafter (or the 18-month period thereafter for Mr. Ciaffoni) and a perpetual confidentiality covenant. |
Pursuant to the extent they were exercisable onexecutive employment agreements, if the termination date, foremployment of an executive is terminated by the Company without Cause or if the Executive resigns with Good Reason (as each term is defined in the employment agreements), then Mr. Ciaffoni would be entitled to 18 months of severance benefits and each other executive would be entitled to 12 months of severance benefits. During his or her applicable severance period, and subject to the Company’s receipt of a periodgeneral release of twelveclaims and the terminated executive’s continued compliance with their restrictive covenants, the applicable Executive would receive the following severance benefits, less applicable tax withholding:
● | payment of any annual bonus otherwise payable (but for the cessation of executive’s employment) with respect to a year ended prior to the cessation of executive’s employment; |
● | continuation of the executive’s then-current base salary in accordance with normal payroll procedures for the applicable severance period; |
● | payment of a cash severance benefit equal to the executive’s annual bonus at the target percentage for the year in which the termination occurs (except in the case of Mr. Ciaffoni, who would receive payment of a cash severance benefit equal to 150% of his annual bonus at the target percentage for the year in which the termination occurs), paid in monthly installments over the applicable severance period; |
● | the executive’s unvested equity incentives that are subject only to time-based vesting and would have vested over the applicable severance period will become immediately and automatically fully vested and exercisable (equity incentives that are subject to performance-based vesting will vest, if at all, in accordance with the applicable award agreements); and |
● | waiver of the applicable premium otherwise payable for COBRA continuation coverage for the executive, if applicable (and, to the extent covered immediately prior to the date of such cessation, his or her eligible dependents) during the applicable severance period. |
If any executive’s employment is terminated by the Company without Cause or if the executive resigns with Good Reason, in either case within 12 months fromfollowing the termination date or until the expirationoccurrence of the original option term, if shorter. If the participant terminates employment with us (or our affiliates) for causea Change in Control (as defined in the Plan)employment agreements), all unexercised options (whether vested or unvested) will terminatethen, subject to the Company’s receipt of a general release of claims and the terminated executive’s continued compliance with their restrictive covenants, such executive would be forfeited onentitled to receive the termination date. following severance benefits, less applicable tax withholding:
● | all of the executive’s unvested equity incentives that are subject only to time-based vesting will become immediately and automatically fully vested and exercisable (equity incentives that are subject to performance-based vesting will vest, if at all, in accordance with the applicable award agreements); |
● | a lump sum payment of 18 months (or in the case of Mr. Ciaffoni, 24 months) of the executive’s then-current base salary; |
● | a lump sum payment equal to 1.5 times his or her then-current target annual bonus (or in the case of Mr. Ciaffoni, two times his then current target annual bonus); and |
● | waiver of the applicable premium otherwise payable for COBRA continuation coverage for the executive, if applicable (and, to the extent covered immediately prior to the date of such cessation, his or her eligible dependents) for a period of 18 months (or in the case of Mr. Ciaffoni, 24 months). |
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If the participant'sMr. Ciaffoni’s employment terminates for any other reason, any vested but unexercised options may be exercised by the participant,Company ceases due to his death or Disability (as defined in his employment agreement), then Mr. Ciaffoni will be entitled to:
● | payment of any annual bonus otherwise payable (but for the cessation of his employment) with respect to a year ended prior to the cessation of his employment; |
● | a pro rated amount of the annual bonus that would have been paid to Mr. Ciaffoni for the fiscal year in which his employment terminates; |
● | all unvested restricted stock, stock options and other equity incentives awarded to Mr. Ciaffoni by the Company shall become fully vested; and |
● | waiver of the applicable premium otherwise payable for COBRA continuation coverage for Mr. Ciaffoni, if applicable (and, to the extent covered immediately prior to the date of such cessation, his eligible dependents) for a period equal to 12 months. |
Potential Payments upon Termination without Cause or Resignation for Good Reason
For each named executive officer, the following table sets forth quantitative estimates of the payments and benefits that would have become payable if such executive's employment had been terminated without cause or the executive resigned for good reason on December 31, 2020 other than in connection with a change of control. Amounts below reflect potential payments pursuant to the extent exercisable atemployment agreements for such named executive officers as described above in the timesection titled “—Employment Agreements.”
| | | | | | | | | | | | |
| | | | Annual | | | | | | | | |
| | Salary | | Cash | | Benefit | | Value of | | Value of | | |
| | Continuation | | Incentive | | Continuation | | Stock Awards | | Option Awards | | Total |
Name and Principal Position | | ($)(1) | | ($)(2) | | ($)(3) | | Vesting ($)(4) | | Vesting ($)(5) | | ($) |
Joseph Ciaffoni | | 985,800 | | 690,060 | | 28,051 | | 1,939,625 | | 522,150 | | 4,165,686 |
President and Chief Executive Officer | | | | | | | | | | | | |
| | | | | | | | | | | | |
Paul Brannelly | | 439,900 | | 219,950 | | 13,164 | | 466,939 | | 42,708 | | 1,182,661 |
Executive Vice President and Chief Financial Officer | | | | | | | | | | | | |
| | | | | | | | | | | | |
Richard Malamut, M.D. | | 423,300 | | 211,650 | | 13,164 | | 314,211 | | 104,338 | | 1,066,663 |
Executive Vice President and Chief Medical Officer | | | | | | | | | | | | |
| | | | | | | | | | | | |
Alison Fleming, Ph.D. | | 378,500 | | 189,250 | | 23,426 | | 779,608 | | 36,100 | | 1,406,884 |
Executive Vice President and Chief Technical Officer | | | | | | | | | | | | |
| | | | | | | | | | | | |
Shirley Kuhlmann | | 411,500 | | 205,750 | | 18,701 | | 352,268 | | 26,432 | | 1,014,651 |
Executive Vice President and General Counsel | | | | | | | | | | | | |
(1) | Continuation of base salary following termination of employment paid in installments over an 18-month period for Mr. Ciaffoni, and 12-month period for Mr. Brannelly, Dr. Malamut, Dr. Fleming, and Ms. Kuhlmann. |
(2) | Target cash incentive equal to 150% target bonus paid over an 18-month period for Mr. Ciaffoni, and 100% target bonus paid over a 12-month period for Mr. Brannelly, Dr. Malamut, Dr. Fleming, and Ms. Kuhlmann. |
(3) | Estimated value of continued group health insurance for 18 months for Mr. Ciaffoni, and 12 months for Mr. Brannelly, Dr. Malamut, Dr. Fleming, and Ms. Kuhlmann. |
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(4) | Amounts reflect value of the restricted stock unit shares that would become vested based on the closing price of our common stock of $20.03 on December 31, 2020. |
(5) | Amounts reflect the intrinsic value of unvested stock options that would become vested based on the spread between the closing stock price of our common stock of $20.03 on December 31, 2020 and the exercise price applicable to such stock option. |
Potential Payments Upon Termination or Change in Control
For each named executive officer, the termination date (or such time as specified by the compensation committee at the time of grant) or until the expirationfollowing table sets forth quantitative estimates of the original option term, whichever period is shorter. Unless otherwise provided bypayments and benefits that would have become payable if such executive’s employment had been terminated without cause or the executive resigned for good reason on December 31, 2020, assuming that such termination occurs within twelve months following a change of control. Amounts below reflect potential payments pursuant to the employment agreements for such named executive officers as described above in the section titled “—Employment Agreements.”
