Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members and our Company, its senior management and its independent auditors, our Board has affirmatively determined that the following six directors who served on our Board in 2016 and continue to serve (including nominees for election at the Annual Meeting, Mr. Pucci and Dr. Raffin) are independent directors within the meaning of the applicable NASDAQ listing standards: Dr. van Es-Johansson, Mr. Edick,Johnson, Mr. Saluri, Mr. Talarico, Ms. Zoth,Lalande, Dr. McCracken, Dr. Raffin and Mr. Pucci.Ms. Zoth. In making this determination,its independence assessments, our Board found that none of these directors or nominees for director had a material or other disqualifying relationship with our Company.
Our Board appointed Dr. Raffin as the Lead Independent Director to help reinforce the independence of our Board as a whole. The position of Lead Independent Director has been structured to serve as an effective balance to a combined Chief Executive Officer/Chairman: theOfficer and Chair. The Lead Independent Director is empowered, among other duties and responsibilities, to develop, together with the Chief Executive Officer, the agenda for meetings of our Board, to develop, together with committee chairs, the agendas for meetings of committees, to preside over Board meetings in the absence of the officers and to oversee our Board’s annual evaluation of the Chief Executive Officer’s performance.
One of our Board’s key functions 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 Board standing committees that address risks inherent in their respective areas of oversight. In particular, while our Board is responsible for monitoring and assessing strategic risk exposure, our Audit Committee has the responsibility to consider and discuss the major financial risk exposures and the steps management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. Our Audit Committee also monitors compliance with legal and regulatory requirements with respect to SEC regulations, and NASDAQ listing standards, pharmaceutical industry regulations and corporate risk management, in addition to oversight of the performance of our accounting and financial reporting processes. Our Nominating and Corporate Governance Committee monitors the effectiveness of the corporate governance guidelines, including whether they are successful in preventing illegal or improper liability-creating conduct.conduct, and is responsible for overseeing our cybersecurity risk management processes. Our Compensation Committee assesses and monitors whether any compensation policies and programs have the potential to encourage excessive risk-taking. The entire Board and its committees address risk management issues from time-to-time and meet at least annually with the employees responsible for risk management in the committees’ respective areas of oversight. Both our Board as a whole and the various standing committees receive periodic reports from the employees responsible for risk management, as well as incidental reports as matters may arise. It is the responsibility of the committee chairs to report findings regarding material risk exposures to our Board as quickly as possible.
Below is a description of each committee of our Board.
Our Audit Committee was established by our Board in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, or the Exchange Act to oversee our corporate accounting and financial reporting processes and audits
Our Board reviews the NASDAQ listing standards definition of independence for Audit Committee members on an annual basis and has determined that each current member of our Audit Committee meets the independence requirement (as independence is currently defined in Rule 5605(c)(2)(A)(i) and (ii) of the NASDAQ listing standards).
Our Board has also determined that Ms. Zoth qualifies as an “audit committee financial expert,” as defined in applicable SEC rules. Our Board made a qualitative assessment of Ms. Zoth’s level of knowledge and experience based on a number of factors, including her formal education and her years of experience.
The purpose of our Compensation Committee is to discharge the responsibilities of our Board to oversee our compensation policies, plans and programs and to review and determine the compensation to be paid to our directors, executive officers and other senior management. The scope of authority and specific responsibilities of our Compensation Committee include:
Our Nominating and Corporate Governance Committee of our Board is responsible for overseeing our corporate governance functions on behalf of our Board, making recommendations to our Board regarding corporate governance issues, identifying, reviewing and evaluating candidates to serve as directors of the Company consistent with criteria approved by our Board, reviewing and evaluating incumbent directors, recommending to our Board for selection candidates for election to our Board and making other recommendations to our Board regarding affairs relating to the directors of the Company, including director compensation.
Our Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements, being over 21 years of age and having the highest personal integrity and ethics. Our Nominating and Corporate Governance Committee also considers whether the candidate possesses the following factors among others: relevant expertise upon which to base advice and guidance to management, sufficient time to devote to the affairs of the Company, demonstrated excellence in his or her field, the ability to exercise sound business judgment and the commitment to rigorously represent the long-term interests of our stockholders. Candidates for director nominees are reviewed in the context of the current composition of our Board, the operating requirements of the Company and the long-term interests of stockholders. In conducting this assessment, our Nominating and Corporate Governance Committee typically considers diversity, age, skills and such other factors as it deems appropriate given the current needs of our Board and the Company to maintain a balance of knowledge, experience and capability. Our
Nominating and Corporate Governance Committee does not have a policy regarding how it considers diversity in selecting candidates.
In the case of incumbent directors whose terms of office are set to expire, our Nominating and Corporate Governance Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any relationships and transactions that might impair the directors’ independence. Our Nominating and Corporate Governance Committee also takes into account the results of our Board’s self-evaluation, conducted annually on a group and individual basis. In the case of new director candidates, our Nominating and Corporate Governance Committee also determines whether the nominee is independent for NASDAQ purposes, which determination is based upon applicable NASDAQ listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. Our Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. Our Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering
the function and needs of our Board. Our Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to our Board by majority vote. During 2015, our Nominating and Corporate Governance Committee retained and paid a search firm to assist in the identification and evaluation of candidates for director.
In identifying potential candidates for Board membership, our Nominating and Corporate Governance Committee relies on suggestions and recommendations from our Board, stockholders, management and others. Our Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders.stockholders that are properly and timely submitted by stockholders in accordance with our policies and Bylaws. Our Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above based on whether or not the candidate was recommended by a stockholder.
Accordingly, our Board is asking the stockholders to indicate their support for the compensation of our named executive officers as described in this proxy statement by casting a non-binding advisory vote “FOR” the following resolution:
“RESOLVED, that the compensation paid to our named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
Because the vote is advisory, it is not binding on our Board or our Company. Nevertheless, the views expressed by the stockholders, whether through this vote or otherwise, are important to management and our Board and, accordingly, our Board and our Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.
Unless our Board decides to modify its policy regarding the frequency of soliciting advisory votes on the compensation of our named executive officers, the next scheduled say-on-pay vote will be at the 20182025 Annual Meeting of Stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
Our Audit Committee has selected KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20172024 and has further directed that management submit the selection of independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. KPMG LLP has audited our financial statements since inception in 1999. From 2015 through the Merger, KPMG LLP audited Private Lumos' financial statements. Representatives of KPMG LLP are expected to be presentavailable at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither our Bylaws nor other governing documents or law require stockholder ratification of the selection of KPMG LLP as our independent registered public accounting firm. However, our Audit Committee is submitting the selection of KPMG LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, our Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, our Audit Committee in its discretion may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in the best interests of our Company and our stockholders.
Our Audit Committee has adopted a policy and procedures for the pre-approval of audit services, audit-related services and tax services rendered by our independent registered public accounting firm. The policy generally pre-approves specified services in the defined categories of audit services, audit-related services, and tax services up to specified amounts. Pre-approval may also be given as part of our Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual explicit case-by-case basis before the independent registered public accounting firm is engaged to provide each service. The pre-approval of services has been delegated to the ChairpersonChair of our Audit Committee, but the decision must be reported to the full Audit Committee at its next scheduled meeting.
In connection with the audit of the 20162023 financial statements, our Audit Committee entered into an engagement agreement with KPMG LLP whichthat sets forth the terms by which KPMG LLP was to perform audit services for the Company.
Report of Our Audit Committee (1)
Our Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 20162023 with management of the Company. Our Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16,1301, Communications with Audit Committee, as adopted by the Public Company Accounting Oversight Board, or PCAOB. Our Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with our Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence.
Based on the foregoing, our Audit Committee has recommended to our Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2023, filed March 7, 2024.
AUDIT COMMITTEE
Ms. Lota Zoth (Chair)
Mr. Ernest J. Talarico, III Chad A. Johnson
Mr. Paul R. Edick
Mr. Paolo Pucci
Joseph S. McCracken
(1)The material in this Audit Committee report is not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.4.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of our common stock as of March 15, 2017,1, 2024, except as set forth below, by: (i) each current director and nominee for director; (ii) each of the named executive officers specified in the Summary Compensation Table; (iii) all executive officers and directors of the Company as a group; and (iv) all those known by the Company to be beneficial owners of more than 5% of its common stock.
|
| | | | | | | |
Names of Beneficial Owner | | Shares | | Percentage |
| | | | |
5% Stockholders | | Total | | |
Stine Seed Farm, Inc. (1) | | 7,077,245 |
|
| | 24.2 | % |
First Eagle Investment Management, LLC (2) | | 2,848,000 |
| | | 9.7 | % |
OrbiMed Advisors (3) | | 1,991,700 |
| | | 6.8 | % |
BlackRock Inc. (4) | | 1,825,915 |
| | | 6.2 | % |
Directors and Named Executive Officers | | | | |
Charles J. Link, Jr., M.D. (5) | | 2,103,801 |
|
| | 6.8 | % |
Nicholas N. Vahanian, M.D. (6) | | 1,236,631 |
|
| | 4.1 | % |
John B. Henneman, III (7) | | 257,771 |
| | | * | |
Thomas A. Raffin, M.D. (8) | | 211,721 |
|
| | * |
|
Carl Langren (9) | | 186,702 |
| | | * | |
Brian Wiley (10) | | 165,064 |
| | | * | |
Ernest J. Talarico, III (11) | | 159,683 |
|
| | * |
|
Joseph B. Saluri (12) | | 85,527 |
| | | * | |
Paul R. Edick (13) | | 65,721 |
|
| | * |
|
Lota S. Zoth (14) | | 64,531 |
|
| | * |
|
Paolo Pucci (15) | | 14,021 |
| | | * | |
| | | | | | |
Total for Security Ownership Table | | 18,294,033 |
| | | 55.0 | % |
| | | | |
All Executive Officers & Directors as a Group (11 persons)(16) | | 4,551,173 |
| | | 13.7 | % |
*Represents beneficial The percentage of shares beneficially owned is computed on the basis of 8,107,121 shares of our common stock outstanding as of March 1, 2024. Shares of our common stock that a person has the right to acquire within 60 days of March 1, 2024 are deemed outstanding for purposes of computing the percentage ownership of less than 1%.the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
|
| | |
(1 | ) | Address: 22555 Laredo Trail, Adel, Iowa 50003, Attn: Jerald L. Reichling. Based solely upon a Schedule 13D filed with the SEC on February 14, 2013. |
(2 | ) | Address: 1345 Avenue of the Americas, New York, New York 10105. Based solely upon a Schedule 13G filed with the SEC on February 6, 2017 reflecting the beneficial ownership by First Eagle Investment Management, LLC as of December 31, 2016. |
(3 | ) | Address: 601 Lexington Avenue, 54th Floor, New York, New York 10022. Based solely upon a Schedule 13G filed with the SEC on February 13, 2017 reflecting the beneficial ownership by OrbiMed Advisors LLC as of December 31, 2016. |
(4 | ) | Address: 55 East 52nd Street, New York, New York 10055. Based solely upon a Schedule 13G filed with the SEC on January 25, 2017 reflecting the beneficial ownership by BlackRock Inc. as of December 31, 2016. |
(5 | ) | Includes 1,867,570 shares Dr. Link has the right to acquire through the exercise of stock options within 60 days of March 15, 2017 and 25,139 shares held by his spouse. |
(6 | ) | Includes 1,215,040 shares Dr. Vahanian has the right to acquire through the exercise of stock options within 60 days of March 15, 2017. |
(7 | ) | Includes 231,984 shares Mr. Henneman has the right to acquire through the exercise of stock options within 60 days of March 15, 2017. |
(8 | ) | Includes 147,100 shares Dr. Raffin has the right to acquire through the exercise of stock options within 60 days of March 15, 2017. |
(9 | ) | Includes 133,071 shares Mr. Langren has the right to acquire through the exercise of stock options within 60 days of March 15, 2017 and 49,691 shares held in trust by his spouse. |
(10 | ) | Includes 154,986 shares Mr. Wiley has the right to acquire through the exercise of stock options within 60 days of March 15, 2017. |
(11 | ) | Includes 121,618 shares Mr. Talarico has the right to acquire through the exercise of stock options within 60 days of March 15, 2017. Includes 977 shares of common stock held by Ernie Talarico Roth IRA, 1,737 shares of common stock held by Kelli Talarico Roth IRA, 1,564 shares of common stock held by son's trust and 1,564 shares of common stock held by daughter's trust. |
(12 | ) | Includes 69,479 shares Mr. Saluri has the right to acquire through the exercise of stock options within 60 days of March 15, 2017. |
(13 | ) | Includes 57,815 shares Mr. Edick has the right to acquire through the exercise of stock options within 60 days of March 15, 2017. |
(14 | ) | Includes 56,625 shares Ms. Zoth has the right to acquire through the exercise of stock options within 60 days of March 15, 2017. |
(15 | ) | Includes 11,188 shares Mr. Pucci has the right to acquire through the exercise of stock options within 60 days of March 15, 2017. |
(16 | ) | Includes 4,066,476 shares issuable upon exercise of stock options exercisable within 60 days of March 15, 2017. See notes (5) through (15) above. |
| | | | | | | | | | | | | | |
Name and Address of Beneficial Owner(1) | Shares (#) | Percent (%) |
5% and Greater Stockholders | | |
| Richard J. Hawkins(2) | 949,879 | 11.4% |
| Stine Seed Farm, Inc.(3) | 873,081 | 10.8% |
| Kevin Lalande(4) | 743,547 | 9.2% |
| | Goldman Sachs Group Inc.(5) | 406,711 | 5.0% |
Named Executive Officers and Directors | | |
| Richard J. Hawkins(2) | 949,879 | 11.4% |
| Kevin Lalande(4) | 743,547 | 9.2% |
| John McKew, Ph.D.(6) | 206,959 | 2.5% |
| Lori D. Lawley(7) | 72,263 | * |
| | Aaron Schuchart(8) | 69,824 | * |
| | Bradley J. Powers(9) | 59,143 | * |
| Thomas A. Raffin, M.D.(10) | 34,647 | * |
| Joseph McCracken(11) | 27,746 | * |
| Lota S. Zoth(12) | 22,313 | * |
| Chad A. Johnson(13) | 20,105 | * |
| An van Es-Johansson, M.D.(14) | 12,925 | * |
| All current executive officers and directors as a group (11 persons)(15) | 2,219,351 | 25.4% |
* | Indicates beneficial ownership of less than 1% of the outstanding shares of the Company’s common stock. |
(1) | | Unless otherwise indicated, the address of such individual is Lumos Pharma, Inc., 4200 Marathon Boulevard, Suite 200, Austin, Texas 78756. |
(2) | | | Includes 201,503 shares Mr. Hawkins has the right to acquire through the exercise of stock options and 6,250 RSUs that are scheduled to vest, each within 60 days of March 1, 2024. |
(3) | | | Address is 22555 Laredo Trail, Adel, Iowa 50003. Information presented is based solely upon a Schedule 13D filed with the SEC on October 6, 2017. Harry H. Stine, the CEO of Stine Seed Farm, Inc., may be deemed to beneficially own such shares. |
(4) | | | Consists of the shares held by Sante Health Ventures II, L.P. Mr. Lalande may be deemed to beneficially own such shares. Mr. Lalande, Joe Cunningham, M.D. and Douglas D. French, are managing directors (the “SHV Directors”) of SHV Management Services, LLC (“SHV Management”). SHV Management is the general partner of SHV Management Services, LP, which is the general partner of Santé Health Ventures II, L.P. Each of the SHV Directors, SHV Management, and SHV Management Services, LP disclaims beneficial ownership of these securities except to the extent of its or his pecuniary interest therein. The address for this entity is 201 W 5th Street, Suite 1500, Austin, TX 78701. Information presented is based solely upon a Schedule 13D filed with the SEC on August 30, 2021. Includes 12,025 shares Mr. Lalande has the right to acquire through the exercise of stock options within 60 days of March 1, 2024. |
(5) | | | The securities being reported on by The Goldman Sachs Group, Inc. ("GS Group"), as a parent holding company, are owned, or may be deemed to be beneficially owned, by Goldman Sachs & Co. LLC ("Goldman Sachs"), a broker or dealer registered under Section 15 of the Act and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940. Goldman Sachs is a subsidiary of GS Group. Address is 200 West Street, New York, NY 10282. Information presented is based solely upon a Schedule 13G filed with the SEC on February 9, 2024. |
(6) | | | Includes 201,076 shares Dr. McKew has the right to acquire through the exercise of stock options and 3,250 RSUs that are scheduled to vest, each within 60 days of March 1, 2024. |
(7) | | | Includes 63,819 shares Ms. Lawley has the right to acquire through the exercise of stock options and 1,125 RSUs that are scheduled to vest, each within 60 days of March 1, 2024. |
(8) | | | Includes 64,569 shares Mr. Schuchart has the right to acquire through the exercise of stock options within 60 days of March 1, 2024. |
(9) | | | Includes 54,710 shares Mr. Powers has the right to acquire through the exercise of stock options and 1,125 RSUs that are scheduled to vest, each within 60 days of March 1, 2024. |
(10) | | | Includes 25,241 shares Dr. Raffin has the right to acquire through the exercise of stock options within 60 days of March 1, 2024. |
(11) | | | Includes 12,025 shares Mr. McCracken has the right to acquire through the exercise of stock options within 60 days of March 1, 2024. |
(12) | | | Includes 20,126 shares Ms. Zoth has the right to acquire through the exercise of stock options within 60 days of March 1, 2024. |
(13) | | | Includes 19,029 shares Mr. Johnson has the right to acquire through the exercise of stock options within 60 days of March 1, 2024. |
(14) | | | Includes 12,070 shares Ms. van Es-Johansson has the right to acquire through the exercise of stock options within 60 days of March 1, 2024. |
(15) | | | Includes 686,193 shares issuable pursuant to stock options that the executive officers and directors of the Company have the right to acquire, and 11,750 RSUs owned by the executive officers and directors that vest, within 60 days of March 1, 2024. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a)Securities Authorized For Issuance Under Equity Compensation Plans
We maintain our 2019 Equity Incentive Plan, 2010 Non-Employee Directors’ Stock Award Plan and the ESPP, each of which was approved by our security holders, pursuant to which we may grant equity awards to eligible persons. We also maintain the Lumos Plans that were assumed at the closing of the Exchange Act requiresMerger approved by our directors, executive officerssecurity holders.