| | | | | | | | | | | | |
| | | | Annual | | | | | | | | |
| | Salary | | Cash | | Benefit | | Value of | | Value of | | |
| | Continuation | | Incentive | | Continuation | | Stock Awards | | Option Awards | | Total |
Name and Principal Position | | ($)(1) | | ($)(2) | | ($)(3) | | Vesting ($)(4) | | Vesting ($)(5) | | ($) |
Joseph Ciaffoni | | 1,314,400 | | 920,080 | | 37,402 | | 5,968,499 | | 591,843 | | 8,832,224 |
President and Chief Executive Officer | | | | | | | | | | | | |
| | | | | | | | | | | | |
Paul Brannelly | | 659,850 | | 329,925 | | 19,745 | | 2,043,681 | | 84,008 | | 3,137,209 |
Executive Vice President and Chief Financial Officer | | | | | | | | | | | | |
| | | | | | | | | | | | |
Richard Malamut, M.D. | | 634,950 | | 317,475 | | 19,745 | | 1,368,550 | | 260,844 | | 2,601,564 |
Executive Vice President and Chief Medical Officer | | | | | | | | | | | | |
| | | | | | | | | | | | |
Alison Fleming, Ph.D. | | 567,750 | | 283,875 | | 35,139 | | 2,213,315 | | 69,140 | | 3,169,219 |
Executive Vice President and Chief Technical Officer | | | | | | | | | | | | |
| | | | | | | | | | | | |
Shirley Kuhlmann | | 617,250 | | 308,625 | | 28,051 | | 1,683,522 | | 59,472 | | 2,696,920 |
Executive Vice President and General Counsel | | | | | | | | | | | | |
(1) | Continuation of base salary following termination of employment paid in a lump sum payment equal to 24 months of annual base salary for Mr. Ciaffoni, and 18 months of annual base salary for Mr. Brannelly, Dr. Malamut, Dr. Fleming, and Ms. Kuhlmann. |
(2) | Annual cash incentive following termination of employment paid in a lump sum payment equal to 200% target bonus for Mr. Ciaffoni, and 150% target bonus for Mr. Brannelly, Dr. Malamut, Dr. Fleming, and Ms. Kuhlmann. |
(3) | Estimated value of continued group health insurance for 24 months for Mr. Ciaffoni, and 18 months for Mr. Brannelly, Dr. Malamut, Dr. Fleming, and Ms. Kuhlmann. |
(4) | Amounts reflect value of the performance share units and restricted stock unit shares that would become vested based on the closing price of our common stock of $20.03 on December 31, 2020. |
(5) | Amounts reflect the intrinsic value of unvested stock options that would become vested based on the spread between the closing stock price of our common stock of $20.03 on December 31, 2020 and the exercise price applicable to such stock option. |
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Potential Payments Upon Death or Disability
The following table sets forth quantitative estimates of the payments and benefits that would have become payable if Mr. Ciaffoni’s employment had ceased upon his death or Disability (as defined in his employment agreement) on December 31, 2020. Amounts below reflect potential payments pursuant to the employment agreement for Mr. Ciaffoni as described above in the section titled “—Employment Agreements.”
| | | | | | | | | | |
| | Annual | | | | | | | | |
| | Cash | | Benefit | | Value of | | Value of | | |
| | Incentive | | Continuation | | Stock Awards | | Option Awards | | Total |
Name and Principal Position | | ($)(1) | | ($)(2) | | Vesting ($)(3) | | Vesting ($)(3) | | ($) |
Joseph Ciaffoni | | 460,040 | | 18,701 | | 8,031,149 | | 591,843 | | 9,101,733 |
President and Chief Executive Officer | | | | | | | | | | |
(1) | Amount equal to the annual bonus that would have been paid to Mr. Ciaffoni for the fiscal year in which his employment terminates (had his employment not terminated), multiplied by a fraction equal to the number of days Mr. Ciaffoni worked through the date of termination of employment over 365, which amount shall be paid in the year following employment termination at the time annual bonuses are paid to the Company’s senior executives. |
(2) | Estimated value of continued group health insurance for 12 months. |
(3) | Amount reflects value of the restricted stock unit shares that would become vested based on the closing price of our common stock of $20.03 on December 31, 2020. |
(4) | Amount reflects the intrinsic value of unvested stock options that would become vested based on the spread between the closing stock price of our common stock of $20.03 on December 31, 2020 and the exercise price applicable to such stock option. |
CEO Pay Ratio
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are required to disclose the median of the annual total compensation committee, any options that are not exercisable atof our employees, the timeannual total compensation of terminationour President and Chief Executive Officer, Joseph Ciaffoni, and the ratio of employment will terminate and be forfeited onthese two amounts.
We have determined the termination date.
A restricted stock award is a grant2020 annual total compensation of shares of common stock, which may or may not be subject to forfeiture restrictions during a restriction period. The compensation committee will determine the price, if any,our median compensated employee, excluding Mr. Ciaffoni, to be paid by$168,244. The annual total compensation of our President and Chief Executive Officer as shown in the participant for each share of common stock subject to a restricted stock award.Summary Compensation Table above is $6,042,639. The compensation committee may condition the expirationratio of the restriction period, if any, upon: (i)annual total compensation of our President and Chief Executive Officer to that of our median compensated employee was 35.9 to 1.
We identified the participant's continued service overmedian employee by examining the 2020 target total compensation for all our employees, excluding our President and Chief Executive Officer, who were employed by us on December 16, 2020. We included all employees, whether employed on a periodfull-time, or part-time, salaried or hourly basis. Target total compensation was based on annual base salary paid for 2020 plus target bonus opportunity plus the grant date value of time with us orequity awards made in 2020 and was consistently applied for all employees. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for our affiliates; (ii) the achievement by the participant, us or our affiliates of any other performance goals set by the compensation committee; or (iii) any combination of the above conditions as specified in the award agreement. If the specified conditions are not attained, the participant will forfeit the portion of the restricted stock award with respect to which those conditions are not attained, and the underlying common stock will be forfeited to us. At the end of the restriction period, if the conditions, if any, have been satisfied, the restrictions imposed will lapse with respect to the applicable number of shares. During the restriction period, a participant will have the right to vote the shares underlying the restricted stock, however, unless otherwise provided by the compensation committee, all dividends will remain subject to restriction until the stock with respect to which the dividend was issued lapses. The compensation committee may, in its discretion, accelerate the vesting and delivery of shares of restricted stock.
RSUs are granted in reference to a specified number of shares of common stock and entitle the holder to receive, on achievement of specific performance goals established by the compensation committee, after a period of continued service or any combination of the abovenamed executive officers as set forth in the applicable award agreement, one share of common stock for each such share of common stock covered by the RSU. 2020 Summary Compensation Table in this proxy statement.
The compensation committee may,pay ratio reported above is a reasonable estimate calculated in its discretion, accelerate the vesting of RSUs.
The compensation committee may grant performance awards in accordancea manner consistent with the Plan. Performance awards may be denominated as a number of shares or specified number of other Awards (such as restricted stock or RSUs),SEC rules which may be earned upon achievement or satisfaction of such performance goals as may be specified by the compensation committee. Performance goals may be linkedallow companies to adopt a variety of factors includingmethodologies. Therefore, the participant's completionpay ratio reported by other companies may not be comparable to the pay ratio reported above.
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Option Exercises and Stock Vested
The following table sets forth certain information regarding option exercises and stock vested during the year ended December 31, 2020 with respect to us, an affiliated company or a business unit and are limited to one or more of the following: (i) specified levels of or increases in pre-tax earnings, return on capital, equity measures/ratios (on a gross, net, pre-tax or post tax basis), including basic earnings per share, diluted earnings per share, total earnings (including total earnings as adjusted by the compensation committee at the time of the Award), operating earnings, earnings growth, earnings before interest and taxes ("EBIT"), and earnings before interest, taxes, depreciation and amortization ("EBITDA") (including EBIT or EBITDA as adjusted by the committee at the time of the Award); (ii) total sales or sales growth; (iii) gross margin; (iv) customer service levels; (v) employee recruiting and development; (vi) advertising effectiveness; (vii) development of new markets; (viii) financial ratios; (ix) strategic initiatives; (x) improvement in or attainment of operating expense levels; (xi) improvement in or
attainment of capital expense levels; (xii) the attainment of certain target levels of, or a specified increase in, operational cash flow; (xiii) the achievement of a certain level of, reduction of, or other specified objectives with regard to limiting the level of increase in, all or a portioneach of our bank debt or other long-term or short-term public or private debt or other similar financial obligations of ours, which may be calculated net of such cash balances and/or other specified offsets; (xiv) appreciation in and/or maintenance of certain target levels in the fair market value; (xv) the attainment of a certain level of, reduction of, or other specified objectives with regard to limiting the level of or rate of increase in all or a portion of specified expenses (xvi) individual objectives; and (xvii) any combination of the foregoing.
The compensation committee may impose restrictions on the grant, exercise or payment of an Award as it determines appropriate. Generally, Awards granted under the Plan will be nontransferable except by will or by the laws of descent and distribution. No participant will have any rights as a shareholder with respect to shares covered by options or RSUs, unless and until such Awards are settled in shares of common stock.
No option will be exercisable, no shares of common stock will be issued, no certificates for shares of common stock will be delivered and no payment will be made under the Plan except in compliance with all applicable laws.
�� The Board may amend, suspend or terminate the Plan and the compensation committee may amend any outstanding Award at any time; provided, however, that no such amendment or termination may adversely affect Awards then outstanding without the holder's permission.