The following table gives information about equity awards under the applicable foregoing plans as of December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | |
Equity compensation plans approved by security holders | 1,399,025 | | | $ | 8.91 | | 753,596 | | | (1)(2) |
Equity compensation plans not approved by security holders | — | | | $ | — | | | — | | | |
Total | 1,399,025 | | | | 753,596 | | | |
(1) The 2009 Equity Incentive Plan incorporated an evergreen formula pursuant to which, on each January 1st, the aggregate number of shares reserved for issuance under the plan will increase by a number equal to 4% of the outstanding shares on December 31st of the preceding calendar year, or such lesser amount (or no shares) as determined by our Board. On May 9, 2019, the Company’s stockholders approved a proposal to amend and persons who own more than 10%extend the 2009 Plan (the "2019 Plan") which, among other modifications, included decreasing the automatic annual “evergreen provision” from 4% to 3%, in accordance with which, on January 1 of each year, from 2020 to (and including) 2029, a registered classnumber of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownershipshares of common stock and other equity securitiesin an amount equal to 3% of the Company. Directors, executive officers and greater than 10% stockholders are required by SEC regulation to furnish the Company with copiestotal number of all Section 16(a) forms they file.
To our knowledge, based solelyshares of common stock outstanding on a reviewDecember 31 of the copiespreceding calendar year, or such lesser amount of such reports furnishedshares (or no shares) approved by the Company’s Board of Directors, was added or will be added to the Company and written representations that no other reports were required, duringshares reserved under the fiscal year ended2019 Plan.
(2) Of these shares, as of December 31, 2016,2023, 712,026 shares remained available under the Company believes that all reports required by Section 16(a) of2019 Equity Incentive Plan, 5,624 shares remained available under the Exchange Act to be filed by our officers, directors2010 Non-Employee Directors’ Stock Award Plan and greater than 10% beneficial owners were complied with.35,946 shares remained available under the ESPP.
DIRECTOR COMPENSATION
The following table shows certain information with respect to the compensation of all of our non-employee directors for the fiscal year ended December 31,
2016.2023. | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Cash Compensation (1) | | | Option Awards ($) (2)(3)(4) | | Total ($) |
Chad A. Johnson | | $55,500 | | | $8,829 | | $64,329 |
Thomas A. Raffin, M.D. | | $78,000 | | | $8,829 | | $86,829 |
An van Es-Johansson | | $44,000 | | | $8,829 | | $52,829 |
Lota S. Zoth | | $60,500 | | | $8,829 | | $69,329 |
Kevin Lalande | | $45,500 | | | $8,829 | | $54,329 |
Joseph S. McCracken | | $47,500 | | | $8,829 | | $56,329 |
| | | | | | | | | | | | | | |
(1) | | | Cash compensation is paid quarterly based on the annual amount of $40,000 for all non-employee directors with additional annual cash compensation of $22,000 for Lead Independent Director, $15,000, $12,000 and $8,000 for the Chairs of the Audit, Compensation and Nominating and Corporate Governance Committees, respectively; and $7,500, $5,500 and $4,000 for members of the Audit, Compensation and Nominating and Corporate Governance Committees, respectively. |
(2) | | | The assumptions we used in valuing options are described under the caption “Share-Based Compensation” in note 2 to our financial statements included in our Annual Report on Form 10-K filed on March 7, 2024. This column reflects the aggregate grant date fair value of options granted during the year indicated in accordance with FASB ASC Topic 718. |
(3) | | | The aggregate number of shares subject to stock option awards outstanding for each non-employee director as of December 31, 2023 are as follows: |
| | | Option Awards |
| Chad A. Johnson | | 22,374 |
| Thomas A. Raffin, M.D. | | 28,586 |
| An van Es-Johansson | | 15,415 |
| Kevin Lalande | | 15,370 |
| | Joseph S. McCracken | | 15,370 |
| Lota Zoth | | 23,471 |
(4) | | | Reflects the grant date fair value of 3,345 options granted at an exercise price of $3.42, which was the per share closing price of our common stock on the NASDAQ Global Market on the date of grant. |
|
| | | | | | | | |
| | | | | | | | |
Name | | Cash Compensation (1)(2) | | | Option Awards ($) (3)(4)(5) | | | Total ($) |
Paul R. Edick | | $71,000 | | | $150,117 | | | $221,117 |
Paolo Pucci | | $69,625 | | | $150,117 | | | $219,742 |
Thomas A. Raffin, M.D. | | $99,167 | | | $150,117 | | | $249,284 |
Joseph Saluri | | $69,000 | | | $150,117 | | | $219,117 |
Ernest J. Talarico, III | | $75,000 | | | $150,117 | | | $225,117 |
Lota Zoth | | $81,500 | | | $150,117 | | | $231,617 |
|
| | | | |
(1 | ) | Cash compensation paid quarterly based on the annual amount of $50,000 for all Non-Employee Directors with additional annual cash compensation of $30,000 for Lead Independent Director, $20,000, $17,500 and $10,000 for the Chairs of the Audit, Compensation and Nominating and Corporate Governance Committees, respectively; and $13,500, $11,500 and $7,500 for members of the Audit, Compensation and Nominating and Corporate Governance Committees, respectively. |
(2 | ) | Effective following the Annual Meeting in May 2016 and based upon advice from Radford, the board increased the compensation paid for Lead Independent Director from $15,000 to $30,000 annually. This resulted in a proportional increase in the compensation for Dr. Raffin during the second quarter. |
(3 | ) | The assumptions we used in valuing options are described under the caption “Share-Based Compensation” in note 2 to our financial statements included in our Annual Report on Form 10-K filed March 6, 2017. This column reflects compensation expense that would be recorded under FASB ASC topic 718 as stock-based compensation in our financial statements for the indicated year in connection with options we granted in the indicated year, disregarding the effects of any estimate of forfeitures related to service-based vesting. |
(4 | ) | The number of stock awards and aggregate number of shares subject to stock option awards outstanding for each non-employee director as of December 31, 2016 are as follows: |
| | Stock Awards | Option Awards |
| Paul R. Edick | — | 80,371 |
| Paolo Pucci | 3,337 | 41,378 |
| Thomas A. Raffin, M.D. | — | 169,656 |
| Joseph B. Saluri | — | 92,035 |
| Ernest J. Talarico, III | — | 144,174 |
| Lota Zoth | — | 79,181 |
(5 | ) | Grant date fair value of 22,556 options granted in 2016 at an exercise price of $10.78, which was the per share closing price of our common stock on the NASDAQ Global Market on the date of grant. |
Non-Employee Director Compensation
The following compensation components are paid to our non-employee directors:
•Annual cash retainer fees;
•An equity grant upon initial election or appointment to our Board; and
•An annual equity grant.
Our non-employee director compensation program as in effect for the fiscal year ended December 31, 20162023 is as described below. For a description of our compensation program in effect for prior years, please refer to the proxy statement for our 20162022 Annual Meeting of stockholders. Under our program, each non-employee director was entitled to receive annual cash retainer fees in the amounts set forth below and were paid in cash quarterly on the first day of each quarter during their annual term commencing upon their election or re-election at each Annual Meeting of Stockholders. Such amounts were pro-rated for appointments made to our Board between our annual meetings.
|
| | | | |
Annual retainer fee payable to all non-employee directors | $ | 50,000 |
| |
Additional annual retainer fee payable to the Lead Independent Director of our Board | $ | 30,000 |
| |
Additional annual retainer fee payable to our Audit Committee Chair | $ | 20,000 |
| |
Additional annual retainer fee payable to other Audit Committee members | $ | 13,500 |
| |
Additional annual retainer fee payable to our Compensation Committee Chair | $ | 17,500 |
| |
Additional annual retainer fee payable to other Compensation Committee members | $ | 11,500 |
| |
Additional annual retainer fee payable to our Nominating and Corporate Governance Committee Chair | $ | 10,000 |
| |
Additional annual retainer fee payable to other Nominating and Corporate Governance Committee members | $ | 7,500 |
| |
| | | | | | | | | | | | | | |
Director Compensation | | | | 2023 |
Annual retainer fee payable to all non-employee directors | | | $ | 40,000 | |
Additional annual retainer fee payable to the Lead Independent Director of our Board | | | $ | 22,000 | |
Additional annual retainer fee payable to our Audit Committee Chair | | | $ | 15,000 | |
Additional annual retainer fee payable to other Audit Committee members | | | $ | 7,500 | |
Additional annual retainer fee payable to our Compensation Committee Chair | | | $ | 12,000 | |
Additional annual retainer fee payable to other Compensation Committee members | | | $ | 5,500 | |
Additional annual retainer fee payable to our Nominating and Corporate Governance Committee Chair | | | $ | 8,000 | |
Additional annual retainer fee payable to other Nominating and Corporate Governance Committee members | | | $ | 4,000 | |
Based upon Radford’s advice in December 2015, our Compensation Committee recommended, our Board approved, an increase in the annual cash retainer payable to our Lead Independent Director by $15,000 to a total annual cash retainer of $30,000 effective following our Annual Meeting. Radford’s recommendation was based upon a review of compensation paid to lead directors of other companies Radford deemed comparable to us. This increase took effect following our 2016 Annual Meeting and resulted in a proportional increase in the compensation Dr. Raffin received for service as the Lead Independent Director during the second quarter of 2016.
Upon election to our Board, each non-employee director receives an initial grant of stock options with a value of $250,000 based on the fair market value of the awards on the grant date pursuant to our 2010 Non-Employee Directors' Stock Award Plan, as amended. Additionally, duringDuring the term of his or her service on our board,Board, each non-employee director receives an annual grant comprised of stock options withfor a valuenumber of $150,000 based on the market valueshares equal to 0.041% of the awards onnumber of shares outstanding at the date of grant. Additionally, any newly appointed director to our Board will receive an initial grant of stock options for a number of shares equal to 0.081% of the number of shares outstanding at the time of appointment. The annual grant vests 100% on the earlier of the first anniversary of grant date and the first Annual Meeting following the date of grant, and the initial grant vests 1/3 annually over three years.
We also reimburse our directors, including our employee directors, for their reasonable expenses incurred in attending meetings of our Board and the committees of our Board. Other than reimbursement of any such reasonable expenses, our employee directors do not receive compensation for their service on our Board.
Director Stock Ownership Guidelines
Our stock ownership guidelines for non-employee directors anticipate that each director will, by December 31, 2018, hold shares of our common stock representing at least $150,000 worth of common stock or 10,000 shares, whichever is less. All of our directors currently meet stock ownership guidelines or are making acceptable progress toward their required level.
COMPENSATION DISCUSSION AND ANALYSIS
The following Compensation Discussion and Analysis ("CD&A") describes our executive compensation program and philosophy, our compensation-setting process, the elements of our executive compensation program, and the compensation decisions made in 2016. This CD&A should be read together with the compensation tables and related disclosures that immediately follow, which provide further historical compensation information for our named executive officers ("NEOs") as identified below.
This discussion contains forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt may differ materially from currently planned programs as summarized in this discussion.
I. Executive Officers
Our NEOs in 2016 were:
|
| | |
Name | Age | Title |
Charles J. Link, Jr., M.D. | 57 | Chairman of the Board and Chief Executive and Scientific Officer |
Nicholas N. Vahanian, M.D. | 49 | President and Chief Medical Officer |
John B. Henneman, III | 55 | Chief Financial Officer and Secretary |
Brian Wiley | 49 | Chief Commercial Officer |
Carl Langren | 61 | Vice President of Finance |
EXECUTIVE OFFICERS
Our executive officers are appointed by and serve at the direction of our BoardBoard. The following table lists the names and positions of Directors. There are no family relationships between our directors, director nominees, andcurrent executive officers. officers:
Charles
| | | | | | | | | | | |
Name | Age | | Position(s) |
Richard J. Hawkins | 75 | | Chief Executive Officer and Chair |
Lori D. Lawley | 40 | | Chief Financial Officer |
John McKew, Ph.D. | 59 | | President and Chief Scientific Officer |
Bradley J. Powers | 45 | | General Counsel |
Richard J. Link, Jr., M.D.Hawkins, , See Dr. Link’ssee Mr. Hawkin's biography in “Proposal"Proposal Number 1-Election1- Election of Directors.”"
Nicholas N. Vahanian, M.D., See Dr. Vahanian’s biography in “Proposal Number 1-Election of Directors.”
John B. Henneman, IIILori D. Lawleyhas served as our Chief Financial Officer Secretary, Executivesince July 2021. Previously, Ms. Lawley was Senior Vice President - Finance and Controller and the principal accounting officer since March 2020 and served the Company in various roles of increasing responsibilities from 2015 to 2020. Prior to joining the Company, Ms. Lawley worked at Ernst and Young LLP for over 8 years where she was a Senior Manager. Ms. Lawley is a licensed certified public accountant. Ms. Lawley received her Bachelor of Business Administration and Master’s in Professional Accounting from the University of Texas.
John McKew, Ph.D., has served as our President since August 2021. Dr. McKew served as our Chief Scientific and Chief AdministrativeOperating Officer from March 2020 until August 2021 and served as the Chief Scientific Officer of Private Lumos from 2016 through the Merger in March 2020. From 2014 until 2016, Dr. McKew was V.P. of research for aTyr Pharma where he led research aimed at understanding and harnessing the therapeutic potential of tRNA synthetases. From 2010 until 2014, Dr. McKew worked for the NIH, during which time he served as a branch chief at the National Human Genome Research Institute Home (the “NHGRI”) from 2010 until 2013, and as the acting Scientific Director of the Division of Preclinical Innovation at the National Center for Advancing Translational Sciences (“NCATS”) from 2013 until 2014. His responsibilities included developing both the Therapeutics for Rare and Neglected Disease (“TRND”) and the Bridging Interventional Development Gaps (“BrIDGs”) programs. The department he led also included NCATS’s high throughput screening center and its Tox21 in vitro toxicology initiative. Before joining the NIH, Dr. McKew held a director level position at Wyeth Research in Cambridge, Massachusetts. Dr. McKew is also currently an Adjunct Associate Professor at the Boston University School of Medicine. Dr. McKew received a B.S. degree in chemistry and biochemistry from State University of New York at Stony Brook, a Ph.D. in organic chemistry from the University of California, Davis, and held post-doctoral research positions at the University of Geneva and Firmenich, SA.
Bradley J. Powers has served as our General Counsel since 2014.August 2015. Prior to joining the Company, Mr. HennemanPowers served for sixteen years at Integra Life Sciences, a publicly traded life sciences company. He joined Integra in 1998 as the General Counsel of Kinze Manufacturing, an agricultural equipment manufacturer in North America, since March 2013. Mr. Powers received a B.S. degree in biology and Chief Administrative Officer, was appointed Acting Chief Financial Officera M.S. degree in 2007bioinformatics and assumed that role permanently in 2008. In April 2014, he was named as Corporate Vice President and Chief Administrative Officer, concurrently with the appointment of a new Chief Financial Officer. During his 16 years at Integra, in addition to his responsibilities as Chief Financial Officer, he was responsible at various times for Integra's law department, corporate development, regulatory affairs, quality systems, clinical affairs, human resources, information systems and management of Integra’s surgical instruments business. Mr. Henneman currently serves on the Board of Directors of R1 RCM, Inc., a NASDAQ listed company that is a provider of revenue cycle management services to hospitals, SeaSpine Holdings Corporation, a NASDAQ listed company that is a spinal implant and orthobiologics company and Alafair Biosciences, a privately-held biomaterials company. Mr. Henneman received his A.B. in Politicscomputational biology from PrincetonIowa State University and a J.D. from theDrake University of Michigan Law School.
Brian Wiley
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding compensation earned during the years ended December 31, 2023 and December 31, 2022, by the executive officers identified below, who are referred to in this proxy statement as our Chief Commercial Officer since 2015 and previously served as its Vice President of Business Development from 2013 to 2015. Mr. Wiley is responsible for the business development, commercialization and corporate communications strategies for all of our portfolio products. Prior to joining the Company, Mr. Wiley was the Principal and Founder of Boston BioConsulting, LLC, Senior Director of Oncology Marketing at Celgene Corporation & Gloucester Pharmaceuticals, and Associate Director of Oncology Marketing at Millennium Pharmaceuticals. Mr. Wiley also held multiple commercialization positions of increasing responsibility at Aventis/Sanofi Oncology from 1992-2004. Mr. Wiley received his B.A. from The Pennsylvania State University.“named executive officers.”