In the event of a change in control (as defined in the Plan), the compensation committee may, on a participant-by-participant basis: (i) cause any or all outstanding Awards to become vested and immediately exercisable (as applicable), in whole or in part; (ii) cause any outstanding option to become fully vested and immediately exercisable for a reasonable period in advance of the change in control and, to the extent not exercised prior to that change in control, cancel that option upon closing of the change in control; (iii) cancel any unvested Award or unvested portion thereof, with or without consideration; (iv) cancel any Award in exchange for a substitute award; (v) redeem any restricted stock or RSU for cash and/or other substitute consideration with value equal to fair market value of an unrestricted share on the date of the change in control; (vi) cancel any outstanding options with respect to all common stock for which the Award remains unexercised for a cash payment equal to the excess (if any) of the fair market value of the shares subject to the option over the exercise price of the option; (vii) take such other action as the compensation committee will determine to be reasonable under the circumstances; and/or (viii) in the case of any Award subject to Section 409A of the Internal Revenue Code (the "Code"), such Award will vest and be distributed only in accordance with the terms of the applicable award agreement and the compensation committee will only be permitted to use discretion to the extent that such discretion would be permitted under Section 409A of the Code.
Neither the Board nor the compensation committee may, without obtaining prior approval of our shareholders: (i) implement any cancellation/re-grant program pursuant to which outstanding options under the Plan are cancelled and new options are granted in replacement with a lower exercise per share, (ii) cancel outstanding options under the Plan with an exercise price per share in excess of the then current fair market value per share for consideration payable in our equity securities or (iii) otherwise directly reduce the exercise price in effect for outstanding options under the Plan.
2015 Employee Stock Purchase Plan
On April 23, 2015, we adopted the 2015 Employee Stock Purchase Plan (the "2015 ESPP"), which became effective immediately prior to the closing of the IPO. The 2015 ESPP is administered by our Board or by a committee appointed by our Board. The 2015 ESPP provides participating employees with the opportunity to purchase an aggregate of 407,393 shares of our common stock, which includes
shares of common stock that were automatically added to the shares reserved for issuance under the 2015 ESPP pursuant to an "evergreen" provision contained in the 2015 ESPP. Pursuant to such provision, the number of shares of our common stock reserved for issuance under the 2015 ESPP automatically increases on the first day of each fiscal year, commencing on January 1, 2016 and ending on December 31, 2025, in an amount equal to the least of (i) 400,000 shares of our common stock, (ii) 1.0% of the total number of shares of our common stock outstanding on the first day of the applicable year, and (iii) an amount determined by our Board.
All of our employees are eligible to participate in the 2015 ESPP, provided that:
No employee may purchase shares of our common stock under the 2015 ESPP and any of our other employee stock purchase plans in excess of $25,000 of the fair market value of our common stock (as of the date of the option grant) in any calendar year. In addition, no employee may purchase shares of our common stock under the 2015 ESPP that would result in the employee owning 5% or more of the total combined voting power or value of our stock.
We expect to make one or more offerings to our eligible employees to purchase stock under the 2015 ESPP beginning at such time as our Board (or a person designated by our Board) may determine. Each offering will consist of a six-month offering period during which payroll deductions will be made and held for the purchase of our common stock at the end of the offering period. The first such offering period began on February 1, 2016 and will end on July 30, 2016. Our Board may, at its discretion, choose a different length of offering period so long as it does not exceed 12 months.
On the commencement date of each offering period, each eligible employee may authorize up to a maximum of 15% of his or her compensation to be deducted by us during the offering period. Each employee who continues to be a participant in the 2015 ESPP on the last business day of the offering period will be deemed to have exercised an option to purchase from us the number of whole shares of our common stock that his or her accumulated payroll deductions on such date will pay for, not in excess of the maximum numbers set forth above. Under the terms of the 2015 ESPP, the purchase price will be determined by our Board or compensation committee for each offering period and will be at least 85% of the applicable closing price of our common stock. If our Board does not make a determination of the purchase price, the purchase price will be 85% of the lesser of the closing price of our common stock on the first business day of the offering period or on the last business day of the offering period.
An employee may for any reason withdraw from participation in an offering no later than 21 days prior to the end of an offering period and permanently draw out the balance accumulated in the employee's account. If an employee elects to discontinue his or her payroll deductions during an offering period but does not elect to withdraw his or her funds, funds previously deducted will be applied to the purchase of common stock at the end of the offering period. If a participating employee's employment ends before the last business day of an offering period, no additional payroll deductions will be made and the balance in the employee's account will be paid to the employee.
We will be required to make equitable adjustments to the number and class of securities available under the 2015 ESPP, the share limitations under the 2015 ESPP and the purchase price for an offering period under the 2015 ESPP to reflect stock splits, reverse stock splits, stock dividends,
recapitalizations, combinations of shares, reclassifications of shares, spin-offs and other similar changes in capitalization or events or any dividends or distributions to holders of our common stock other than ordinary cash dividends. The number of shares of common stock available for any offerings under the 2015 ESPP will be adjusted if the number of our outstanding shares is increased or reduced by split up, reclassification, stock dividend or the like.
Our Board may at any time, and from time to time, terminate, amend or suspend the 2015 ESPP or any portion thereof. We will obtain shareholder approval for any amendment if such approval is required by Section 423 of the Code. The 2015 ESPP will also terminate upon the occurrence of a change in control (defined with reference to the Plan). Upon termination, we will refund all amounts in the accounts of participating employees.
Non-Equity Incentive Compensation
Performance Bonus Plan
On April 23, 2015, we adopted the Performance Bonus Plan, which became effective immediately prior to the closing of the IPO. The Performance Bonus Plan is administered by the compensation committee. The purpose of the Performance Bonus Plan is to benefit and advance our interests, by rewarding selected employees of ours and our affiliates for their contributions to our success and thereby motivate them to continue to make such contributions in the future by granting performance-based awards. The material terms of such plan are summarized below.
Background. Our Board believes that it is in our best interests and those of our shareholders to enhance our ability to attract and retain qualified personnel through performance based incentives, and once we are subject to Section 162(m) of the Code, maintain the highest level of deductibility of compensation paid to employees. Section 162(m) provides newly public companies an opportunity to transition their compensation structures to comply with the rules under Section 162(m), and we will generally become subject to such rules beginning with our 2019 annual meeting of shareholders. Section 162(m) of the Code disallows a deduction to us for any compensation paid to certain executive officers in excess of $1.0 million per year, subject to certain exceptions. Among other exceptions, the deduction limit does not apply to compensation that meets the specified requirements for "performance-based compensation." In general, those requirements include the establishment of objective performance goals for the payment of such compensation by a committee of the Board composed solely of two or more outside directors, shareholder approval of the material terms of such compensation, and certification by the compensation committee that the performance goals for the payment of such compensation have been achieved.
Administration. Subject to the other provisions of the Performance Bonus Plan, the compensation committee has the authority to administer and interpret the Performance Bonus Plan, including the authority to select the employees (including employees who are directors) to participate in the Performance Bonus Plan, to establish the performance goals, to determine the amount of incentive compensation bonus payable to any participant, to determine the terms and conditions of any such incentive opportunity; to make all determinations and take all other actions necessary or appropriate for proper administration and operation of the Performance Bonus Plan and to establish and amend rules and regulations relating to the Performance Bonus Plan.
The compensation committee may also delegate to one or more of our executive officers the authority to administer the Performance Bonus Plan with respect to any participants who are not subject to Section 162(m) of the Code.
Eligibility. The named executive officers and such other of our employees as selected by the compensation committee are eligible to participate in the Performance Bonus Plan. The maximum amount of the incentive compensation bonuses payable to any participant under the Performanceofficers:
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| Option Awards | | Stock Awards | ||
| Number of Shares | Value Realized on | | Number of Shares | Value Realized on |
Name | (#) | ($) | | (#) | ($) |
Joseph Ciaffoni | 64,820 | 862,994 | | 56,102 | 1,150,798 |
President and Chief Executive Officer | | | | | |
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Paul Brannelly | - | - | | 18,927 | 395,089 |
Executive Vice President and Chief Financial Officer | | | | | |
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Alison Fleming, Ph.D. | 16,000 | 218,400 | | 17,327 | 360,497 |
Executive Vice President and Chief Technical Officer | | | | | |
| | | | | |
Shirley Kuhlmann | - | - | | 11,400 | 225,218 |
Executive Vice President and General Counsel | | | | | |
| | | | | |
Richard Malamut, M.D. | - | - | | 10,625 | 164,581 |
Executive Vice President and Chief Medical Officer | | | | | |
Bonus Plan in, or in respect of, any single fiscal year will not exceed $5.0 million. All incentive compensation bonuses paid pursuant to the Performance Bonus Plan will be paid in cash.