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | Year | Salary($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | | Total ($) |
Richard J. Hawkins | 2023 | 582,624 | 15,840 | 82,677 | 224,311 | 47,417 | (5) | 952,869 |
Chief Executive Officer | 2022 | 582,185 | 45,090 | 252,060 | 350,656 | 42,882 | (6) | 1,272,873 |
John C. McKew | 2023 | 535,500 | 7,040 | 37,369 | 287,425 | 37,457 | (7) | 904,791 |
President and Chief Scientific Officer | 2022 | 535,096 | 15,030 | 99,685 | 374,969 | 33,398 | (8) | 1,058,178 |
Lori Lawley | 2023 | 391,000 | 3,520 | 28,026 | 109,480 | 37,749 | (9) | 569,775 |
Chief Financial Officer | 2022 | 389,923 | 10,020 | 85,444 | 170,476 | 36,166 | (10) | 692,029 |
Carl Langren
has served as our Vice President of Finance since 2011 and previously served as the Chief Financial Officer of BioProtection Systems from 2005 to 2011. Prior to joining the Company, Mr. Langren served as a principal in Capital Management
Solutions from 2003 to 2006, the Chief Financial Officer of Housby Mixer Group from 1998 to 2002 and as President of Iowa Machinery and Supply from 1990 to 1998. Mr. Langren also served as Chief Financial Officer of Equity Dynamics, Inc., Treasurer of DFM Corporation and tax manager with McGladrey Pullen and Company (now RSM US LLP). Mr. Langren received his B.A. from the University of Iowa in Iowa City, Iowa.
II. Executive Summary
Our Strategy Overview
Our strategy is to discover, develop and commercialize immunotherapeutic products for the treatment of cancer where the needs of patients are unmet by current therapies. The critical components of our business strategy include:
Supporting the development of GDC-0919 through the strategic collaboration with Genentech, Inc., a member of the Roche Group.
Obtaining additional clinical data for indoximod in melanoma, brain, pancreatic, lung and prostate cancers.
Developing improved formulations of indoximod that will enhance clinical and commercial potential.
Seeking further regulatory approvals and exclusivity for the indoximod program.
Strengthening our pipeline of oncology product candidates through our active drug discovery and business development programs.
Completing the trails for and evaluating the data from two HyperAcute Cellular Immunotherapy product candidates.
Supporting Merck, Sharp and Dohme Corp., or Merck, in the further development of our Ebola vaccine product candidate, and developing the Zika program to the point at which it is appropriate for a strategic collaboration.
Our Performance Overview
Highlights from our 2016 fiscal year included:
The IDO pathway, which helps cancer escape the patient’s immune system, became increasingly validated as an immuno-oncology target, with clinical data coming from our Company and others.
We presented early Phase 2 clinical data of indoximod plus gemcitabine/nab-paclitaxel for the treatment of patients with metastatic pancreatic cancer at the 2016 American Society of Clinical Oncology, or ASCO, Annual Meeting, suggesting evidence of safety and clinical activity.
We also presented promising interim Phase 2 clinical data from a cohort of patients with advanced melanoma treated with indoximod plus pembrolizumab at the 2016 ASCO Annual Meeting.
Our Ebola vaccine candidate (rVSV∆G-ZEBOV GP), in collaboration with Merck, received breakthrough therapy designation from the FDA and PRIME status from the European Medicines Agency. In December 2016, the final results of the Guinea trial were published on-line in The Lancet and confirmed efficacy of the vaccine.
Notwithstanding our clinical progress, several factors led to a decline in our stock price during 2016, including particularly the failure of our Phase 3 clinical trials for algenpantucel-L, the results of which were reported during the year. We were disappointed in these results; however, our scientific and clinical teams are focused on promising future opportunities in this area and others.
As described in our CD&A, we have adjusted our executive compensation to reflect our current strategy, operational priorities and smaller market capitalization and to motivate management to build stockholder value in 2017.
How Our Compensation Program Works
Our philosophy continues to be based on attracting and retaining top talent while providing competitive compensation that creates a direct, meaningful link between business results and compensation opportunities. We rely on three primary elements:
|
| | | | | | | |
Element(1) | Form | Performance Period | ObjectiveThis column reflects the aggregate grant date fair value of RSUs granted during the year indicated in accordance with FASB ASC Topic 718. The assumptions we used in valuing RSUs are described under the caption "Share-Based Compensation" in note 2 to our financial statements included in our Annual Report on Form 10-K filed March 7, 2024. |
Base Salary(2) | Cash (fixed) | Annual | RecognitionThis column reflects the aggregate grant date fair value of an individual's role and responsibilities; provides fixed competitive pay for retention purposesoptions granted during the year indicated in accordance with FASB ASC Topic 718. The assumptions we used in valuing options are described under the caption “Share-Based Compensation” in note 2 to our financial statements included in our Annual Report on Form 10-K filed on March 7, 2024. |
Short-Term Incentive Bonuses(3) | Cash (variable) | Annual | Variable pay designedThe amounts shown in this column represent the cash bonuses earned by the named executive officers with respect to reward achievementthe fiscal year under our performance-based cash bonus program. Amounts earned with respect to the fiscal year are generally paid in the first quarter following the close of annual corporate and individual goalsthe fiscal year. |
Long-Term Equity Incentives(4) | Stock Options and Restricted Stock Units (variable) | Multi-year | Meaningful incentives for management to create long-term stockholder value; supports the Company's retention strategy; provides alignment of management and stockholder interestsUnless otherwise indicated, amounts in this column represent our contributions under our 401(k) plan. |
(5) | | | Includes $917 in life insurance premiums. |
(6) | | | Includes $632 in life insurance premiums. |
(7) | | | Includes $2,748 in life insurance premiums. |
(8) | | | Includes $2,196 in life insurance premiums. |
(9) | | | Includes $1,749 in life insurance premiums. |
(10) | | | Includes $1,416 in life insurance premiums. |
We view each of the elements of our compensation program as related but distinct, and we have not established any formal policies or guidelines for allocating compensation between the elements. Our decisions about each individual element generally do not affect the decisions we make about other elements. For example, we do not believe that significant compensation derived from one element of compensation, such as equity appreciation, should adversely affect compensation from other elements, such as salary or bonus.
Target Pay Mix
Consistent with our desireNarrative Disclosure to align pay and performance, we take the above mentioned elements and weight their distribution heavily to variable, at-risk pay:
The variable pay portion of the above graphs can be further broken down to show that 85.2% of the CEO 2016 Target Pay Mix is attributable to long-term incentives with just 4.8% attributable to short-term incentives. Other NEOs 2016 Target Pay Mix follows a similar pattern with 79.1% attributable to long-term incentives and 5.0% attributable to short-term incentives.
Realizable Pay
We believe strong pay for performance programs align the short-term and long-term interests of management and stockholders. One way to demonstrate this alignment is to take a snapshot of compensation and note the variance versus the amounts reported as the grant date fair value in the Summary Compensation Table (an accounting value, as required by the SEC). As can be seen in the graphs below, the difference between the reported values (the "SCT" stacked bar) and the realizable pay (the other bar) for 2014 through 2016 is significant, particularly in light of our poor stock price performance in 2016.
“SCT” pay is the pay levels as disclosed in the Summary Compensation Table annually. This includes actual base salary, actual annual bonuses received, and long-term incentive components (restricted stock units and annual stock option grants) based on the grant date fair value.
“Realizable” pay is defined as the compensation earned or deliverable for each year calculated as of the end of the 2016 fiscal year, including: actual salary received, actual annual bonuses received, and the intrinsic value of long-term incentive plan components, as valued on December 30, 2016 (the last trading day of fiscal year 2016) using the year-end share price of $10.28. Options are valued based on spread value as of December 30, 2016.
Chief Executive Officer 2016 Realizable Compensation
The table below highlights the significant variances in the SCT compensation reported versus the realizable compensation at December 31, 2016 for our Chief Executive Officer.
|
| | | |
Chief Executive Officer | 2016 SCT Compensation | | Realizable Compensation at 12/31/16 |
Salary | $659,900 | | $659,900 |
Bonus | $461,930 | # | $230,965 |
Spot Bonus | $55,000 | | $55,000 |
Restricted Stock | $1,619,772 | | $479,449 |
Performance Based Restricted Stock Units | $974,281 | | $72,096 |
Stock Options | $3,071,426 | | $0 |
Total | $6,842,309 | | $1,497,410 |
# Amount represents 100% of the target bonus amount for our Chief Executive Officer for 2016.
Consideration of Say-on-Pay Results
Our Compensation Committee and our Board values the opinions of our stockholders and considers the outcome of each non-binding advisory stockholder vote on compensation (commonly referred to as a "say-on-pay" vote) when they advise on and make compensation decisions for our executive officers.
At our 2016 annual stockholder meeting, our "say-on-pay" vote was approved, on an advisory basis, with over 80% support. We appreciate this support for our philosophy of linking compensation to our operating and organizational objectives and the creation of long-term stockholder value. As a result, our Compensation Committee has retained our general approach to executive compensation, and continued to apply the same general principles and philosophy as in the prior fiscal year in determining executive compensation. Our Compensation Committee will continue to consider stockholder concerns and feedback in the future.
III. Objectives and Philosophy
Our executive officer compensation program is intended to achieve the following objectives:
Attract and incentivize talented individuals to lead and manage our business;
Reward our executive officers fairly over time and to retain those individuals who continue to meet our high expectations;
Align our executive officers’ compensation with our business objectives and the interests of our stockholders; and
Make us competitive in the biopharmaceutical industry, where there is significant competition for talented employees.
Our compensation philosophy also considers substantial corporate accomplishments and developments, including continued clinical advancement, ongoing technological and pipeline development, clinical trial enrollment and significant collaboration and licensing transactions.
IV. Determination of Compensation
We seek to foster a performance-oriented culture, where individual performance is aligned with organizational objectives. In order to achieve this objective, we evaluate and reward our executive officers based on their contributions to the achievement of annual goals and objectives set early in the year. Performance is reviewed each year through the processes discussed further below, with a focus on our research, clinical, regulatory, financial and operational performance, and in view of economic and financial conditions affecting the performance period.
Role of our Compensation Committee
Our Compensation Committee is responsible for reviewing and making recommendations to our full Board regarding the compensation to be paid to our executive officers and directors. All compensation decisions regarding our executive officers and directors are ultimately made by our Board.
From time to time, various members of management and other employees as well as outside advisors or consultants may be invited by our Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. The charter of our Compensation Committee grants our Compensation Committee full access to all books, records, facilities and personnel of the Company, as well as the authority to obtain, at the expense of the Company, advice and assistance from independent third party consultants, where appropriate. In particular, our Compensation Committee has the sole authority to select, retain and terminate compensation consultants to assist in its evaluation of executive and director compensation, including the sole authority to approve the consultant’s reasonable fees and other retention terms. Under the charter, our Compensation Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to our Compensation Committee, other than in-house legal counsel, only after taking into consideration six factors, prescribed by the SEC and NASDAQ, that bear upon the adviser’s independence.
Role of Consultants
For fiscal year 2016, our Compensation Committee retained Radford, an Aon Hewitt Company, or Radford, as its independent compensation consultant to advise on various aspects of executive compensation and our overall equity practices. Radford was retained by and reported directly to our Compensation Committee. Radford did not provide any other consulting services to our Company.
Annually, our Compensation Committee has considered the following six factors, as set forth by the SEC and NASDAQ, when engaging Radford and evaluating its independence: (i) the provision of other services to our Company by Radford; (ii) the amount of fees from our Company paid to Radford as a percentage of the firm’s total revenue; (iii) Radford’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of Radford or the individual compensation advisors employed by the firm with an executive officer of our Company; (v) any business or personal relationship of the individual compensation advisors with any member of our Compensation Committee; and (vi) any stock of our Company owned by the individual compensation advisors employed by the firm. Based on its review, our Compensation Committee has determined that the work of Radford has not raised any conflict of interest that would adversely affect Radford’s independence.
Basis for Historical and Future Compensation Policies and Decisions
In arriving at the amount and types of initial compensation for each of our executive officers, our Compensation Committee and our Board consider the following factors:
The individual’s particular background and circumstances, including prior relevant work experience and compensation paid prior to joining us;
The individual’s role with us and the compensation paid to persons holding similar roles in similarly situated companies represented in the compensation data that we review;
The demand for people with the individual’s specific expertise and experience;
Performance goals and other expectations for the individual’s position;
Comparison to our other executive officers having similar levels of expertise and experience; and
Recommendations from our compensation consultant.
Each year, our Compensation Committee and our Board reviews the compensation of our executive offers and determines whether any adjustments should be made to each element. In determining whether to adjust the compensation of any of our executive officers, our Compensation Committee and our Board generally take into account the following factors:
Compensation generally paid by similarly situated companies to their executive officers with similar roles and responsibilities;
Formal market data regarding base salary, cash incentives and equity compensation from surveys of biopharmaceutical and biotechnology companies conducted by our compensation consultant;
The roles and responsibilities of our executive officers, including any increases or decreases in responsibilities; and
The contributions to achieving our corporate objectives and the individual performance of each executive officer.
Role of Our Chief Executive Officer
In connection with each annual review cycle our Chief Executive Officer meets with our executive officers to discuss our accomplishments during the year and the individual’s performance and contributions over the prior year. Based on these discussions, our Chief Executive Officer then develops a set of compensation recommendations for submission to our Compensation Committee. Our Compensation Committee uses these recommendations, its own judgment and experience, and the resources described above to determine the appropriate mix of compensation for each of our executive officers, and then makes formal recommendations regarding executive compensation decisions to our full Board. In making these recommendations, our Compensation Committee does not delegate any of its functions to others. Our Chief Executive Officer does not participate in the determination of his own compensation.
Peer Analysis
As part of its engagement, Radford was requested by our Compensation Committee to develop a comparative group of current peer companies and to perform analyses of competitive performance and compensation levels for that group.
2016 Peer Group
For our 2016 Peer Group, Radford helped to identify peers similar to us with respect to sector and developmental stage as well as market capitalization and organizational complexity (as measured by number of full-time employees).
Sector and Developmental Stage - focused on biopharmaceuticals companies in Late stage / pre-commercial Phase III, or recent commercial companies with minimal revenue (less than $100M)
Market Capitalization - Valuation generally 0.5 times to 3.0 times our market capitalization
Organization Complexity - 50 to 200 employees
Our 2016 Peer Group, identified in late 2015 and used to make 2016 compensation decisions at the beginning of 2016, consisted of the following companies:
|
| |
ACADIA Pharmaceuticals | Keryx BioPharmaceuticals |
Acceleron Pharma | MacroGenics |
ARIAD Pharmaceuticals | MannKind |
Array BioPharma | Merrimack Pharmaceuticals |
Bluebird Bio | Neurocrine Biosciences |
Celldex Therapeutics | Novavax |
Cempra | OncoMed Pharmaceuticals |
Chimerix | Portola Pharmaceuticals |
Clovis Oncology | Prothena |
Dynavax Technologies | Relypsa |
Epizyme | Sangamo BioSciences |
Halozyme Therapeutics | Sarepta Therapeutics |
ImmunoGen | TESARO |
Infinity Pharmaceuticals | ZIOPHARM Oncology |
|
| | | | | |
| | 12/31/15 Market Cap ($mm) | Number of Employees |
Peers | 75th percentile | 2,109.9 |
| 274 |
|
| Median | 1,182.3 |
| 194 |
|
| 25th percentile | 676.0 |
| 120 |
|
NewLink Genetics Corporation | | 1,047.5 |
| 130 |
|
| Rank | 37 | % | 34 | % |
Total cash compensation (base salary plus target bonus) is targeted to be 9% and 12% above the 75th percentile for Drs. Link and Vahanian, respectively, and between the 50th and 75th percentiles for Mr. Henneman, Mr. Wiley and Mr. Langren, as compared to similarly positioned executives in our peer group. The target percentile levels for executives reflect the scope of their respective responsibilities and their history of contributions to our Company. Dr. Link serves both as our Chief Executive Officer and as our Chief Scientific Officer and Dr. Vahanian serves both as our President and our Chief Medical Officer.
In determining 2016 equity awards for our officers, our Compensation Committee targeted a percentage of our outstanding shares based on a particular percentile within our peer group. For Drs. Link and Vahanian, our Compensation Committee targeted an equity award at the 90th percentile of the peer group. Our Compensation Committee next considered the resulting equity award value of Drs. Link and Vahanian and adjusted target equity awards downward to the extent necessary to maintain equity award value at the targeted percentile level. For the other executives, the Committee targeted equity awards between the 50th and 90th percentile of the peer group taking into account both equity award value and the percentage ownership represented by the award. The target percentile for each officer reflected the Committee’s assessment of the scope of the executive officer’s current and anticipated responsibilities and his history of contributions to our Company.
2017 Peer Group
Given our share price movement in 2016, we reevaluated the appropriateness of our peer group in mid-2016 to ensure that our approach to reviewing compensation levels for the 2017 fiscal year was appropriately aligned with the state and size of our business. After that review, we dropped several companies from the peer group while adding others:
|
| |
Dropped for 2017 | Added for 2017 |
ACADIA Pharmaceuticals | Aduro BioTech |
Acceleron Pharma | Agenus |
ARIAD Pharmaceuticals | Bellicum Pharmaceuticals |
Bluebird Bio | ChemoCentryx |
Halozyme Therapeutics | Coherus Biosciences |
Neurocrine Biosciences | Inovio Pharmaceuticals |
Novavax | Karyopharm Therapeutics |
Portola Pharmaceuticals | Mirati Therapeutics |
Prothena | Regulus Therapeutics |
Relypsa | Rigel Pharmaceuticals |
Sarepta Therapeutics | TG Therapeutics |
TESARO | Xencor |
V. Elements of our Executive Compensation Program
Our compensation program consists of three primary components: base salary, short-term incentives, and long-term equity incentives.