Bonus Opportunity and Performance Goals. Bonuses may be payable to a participant as a result of the satisfaction of performance goals in respect of any performance period determined by the compensation committee; provided that, to the extent a participant would be subject to Section 162(m) of the Code, the performance goals will be set in accordance with the regulations under Section 162(m) of the Code. Performance goals, which may vary among and between participants, may include objectives stated with respect to us, an affiliated company or a business unit and such objectives are limited to one or more of the following: (i) specified levels of or increases in pre-tax earnings, return on capital, equity measures/ratios (on a gross, net, pre-tax or post tax basis), including basic earnings per share, diluted earnings per share, total earnings (including total earnings as adjusted by the compensation committee at the time of the Award), operating earnings, earnings growth, EBIT and EBITDA (including EBIT or EBITDA as adjusted by the compensation committee at the time of the Award); (ii) total sales or sales growth; (iii) gross margin; (iv) customer service levels; (v) employee recruiting and development; (vi) advertising effectiveness; (vii) development of new markets; (viii) financial ratios; (ix) strategic initiatives; (x) improvement in or attainment of operating expense levels; (xi) improvement in or attainment of capital expense levels; (xii) the attainment of certain target levels of, or a specified increase in, operational cash flow; (xiii) the achievement of a certain level of, reduction of, or other specified objectives with regard to limiting the level of increase in, all or a portion of, the Company's bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be calculated net of such cash balances and/or other specified offsets; (xiv) appreciation in and/or maintenance of certain target levels in the fair market value; (xv) the attainment of a certain level of, reduction of, or other specified objectives with regard to limiting the level of or rate of increase in all or a portion of specified expenses (xvi) individual objectives; and (xvii) any combination of the foregoing.
The compensation committee will provide a threshold level of performance below which no incentive compensation bonus will be paid, as well as a maximum level of performance above which no additional incentive compensation bonus will be paid. It also may provide for the payment of differing amounts for different levels of performance, determined with regard either to a fixed monetary amount or a percentage of the participant's base salary. The compensation committee will make such adjustments, to the extent it deems appropriate, to established performance goals and performance thresholds to compensate for, or to reflect, any material changes which may have occurred due to an "extraordinary event"; provided, however, that no such adjustment may be made unless such adjustment would be permissible under Section 162(m) of the Code. An "extraordinary event" under the Performance Bonus Plan is defined as follows:
As soon as practicable after the end of each performance period, but before any incentive compensation bonuses are paid to the participants under the Performance Bonus Plan, the compensation committee will certify in writing (i) whether the performance goal(s) were attained and (ii) the amount of the incentive compensation bonus payable to each participant based upon the attainment of such specified performance goals. The compensation committee also may reduce,
eliminate, or, with respect only to participants who are not subject to Section 162(m) of the Code, increase the amount of any incentive compensation bonus of any participant at any time prior to payment thereof, based on such criteria as the compensation committee will determine, including but not limited to individual merit and attainment of, or the failure to attain, specified personal goals established by the compensation committee. Under no circumstances, however, may the compensation committee, with respect solely to a participant who is subject to Section 162(m) of the Code, (i) increase the amount of the incentive compensation otherwise payable to such participant beyond the amount originally established by the compensation committee, (ii) waive the attainment of the performance goals established and applicable to such participant's incentive compensation or (iii) otherwise exercise its discretion so as to cause any incentive compensation bonus payable to such participant to not qualify as "performance-based compensation" under Section 162(m) of the Code.
All amounts due under the Performance Bonus Plan will be paid within two and one-half months of the end of the year in which such incentive compensation is no longer subject to a risk of forfeiture. The compensation committee, without the consent of any participant, may amend or terminate the Performance Bonus Plan at any time. However, no amendment that would require the consent of the shareholders pursuant to Section 162(m) of the Code will be effective without such consent.
Retirement Benefits
We maintain a 401(k) Plan for all employees after three months of consecutive employment who are 2118 years of age or older. Employees can contribute up to 100%90% of their eligible pay, subject to maximum amounts allowed under law. We currently provide matching and profit sharing contributions under the 401(k) Plan. The total amount of our matching contributions under the 401(k) Plan for 2014 and 2015 was $35,000 and $44,095, respectively.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The following includes a summary of transactions since January 1, 20152020 to which we have been a party, in which the amount involved in the transaction exceeded $120,000, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described elsewhere in this proxy statement.
Participation in Follow-On Public Offering
In January 2016, RA Capital Management LLC, which was previously one of our 5% shareholders, purchased an aggregate of 200,000 shares of our common stock in a follow-on public offering of our common stock at the public offering price. In addition, Eventide Asset Management, LLC and Healthcor Management LP, which are currently among our 5% shareholders but were not at the time of the follow-on public offering, purchased 275,000 and 150,000 shares of our common stock, respectively.
Participation in Initial Public Offering
In the IPO, certain of our 5% shareholders and their affiliates purchased an aggregate of 1,300,000 shares of our common stock. Each of those purchases was made through the underwriters at the initial public offering price. The following table set forth the aggregate number of shares of our common stock that these 5% shareholders and their affiliates purchased in the IPO:
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Delaware corporation. Messrs. David Bonderman and James G. Coulter are officers and the sole shareholders of Group Advisors and may therefore be deemed to be the beneficial owners of the shares held by TPG Biotechnology Partners IV, L.P. Each of Messrs. Bonderman and Coulter expressly disclaims beneficial ownership of the securities listed above except to the extent of any pecuniary interest therein. Eran Nadav, Ph.D., a member of our Board, is a partner of TPG Global, LLC. The address for Messrs. Bonderman, Coulter, Nadav and TPG Biotechnology Partners IV, L.P. is c/o TPG Global, LLC, 301 Commerce Street, Suite 3300, Fort Worth, TX 76102.
Series D Convertible Preferred Stock Financing
In March 2015, we entered into a Series D Convertible Preferred Stock Purchase Agreement pursuant to which we issued and sold to investors an aggregate of 41,666,667 shares of our Series D Convertible Preferred Stock at a purchase price of $1.20 per share, for aggregate consideration of $50.0 million. This financing was led by TPG Biotechnology Partners IV, L.P., which was joined by RA Capital Management, Adage Capital Management, Rock Springs Capital, EcoR1 Capital, Eventide Asset Management and Aperture Venture Partners. Entities affiliated with Longitude Capital Partners, LLC, Skyline Ventures Partners V, L.P., Frazier Healthcare VI, L.P. and Boston Millennia Partners also participated in the financing. In connection with the Series D Convertible Preferred Stock financing, convertible notes with related parties in the aggregate principal amount of $5 million automatically converted to an aggregate of 4,166,667 shares of Series D Convertible Preferred Stock.
Series C Convertible Preferred Stock Financing
In August 2013, we entered into a Series C Convertible Preferred Stock Purchase Agreement, or the Series C Purchase Agreement, pursuant to which we issued and sold to investors an aggregate of 2,220,670 shares of our Series C Convertible Preferred Stock at a purchase price of $1.386 per share, for aggregate consideration of $3.1 million. In September 2013, at an additional closing pursuant to the Series C Purchase Agreement, we issued and sold to investors an aggregate of 665,334 shares of our Series C Convertible Preferred Stock at a purchase price of $1.386 per share, for aggregate consideration of $922,000. In December 2013, those investors who participated in the closings in August and September 2013 exercised their option under the Series C Purchase Agreement to purchase an additional pro rata portion of an aggregate of 5,772,004 shares of our Series C Convertible Preferred Stock at a purchase price of $1.386 per share, for aggregate consideration of $8.0 million.
Series B Convertible Preferred Stock Financing
In February 2012, we entered into a Series B Convertible Preferred Stock Purchase Agreement, pursuant to which we issued and sold to investors an aggregate of 27,324,237 shares of our Series B Convertible Preferred Stock at a purchase price of $0.84 per share, for aggregate consideration of $23.0 million. In connection with the Series B Convertible Preferred Stock financing, all issued and outstanding shares of previously issued Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series C-2 Preferred Stock and Series D-1 Preferred Stock were converted into 18,464,674 shares of Series A Convertible Preferred Stock.
All outstanding convertible preferred stock converted into common stock upon the closing of the IPO.