Base Salary
Base salary is the primary fixed element of our executive compensation program. We use base salary to compensate our executive officers for services rendered during the fiscal year, and to ensure that we remain competitive in attracting and retaining executive talent.
Upon joining us, each of our executive officers, with the exception of Dr. Link, received an offer letter that provided for an initial base salary. These initial base salaries are the product of negotiation with the executive, but we generally seek to establish salaries that we believe are commensurate with the salaries paid to industry peers with comparable qualifications, experience, responsibilities and performance at similar companies. Our Compensation Committee has also relied on its members’ collective experience in the marketplace for determining what they believe to be the market rate of salaries for executives of comparable companies.
Historically, we have not applied, nor do we intend to apply, specific formulas to determine base salary increases. Instead, we annually review corporate and individual performance. Our Compensation Committee examines numerous factors, including the executive’s expertise, seniority, position, functional role, level of responsibility and individual performance
during the previous year. Further, our Compensation Committee reviews peer and market data as provided by Radford.Setren & Associates.
In January 2016, our base salaries were determined as follows:
Short-Term Cash Incentives |
| | | |
NEO | 2015 Base Salary | 2016 Base Salary | % Change |
Charles J. Link, Jr., M.D. | $640,700 | $659,900 | 3.0% |
Nicholas N. Vahanian, M.D. | $531,800 | $574,300 | 8.0% |
John B. Henneman, III | $365,200 | $423,600 | 16.0% |
Brian Wiley | $319,600 | $370,700 | 16.0% |
Carl Langren | $250,000 | $277,500 | 11.0% |
Increases in 2016 were based on peer group data, input from Dr. Link regarding the performance of each individual, and the growth of our Company and the attendant increase in executive responsibilities.
2017 Base Salaries
After reviewing similar data and feedback as discussed above, our Compensation Committee has determined to keep our base salaries unchanged for 2017.
Performance-Based Cash Bonuses
Our performance-based cash bonus program isincentives are designed to promote our interests and the interests of our stockholders by providingprovide executive officers with the opportunity to earn annual cash bonusesawards based upon the achievement of pre-specified corporate and individual performance objectives which align with and to assist us in attracting and retaining executive talent.support our business strategy.
Shortly before the end of each fiscal year, our Board determines the annual target bonus percentages for our executive officers for the upcoming fiscal year based on the recommendations of our Compensation Committee. Generally, each executive officer is eligible for a discretionary annual cash incentive payment up to a specified percentage of the executive officer’s salary. Our Board sets these annual target bonus percentages at levels that, upon achievement of the target percentage, are likely to result in cash bonus payments that our Board believes to be approximately the level paid to high-performing executives of comparable companies in the biopharmaceutical industry. The performance goals for each fiscal year are generally determined by the Board in the first quarter of such fiscal year, which may include corporate and/or individual performance objectives.
For 2016,2023, based upon recommendations of our Compensation Committee andwith the Radford Report,assistance of Setren & Associates, our Board establishedmaintained target bonus amounts for Dr. Link, Dr. Vahanian, Mr. Henneman,Hawkins, Mr. WileyMcKew and Mr. LangrenMs. Lawley equal to 70%55%, 50%, and 40%, 35% and 30% of their respective base salaries. Our Board reserved the ability to grant bonuses in excess of the executives’ target bonus percentages for extraordinary performance.
2023 Performance Objectives
The performance goals for each fiscal year are determined by the Board in the first quarter of each fiscal year, and typically include corporate and individual performance objectives which are tailored to each executive’s role and responsibilities.
For 2016, our NEOs2023, the Company had the following performancecorporate goals:
|
| | | | |
NEOMetric | Performance Goals (weightings)Weight |
Charles J. Link, Jr., M.D.Clinical: •100% enrollment of randomized patients in OraGrowtH210 by end of Q2 and deliver top-line six month data by year end (15%) •OraGrowtH210 Trial six month AHV analysis from up to 24 subjects by year end (15%) •Bioavailability trial initiated by year end (10%) | 1)40% |
IMPRESS (0405)/Algenpantucel-LCMC: •Drug products shipped and available at clinical site by Q4 2023 for relative bioavailability and other studies (10%) •Complete tech-transfer of drug substance manufacturing process and stability study initiation of 10 kg and 25 kg scale by state of Q4 2023 (5%) •Completion of analytical, quality and manufacturing process related factors for Phase 3 HyperAcute Pancreas Final Analysis: Complete data compilation, verification, clean up, data lockdrug product manufacture readiness by end of Q2 2023 (5%) | 20% |
Finance: •Secure financing through a combination of strategic transaction, regional license deal(s), financial sources and/or operational improvements to extend cash runway by an additional 6 to 12 months with Board approval | 30% |
R&D and Business Development: •Successful negotiation of the license agreement and go/no-go decision by Board by the end of the year and generate scale up and execute statistical analysis plan (25%) |
2)pharmacology data necessary for final decision on option deal | Manufacture/Commercial Scale Drug Supply Ready for Commercial Scale Manufacture for Algenpantucel-L: Ames B5 facility and CMO (WuXi): [Goal requires completion if IMPRESS positive] (25%) |
3) | Commercialization: Prepare and assemble Algenpantucel-L launch plan with cross functional team and secure management approval. (25%) |
4) | Genentech NLG-0919 License: Fulfill NewLink obligations within the contract and advance product development and pipeline (25%) |
Nicholas N. Vahanian, M.D. | 1) | IMPRESS (0405)/Algenpantucel-L Phase 3 HyperAcute Pancreas Final Analysis: Complete data compilation, verification, clean up, data lock up and execute statistical analysis plan (25%) |
2) | Manufacture/Commercial Scale Drug Supply Ready for Commercial Scale Manufacture for Algenpantucel-L: Ames B5 facility and CMO (WuXi): [Goal requires completion if IMPRESS positive] (25%) |
3) | Regulatory BLA Algenpantucel-L: Prepare to submit Modules if positive trial (20%) |
4) | PILLAR, Locally Advanced Pancreas Cancer 2101, MBC: Prepare and execute statistical analysis plan (20%) |
5) | Clinical Development: NLG2102 (GBM, with Indoximod) & NLG2104 (Metastatic Pancreas with Indoximod) reach total enrollment goals (10%) |
John B. Henneman, III | 1) | Algenpantucel-L preparation: Ensure the readiness of quality systems to support the submission and approval of BLA (20%) |
2) | Support the commercialization of Algenpantucel-L by developing sale and marketing compliance policies and training and Sunshine Act compliant systems for tracking payments to healthcare providers (20%) |
3) | Cash: Ensure >6 quarters of cash on hand at December 31, 2016 (20%) |
4) | Maintain and develop personal relationships with key financial institutions, analysts and portfolio managers to promote and sustain the interest of institutional investors in the Company. Emphasize credibility, achievable expectations and transparency. Increase sell-side analyst coverage (20%) |
5) | Support organizational development; lead or support recruitment of senior leaders in HR, business development, investor relations and the commercial organization; support organizational assessment and development consistent with operating plan; develop a plan for significant expense reduction in advance of IMPRESS readout (20%) |
Brian Wiley | 1) | Commercial - Prior to IMPRESS data: Establish key additional commercial functions (commercial operations & business analytics), Establish Integrated Launch Team, Fully characterize the market and patient journey, Increase overall awareness for NewLink and Algenpantucel-L (20%) |
2) | Commercial - Establish launch ready status for 3PL and affiliated services, Finalize and initiate HR plan for post data (20%) |
3) | Significantly increase KOL understanding and support for Algenpantucel-L and HACI, complete reimbursement strategy and secure external resources/support (20%) |
4) | Demonstrate leadership of integrated Algenpantucel-L launch team (15%) |
5) | Business Development - Secure EX US partner of Plan internal EX US planning to launch Algenpantucel-L (pre-data deal provides extra bonus) (15%) |
6) | Business Development - Initiate Clinical Collaboration(s) with our assets and those of other companies and/or institutions (10%) |
Carl Langren | 1) | Complete timely required SEC filings, No material out of period adjustments (35%) |
2) | Bring company into compliance with COSO 2013 (15%) |
3) | Implement at least two QAD sub-systems to support Ankeny/RiPS/Ames/Commercialization (30%) |
4) | Implement automation (Concur) to support travel and reimbursement (20%)10% |
At the end of eachthe fiscal year, Dr. Link determines cash bonus recommendations for each of our executive officers, based on our corporate accomplishments and the individual’s performance and contributions to those accomplishments during the fiscal year. These recommendations are subjective determinations that may vary, from time to time, depending on our overall strategic objectives and the job responsibilities of each executive officer, but relate generally to factors such as development and progression of our existing product candidates, achievement of clinical and regulatory milestones, operational goals such as the expansion of
our manufacturing capabilities, and financial factors such as raising and maintaining capital. However, these recommendations may be more or less than the established target percentages for the executive officers, depending on individual and corporate performance, as well as our financial position. Our Compensation Committee assesses the bonuses recommended by our Chief Executive Officer and makes its bonus recommendations to our full Board. Based on its considerationaccomplishments of each executive versus each of the recommendationsaforementioned goals and recommends earned bonus amounts to the Board for approval. The Compensation Committee retains the ability to apply discretion to adjust bonus amounts higher or lower based on other corporate performance factors.
2023 Earned Bonuses
For 2023, the Compensation Committee continued to take a two-tiered approach at determining the amount of earned bonus for each executive based on the current company conditions as well as actual performance. First, the Compensation Committee looked at the performance of each executive against each of the stated performance goals. Secondly, in light of current events and biotech industry conditions as a whole, the Compensation Committee determined it to be in the best interests of the company and its stockholders to use the bonus earning as a retention device in efforts to retain key personnel. Additionally, the Compensation Committee, at its discretion, determined that Dr. McKew should receive a supplemental bonus because he provided contributions to the Company that are expected to increase stockholder value. Dr. McKew's contributions include extensive leadership during the analysis and reporting of our Compensation Committee,top line data analysis for our OraGrowtH210 and OraGrowtH212 Trials, as well as considerable contributions and guidance throughout the non-employee directors on our Board then makeprocess of acquiring patent protection for a final decision regarding cash bonus payments, if any, for the year. Whether or not a bonus is paid for any year is solely within the discretionnovel formulation of our Board.LUM-201 to extend exclusivity to 2042.
In 2016,
For 2023, the Compensation Committee determined that executives had achieved 50% of their bonus objectives,performance with respect to the stated goals would result in a 70% payout, and bonuses were paid accordingly. Separately, in recognition of the NEOs efforts in the successful completion of the restructuring following the failure of the Phase 3 algenpantucel-L trials, our executives received a spot bonus.
Final bonus payouts for 20162023 performance were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Executive | 2023 Target Bonus | 2023 Earned Bonus | Supplemental Bonus(4) | Total Bonus Payout |
%(1) | $ | %(2) | | %(3) | $ |
Richard J. Hawkins | 55 | $320,443 | 70 | | 38.5 | $224,311 | $0 | $224,311 |
John C. McKew | 50 | $267,750 | 70 | | 35.0 | $187,425 | $100,000 | $287,425 |
Lori Lawley | 40 | $156,400 | 70 | | 28.0 | $109,480 | $0 | $109,480 |
(1) Target bonus percentage represents a percentage of base salary. |
| | | | | |
NEO | Target Bonus | Bonus Awarded | Bonus Amount | Spot Bonus | Total 2016 Bonus |
Charles J. Link, Jr., M.D. | $461,930 | 50% | $230,965 | $55,000 | $285,965 |
Nicholas N. Vahanian, M.D. | $287,150 | 50% | $143,575 | $43,000 | $186,575 |
John B. Henneman, III | $169,440 | 50% | $84,720 | $26,250 | $110,970 |
Brian Wiley | $129,745 | 50% | $64,873 | $19,525 | $84,398 |
Carl Langren | $83,250 | 50% | $41,625 | $12,625 | $54,250 |
(2) Bonus awarded at 70% in consideration of goal achievement.
(3) Represents bonus percentage actually awarded.
2017 Performance Bonus Targets(4) Represents a supplemental bonus award at the discretion of the Board.
Our Compensation Committee has determined to leave target bonus amounts for all executives unchanged from 2016 levels. As such, target bonus amounts for Dr. Link, Dr. Vahanian, Mr. Henneman, Mr. Wiley and Mr. Langren equal to 70%, 50%, 40%, 35% and 30% of their respective base salaries.
Long-Term Equity Compensation
Equity incentives represent the largest at-risk element of our executive compensation program. Our equity incentives are designed to align the interests of our executive officers with those of our stockholders by creating an incentive for our executive officers to maximize stockholder value and to remain employed with us despite a competitive labor market.
Typically,
In 2023, target long-term incentive awards were delivered in the form of time-based stock awards grants are made to our existing executive officers during the first quarter of each fiscal year, and these annualoptions, performance-based stock awards consist of restricted stock units, or RSUs, and stock options. The number of stock awards is based on a targeted percentage of our outstanding shares based on a particular percentage of our peer group and are granted in relative proportion of 35% and 65%, calculated based on the fair value of the awards on the date of grant. Stock options and RSUs typically vest monthly over 48 months. Beginning in 2016, in an effortRSUs. The Compensation Committee looked to more closely align compensation tothe successful nature of meeting company performance, the Company issued performance restricted stock units, or pRSUs, that vest only under previously determined specific conditions. The pRSUs granted in 2016 shall vest on the following schedule:
| |
i. | 50% of the shares underlying such pRSU shall vest if the Company's Phase 3 IMPRESS trial meets a statistically significant positive endpoint; |
| |
ii. | 25% of the shares underlying such pRSU shall vest if the Company's NDA for Algenpantucel-L is accepted for filing by the FDA;objectives and |
| |
iii. | 25% of the shares underlying such pRSU shall vest if GDC-0919 advances into Phase 2 development and the Company receives a milestone payment related to such advancement pursuant to the terms of the License and Collaboration Agreement dated October 16, 2014 by and among the Company, NewLink Global, Genentech, Inc. and F. Hoffman-LaRoche Ltd., as the same may be amended from time to time. |
In 2016, our executives were granted stock options and restrictedRSUs are a means to help retain executives and drive the company into the future. The Compensation Committee believes this vehicle mix further reinforces our pay for performance philosophy, as value is only provided to executives if stockholder value is created and the executive remains with the company.
The awards had the following vesting and performance criteria:
Time-vested Options - These options vest and become exercisable in a series of 48 successive, substantially equal monthly installments.
Performance-based Options - These options vest and become exercisable in three substantially equal installments on the first of the month following an increase of closing stock unitsprice, as follows:defined as the closing stock price on Nasdaq Stock Market by at least 50%, 100% and 150%, respectively, above the closing stock price on December 31, 2022, when measured over 30 consecutive calendar days, provided such increase occurs within two years of the date of grant, otherwise such options shall be cancelled.
|
| | | |
NEO | Options (#) | RSUs (#) | pRSUs (#)(1) |
Charles J. Link, Jr., M.D. | 133,435 | 46,639 | 28,053 |
Nicholas N. Vahanian, M.D. | 84,275 | 29,456 | 19,637 |
John B. Henneman, III | 196,351 | 16,201 | 9,819 |
Brian Wiley | 48,259 | 6,382 | 7,013 |
Carl Langren | 28,989 | 3,142 | 1,122 |
(1) | As a result of the performance conditions described in detail above, in connection with the negative result from our IMPRESS trial, 75% of each of these pRSUs were forfeited in 2016. |
20172023 Equity Grants
On January 3, 2017,February 1, 2023, our Compensation Committee granted executives stock options, but did not awardthe following equity awards to our executives any RSUs or pRSUs. For Dr. Link, Dr. Vahanian, and Mr. Henneman, 50% of option grants will vest monthly over 48 monthly installments, as in past years. The other 50% of options grants will vest contingent on the achievement of performance conditions as follows:
| |
i. | 12.50% upon completion of current planned Phase 1 equivalency study of new indoximod salt formulation with “completion” measured by the last patient enrolled in such study |
| |
ii. | 12.50% upon completion of the current planned Phase 1 study of pro-indoximod new chemical entity with "completion" measured by the last patient enrolled in such study |
| |
iii. | 12.50% upon increase of closing share price of the Company’s common stock on the Nasdaq Stock Market by at least 33% above exercise price of the stock options granted on January 3, 2017, when measured over 30 consecutive calendar days (must occur by January 3, 2021 or such shares will be forfeited), and |
| |
iv. | 12.50% upon increase of closing share price of the Company’s common stock on the Nasdaq Stock Market by at least 50% above the exercise price of the stock options granted on January 3, 2017, when measured over 30 consecutive calendar days (must occur by January 3, 2021 or such shares will be forfeited). |
V. Additional Compensation Policies and Practices | | | | | | | | | | | |
Executive | Time-vesting Stock Options (#) | Performance-based Stock Options (#) | RSUs (#) |
Richard J. Hawkins | 17,700 | 17,700 | 4,500 |
John C. McKew | 8,000 | 8,000 | 2,000 |
Lori Lawley | 6,000 | 6,000 | 1,000 |
Anti-Hedging and Anti-Pledging Policies
We have adopted a Policy on Stock Trading by Employees, Officers and Directors. That policy expressly prohibitprohibits our employees and directors from: (i) engaging in hedging transactions or (ii) pledging our stock as collateral.
Officer Stock Ownership Guidelines
In 2017, we adopted stock ownership guidelines for our executives. The guideline for our Chief Executive Officer is ownership of our equity securities with a value of at least 3.0 times his annual base salary, for our President is at least 2.0 times his annual base salary and for the other executive officers is at least 1.0 times their respective base salaries. The applicable guidelines must be met within three years.
Federal Tax Considerations Under Sections 162(m) and 409A
Section 162(m) limits ourof the Internal Revenue Code generally disallows public companies a tax deduction for federal income tax purposes to not more thanof remuneration in excess of $1 million of compensation paid to specifiedthe chief executive officer and certain other highly compensated executive officers in a calendarany taxable year. While our Compensation above $1 million may be deducted ifCommittee considers tax deductibility as one of the factors in determining executive compensation, the Compensation Committee believes that we should retain the flexibility to provide compensation to our named executive officers that is not fully tax deductible when it is performance-based compensation within the meaning of Section 162(m). With the exception of fiscal year 2014, we have had a history of operating lossesbelieves that such payments are appropriate to attract and expectretain executive talent or meet other business objectives. Our Compensation Committee intends to continue to incur operating losses for the foreseeable future. These net operating loss carryforwards would have the effect of offsetting certain future taxable gains, and as such, we generally do not consider the tax implications ofcompensate our executive compensation programs to be meaningful to our operating or financial results. To maintain flexibility in compensating ournamed executive officers in a manner designedconsistent with the best interests of our Company and our stockholders even if any portion of such compensation is non-deductible.
In addition to promote our compensation objectives, ourconsidering the tax consequences, the Compensation Committee has not yet established a policy for determining which forms of incentive compensation awarded to our executive officers will be designed to qualify as performance-based compensation.
In December 2016, our Compensation Committee reviewedconsiders the Company’s current practices with respect to Section 162(m) and the potential benefits, costs, and risks of conforming the incentive compensation arrangementsaccounting consequences of its executive officers to Section 162(m)decisions, including the impact of expenses being recognized in connection with equity-based awards, in determining the size and determined that no change in practice was necessary. However, our Compensation Committee continuesform of different equity-based awards.
to evaluate the effects of the compensation limits of Section 162(m) on any compensation it proposes to grant, and our Compensation Committee intends to provide future compensation in a manner consistent with our best interests and those of our stockholders.
Section 409A of the Code addresses the tax treatment of nonqualified deferred compensation benefits and provides for significant taxes and penalties in the case of payment of nonqualified deferred compensation. We currently structure and intend to continue to structure our executive compensation programs to avoid triggering these taxes and penalties under Section 409A.
Accounting Considerations
We account for equity compensation paid to our employees in accordance with Accounting Standards Codification, or ASC, topic 718, which requires us to measure and recognize compensation expense in our financial statements for all share-based payments based upon an estimate of their fair value over the service period of the award. We record cash compensation as an expense at the time the obligation is incurred.
401(k) Plan
Our employees, including our executive officers, are eligible to participate in our 401(k) plan. Our 401(k) plan is intended to qualify as a tax qualified plan under Section 401 of the Code. Pursuant to the terms of our 401(k) plan, we provide a non-elective employer contribution of up to 3%5% of each participant’s eligible compensation, or the Safe Harbor Contribution, with a possibility of additional discretionary contributions. In January 2016, our Board approved discretionary employer contributions in amounts that, when added to the Safe Harbor Contributions, amounted to 4.5% of total potential 2016 cash compensation for each member of the senior management team and 5% of total 2016 cash compensation for all other eligible employees.
Other Benefits and Perquisites
We pay at least a portion of the premiums for medical insurance, dental insurance, life insurance and accidental death and dismemberment insurance benefits to all full-time employees, including our executive officers. These benefits are available to all employees, subject to applicable laws.
From time to time, we have provided relocation expenses in connection with the relocation of executive officers to the geographic area of our corporate headquarters in Ames, Iowa and Austin, Texas. In connection with the establishment of a corporate headquarters in Austin, Texas, we agreed to reimburse the cost of apartment leases in Austin, Texas, for Dr. Link and Dr. Vahanian in 2016 given the significant time commitment involved with oversight of clinical and commercial operations in Texas. We intend to continue to provide relocation expenses in the future, as necessary, to obtain the services of qualified individuals.
Employment Agreements and Potential Benefits Related to Change in Control or Termination
On January 4, 2016, we entered into a new form of employment agreement with each of the named executive officers. These agreements with Dr. Link, Dr. Vahanian, Mr. Wiley and Mr. Langren amend and restate the existing employment agreements with such named executive officers described above. The agreement with Mr. Henneman is the first employment agreement between us and Mr. Henneman.
The material terms of these agreements include: (i) an annual base salary that is subject to annual review and periodic adjustment but that cannot be decreased without the executive’s express written consent or in connection with an across-the-board decrease in salaries that proportionally affects all executives; (ii) eligibility for an annual performance bonus targeted at a percentage of the executive’s base salary and based on the Company and the executive’s performance as determined by our Board and our Compensation Committee; and (iii) participation in benefit plans and programs generally available to our employees and executives.
Upon the executive’s termination without cause, resignation for good reason or death or disability, the executive is entitled to receive certain benefits, subject to the executive’s execution of a separation and release agreement and continuing compliance with obligations to us. Such benefits include (i) continuing base salary payments for a certain number of months (the number of months varying by executive); (ii) receipt of a prorated bonus based on the number of days worked during the year of separation; (iii) twelve months of accelerated vesting of the executive’s outstanding equity awards; and (iv) post-employment reimbursement of COBRA health insurance payments for a certain number of months (the number of months varying by executive).
Given the nature of the industry in which we participate and the range of strategic initiatives that we may explore, we believe these severance and change of control benefits are an essential element of our executive compensation package and assist us in recruiting and retaining talented individuals. In addition, since we believe it may be difficult for our executive officers to find comparable employment following a termination without cause or resignation with good reason in connection with or following a change in control, these severance and change in control benefits are intended to ease the consequences to an executive officer of an unexpected termination of employment. By establishing these severance and change in control benefits, we believe we can mitigate the distraction and loss of executive officers that may occur in connection with rumored or actual fundamental corporate changes and thereby protect shareholder interests while a transaction is under consideration or pending.
See the section below titled “Employment Agreements” for a summary of the new terms.
Compensation Policies and Practices as They Relate to Risk Management
We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on us. In addition, our Compensation Committee believes that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks.
Our Compensation Committee annually reviews the elements of executive compensation to determine whether any portion of executive compensation encouraged excessive risk taking and has concluded that:
significant weighting towards long-term incentive compensation discourages short-term risk taking, including use of multi-year vesting for equity awards, which comprise the majority of compensation awards;
goals are set to focus mainly on key events related to the overall success of our product development rather than individual elements;
our anti-hedging, anti-pledging policies and stock ownership guidelines are important safeguard against excessive risk taking;
incentive awards are benchmarked to calculate reasonable overall compensation; and
as a biopharmaceutical business, we do not face the same level of risks associated with compensation for employees at financial services companies (traders and instruments with a high degree of risk).
Furthermore, as described above in “Compensation Discussion and Analysis,” compensation decisions include subjective considerations, which help to constrain the influence of formulae or objective factors on excessive risk taking.
Summary Compensation Table
The following table sets forth information regarding compensation earned during the years ended December 31, 2016, 2015 and 2014, by our named executive officers.
|
| | | | | | | | | | | | | | | | |
Name and Principal Position | Year | Salary ($) | Bonus (1) | Stock Awards (2)(3)($) | Option Awards(4)($) | Non-Equity Incentive Plan Compensation ($)(5) | All Other Compensation ($)(6) | | Total ($) |
Charles J. Link, Jr., M.D. | 2016 | 659,900 |
| 55,000 |
| 2,594,053 |
| 3,071,426 |
| 230,965 |
| 93,500 |
| (7) | 6,704,844 |
|
Chief Executive & Scientific Officer | 2015 | 640,700 |
| — |
| 1,964,250 |
| 3,825,722 |
| 422,862 |
| 102,960 |
| (8) | 6,956,494 |
|
| 2014 | 573,200 |
| — |
| 758,990 |
| 1,354,861 |
| 515,880 |
| 88,277 |
| (9) | 3,291,208 |
|
| | | | | | | | | |
Nicholas N. Vahanian, M.D. | 2016 | 574,300 |
| 43,000 |
| 1,705,000 |
| 1,939,848 |
| 143,575 |
| 44,200 |
| (10) | 4,449,923 |
|
President & Chief Medical Officer | 2015 | 531,800 |
| — |
| 1,091,250 |
| 2,167,018 |
| 305,785 |
| 61,706 |
| (11) | 4,157,559 |
|
| 2014 | 453,600 |
| — |
| 523,810 |
| 887,667 |
| 340,200 |
| 47,530 |
| (12) | 2,252,807 |
|
| | | | | | | | | |
John B. Henneman, III | 2016 | 423,600 |
| 26,250 |
| 903,675 |
| 2,153,813 |
| 84,720 |
| 26,729 |
| | 3,618,787 |
|
Chief Financial Officer & Secretary | 2015 | 365,200 |
| — |
| 87,300 |
| 173,896 |
| 167,992 |
| 23,994 |
| | 818,382 |
|
| 2014 | 90,000 |
| — |
| 936,108 |
| 2,990,967 |
| — |
| — |
| | 4,017,075 |
|
| | | | | | | | | |
Brian Wiley | 2016 | 370,700 |
| 19,525 |
| 465,208 |
| 637,668 |
| 64,873 |
| 22,755 |
| | 1,580,729 |
|
Chief Commercial Officer | 2015 | 319,600 |
| — |
| 323,010 |
| 626,027 |
| 95,880 |
| 18,697 |
| | 1,383,214 |
|
| 2014 | 262,500 |
| — |
| 121,866 |
| 338,917 |
| 118,125 |
| 15,356 |
| | 856,764 |
|
| | | | | | | | | |
Carl Langren | 2016 | 277,500 |
| 12,625 |
| 148,089 |
| 346,385 |
| 41,625 |
| 16,588 |
| | 842,812 |
|
Vice President of Finance | 2015 | 250,000 |
| — |
| 222,615 |
| 441,290 |
| 75,000 |
| 14,625 |
| | 1,003,530 |
|
| | | | | | | | | |
|
| | | |
(1 | ) | The amounts shown in this column represent the supplementary cash bonuses earned by the named executive officers with respect to the fiscal year in connection with the restructuring of the Company after the failure of the Phase 3 algenpantucel-L clinical trials. For additional information, see the Compensation Discussion and Analysis beginning on page 22 of this proxy statement. |
(2 | ) | The assumptions we used in valuing RSUs are described under the caption “Share-Based Compensation” in note 2(l) to our financial statements included in our Annual Report on Form 10-K filed March 6, 2017. This column reflects compensation expense that would be recorded under FASB ASC topic 718 as stock-based compensation in our financial statements for the indicated year in connection with RSUs we granted in the indicated year. |
(3 | ) | The amounts shown in this column include compensation expense associated with performance based RSUs that were forfeited in 2016. No compensation expense was recorded under FASB ASC 718 in the Company's 2016 consolidated statement of operations. The following table shows the compensation expense associated with the RSUs that were forfeited: |
| Charles J. Link, Jr. M.D. | $730,719 |
| Nicholas N. Vahanian, M.D. | $511,503 |
| John B. Henneman, III | $255,752 |
| Brian Wiley | $182,680 |
| Carl Langren | $29,243 |
(4 | ) | The assumptions we used in valuing options are described under the caption “Share-Based Compensation” in note 2 to our financial statements included in our Annual Report on Form 10-K filed March 6, 2017. This column reflects compensation expense that would be recorded under FASB ASC topic 718 as stock-based compensation in our financial statements for the indicated year in connection with options we granted in the indicated year, disregarding the effects of any estimate of forfeitures related to service-based vesting. |
(5 | ) | The amounts shown in this column represent the cash bonuses earned by the named executive officers with respect to the fiscal year under our performance-based cash bonus program. Amounts earned with respect to the fiscal year are generally paid in the first quarter of the following year. For additional information, see the Compensation Discussion and Analysis beginning on page 22 of this proxy statement. |
(6 | ) | Unless otherwise indicated, amounts in this column represent our contributions under our 401(k) plan. |
(7 | ) | Amount includes: (i) a $46,200 contribution under our 401(k) plan; and (ii) $47,300 in personal benefits received by Dr. Link that we reimbursed or paid on his behalf in 2016, including rent. |
(8 | ) | Amount includes: (i) a $47,860 contribution under our 401(k) plan; and (ii) $55,100 in perquisites and personal benefits received by Dr. Link that we reimbursed or paid on his behalf in 2015, including rent. |
(9 | ) | Amount includes: (i) a $41,270 contribution under our 401(k) plan; and (ii) $47,007 in perquisites and personal benefits received by Dr. Link that we reimbursed or paid on his behalf in 2014, including rent. |
(10 | ) | Amount includes: (i) a $35,000 contribution under our 401(k) plan; and (ii) $9,200 in personal benefits received by Dr. Vahanian that we reimbursed or paid on his behalf in 2016, including rent. |
(11 | ) | Amount includes: (i) a $37,691 contribution under our 401(k) plan; and (ii) $24,014 in personal benefits received by Dr. Vahanian that we reimbursed or paid on his behalf in 2015, including rent. |
(12 | ) | Amount includes: (i) a $30,618 contribution under our 401(k) plan; and (ii) $16,912 in personal benefits received by Dr. Vahanian that we reimbursed or paid on his behalf in 2014, including rent. |
Grants of Plan-Based Awards
|
| | | | | | | | | | | | | |
| | Estimated Future Payouts under Non-Equity Incentive Plan Awards(1) | All Other Stock Awards: Number of Units (#) (2) | | All other Option Awards: Number of Securities Underlying Options (#)(3) | | Exercise or Base Price of Option Awards ($/Sh)(4) | Grant Date Fair Value of Option and Stock Awards(5) |
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) |
Charles J. Link, Jr., M.D. | 1/4/2016 | — | 461,930 | 461,930 | | |
|
| | |
|
| 1/4/2016 | | | | 46,639 |
| | | | | $1,619,772 |
| 1/4/2016 | | | | 28,053 |
| (6) | | | | $974,281 |
| 1/4/2016 | | | | | | 133,435 |
| | 34.73 | $3,071,426 |
Nicholas N. Vahanian, M.D. | 1/4/2016 | — | 287,150 | 287,150 | | |
|
| | |
|
| 1/4/2016 | | | | 29,456 |
| | | | | $1,023,007 |
| 1/4/2016 | | | | 19,637 |
| (6) | | | | $681,993 |
| 1/4/2016 | | | | | | 84,275 |
| | 34.73 | $1,939,848 |
John B. Henneman, III | 1/4/2016 | — | 169,440 | 169,440 | | | | | | |
| 1/4/2016 | | | | 16,201 |
| | | | | $562,661 |
| 1/4/2016 | | | | 9,819 |
| (6) | | | | $341,014 |
| 1/4/2016 | | | | | | 46,351 |
| | 34.73 | $1,066,910 |
| 8/9/2016 | | | | | | 150,000 |
| | 10.78 | $1,086,903 |
Brian Wiley | 1/4/2016 | — | 129,745 | 129,745 | | | | | | |
| 1/4/2016 | | | | 6,382 |
| | | | | $221,647 |
| 1/4/2016 | | | | 7,013 |
| (6) | | | | $243,561 |
| 1/4/2016 | | | | | | 18,259 |
| | 34.73 | $420,287 |
| 8/9/2016 | | | | | | 30,000 |
| | 10.73 | $217,381 |
Carl Langren | 1/4/2016 | — | 83,250 | 83,250 | | | | | | |
| 1/4/2016 | | | | 3,142 |
| | | | | $109,122 |
| 1/4/2016 | | | | 1,122 |
| (6) | | | | $38,967 |
| 1/4/2016 | | | | | | 8,989 |
| | 34.73 | $203,677 |
| | 8/9/2016 | | | | | | 20,000 |
| | 10.78 | $142,708 |
|
| | |
(1 | ) | These columns show the possible target and maximum cash bonus payments to the named executive officers for the year ended December 31, 2016 under our performance-based cash bonus program, which is described in more detail in the Compensation Discussion and Analysis beginning on page 22 of this proxy statement. The actual cash bonus awards earned by the named executive officers for the year ended December 31, 2016 are set forth in the Summary Compensation Table above under the column entitled “Non-Equity Incentive Plan Compensation,” and the amounts set forth in these columns do not represent additional compensation paid to or earned by the named executive officers for the year ended December 31, 2016. |
(2 | ) | This column shows the number of shares of common stock underlying restricted stock units ("RSUs") granted to the named executive officers during the year ended December 31, 2016 under our 2009 Equity Incentive Plan. Unless otherwise indicated, the RSUs vest in four equal annual installments on the anniversary of grant. |
(3 | ) | This column shows the number of shares of common stock underlying stock options granted to the named executive officers during the year ended December 31, 2016 under our 2009 Equity Incentive Plan. The stock options have a 10-year term and vest in equal monthly installments over the subsequent forty-eight months, subject to the recipient's continued employment with us through such vesting dates. |
(4 | ) | This column shows the exercise price for the stock options granted to the named executive officers during the year ended December 31, 2016, which equals the fair value of our common stock on the date of grant. |
(5 | ) | This column shows the full grant date fair value of the stock and option awards granted to the named executive officers during the year ended December 31, 2016, calculated under FASB ASC Topic 718. The full grant date fair value is the amount that we recognize as stock-based compensation expense in our financial statements over the required service period of the award. For additional information, see note 2(l) to our financial statements included in our Annual Report on Form 10-K, filed March 6, 2017. |
(6 | ) | Performance Restricted Stock Unit Awards shall vest on the following schedule: (i) 50% of the shares underlying such RSU shall vest if the Company's Phase 3 IMPRESS trial meets a statistically significant positive endpoint, (ii) 25% of the shares underlying such RSU shall vest if the Company's NDA for Algenpantucel is accepted for filing by the FDA and (iii) 25% of the shares underlying such RSU shall vest if GDC-0919 advances into Phase 2 development and the Company receives a milestone payment related to such advancement pursuant to the terms of the License and Collaboration Agreement dated October 16, 2014 by and among the Company, NewLink Global, Genentech, Inc. and F. Hoffman-LaRoche Ltd., as the same may be amended from time to time. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
The value and amount of stock options awarded to Mr. John B. Henneman, III in 2014, as shown in the table of Summary Compensation under the heading “Options Awards” reflects an initial stock option award upon such executive’s start of employment with us intended to align the executive’s equity holdings in us with the general level of equity holdings of executives with similar roles and responsibilities at similarly situated companies. In contrast, the value and amount of stock options granted to our other named executive officers reflect annual, or “refresh”, stock option grants. Accordingly, the value and amount of stock options awarded to Mr. Henneman in 2014 were relatively higher, considering each executive’s role with us, than the value and amount of stock options awarded to our other named executive officers in those years.