The participants in the convertible preferred stock financings described above included the following directors, executive officers and/or holders of more than 5% of our capital stock or entities affiliated with them. The following table presents the number of shares issued to these related parties in these financings:
Participants(1) | Shares of Series A Convertible Preferred Stock | Series A Convertible Preferred Stock Aggregate Purchase Price | Shares of Series B Convertible Preferred Stock | Series B Convertible Preferred Stock Aggregate Purchase Price | Shares of Series C Convertible Preferred Stock | Series C Convertible Preferred Stock Aggregate Purchase Price | Shares of Series D Convertible Preferred Stock | Series D Convertible Preferred Stock Aggregate Purchase Price | |||||||||||||||||
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5% or greater shareholders | |||||||||||||||||||||||||
Entities affiliated with Boston Millennia Partners(2) | 4,881,801 | (8) | $ | 5,988,017 | 1,862,481 | $ | 1,564,484 | — | $ | — | 712,357 | $ | 854,828 | ||||||||||||
Frazier Healthcare VI, L.P.(3) | 4,019,183 | (8) | $ | 4,929,930 | 1,533,399 | $ | 1,288,055 | 2,705,585 | $ | 3,749,941 | 3,676,078 | $ | 4,411,294 | ||||||||||||
Entities affiliated with Longitude Capital Partners, LLC(4) | — | $ | — | 13,095,238 | $ | 11,000,000 | 3,224,261 | $ | 4,468,826 | 5,146,509 | $ | 6,175,811 | |||||||||||||
Skyline Venture Partners V, L.P.(5) | — | $ | — | 10,714,286 | $ | 9,000,000 | 2,638,030 | $ | 3,656,310 | 5,881,724 | $ | 7,058,068 | |||||||||||||
TPG Biotechnology Partners IV, L.P.(6) | — | — | — | — | — | — | 8,333,333 | $ | 10,000,000 | ||||||||||||||||
RA Capital Healthcare Fund, LP(7) | — | — | — | — | — | — | 5,833,333 | $ | 7,000,000 |
Convertible Note Financing
In November and December 2014, we entered into a Convertible Note Purchase Agreement, pursuant to which we issued and sold to investors convertible promissory notes in the aggregate principal amount of $5.0 million (the "2014 Convertible Note Financing"). Pursuant to the Convertible Note Purchase Agreement, the convertible notes bore interest at a rate per annum of 6.0% and mature on the earlier of (i) November 14, 2015, (ii) immediately prior to a liquidation of the company, or (iii) upon an event of default. In connection with the Series D Convertible Preferred Stock financing, the notes automatically converted into an aggregate of 4,166,667 shares of Series D Convertible
Preferred Stock. The participants in the 2014 Convertible Notes Financing included the following directors, executive officers and/or holders of more than 5% of our capital stock or entities affiliated with them. The following table presents the amount of the notes issued to these related parties in this financing:
Participants(1) | Amount of Notes Purchased | |||
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5% or greater shareholders | ||||
Entities affiliated with Boston Millennia Partners(2) | $ | 754,829 | ||
Frazier Healthcare VI, L.P.(3) | $ | 924,264 | ||
Entities affiliated with Longitude Capital Partners, LLC(4) | $ | 1,826,499 | ||
Skyline Venture Partners V, L.P.(5) | $ | 1,494,408 |
In connection with the 2014 Convertible Note Financing, we entered into a Preferred Shareholder Agreement with the Boston Millennia Funds, the Longitude Funds, Skyline Venture Partners V, L.P. and Frazier Healthcare VI, L.P., pursuant to which the Longitude Funds, Skyline Venture Partners V, L.P. and Frazier Healthcare VI, L.P. agreed to vote their shares to waive, with respect to the Boston Millennia Funds, application of a mandatory conversion provision in our articles of incorporation and other similar conversion provisions or other devices or mechanisms that may be adopted that are intended to incentivize the continued investment in the Company by existing holders of our preferred stock, subject to certain conditions described in the Preferred Shareholder Agreement. The Preferred Shareholder Agreement terminated by its terms upon the closing of the Series D Convertible Preferred Stock financing.
Seventh Amended and Restated Stockholders Agreement
In connection with the Series D Convertible Preferred Stock financing in March 2015, we entered into the Seventh Amended and Restated Stockholders Agreement (the "Stockholders Agreement") with certain of our shareholders, including Island View Investors, LLC, a limited liability company of which our President and Chief Executive Officer, Michael T. Heffernan, is the sole member, the Longitude Funds, the Boston Millennia Funds, Frazier Healthcare VI, L.P., Skyline Venture Partners V, L.P., TPG Biotechnology Partners IV, L.P. and RA Capital Healthcare Fund, LP. The Stockholders Agreement, among other things:
The Stockholders Agreement terminated automatically upon completion of the IPO.
Eighth Amended and Restated Investor Rights Agreement
In connection with the Series D Convertible Preferred Stock financing in March 2015, we entered into the Eighth Amended and Restated Investor Rights Agreement (the "Investor Rights Agreement") with certain of our investors, including the Longitude Funds, the Boston Millennia Funds, Frazier Healthcare VI, L.P., Skyline Venture Partners V, L.P., TPG Biotechnology Partners IV, L.P. and RA Capital Healthcare Fund, LP The Investor Rights Agreement, among other things:
The provisions in the Investor Rights Agreement granting certain pre-emptive rights terminated automatically upon closing of the IPO.
Management Rights Letters
We entered into management rights letters with certain of our shareholders, including the Boston Millennia Funds, the Longitude Funds, Frazier Healthcare VI, L.P., Skyline Venture Partners V, L.P. and Aperture Venture Partners III, L.P. The management rights letters granted certain management rights in the event that such shareholder is not represented on our Board, as well as certain inspection rights. The management rights letters terminated automatically upon completion of the IPO.
Employment Agreements
We have entered into employment agreements with certain of our named executive officers that provide for salary, bonuscash incentives, and severance compensation. For more information regarding these employment agreements, see "Executive“Executive Compensation—Employment Agreements"Agreements” and "Executive“Executive Compensation—Potential Payments Upon a Termination or Change of Control."”
Equity Issued to Executive Officers and Directors
We have granted common stock and/or stock options to our named executive officers and non-employee directors, as more fully described in "Executive“Executive Compensation—Employment Agreements," "Executive” “Executive Compensation—Equity Awards During Fiscal Years EndedYear ended December 31, 20152020” and 2014" and "Proposal“Proposal 1: Election of Directors—Corporate Governance—Compensation of Non-Employee Directors."”
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Indemnification Agreements with our Directors and Officers
We have entered into, and intend to continue to enter into, indemnification agreements with our directors and executive officers, in addition to the indemnification provided for in our articles of incorporation and bylaws. These agreements, among other things, require us to indemnify our directors and executive officers for certain expenses, including attorneys'attorneys’ fees, judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of their services as one of our directors and/or executive officers or any other company or enterprise to which the person provides services at our request. We believe that these charter and bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers.
The limitation of liability and indemnification provisions in our articles of incorporation and bylaws may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our shareholders. A shareholder'sshareholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Policies and Procedures for Transactions with Related Persons
Our Board has adopted a related party transactions policy for us. Pursuant to the related party transactions policy, we will review all transactions with a dollar value in excess of $120,000 involving us in which any of our directors, director nominees, significant shareholders and executive officers and their immediate family members will be participants, to determine whether such person has a direct or indirect material interest in the transaction. All directors, director nominees and executive officers are required to promptly notify our Chief Financial Officer of any proposed transaction involving us in which such person has a direct or indirect material interest. Such proposed transaction will then be reviewed by the audit committee to determine whether the proposed transaction is a related party transaction under our policy. In reviewing any related party transaction, the audit committee determines whether or not to approve or ratify the transaction based on all relevant facts and circumstances, including the following:
● | the materiality and character of the related person’s interest in the transaction; |
● | the commercial reasonableness of the terms of the transaction; |
● | the benefit and perceived benefit, or lack thereof, to us; |
● | the opportunity costs of alternate transactions; and |
● | the actual or apparent conflict of interest of the related person. |
In the event that any member of the audit committee is not a disinterested member with respect to the related person transaction under review, that member will be excluded from the review and approval or rejection of such related party transaction and another director may be designated to join the committee for purposes of such review. Whenever practicable, the reporting, review and approval will occur prior to entering into the transaction. If advance review and approval is not practicable, the audit committee will review and may, in its discretion, ratify the related party transaction. After any such review, the audit committee will approve or ratify the transaction only if it determines that the transaction is in, or not inconsistent with, the best interests of us and our shareholders. Our related party transaction policy is available on our website, www.collegiumpharma.com, under the "Investor Relations"“Investor Relations” section. The information contained in, or that can be accessed through, our website is not part of this proxy statement.
All of the transactions described in this section occurred prior to the adoption of our related party transactions policy, other than with respect to RA Capital Management LLC's investment in our January 2016 follow-on public offering. The material terms of the follow-on public offering were approved by a pricing committee of our Board consisting solely of independent directors.
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PROPOSAL 2:3: RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee has selectedappointed Deloitte & Touche LLP as the company'sCompany’s independent registered public accounting firm for the fiscal year ending December 31, 20162021 and our Board has directed that management submit the selectionappointment of the company'sCompany’s independent registered public accounting firm for ratification by the shareholders at the 2016 Annual Meeting. Representatives of Deloitte & Touche LLP are expected to be present at the 2016 Annual Meeting, will have an opportunity to make a statement if they so desire, and be available to respond to appropriate questions. Deloitte & Touche LLP was first appointed to serve as our independent registered public accounting firm for the fiscal year endingended December 31, 2016 on April 11, 2016. Grant Thornton LLP served as our independent registered public accounting firm for the fiscal years ended December 31, 2014 and 2015, and Walter & Shuffain, P.C. ("W&S") served as our independent registered public accounting firm from inception through the fiscal year ended December 31, 2013. See "—Change in Independent Registered Public Accounting Firm" below.
Shareholder ratification of the selectionappointment of Deloitte & Touche LLP as the company'sCompany’s independent registered public accounting firm is not required by Virginia law, or our articles of incorporation or our bylaws. However, our Board is submitting the audit committee's selectioncommittee’s appointment of Deloitte & Touche LLP to the shareholders for ratification as a matter of good corporate practice. If the shareholders fail to ratify the selection,appointment, the audit committee will reconsider whether to retain that firm. Even if the selectionappointment is ratified, the audit committee in its discretion may direct the selectionappointment of a different independent registered public accounting firm at any time during the year if the audit committee determines that such a change would be in the best interests of the companyCompany and its shareholders.
Independent Registered Public Accountants'Accountants’ Fees
The following table sets forth the aggregate fees billed to us by Grant ThorntonDeloitte & Touche LLP, our independent registered public accounting firm, for the fiscal years ended December 31, 2019 and December 31, 2020, respectively, as described below:
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Fee Category | 2014 | 2015 |
| 2019 |
| 2020 | |||||||
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Audit Fees | $ | 496,462 | $ | 551,986 | | $ | 928,875 | | $ | 1,275,550 | |||
Audit-Related Fees | — | — | | | 22,658 | | | 98,945 | |||||
Tax Fees | — | — | | | 125,000 | | | — | |||||
All Other Fees | — | — | | | — | | | — | |||||
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Total Fees | $ | 496,462 | $ | 551,986 | | $ | 1,076,533 | | $ | 1,374,495 |
Audit Fees: Audit Fees consist of fees billed for professional services performed by Grant ThorntonDeloitte & Touche LLP for the audit of our annual consolidated financial statements and system of internal control over financial reporting; the reviewreviews of interim consolidated financial statements,statements; and related services that are normally provided in connection with registration statements, including the registration statement for the IPO. Included in the 2015 Audit Fees is $104,072 of fees billed in connection with the IPO.consultations regarding accounting and financial reporting.
Audit-Related Fees: Audit Related Fees may consist offor 2019 and 2020 include fees billed by an independent registered public accounting firm for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. There were no suchSuch amounts include fees incurredbilled by Deloitte & Touche LLP for services provided in connection with the company in 2015 or 2014.submission of our Registration Statements on Form S-3 and Form S-8 and related prospectus supplements for our convertible notes offering during the year ended December 31, 2020.
Tax Fees:Tax Fees may consist of fees billed for permissible professional services including tax consulting and compliance performed by Deloitte Tax LLP, an independent registered public accounting firm.affiliate of Deloitte & Touche LLP, for tax planning and advice regarding the application of Section 382 of the Internal Revenue Code.
All Other Fees: There were no such fees incurred in 20152019 or 2014.2020.
All Other Fees: There were no such fees incurred in 2015 or 2014.
The audit committee has considered the services listed above to be compatible with maintaining Grant Thornton LLP's independence.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Walter & Shuffain, P.C.
On or about September 24, 2014, we dismissed W&S as our independent public accounting firm. The dismissal of W&S was approved by our Board. The audit report of W&S on our financial statements as of and for the fiscal year ended December 31, 2012 did not contain any adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except for modifications for uncertainties related to going concern.
In connection with the audit of our financial statements for the fiscal year ended December 31, 2012, and for the subsequent interim period through the date of the dismissal of W&S, (i) there were no disagreements with W&S on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to W&S' satisfaction, would have caused W&S to make reference to the subject matter of the disagreement in connection with its report, and (ii) there were no "reportable events," as that term is described in Item 304(a)(1)(v) of Regulation S-K.
We provided to W&S a copy of the foregoing disclosure.
On September 24, 2014, we engaged Grant Thornton LLP to serve as our independent registered public accounting firm, to audit the fiscal year ended December 31, 2014. The engagement of Grant Thornton LLP was approved by our Board. During the two most recent fiscal years, neither we, nor anyone acting on our behalf, consulted with Grant Thornton LLP regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and no written report nor oral advice was provided by Grant Thornton LLP, or (ii) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
Grant Thornton LLP
On April 11, 2016, we dismissed Grant Thornton LLP as our independent registered public accounting firm. The dismissal was approved by the audit committee. The reports of Grant Thornton LLP on our financial statements as of and for the years ended December 31, 2015 and 2014 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During our fiscal years ended December 31, 2015 and 2014, and the subsequent interim period through April 11, 2016, there were no disagreements with Grant Thornton LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Grant Thornton LLP, would have caused Grant Thornton LLP to make reference to the subject matter of the disagreements in connection with its report. Pursuant to the rules of the SEC applicable to "emerging growth companies," Grant Thornton LLP was not required to provide an attestation as to the effectiveness of our internal control over financial reporting for any period since our inception. However, during the course of preparing our December 31, 2014 financial statements in connection with our initial public offering, Grant
Thornton LLP and our management team determined that we had the following material weaknesses in its internal control over financial reporting:
Our management believes that each material weakness described above was remediated during the fiscal year ended December 31, 2015. The audit committee discussed the subject matter of these material weaknesses with Grant Thornton LLP, and we authorized Grant Thornton LLP to respond fully to the inquiries of Deloitte & Touche LLP, the successor independent registered public accounting firm, concerning these material weaknesses.LLP’s independence.
Other than as disclosed above, there were no reportable events, as that term is defined in Item 304(a)(1)(v) of Regulation S-K promulgated under the Exchange Act during our two most recent fiscal years or during the subsequent interim period through April 11, 2016.
We provided to Grant Thornton LLP a copy of the foregoing disclosure.
On April 11, 2016, we appointed Deloitte & Touche LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2016. The appointment of Deloitte & Touche LLP was approved by the audit committee and was subject to Deloitte & Touche LLP's normal client acceptance procedures.
During the two most recent fiscal years and in the subsequent interim period through April 11, 2016, neither the Company nor any person on its behalf has consulted with Deloitte & Touche LLP with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and neither a written report was provided to us nor oral advice was provided that Deloitte & Touche LLP concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a "disagreement" or a "reportable event" as such terms are described in Items 304(a)(1)(iv) or 304(a)(1)(v), respectively, of Regulation S-K promulgated under the Exchange Act.
Pre-Approval Policies and Procedures
In accordance with the Sarbanes-Oxley Act of 2002, as amended, the audit committee'scommittee’s policy is to pre-approve all auditedaudit and permitted non-audit services provided by our independent registered public accounting firm. The audit
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committee may, in accordance with applicable law, establish pre-approval policies and procedures for the engagement of the independent auditor or other registered public accounting firm to render services to the Company. The Chair of the audit committee and any other member of the audit committee to whom authority has been delegated by the audit committee has the authority in between meetings to pre-approve any audit or non-audit services, including fees, to be performed by the independent registered public accounting firm, provided that any such approvals are presented to the audit committee at its next scheduled meeting. In fiscal years 20152019 and 2014,2020, all of the
services performed by our independent registered public accounting firm were pre-approved by the audit committee pursuant to our policy.
Recommendation of our Board
Our Board recommends a vote "FOR" the ratification of the selection of DeloitteOUR BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & ToucheTOUCHE LLP as our independent registered public accounting firm for the fiscal year ending DecemberAS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2016.