In August 2016, the Company issued stock options under a program designed to retain key employees following the failure of our Phase 3 clinical trials for algenpantucel-L. Mr. Henneman, Mr. Wiley and Mr. Langren each received stock options pursuant to such retention program, which grants are set forth in the "Grants of Plan-Based Awards" table beginning on page 38 of this proxy statement. These retention stock option grants resulted in a higher value and a larger number of stock options than had been awarded historically to such officers. Dr. Link and Dr. Vahanian did not receive stock options under this program.
The amount of salary and bonus for each of our NEOs in proportion to his total compensation, and the factors that our Compensation Committee considered in determining the proportion, are discussed under the heading “Compensation Discussion and Analysis” above.
Employment Agreements
We have entered into employment agreements with each of the NEOs.named executive officers. The material terms of the agreements that were in effect during fiscal 20162023 for the NEOsnamed executive officers are summarized below. Each of these agreements also contains severance and change of control provisions discussed under the heading "Potential“Potential Payments Upon Termination or Change in Control"Control” beginning on page 4532 of this proxy statement.
Employment Agreement with Dr. CharlesRichard J. Link, Jr.Hawkins
Pursuant to the employment agreement between us and Dr. Link that was amended and restated on January 4, 2016, Dr. LinkMr. Hawkins dated March 27, 2020, Mr. Hawkins earns an annual base salary, which is subject to annual review and adjustment by our Board. For 2016, Dr. Link2023, Mr. Hawkins earned an annual base salary of $659,900. Dr. Link$582,624. Mr. Hawkins is also eligible to receive an annual performance bonus based on his achievement of certain milestones and performance objectives. For 2016, Dr. Link’sIn 2023, Mr. Hawkins’ target bonus was set at 70%55% of his annual base salary.salary, which was the same level as 2022.
The employment agreement with Dr. LinkMr. Hawkins also provides that his employment with us is at-will and may be altered or terminated by either Dr. LinkMr. Hawkins or us at any time. However, if we terminate Dr. Link’sMr. Hawkins’ employment without just cause or if he resigns for good reason (other than in connection with a change in control of us), as long as Dr. LinkMr. Hawkins executes a general release in favor of us, he will be entitled to receive certain payments and other benefits, which are described in more detail under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 45 of this proxy statement.Control.”
The employment agreement with Dr. LinkMr. Hawkins further provides that if we (or any surviving or acquiring corporation) terminate Dr. Link’sMr. Hawkins’ employment without just cause or if he resigns for good reason within one month prior to or 13 months following the effective date of a change in control, as long as Dr. LinkMr. Hawkins executes a general release in favor of us (or any surviving or acquiring corporation), he will be entitled to receive certain payments and other benefits, which are described in more detail under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 45 of this proxy statement.Control.”
Employment Agreement with Dr. Nicholas N. VahanianJohn C. McKew
Pursuant to the employment agreement between us and Dr. Vahanian that wasMcKew dated March 27, 2020, as amended and restated on January 4, 2016,August 1, 2021, Dr. VahanianMcKew earns an annual base salary, which is subject to annual review and adjustment by our Board. For 2016,2023, Dr. VahanianMcKew earned an annual base salary of $574,300.$535,500. Dr. VahanianMcKew is also eligible to receive an annual performance bonus based on his achievement of certain milestones and performance objectives. For 2016,In 2023, Dr. Vahanian’sMcKew’s target bonus was set at 50% of his annual base salary.salary, which was the same level as 2022.
The employment agreement with Dr. VahanianMcKew also provides that his employment with us is at-will and may be altered or terminated by either Dr. VahanianMcKew or us at any time. However, if we terminate Dr. Vahanian’sMcKew’s employment without just cause or if he resigns for good reason (other than in connection with a change in control of us), as long as Dr. VahanianMcKew executes a general release in favor of us, he will be entitled to receive certain payments and other benefits, which are described in more detail under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 45 of this proxy statement.Control.”
The employment agreement with Dr. VahanianMcKew further provides that if we (or any surviving or acquiring corporation) terminate Dr. Vahanian’sMcKew’s employment without just cause or if he resigns for good reason within one month prior to or 13 months following the effective date of a change in control, as long as Dr. VahanianMcKew executes a general release in favor of us (or any surviving or acquiring corporation), he will be entitled to receive certain payments and other benefits, which are described in more detail under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 45 of this proxy statement.Control.”
Employment Agreement with John B. Henneman, IIILori Lawley
On January 4, 2016, we entered into an employment agreement with Mr. Henneman in connection with his employment as Executive Vice President, Chief Financial Officer and Secretary.
Pursuant to the employment agreement Mr. Hennemanbetween us and Ms. Lawley dated September 30, 2019, as amended June 30, 2021, Ms. Lawley earns an annual base salary, which is subject to annual review and adjustment by our Board. In 2016, Mr. HennemanFor 2023, Ms. Lawley earned an annual base salary of $423,600. Mr. Henneman$391,000. Ms. Lawley is also eligible to receive an annual performance bonus based on hisher achievement of certain milestones and performance objectives. In 2016, Mr. Henneman’sFor 2023, Ms. Lawley’ target bonus was set at 40% of hisher annual base salary.salary, which was the same level as 2022.
The employment agreement with Mr. HennemanMs. Lawley also provides that hisher employment with us is at-will and may be altered or terminated by either Mr. HennemanMs. Lawley or us at any time. However, if we terminate Mr. Henneman’sMs. Lawley’ employment without just cause or if heshe resigns for good reason (other than in connection with a change in control of us), as long as Mr. HennemanMs. Lawley executes a general release in favor of us, heshe will be entitled to receive certain payments and other benefits, which are described in more detail under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 45 of this proxy statement.Control.”
The employment agreement with Mr. HennemanMs. Lawley further provides that if we (or any surviving or acquiring corporation) terminate Mr. Henneman’sMs. Lawley’ employment without just cause or if heshe resigns for good reason within one month prior to or 13 months following the effective date of a change in control, as long as Mr. HennemanMs. Lawley executes a general release in favor of us (or any surviving or acquiring corporation), he will be entitled to receive certain payments and other benefits, which are described in more detail under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 45 of this proxy statement.Control.”
Employment Agreement with Mr. Brian Wiley
Pursuant to the employment agreement between us and Mr. Wiley that was amended and restated January 4, 2016, Mr. Wiley earns an annual base salary, which is subject to annual review and adjustment by our Board. In 2016, Mr. Wiley earned an annual base salary of $370,700. Mr. Wiley is also eligible to receive an annual performance bonus based on his achievement of certain milestones and performance objectives. In 2016, Mr. Wiley’s target bonus was set at 35% of his annual base salary.
The employment agreement with Mr. Wiley also provides that his employment with us is at-will and may be altered or terminated by either Mr. Wiley or us at any time. However, if we terminate Mr. Wiley’s employment without just cause or if he resigns for good reason (other than in connection with a change in control of us), as long as Mr. Wiley executes a general release in favor of us, he will be entitled to receive certain payments and other benefits, which are described in more detail under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 45 of this proxy statement.
The employment agreement with Mr. Wiley further provides that if we (or any surviving or acquiring corporation) terminate Mr. Wiley’s employment without just cause or if he resigns for good reason within one month prior to or 13 months following the effective date of a change in control, as long as Mr. Wiley executes a general release in favor of us (or any surviving or acquiring corporation), he will be entitled to receive certain payments and other benefits, which are described in more detail under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 45 of this proxy statement.
Employment Agreement with Mr. Carl Langren
Pursuant to the employment agreement between us and Mr. Langren that was amended and restated January 4, 2016, Mr. Langren earns an annual base salary, which is subject to annual review and adjustment by our Board. In 2016, Mr. Langren earned an annual base salary of $277,500. Mr. Langren is also eligible to receive an annual performance bonus based on his achievement of certain milestones and performance objectives. In 2016, Mr. Langren’s target bonus was set at 30% of his annual base salary.
The employment agreement with Mr. Langren also provides that his employment with us is at-will and may be altered or terminated by either Mr. Langren or us at any time. However, if we terminate Mr. Langren’s employment without just cause or if he resigns for good reason (other than in connection with a change in control of us), as long as Mr. Langren executes a general release in favor of us, he will be entitled to receive certain payments and other benefits, which are described in more detail under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 45 of this proxy statement.
The employment agreement with Mr. Langren further provides that if we (or any surviving or acquiring corporation) terminate Mr. Langren’s employment without just cause or if he resigns for good reason within one month prior to or 13 months following the effective date of a change in control, as long as Mr. Langren executes a general release in favor of us (or any surviving or acquiring corporation), he will be entitled to receive certain payments and other benefits, which are described in more detail under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 45 of this proxy statement.
Confidential Information and Inventions Agreement
Each of our named executive officers has entered into a form agreement with respect to confidential information and assignment of inventions. Among other things, this agreement obligates each named executive officer to refrain from disclosing any of our confidential information received during the course of employment and, with some exceptions, to assign to us any inventions conceived or developed during the course of employment.
Each of our named executive officers entered into a new form of agreement with respect to confidential information and inventions on January 4, 2016. The terms of these new agreements did not materially change from those to which the executives were previously party.
Option Exercises and Stock Vested in 2016
The following table sets forth information regarding each exercise of stock options, and each vesting of restricted stock units, during the year ended December 31, 2016 for each of our NEOs on an aggregated basis.
|
| | | | | | |
Name | Number of Shares Acquired on Exercise of Stock Options(#) | Number of Shares Acquired on RSU Vest(#) | Value Realized on Exercise or Vest ($) |
Charles J. Link, Jr. M.D. | — |
| | — |
|
Chief Executive & Scientific Officer | | 17,000 |
| $618,630 |
| | | |
| | | |
Nicholas N. Vahanian, M.D. | — |
| | — |
|
President & Chief Medical Officer | | 10,000 |
| $363,900 |
| | | |
| | | |
John B. Henneman, III | — |
| | — |
|
Chief Financial Officer & Secretary | | 10,697 |
| $171,354 |
| | | |
| | | |
Brian Wiley | — |
| | — |
|
Chief Commercial Officer | | 3,275 |
| $119,177 |
| | | |
| | | |
Carl Langren | — |
| | — |
|
Vice President of Finance | | 2,700 |
| $98,253 |
| | | |
| | | |
Outstanding Equity Awards at December 31, 20162023
The following table provides information about outstanding stock options and restricted stock unitsRSUs held by each of our named executive officers at December 31, 2016.2023. All of these options or restricted stock unitsRSUs were granted under our 2000 Equity Incentive Plan or our 2009 Equity Incentive2019 Plan.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | | | Stock Awards |
| | Number of Shares Underlying Unexercised Options(1) | | | | | |
Name | (#) Exercisable | | (#) Unexercisable (2) | Grant Date | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(3) | Market Value of Shares or Units of Stock That Have Not Vested ($)(4) |
Richard J. Hawkins | 19,624 | | | — | | | 6/27/2019 | $ | 1.84 | | 6/26/2029 | — | — |
| | 50,824 | | | 11,250 | | | 4/1/2020 | $ | 7.87 | | 3/31/2030 | — | — |
| | 72,926 | | | — | | | 4/1/2020 | $ | 7.87 | | 3/31/2030 | — | — |
| | | | | 4/1/2020 | | | 6,250 | 19,875 |
| | 20,169 | | | 8,306 | | | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | | | | | 2/1/2021 | | | 1,165 | 3,705 |
| | 16,225 | | | 19,175 | | | 2/1/2022 | $ | 10.02 | | 1/31/2032 | — | — |
| | | | | | 2/1/2022 | | | 3,375 | 10,733 |
| | 3,687 | | | 14,013 | | | 2/1/2023 | $ | 3.52 | | 1/31/2033 | | |
| | | | 5,900 | | (5) | 2/1/2023 | $ | 3.52 | | 1/31/2025 | | |
| | | | 5,900 | | (6) | 2/1/2023 | $ | 3.52 | | 1/31/2025 | | |
| | | | 5,900 | | (7) | 2/1/2023 | $ | 3.52 | | 1/31/2025 | | |
| | | | | | 2/1/2023 | | | 4,500 | 14,310 |
John C. McKew | 66,697 | | | — | | | 7/11/2016 | $ | 4.82 | | 7/10/2026 | — | — |
| 14,993 | | | — | | | 7/11/2016 | $ | 4.82 | | 7/10/2026 | — | — |
| 9,583 | | | — | | | 1/18/2018 | $ | 2.45 | | 1/17/2028 | — | — |
| 56 | | | — | | | 8/29/2018 | $ | 2.45 | | 8/28/2028 | — | — |
| 6,485 | | | — | | | 8/29/2018 | $ | 2.45 | | 8/28/2028 | — | — |
| 58,329 | | | 5,417 | | | 4/1/2020 | $ | 7.87 | | 3/31/2030 | — | — |
| 1,254 | | | — | | | 4/1/2020 | $ | 7.87 | | 3/31/2030 | — | — |
| | | | | 4/1/2020 | | | 3,250 | 10,335 |
| | 7,083 | | | 2,917 | | | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | 9,332 | | | 3,843 | | | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | 5,000 | | | — | | (8) | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | 5,000 | | | — | | (9) | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | | | | | 2/1/2021 | | | 539 | 1,714 |
| | | | | | 8/1/2021 | | | 10,000 | 31,800 |
| | 6,416 | | | 7,584 | | | 2/1/2022 | $ | 10.02 | | 1/31/2032 | — | — |
| | | | | | 2/1/2022 | | | 1,125 | 3,578 |
| | 1,666 | | | 6,334 | | | 2/1/2023 | $ | 3.52 | | 1/31/2033 | | |
| | | | 2,667 | | (5) | 2/1/2023 | $ | 3.52 | | 1/31/2025 | | |
| | | | 2,667 | | (6) | 2/1/2023 | $ | 3.52 | | 1/31/2025 | | |
| | | | 2,666 | | (7) | 2/1/2023 | $ | 3.52 | | 1/31/2025 | | |
| | | | | | 2/1/2023 | | | 2,000 | 6,360 |
|
| | | | | | | | | | | | |
| Number of Shares Underlying Unexercised Options(1) | Number of Shares Underlying Unvested Restricted Stock Units (2) | Option Grant Date | Option Exercise Price | Option Expiration Date |
| | | | | | | | |
| (#) Exercisable |
| | (#) Unexercisable (3) | | | | | |
| | | | | | | | |
Charles J. Link, Jr., M.D. | 2,564 |
| (4)(8) | — |
| | | | 6/1/2007 | $0.80 | 1/21/2019 |
| 264,474 |
| (4)(6) | — |
| | | | 6/1/2007 | $4.20 | 5/13/2019 |
| 468,037 |
| (4)(6) | — |
| | | | 12/4/2009 | $2.10 | 5/13/2019 |
| 428,571 |
| | — |
| | | | 1/1/2009 | $2.97 | 12/4/2019 |
| 50,792 |
| | — |
| | | | 4/14/2011 | $7.00 | 4/13/2021 |
| 44,446 |
| | — |
| | | | 4/14/2011 | $7.00 | 4/13/2021 |
| 9,385 |
| | — |
| | | | 1/19/2012 | $6.87 | 1/18/2022 |
| 130,615 |
| | — |
| | | | 1/19/2012 | $6.87 | 1/18/2022 |
|
| | | | | | | | | | | | |
| 6,782 |
| | 3,230 |
| | | | 1/14/2013 | $11.79 | 1/13/2023 |
| 144,988 |
| | — |
| | | | 1/14/2013 | $11.79 | 1/13/2023 |
| — |
| | 5,162 |
| | | | 1/2/2014 | $21.38 | 1/1/2024 |
| 79,296 |
| (5) | 24,292 |
| | | | 1/2/2014 | $21.38 | 1/1/2024 |
| | | | | 11,500 |
| | 1/2/2014 | $21.38 | |
| — |