Table of Contents2021.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our capital stock outstanding as of the Record Date by:
● | each person, or group of affiliated persons, known by us to beneficially own more than 5% of our shares of common stock; |
● | each of our directors and director nominees; |
● | each of our named executive officers; and |
● | all of our directors and executive officers as a group. |
The percentage ownership information is based on 23,511,61535,203,824 shares of common stock outstanding as of the Record Date. Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our common stock. We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules attribute beneficial ownership of securities as of a particular date to persons who hold options or warrants to purchase shares of common stock and that are exercisable within 60 days of such date. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
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Except as otherwise noted below, the address for each person or entity listed in the table is c/o Collegium Pharmaceutical, Inc., 780 Dedham Street,100 Technology Center Drive, Suite 800, Canton,300, Stoughton, MA 02021.02072.
| | | | |
|
| Number of |
| Percentage |
| | shares | | of shares |
| | beneficially | | beneficially |
Name and Address of Beneficial Owner | | owned | | owned |
5% or greater shareholders: | |
| |
|
BlackRock, Inc. (1) | | 5,875,672 | | 16.69% |
Janus Henderson Group plc (2) | | 5,087,509 | | 14.45% |
Eventide Asset Management, LLC (3) | | 2,427,976 | | 6.90% |
Perceptive Advisers LLC (4) | | 2,058,068 | | 5.85% |
Camber Capital Management LP (5) | | 2,000,000 | | 5.68% |
Rubric Capital Management LP (6) | | 1,926,283 | | 5.47% |
The Vanguard Group (7) | | 1,730,852 | | 4.92% |
Directors, Nominees and Named Executive Officers: | |
| | |
Joseph Ciaffoni (8) | | 166,154 | | * |
Paul Brannelly (9) | | 298,017 | | * |
Scott Dreyer (10) | | 68,205 | | * |
Alison Fleming (11) | | 195,258 | | * |
Shirley Kuhlmann (12) | | 58,952 | | * |
Richard Malamut, M.D. (13) | | 61,872 | | * |
Michael Heffernan, R.Ph. (14) | | 460,754 | | 1.31% |
Rita Balice-Gordon, Ph.D. | | — | | * |
Garen Bohlin (15) | | 90,560 | | * |
John Fallon, M.D. (16) | | 70,250 | | * |
John Freund, M.D. (17) | | 119,988 | | * |
Gwen Melincoff (18) | | 58,089 | | * |
Gino Santini (19) | | 99,763 | | * |
Theodore Schroeder (20) | | 76,575 | | * |
All current executive officers and directors as a group (14 persons)(21) | | 1,824,437 | | 5.18% |
* | Represents beneficial ownership of less than one percent (1%) of the outstanding shares of our common stock. |
(1) | Based solely on an Amendment to Schedule 13G filed with the SEC on March 10, 2021, BlackRock, Inc., a Delaware corporation, located at 55 East 52nd Street, New York, NY 10055 (“BlackRock”), reported aggregate beneficial ownership of 5,875,672 shares of our common stock as of February 28, 2021. BlackRock reported that it possessed sole voting power of 5,821,782 shares and sole dispositive power of 5,875,672 shares. BlackRock also reported that it did not possess shared voting or dispositive power over any shares beneficially owned. |
(2) | Based solely on an Amendment to Schedule 13G filed with the SEC on February 11, 2021, Janus Henderson Group plc, a Jersey public limited company located at 201 Bishopsgate EC2M 3AE, London, United Kingdom (“Janus Henderson”), reported aggregate beneficial ownership of 5,087,509 shares of our common stock as of December 31, 2020. Janus Henderson reported that it possessed shared voting and dispositive power of all of its shares and that it did not possess sole voting or dispositive power over any shares beneficially owned. |
(3) | Based solely on an Amendment to Schedule 13G filed with the SEC on February 4, 2020, Eventide Asset Management, LLC, a Delaware limited liability company located at One International Place, 35th floor, Boston, MA 02110 (“Eventide”), reported aggregate beneficial ownership of 2,427,976 shares of our common stock as of December 31, 2019. Eventide reported that it possessed sole voting and dispositive power of all of its shares and that it did not possess shared voting or dispositive power over any shares beneficially owned. |
(4) | Based solely on an Amendment to Schedule 13G filed with the SEC on February 16, 2021, Perceptive Advisors LLC, a Delaware limited liability company located at 51 Astor Place, 10th Floor, New York, NY 10003 (“Perceptive”), reported aggregate beneficial ownership of 2,058,068 shares of our common stock as of December 31, 2020. Perceptive reported that it possessed shared voting and dispositive power of all of its shares and that it did not possess sole voting or dispositive power over any shares beneficially owned. |
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Name and Address of Beneficial Owner | Number of shares beneficially owned | Percentage of shares beneficially owned | |||||
---|---|---|---|---|---|---|---|
5% or greater shareholders: | |||||||
Entities affiliated with Longitude Capital Partners, LLC(1) | 3,321,842 | 14.13 | % | ||||
Skyline Venture Partners V, L.P.(2) | 2,949,916 | 12.55 | % | ||||
Frazier Healthcare VI, L.P.(3) | 1,887,332 | 8.03 | % | ||||
Eventide Asset Management, LLC(4) | 1,401,001 | 5.96 | % | ||||
TPG Biotechnology Partners IV, L.P.(5) | 1,325,263 | 5.64 | % | ||||
HealthCor Management, L.P.(6) | 1,200,000 | 5.10 | % | ||||
Directors, Nominees and Named Executive Officers: | |||||||
Michael T. Heffernan, R. Ph.(7) | 661,463 | 2.80 | % | ||||
Paul Brannelly(8) | 91,746 | * | |||||
Barry S. Duke(9) | 34,443 | * | |||||
Garen G. Bohlin(10) | 10,268 | * | |||||
John G. Freund, M.D.(11) | 2,949,916 | 12.55 | % | ||||
Patrick Heron(12) | 1,887,332 | 8.03 | % | ||||
David Hirsch, M.D., Ph.D.(13) | 3,321,842 | 14.13 | % | ||||
Eran Nadav, Ph.D. | — | — | |||||
Gino Santini | 23,188 | * | |||||
Theodore R. Schroeder | — | — | |||||
John A. Fallon, M.D. | — | — | |||||
All current executive officers and directors as a group (10 persons)(15) | 8,980,198 | 37.93 | % |
(5) | Based solely on a Schedule 13G filed with the SEC on February 21, 2020, Camber Capital Management LP, a Delaware limited partnership located at 101 Huntington Avenue, Suite 2102, Boston, MA 02199 (“Camber”), reported aggregate beneficial ownership of 2,000,000 shares of our common stock as of February 11, 2020. Camber reported that it possessed shared voting and dispositive power of all of its shares and that it did not possess sole voting or dispositive power over any shares beneficially owned. |
(6) | Based solely on a Schedule 13G filed with the SEC on February 16, 2021, Rubric Capital Management LP (“Rubric”), located at 155 East 44th Street. Suite 1630, New York, NY 10007, reported aggregate beneficial ownership of 1,926,283 shares of our common stock as of December 31, 2020. Rubric reported that it possessed shared voting and dispositive power of all of its shares and that it did not possess sole voting or dispositive power over any shares beneficially owned. |
(7) | Based solely on an Amendment to Schedule 13G filed with the SEC on February 10, 2021, The Vanguard Group, Inc., a Pennsylvania corporation (“Vanguard”), located at 100 Vanguard Blvd., Malvern, PA 19355, reported aggregate beneficial ownership of 1,730,852 shares of our common stock. Vanguard reported that it possessed sole voting power of no shares and sole dispositive power of 1,627,268 shares. Vanguard also reported that it had shared voting power of 78,646 shares and shared dispositive power of 103,584 shares. |
(8) | Includes 97,807 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date |
(9) | Includes 167,933 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(10) | Includes 63,941 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(11) | Includes 140,422 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(12) | Includes 43,685 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(13) | Includes 49,218 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(14) | Includes 460,754 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(15) | Includes 88,307shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(16) | Includes 60,915 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(17) | Includes 74,322 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(18) | Includes 55,836 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(19) | Includes 74,322 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(20) | Includes 74,322 shares of our common stock subject to options exercisable and restricted stock units vesting within 60 days of the Record Date. |
(21) | Includes 1,451,784 shares of common stock which the directors and current executive officers (i.e., Messrs. Ciaffoni, Brannelly and Dreyer, Drs. Fleming and Malamut, and Ms. Kuhlmann) (i) have the right to acquire |
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ownership of any such shares of common stock in excess of their actual pecuniary interest therein. The address for the reporting persons set forth above is Carnegie Hall Tower, 152 West 57th Street, 43rd Floor, New York, New York 10019, with the exception of Arthur Cohen, whose business address is 12 South Main Street, #203, Norwalk, CT 06854. For information regarding Healthcor Management, L.P. and its affiliates, we have relied on the Schedule 13G filed by Healthcor Management, L.P. on January 13, 2016.
upon the exercise of stock options that were exercisable as of the Record Date, or that will become exercisable within 60 days after that date; or (ii) will acquire upon vesting of restricted stock units within 60 days after the Record Date. |
DELINQUENT SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
REPORTS
Section 16(a) of the Exchange Act requires our directors and executive officers, and any persons who beneficially own more than 10% of our stock, to file with the SEC initial reports of ownership and reports of changes in ownership in our stock. Such persons are required by SEC regulations to furnish to us copies of all Section 16(a) forms they file. As a matter of practice, our administrative staff assists our directors and executive officers in preparing and filing such reports with the SEC. To our knowledge, based solely on our review of copies of the reports received by us, all such Section 16(a) filing requirements were met.met, except that two Form 4s for Dr. Fleming to disclose certain transactions occurring in 2018 were not filed on a timely basis due to an administrative error. The transactions at issue consisted of six option exercises and eight sales of common stock made pursuant to a Rule 10b5-1 trading plan. The Form 4s were filed on January 11, 2021 and March 3, 2021.