| (5) | 3,471 |
| | | | 1/2/2015 | $43.65 | 1/1/2025 |
| 68,520 |
| (5) | 71,009 |
| | | | 1/2/2015 | $43.65 | 1/1/2025 |
| | | | | 33,750 |
| | 1/2/2015 | $43.65 | |
| — |
| (5) | 2,780 |
| | | | 1/4/2016 | $34.73 | 1/3/2026 |
| 30,578 |
| (5) | 100,077 |
| | | | 1/4/2016 | $34.73 | 1/3/2026 |
| | | | | 46,639 |
| | 1/4/2016 | $34.73 | |
| | | | | 7,013 |
| (9) | 1/4/2016 | $34.73 | |
| | | | | | | | | |
Nicholas N. Vahanian, M.D. | 145,451 |
| (4)(7) | — |
| | | | 6/1/2007 | $2.10 | 5/12/2019 |
| 59,444 |
| | — |
| | | | 6/1/2007 | $2.10 | 5/12/2019 |
| 45,160 |
| | — |
| | | | 12/4/2009 | $2.97 | 12/3/2019 |
| 335,792 |
| | — |
| | | | 12/4/2009 | $2.97 | 12/3/2019 |
| 190,476 |
| | — |
| | | | 3/3/2010 | $3.07 | 3/2/2020 |
| 14,286 |
| | — |
| | | | 4/14/2011 | $7.00 | 4/13/2021 |
| 28,571 |
| | — |
| | | | 4/14/2011 | $7.00 | 4/13/2021 |
| 16,159 |
| | — |
| | | | 1/19/2012 | $6.87 | 1/18/2022 |
| 63,841 |
| | — |
| | | | 1/19/2012 | $6.87 | 1/18/2022 |
| 7,510 |
| | 1,875 |
| | | | 1/14/2013 | $11.79 | 1/13/2023 |
| 80,615 |
| | — |
| | | | 1/14/2013 | $11.79 | 1/13/2023 |
| — |
| (5) | 5,128 |
| | | | 1/2/2014 | $21.38 | 1/1/2024 |
| 51,953 |
| (5) | 14,169 |
| | | | 1/2/2014 | $21.38 | 1/1/2024 |
| | | | | 7,500 |
| | 1/2/2014 | $21.38 | |
| — |
| (5) | 3,251 |
| | | | 1/2/2015 | $43.65 | 1/1/2025 |
| 38,812 |
| (5) | 38,937 |
| | | | 1/2/2015 | $43.65 | 1/1/2025 |
| | | | | 18,750 |
| | 1/2/2015 | $43.65 | |
| — |
| (5) | 2,513 |
| | | | 1/4/2016 | $34.73 | 1/3/2026 |
| 19,313 |
| (5) | 62,449 |
| | | | 1/4/2016 | $34.73 | 1/3/2026 |
| | | | | 29,456 |
| | 1/4/2016 | $34.73 | |
| | | | | 4,909 |
| (9) | 1/4/2016 | $34.73 | |
| | | | | | | | | |
John B. Henneman, III | 8,714 |
| | 8,714 |
| | | | 10/1/2014 | $22.95 | 9/30/2024 |
| 104,629 |
| | 87,193 |
| | | | 10/1/2014 | $22.95 | 9/30/2024 |
| | | | | 20,395 |
| | 10/1/2014 | $22.95 | |
| — |
| (5) | 136 |
| | | | 1/2/2015 | $43.65 | 1/1/2025 |
| 3,114 |
| (5) | 3,250 |
| | | | 1/2/2015 | $43.65 | 1/1/2025 |
| | | | | 1,500 |
| | 1/2/2015 | $43.65 | |
| — |
| (5) | 3,674 |
| | | | 1/4/2016 | $34.73 | 1/3/2026 |
|
| | | | | | | | | | | | |
| 10,622 |
| (5) | 32,055 |
| | | | 1/4/2016 | $34.73 | 1/3/2026 |
| 16,666 |
| (5) | 133,334 |
| | | | 8/9/2016 | $10.78 | 8/8/2026 |
| | | | | 16,201 |
| | 1/4/2016 | $34.73 | |
| | | | | 2,455 |
| (9) | 1/4/2016 | $34.73 | |
| | | | | | | | | |
Brian Wiley | 8,481 |
| | 4,250 |
| | | | 1/14/2013 | $11.79 | 1/13/2023 |
| 86,269 |
| | — |
| | | | 1/14/2013 | $11.79 | 1/13/2023 |
| — |
| (5) | 2,896 |
| | | | 1/2/2014 | $21.38 | 1/1/2024 |
| 19,687 |
| (5) | 4,417 |
| | | | 1/2/2014 | $21.38 | 1/1/2024 |
| | | | | 2,850 |
| | 1/2/2014 | $21.38 | |
| — |
| (5) | 2,503 |
| | | | 1/2/2015 | $43.65 | 1/1/2025 |
| 11,212 |
| (5) | 9,685 |
| | | | 1/2/2015 | $43.65 | 1/1/2025 |
| | | | | 5,550 |
| | 1/2/2015 | $43.65 | |
| — |
| (5) | 2,647 |
| | | | 1/4/2016 | $34.73 | 1/3/2026 |
| 4,184 |
| (5) | 11,428 |
| | | | 1/4/2016 | $34.73 | 1/3/2026 |
| 3,333 |
| (5) | 26,667 |
| | | | 8/9/2016 | $10.78 | 8/8/2026 |
| | | | | 6,382 |
| | 1/4/2016 | $34.73 | |
| | | | | 1,753 |
| (9) | 1/4/2016 | $34.73 | |
| | | | | | | | | |
Carl Langren | 9,523 |
| | — |
| | | | 12/14/2007 | $2.10 | 12/13/2017 |
| 2,380 |
| | — |
| | | | 3/3/2010 | $3.07 | 3/2/2020 |
| 2,564 |
| (8) | — |
| | | | 1/8/2011 | $0.80 | 1/20/2019 |
| 16,666 |
| | — |
| | | | 4/14/2011 | $7.00 | 4/13/2021 |
| 18,076 |
| | — |
| | | | 10/19/2011 | $7.00 | 10/18/2021 |
| 5,733 |
| | — |
| | | | 10/19/2011 | $7.00 | 10/18/2021 |
| 10,944 |
| | — |
| | | | 1/19/2012 | $6.87 | 1/18/2022 |
| 4,056 |
| | — |
| | | | 1/19/2012 | $6.87 | 1/18/2022 |
| 10,198 |
| | 417 |
| | | | 1/14/2013 | $11.79 | 1/13/2023 |
| 9,385 |
| | — |
| | | | 1/14/2013 | $11.79 | 1/13/2023 |
| 1,916 |
| (5) | 5,010 |
| | | | 1/2/2014 | $21.38 | 1/1/2024 |
| 17,771 |
| (5) | 2,303 |
| | | | 1/2/2014 | $21.38 | 1/1/2024 |
| | | | | 2,850 |
| | 1/2/2014 | $21.38 | |
| — |
| (5) | 2,355 |
| | | | 1/2/2015 | $43.65 | 1/1/2025 |
| 7,810 |
| (5) | 6,135 |
| | | | 1/2/2015 | $43.65 | 1/1/2025 |
| | | | | 3,825 |
| | 1/2/2015 | $43.65 | |
| — |
| (5) | 2,435 |
| | | | 1/4/2016 | $34.73 | 1/3/2026 |
| 2,059 |
| (5) | 4,495 |
| | | | 1/4/2016 | $34.73 | 1/3/2026 |
| — |
| (5) | 660 |
| | | | 8/9/2016 | $10.78 | 8/8/2026 |
| 2,222 |
| (5) | 17,188 |
| | | | 8/9/2016 | $10.78 | 8/8/2026 |
| | | | | 3,142 |
| | 1/4/2016 | $34.73 | |
| | | | | 280 |
| (9) | 1/4/2016 | $34.73 | |
|
| | |
(1 | ) | Unless otherwise indicated, these options have a 10-year term and vest over a four-year period, with 25% of the options vesting on the first anniversary of the vesting commencement date and the remaining 75% of the options vesting in equal monthly installments thereafter over the next three years, subject to the recipient's continued employment with us through such vesting dates. |
(2 | ) | Unless otherwise indicated, these restricted stock units vest annually over a four-year period, with 25% vesting on each of the first, second, third and fourth anniversaries, subject to the recipient's continued employment with us through such vesting dates. |
(3 | ) | This column shows options that were unvested as of December 31, 2016. |
(4 | ) | These options vest over a five-year period, with 20% of the options vesting on the first anniversary of the vesting commencement date and the remaining 80% of the options vesting in equal monthly installments thereafter over the next four years, subject to the recipient's continued employment with us through such vesting dates. |
(5 | ) | These options vest in equal monthly installments over 48 months. |
(6 | ) | Dr. Link was granted a total option of 732,511 shares at $2.10 per share, which was amended on July 1, 2010 and split into separate grants of 468,037 with a price of $2.10 and 264,474 with a price of $4.20. |
(7 | ) | Dr. Vahanian was granted a total option of 331,296 shares at $2.10 per share, which was amended on July 1, 2010 and split into separate grants of 313,673 with a price of $2.10 and 17,624 with a price of $4.20. |
(8 | ) | This number represents outstanding stock options to purchase our stock that were issued on January 7, 2011 in exchange for options to purchase stock in our subsidiary, BioProtection Systems Corporation. |
(9 | ) | Represents outstanding performance restricted stock unit awards that will vest only upon previously specified performance based measures or will be forfeited. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Lori Lawley | | | | | | | | | |
| | 2,776 | | | — | | | 8/1/2018 | $ | 28.53 | | 7/31/2028 | — | — |
| | 2,257 | | | — | | | 3/1/2019 | $ | 16.20 | | 2/28/2029 | — | — |
| | 520 | | | — | | | 3/1/2019 | $ | 16.20 | | 2/28/2029 | — | — |
| | 463 | | | — | | | 3/1/2019 | $ | 16.20 | | 2/28/2029 | — | — |
| | 694 | | | — | | | 3/1/2019 | $ | 16.20 | | 2/28/2029 | — | — |
| | 1,282 | | | — | | (10) | 7/31/2019 | $ | 15.93 | | 7/30/2026 | — | — |
| | 22,916 | | | 2,084 | | | 4/1/2020 | $ | 7.87 | | 3/31/2030 | — | — |
| | | | | | 4/1/2020 | | | 1,125 | 3,578 |
| | 7,526 | | | 3,099 | | | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | | | | | 2/1/2021 | | | 435 | 1,383 |
| | 12,395 | | | 8,855 | | | 8/1/2021 | $ | 7.60 | | 7/31/2031 | — | — |
| | | | | | 8/1/2021 | | | 1,875 | 5,963 |
| | 5,500 | | | 6,500 | | | 2/1/2022 | $ | 10.02 | | 1/31/2032 | — | — |
| | | | | | 2/1/2022 | | | 750 | 2,385 |
| | 1,250 | | | 4,750 | | | 2/1/2023 | $ | 3.52 | | 1/31/2033 | | |
| | | | 2,000 | | (5) | 2/1/2023 | $ | 3.52 | | 1/31/2025 | | |
| | | | 2,000 | | (6) | 2/1/2023 | $ | 3.52 | | 1/31/2025 | | |
| | | | 2,000 | | (7) | 2/1/2023 | $ | 3.52 | | 1/31/2025 | | |
| | | | | | 2/1/2023 | | | 1,000 | 3,180 |
(1) | Unless otherwise indicated, these options have a 10-year term and vest in substantially equal monthly installments over a four-year period, subject to the recipient's continued employment with us through such vesting dates. |
(2) | This column shows options that were unvested as of December 31, 2023. |
(3) | Unless otherwise indicated, these RSUs vest annually over a four-year period, with 25% vesting on each of the first, second, third and fourth anniversaries of grant date, subject to the recipient's continued employment with us through such vesting dates. |
(4) | Calculated by multiplying the number of RSUs by $3.18, the closing market price of our common stock on December 31, 2023. |
(5) | These options will vest upon an increase of closing share price of the Company’s common stock on the Nasdaq Stock Market by at least 50% above exercise price of the stock options, when measured over 30 consecutive calendar days (must occur within two years of the Date of Grant or such shares will be forfeited). |
(6) | These options will vest upon an increase of closing share price of the Company’s common stock on the Nasdaq Stock Market by at least 100% above exercise price of the stock options, when measured over 30 consecutive calendar days (must occur within two years of the Date of Grant or such shares will be forfeited). |
(7) | These options will vest upon an increase of closing share price of the Company’s common stock on the Nasdaq Stock Market by at least 150% above exercise price of the stock options, when measured over 30 consecutive calendar days (must occur within two years of the Date of Grant or such shares will be forfeited). |
(8) | These options vested following enrollment reaching 50% of total patients enrolled for the LUM-201 trial as defined by the Board. |
(9) | These options vested following completion of the LUM-201 trial as defined by the Board. |
(10) | These options were granted in connection with the forfeiture of previously held options under the stock option exchange program described in more detail and approved by stockholders at our 2019 Annual Meeting. |
Potential Payments Upon Termination or Change in Control
Under our 2009 Equity Incentive2019 Plan, the vesting of stock options granted to our employees and officers may be accelerated in connection with specified corporate transactions and change in control transactions. Other than as set forth in the tables below, none of our other option grants provide for acceleration of vesting of any options in connection with such a transaction, except for certain options originally granted under our 2000 Equity Incentive Plan that may vest upon a change in control if the acquirer does not assume outstanding option grants. In addition, under our 2010 Non-Employee Directors’ Stock Award Plan, in the event of a change in control, 100% of the shares subject to each Director’sdirector’s options will vest.
Under the terms of employment agreements with certain of our named executive officers in effect as of December 31, 2016,2020, if we terminate such named executive officer’s employment for “cause” or such named executive officer resigns without “good reason,” such named executive officer is entitled to the following: (i) any salary earned but unpaid prior to termination; (ii) any benefits accrued prior to termination; (iii) all accrued but unused vacation; and (iv) any business expenses that were incurred but not reimbursed as of the date of termination (collectively, the “Accrued Obligations”). Following such termination, vesting of such named executive officer’s then outstanding stock options shall cease on the date of such termination.
Under the terms of employment agreements with such named executive officers, if we terminate such named executive officer’s employment without cause or such named executive officer resigns with good reason (other than in connection with a change in control), and in each case such named executive officer signs a general release and written acknowledgment of his or
her continuing obligations under his or her confidentiality and inventions assignment agreement with us, such named executive officer is entitled to the following: (i) payment of the Accrued Obligations; (ii) depending on the named executive officer and as described in the tables below, the equivalent of 24, 1812 or 6 months of such named executive officer’s base salary as in effect immediately prior to the termination date, payable on the same basis and at the same time as previously paid and subject to employment tax withholdings and deductions; (iii) for certain of the named executive officers and as described in the tables below, a bonus payout equal to the most recent annual bonus paid to the named executive officer or a portion thereof; and (iv) depending on the named executive officer and as described in the tables below, payment of such named executive officer’s COBRA premiums for 24, 18, 12 or 6 months to be paid in order for such named executive officer to maintain medical insurance coverage that is substantially equivalent to that which such named executive officer received immediately prior to the termination payment of premiums for his or her group health insurance.insurance and (v) 12 months accelerated vesting of such named executive officer’s equity compensation awards (so such executive becomes vested in the portion of such awards that would have become vested if executive remained employed for 365 days after the termination date) and depending on the named executive officer and as described in the tables below, extension of the window to exercise such options for up to 12 months. In the event that such named executive officer breaches his or her confidentiality, non-compete or non-solicitation obligations under his or her confidentiality and inventions assignment agreement with us, the payments described above, except for the Accrued Obligations, shall cease, and we shall have no further obligations to such named executive officer with respect thereto. Our obligation to pay such named executive officer’s COBRA premiums ceases upon such named executive officer’s eligibility for comparable coverage provided by a new employer.
Under the terms of the employment agreements with the named executive officers in effect as of December 31, 2016,2021, if we (or any surviving or acquiring corporation) terminate a named executive officer’s employment without cause or a named
executive officer resigns with good reason within one month prior to or 13 months following the effective date of a change in control (either constituting a “Change of Control Termination”), and in each case such named executive officer signs a general release and written acknowledgment of his or her continuing obligations under his or her confidentiality and inventions assignment agreement with us, such named executive officer is entitled to the following: (i) payment of the Accrued Obligations; (ii) depending on the named executive officer and as described in the tables below, the equivalent of 24, 18 or 12 months of such named executive officer’s base salary as in effect immediately prior to the termination date, payable on the same basis and at the same time as previously paid and subject to employment tax withholdings and deductions; (iii) depending on the named executive officer and as described in the tables below, a bonus payout equal to two, one and one-half or one times the most recent annual cash bonus paid to the named executive officer; (vi)(iv) depending on the named executive officer as described in the tables below, payment of such named executive officer’s COBRA premiums for 24, 18 or 12 months to be paid in order for such named executive officer to maintain medical insurance coverage that is substantially equivalent to that which such named executive officer received immediately prior to the termination payment of premiums for his or her group health insurance; and (v) we will vest 100% of the shares subject to such named executive officer’s equity compensation awards and such vesting shall occur upon the occurrence of the change of control in the case of a Change of Control Termination occurring prior to the change in control or upon termination in the case of a Change of Control Termination occurring after the change of control. If a named executive officer breaches his or her confidentiality, non-compete or non-solicitation obligations under his or her confidentiality and inventions assignment agreement with us, the payments described above, except for the Accrued Obligations, shall cease, and we shall have no further obligations to such named executive officer with respect thereto. Our obligation to pay such named executive officer’s COBRA premiums ceases upon such named executive officer’s eligibility for comparable coverage provided by a new employer.