SECURITIES AUTHORIZED FOR
ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table contains information about our equity compensation plans as of December 31, 2015.2020.
| | | | | | | | ||||||||||
|
| Number of securities |
| | |
| Number of securities | ||||||||||
| | to | | | Weighted-average | | remaining available for | ||||||||||
| | be issued upon | | | exercise price of | | future issuance under | ||||||||||
| | exercise | | | outstanding | | equity compensation | ||||||||||
| | of outstanding | | | options, | | plans | ||||||||||
| | options, | | | warrants and | | (excluding securities | ||||||||||
| | warrants and rights | | | rights | | reflected in column (a)) | ||||||||||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | (a) | | | (b) | | (c) | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders: | |
| | |
| |
| ||||||||||
—2014 Stock Incentive Plan | 1,452,149 | $ | 10.37 | 1,190,159 | | 3,860,481 | | $ | 17.78 | | 928,261 | ||||||
—2015 Employee Stock Purchase Plan | — | — | 200,000 | | - | | | - | | 1,315,844 | |||||||
Equity compensation plans not approved by security holders | — | — | — | | - | | | - | | - | |||||||
Total | 1,452,149 | 1,390,159 | | 3,860,481 | | $ | 17.78 | | 2,244,105 |
The number of shares reserved for issuance under the 2014 Stock Incentive Plan automatically increases on January 1st1st each year, starting on January 1, 2016 and continuing through January 1, 2025, by an amount equal to four percent (4%) of the total number of shares of our capital stock outstanding on December 31st of the immediately preceding calendar year. Notwithstanding the foregoing, our Board may act prior to January 1st of a given year to provide that there will be no January 1st increase in the maximum number of shares that may be issued in respect of awards under the 2014 Stock Incentive Plan or that the increase in the maximum number of shares that may be issued in respect of awards for such year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding sentence.
The number of shares reserved for issuance under the 2015 ESPPEmployee Stock Purchase Plan automatically increases on January 1st each year, starting on January 1, 2016 and ending on December 31, 2025, by an amount equal to the least of (a) 400,000 shares, (b) one percent (1%) of the total number of shares of our common stock outstanding on January 1st1st of each year, and (c) a number determined by our Board.
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SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 20172022
ANNUAL MEETING OF SHAREHOLDERS
Proposals of shareholders intended to be presented at our 20172022 annual meeting of shareholders must be received by us no later than December 30, 2016,6, 2021, which is 120 calendar days prior to the first anniversary of the date on which our proxy statement was released to shareholders in connection with the 2016 Annual Meeting, in order to be included in our proxy statement and form of proxy relating to the 20172022 annual meeting of shareholders, unless the date of the 20172022 annual meeting of shareholders is changed by more than 30 days from the anniversary of 2016the Annual Meeting, in which case the deadline for such proposals will be a reasonable time before we begin to print and send our proxy materials. These proposals must comply with the requirements as to form and substance established by the SEC for such proposals in order to be included in the proxy statement.
In addition, our bylaws establish an advance notice procedure for nominations for election to our Board and other matters that shareholders wish to present for action at an annual meeting other than those to be included in our proxy statement. In general, notice must be received at our principal executive offices not less than 90 calendar days before nor more than 120 calendar days before the one yearone-year anniversary of the previous year'syear’s annual meeting of shareholders. Therefore, to be presented at our 20172022 annual meeting of shareholders, such a proposal must be received by us no earlier than February 9, 2017January 20, 2022 and no later than March 11, 2017.February 19, 2022. However, if the date of the annual meeting is more than 30 days earlier or more than 60 days later than such anniversary date, notice must be received no earlier than the close of business 120 calendar days prior to such annual meeting and no later than the close of business on the later of 90 days prior to such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, then such notice must be received by the tenth day following the day on which public announcement of the date of such meeting was first made by us.
Any proposals we do not receive in accordance with the above standards will not be voted on at the 20172022 annual meeting of shareholders. Shareholders are advised to review our bylaws which also specify requirements as to the form and content of a shareholder'sshareholder’s notice.
Any proposals, notices or information about proposed director candidates should be sent to:
Collegium Pharmaceutical, Inc.780 Dedham StreetSuite 800Canton, MA 02021
|
100 Technology Center Drive, Suite 300 |
Stoughton, MA 02072 |
Attention: Corporate Secretary
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
The SEC has adopted rules known as "householding"“householding” that permit companies and intermediaries (such as brokers) to deliver one set of proxy materials to multiple shareholders residing at the same address. This process enables us to reduce our printing and distribution costs and reduce our environmental impact. Householding is available to both registered shareholders and beneficial owners of shares held in street name.
Registered Shareholders
If you are a registered shareholder and have consented to householding, then we will deliver or mail one Notice or set of our proxy materials, as applicable, for all registered shareholders residing at the same address. Your consent will continue unless you revoke it, which you may do at any time by providing notice to the Company'sour Corporate Secretary by telephone at (781) 713-3699 or by mail at 780 Dedham Street,100 Technology Center Drive, Suite 800, Canton,300, Stoughton, MA 02021.02072. In addition, the Company will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the annual report, proxy statement, or Notice to a shareholder at a shared address to which a single copy of the documents was delivered.
If you are a registered shareholder who has not consented to householding, then we will continue to deliver or mail Notices or copies of our proxy materials, as applicable, to each registered shareholder residing at the same address. You may elect to participate in householding and receive only one Notice or set of proxy materials, as applicable, for all registered shareholders residing at the same address by providing notice to the Company as described above.
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Street Name Holders
Shareholders who hold their shares through a brokerage may elect to participate in householding, or revoke their consent to participate in householding, by contacting their respective brokers.
This proxy statement is accompanied by our 20152020 Annual Report to Shareholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.2020. The 20152020 Form 10-K includes our audited financial statements. We have filed the 20152020 Form 10-K with the SEC, and it is available free of charge at the SEC'sSEC’s website at http://www.sec.gov and on our website at www.collegiumpharma.com. In addition, upon written request to the Company'sour Corporate Secretary at 780 Dedham Street, Suite 800, Canton,100 Technology Center Drive, Stoughton, MA 02021,02072, we will mail a paper copy of our 20152020 Form 10-K, including the financial statements and the financial statement schedules, to you free of charge.
We do not know of any business that will be presented for consideration or action by the shareholders at the 2016 Annual Meeting other than that described in this proxy statement. If, however, any other business is properly brought before the meeting, shares represented by proxies will be voted in accordance with the best judgment of the persons named in the proxies or their substitutes. All shareholders are urged to complete, sign and return the proxy card.
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MMMMMMMMMMMM . Admission Ticket MMMMMMMMMMMMMMM C123456789 000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE______________ SACKPACK_____________ Electronic Voting Instructions Available 24 hours a day, 7 days a week! InsteadTable of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Time, on June 8, 2016.Contents
MMMMMMMMMMMM The Sample Company C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ MR |
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2021 Annual Meeting Admission Ticket 2021 Annual Meeting of Collegium Pharmaceutical, Inc. Shareholders Thursday, May 20, 2021, 10:00 a.m. Eastern Time Virtually via live webcast www.meetingcenter.io/277168861 The 2021 Annual Meeting of Shareholders of Collegium Pharmaceutical, Inc. will be held on Thursday, May 20, 2021, at 10:00 a.m. (Eastern Time), virtually via live webcast at www.meetingcenter.io/277168861. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. The password for this meeting is — COPI2021. q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + Notice of 2021 Annual Meeting of Shareholders Virtually via live webcast www.meetingcenter.io/277168861 Proxy Solicited by Board of Directors for Annual Meeting — May 20, 2021 Joseph Ciaffoni and Shirley Kuhlmann, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Shareholders of Collegium Pharmaceutical, Inc. to be held on May 20, 2021 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR all director nominees and FOR Proposals 2 and 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) Change of Address — Please print new address below. Comments — Please print your comments below. + C Non-Voting Items Proxy — Collegium Pharmaceutical, Inc. Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/COPI |
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