The following tables reflect the estimated potential payments that would be payable to each named executive officer, upon a termination or change in control of us under the terms of his or her employment agreement in effect as of December 31, 2016.2022. The amounts shown below reflect only the additional payments or benefits that each named executive officer would have received upon the occurrence of the respective triggering events listed below, but they do not include the value of payments or benefits that would have been earned, or any amounts associated with equity awards that would have vested, absent the triggering event. For purposes of calculating the potential payments set forth in the tables below, we have assumed that (i) the date of termination was December 31, 20162023 and (ii) the stock price was $10.28,$3.18, which was the per share closing price of our common stock on the NASDAQ Global Market on December 31, 2016.
2023.
|
| | | | | | | | | | | | | |
| | | | | | | |
Charles J. Link, Jr., M.D. | | Termination For Just Cause or Resignation Without Good Reason | | Termination Without Just Cause or Resignation With Good Reason | | Termination Without Just Cause or Resignation With Good Reason (in connection with a Change in Control) | |
Cash Payments | | | | | | | |
Cash Severance | | — | | $ | 1,550,765 |
| (1) | $ | 1,781,730 |
| (2) |
Long-Term Incentives | | | | | | | |
Stock Options (Unvested and Accelerated) | | — | | — | | $ | 944,619 |
| (3) |
Benefits and Perquisites | | | | | | | |
Accrued Obligations | | $ | 299,493 |
| (4) | $ | 299,493 |
| (4) | $ | 299,493 |
| (4) |
Benefits Continuation | | — | | $ | 29,610 |
| (5) | $ | 29,610 |
| (5) |
| | | | | | | |
Total Payments Upon Termination | | $ | 299,493 |
| | $ | 1,879,868 |
| | $ | 3,055,452 |
| |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Richard J. Hawkins | Termination For Just Cause or Resignation Without Good Reason | | Termination Without Just Cause or Resignation With Good Reason | | Termination Without Just Cause or Resignation With Good Reason (in connection with a Change in Control) | |
Cash Payments | | | | | | |
Cash Severance | — | | $ | 806,935 | | (1) | $ | 1,613,870 | | (2) |
Long-Term Incentives | | | | | | |
RSUs and Stock Options (Unvested and Accelerated) | — | | 48,622 | (3)(4) | 48,622 | (3)(4) |
Benefits and Perquisites | | | | | | |
Accrued Obligations | 100,839 | (5) | 100,839 | (5) | 100,839 | (5) |
Benefits Continuation | — | | 20,306 | | (6) | 40,613 | | (7) |
Total Payments Upon Termination | $ | 100,839 | | | $ | 976,702 | | | $ | 1,803,944 | | |
|
| | | | |
(1) | Amount represents 12 months of his base salary in effect as of January 1, 2023 and an amount equal to his most recent annual bonus. |
(1 | )(2) | Amount represents 24 months of his base salary then in effect and an amount equal to one times his most recent annual bonus. |
| |
(2 | ) | Amount represents 24 monthsas of his base salary then in effectJanuary 1, 2023 and an amount equal to two times his most recent annual bonus. |
| |
(3 | )(3) | Amount represents the in-the-money value of unvested RSUs as of December 31, 2023, using the closing price per share of our common stock on December 31, 2023. As per the terms of Mr. Hawkins' employment agreement, the unvested RSUs would accelerate and immediately vest under either a termination without just cause or resignation with good reason or a termination without just cause or resignation with good reason in connection with a change of control. |
(4) | Amount represents the value of in-the-money unvested stock options as of December 31, 2016,2023, using the intrinsic value of the options calculated using the spread between the exercise price of each option and the closing price per share of our common stock on December 31, 2016 based on the value of our common stock used for purposes of calculating compensation expense under FASB ASC topic 718.2023. The number of shares underlying such stock options and the exercise price thereof are reflected in the columns entitled “Number of Shares Underlying Unexercised Options-Unexercisable” and “Option Exercise Price,” respectively, in the “OutstandingOutstanding Equity Awards at December 31, 2016” table set forth on page 42section of this proxy statement. |
| |
(4 | )(5) | Amount represents $299,493 in accrued vacation. |
(6) | Amount represents 12 months of COBRA premiums. |
(5 | )(7) | Amount represents 24 months of COBRA premiums. |
|
| | | | | | | | | | | | | |
| | | | | | | |
Nicholas N. Vahanian, M.D. | | Termination For Just Cause or Resignation Without Good Reason | | Termination Without Just Cause or Resignation With Good Reason | | Termination Without Just Cause or Resignation With Good Reason (in connection with a Change in Control) | |
Cash Payments | | | | | | | |
Cash Severance | | — | | $ | 1,005,025 |
| (1) | $ | 1,256,281 |
| (2) |
Long-Term Incentives | | | | | | | |
Stock Options (Unvested and Accelerated) | | — | | — | | $ | 572,658 |
| (3) |
Benefits and Perquisites | | | | | | | |
Accrued Obligations | | $ | 218,786 |
| (4) | $ | 218,786 |
| (4) | $ | 218,786 |
| (4) |
Benefits Continuation | | — | | $ | 22,207 |
| (5) | $ | 25,908 |
| (6) |
| | | | | | | |
Total Payments Upon Termination | | $ | 218,786 |
| | $ | 1,246,018 |
| | $ | 2,073,633 |
| |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
John C. McKew | Termination For Just Cause or Resignation Without Good Reason | | Termination Without Just Cause or Resignation With Good Reason | | Termination Without Just Cause or Resignation With Good Reason (in connection with a Change in Control) | |
Cash Payments | | | | | | |
Cash Severance | — | | $ | 535,500 | | (1) | $ | 1,084,388 | | (2) |
Long-Term Incentives | | | | | | |
RSUs and Stock Options (Unvested and Accelerated) | — | | 53,787 | (3)(4) | 53,787 | (3)(4) |
Benefits and Perquisites | | | | | | |
Accrued Obligations | 92,683 | (5) | 92,683 | (5) | 92,683 | (5) |
Benefits Continuation | — | | 20,306 | | (6) | 30,459 | | (7) |
Total Payments Upon Termination | $ | 92,683 | | | $ | 702,276 | | | $ | 1,261,317 | | |
|
| | | | |
(1) | Amount represents 12 months of his base salary in effect as of January 1, 2023. |
(1 | )(2) | Amount represents 18 months of his base salary then in effect as of January 1, 2023 and an amount equal to one and one half times his most recent annual bonus. |
| |
(2 | ) | Amount represents 21 months of his base salary then in effect and an amount equal to 1.75 times his most recent annual bonus. |
| |
(3 | )(3) | Amount represents the in-the-money value of unvested RSUs as of December 31, 2023, using the closing price per share of our common stock on December 31, 2023. As per the terms of Dr. McKews' employment agreement, the unvested RSUs would accelerate and immediately vest under either a termination without just cause or resignation with good reason or a termination without just cause or resignation with good reason in connection with a change of control. |
(4) | Amount represents the value of in-the-money unvested stock options as of December 31, 2016,2023, using the intrinsic value of the options calculated using the spread between the exercise price of each option and the closing price per share of our common stock on December 31, 2016 based on the value of our common stock used for purposes of calculating compensation expense under FASB ASC topic 718.2023. The number of shares underlying such stock options and the exercise price thereof are reflected in the columns entitled “Number of Shares Underlying Unexercised Options-Unexercisable” and “Option Exercise Price,” respectively, in the “OutstandingOutstanding Equity Awards at December 31, 2016” table set forth on page 42section of this proxy statement. |
| |
(4 | )(5) | Amount represents $218,786 in accrued vacation. |
(6) | Amount represents 12 months of COBRA premiums. |
(5 | )(7) | Amount represents 18 months of COBRA premiums. |
| |
(6 | ) | Amount represents 21 months of COBRA premiums. |
|
| | | | | | | | | | | | | |
| | | | | | | |
John B. Henneman, III | | Termination For Just Cause or Resignation Without Good Reason | | Termination Without Just Cause or Resignation With Good Reason | | Termination Without Just Cause or Resignation With Good Reason (in connection with a Change in Control) | |
Cash Payments | | | | | | | |
Cash Severance | | — | | $ | 423,600 |
| (1) | $ | 762,480 |
| (2) |
Long-Term Incentives | | | | | | | |
Stock Options (Unvested and Accelerated) | | — | | — | | $ | 391,627 |
| (3) |
Benefits and Perquisites | | | | | | | |
Accrued Obligations | | $ | 91,237 |
| (4) | $ | 91,237 |
| (4) | $ | 91,237 |
| (4) |
Benefits Continuation | | — | | $ | 14,805 |
| (5) | $ | 22,207 |
| (6) |
| | | | | | | |
Total Payments Upon Termination | | $ | 91,237 |
| | $ | 529,642 |
| | $ | 1,267,551 |
| |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Lori Lawley | Termination For Just Cause or Resignation Without Good Reason | | Termination Without Just Cause or Resignation With Good Reason | | Termination Without Just Cause or Resignation With Good Reason (in connection with a Change in Control) | |
Cash Payments | | | | | | |
Cash Severance | — | | $ | 391,000 | | (1) | $ | 500,480 | | (2) |
Long-Term Incentives | | | | | | |
RSUs and Stock Options (Unvested and Accelerated) | — | | 16,488 | (3)(4) | 16,488 | (3)(4) |
Benefits and Perquisites | | | | | | |
Accrued Obligations | 67,673 | (5) | 67,673 | (5) | 67,673 | (5) |
Benefits Continuation(6) | — | | 12,653 | | (6) | 12,653 | | (6) |
Total Payments Upon Termination | $ | 67,673 | | | $ | 487,814 | | | $ | 597,294 | | |
|
| | | | |
| |
(1 | )(1) | Amount represents 12 months of hisher base salary then in effect.effect as of January 1, 2023. |
| |
(2 | )(2) | Amount represents 1812 months of hisher base salary then in effect as of January 1, 2023 and an amount equal to 1.5 times hisher most recent annual bonus. |
| |
(3 | )(3) | Amount represents the in-the-money value of unvested RSUs as of December 31, 2023, using the closing price per share of our common stock on December 31, 2023. As per the terms of Ms. Lawley's employment agreement, the unvested RSUs would accelerate and immediately vest under either a termination without just cause or resignation with good reason or a termination without just cause or resignation with good reason in connection with a change of control. |
(4) | Amount represents the value of in-the-money unvested stock options as of December 31, 2016,2023, using the intrinsic value of the options calculated using the spread between the exercise price of each option and the closing price per share of our common stock on December 31, 2016 based on the value of our common stock used for purposes of calculating compensation expense under FASB ASC topic 718.2023. The number of shares underlying such stock options and the exercise price thereof are reflected in the columns entitled “Number of Shares Underlying Unexercised Options-Unexercisable” and “Option Exercise Price,” respectively, in the “OutstandingOutstanding Equity Awards at December 31, 2016” table set forth on page 42section of this proxy statement. |
| |
(4 | )(5) | Amount represents $91,237 in accrued vacation. |
| |
(5 | ) | Amount represents 12 months of COBRA premiums. |
| |
(6 | ) | Amount represents 18 months of COBRA premiums. |
|
| | | | | | | | | | | | | |
| | | | | | | |
Brian Wiley | | Termination For Just Cause or Resignation Without Good Reason | | Termination Without Just Cause or Resignation With Good Reason | | Termination Without Just Cause or Resignation With Good Reason (in connection with a Change in Control) | |
Cash Payments | | | | | | | |
Cash Severance | | — | | $ | 185,350 |
| (1) | $ | 435,573 |
| (2) |
Long-Term Incentives | | | | | | | |
Stock Options (Unvested and Accelerated) | | — | | — | | $ | 151,959 |
| (3) |
Benefits and Perquisites | | | | | | | |
Accrued Obligations | | $ | 79,843 |
| (4) | $ | 79,843 |
| (4) | $ | 79,843 |
| (4) |
Benefits Continuation | | — | | $ | 7,402 |
| (5) | $ | 14,805 |
| (6) |
| | | | | | | |
Total Payments Upon Termination | | $ | 79,843 |
| | $ | 272,595 |
| | $ | 682,180 |
| |
| | | | | | | |
|
| | |
| |
(1 | ) | Amount represents six months of his base salary then in effect. |
| |
(2 | ) | Amount represents 12 months of his base salary then in effect and an amount equal to 1 times his most recent annual bonus. |
| |
(3 | ) | Amount represents the in-the-money value of unvested stock options as of December 31, 2016, using the value of our common stock on December 31, 2016 based on the value of our common stock used for purposes of calculating compensation expense under FASB ASC topic 718. The number of shares underlying such stock options and the exercise price thereof are reflected in the columns entitled “Number of Shares Underlying Unexercised Options-Unexercisable” and “Option Exercise Price,” respectively, in the “Outstanding Equity Awards at December 31, 2016” table set forth on page 42 of this proxy statement. |
| |
(4 | ) | Amount represents $79,843 in accrued vacation. |
| |
(5 | ) | Amount represents six months of COBRA premiums. |
| |
(6 | )(6) | Amount represents 12 months of COBRA premiums. |
Pay Versus Performance Disclosure
In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO named executive officers (“NEOs”) and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
| | | | | | | | | | | | | | | | | | | | |
| | | | | Value of Initial Fixed $100 Investment Based On: | |
Fiscal Year | Summary Compensation Table for PEO(1) | Compensation Actually Paid to PEO(2)(3) | Average Summary Compensation Table Totals for non-PEO NEOs(1) | Average Compensation Actually Paid to non-PEO NEOs(2)(3) | Total Shareholder Return | Net Income (thousands) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) |
2023 | $952,869 | $896,991 | $737,283 | $710,330 | $8.91 | $(34,034) |
2022 | $1,272,873 | $964,542 | $875,104 | $714,372 | $10.11 | $(31,062) |
2021 | $1,353,439 | $(2,577,575) | $1,106,922 | $(353,414) | $19.41 | $(30,430) |
|
| | | | | | | | | | | | | |
| | | | | | | |
Carl Langren | | Termination For Just Cause or Resignation Without Good Reason | | Termination Without Just Cause or Resignation With Good Reason | | Termination Without Just Cause or Resignation With Good Reason (in connection with a Change in Control) | |
Cash Payments | | | | | | | |
Cash Severance | | — | | $ | 138,750 |
| (1) | $ | 319,125 |
| (2) |
Long-Term Incentives | | | | | | | |
Stock Options (Unvested and Accelerated) | | — | | — | | $ | 100,919 |
| (3) |
Benefits and Perquisites | | | | | | | |
Accrued Obligations | | $ | 24,548 |
| (4) | $ | 24,548 |
| (4) | $ | 24,548 |
| (4) |
Benefits Continuation | | — | | $ | 7,402 |
| (5) | $ | 14,805 |
| (6) |
| | | | | | | |
Total Payments Upon Termination | | $ | 24,548 |
| | $ | 170,700 |
| | $ | 459,397 |
| |
| | | | | | | |
|
| | | | |
(1) | The PEO for 2023, 2022 and 2021 is Richard J. Hawkins. The Non-PEO NEOs for whom the average compensation is presented in this table for 2023, 2022 and 2021 are John McKew and Lori Lawley. |
(1(2) | ) | Amount represents six monthsThe amounts shown as Compensation Actually Paid have been calculated in accordance with Item 402(v) of his base salary thenRegulation S-K and do not reflect compensation actually realized or received by the Company’s NEOs. These amounts reflect total compensation as set forth in effect.the Summary Compensation Table for each year, adjusted as described in footnote 3 below. |
(3) | Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. |
(2 | ) | Amount represents 12 months of his base salary then in effect and an amount equal to 1 times his most recent annual bonus. |
| |
(3 | ) | Amount represents the in-the-money value of unvested stock options as of December 31, 2016, using the value of our common stock on December 31, 2016 based on the value of our common stock used for purposes of calculating compensation expense under FASB ASC topic 718. The number of shares underlying such stock options and the exercise price thereof are reflected in the columns entitled “Number of Shares Underlying Unexercised Options-Unexercisable” and “Option Exercise Price,” respectively, in the “Outstanding Equity Awards at December 31, 2016” table set forth on page 42 of this proxy statement. |
| |
(4 | ) | Amount represents $24,548 in accrued vacation. |
| |
(5 | ) | Amount represents six months of COBRA premiums. |
| |
(6 | ) | Amount represents 12 months of COBRA premiums. |
|
| | | | |
PEO | |
Prior FYE | 12/31/22 |
Current FYE | 12/31/23 |
Fiscal Year | 2023 |
SCT Total | $ | 952,869 | |
Minus Change in Pension Value and Above Market Non-Qualified Deferred Compensation | $ | — | |
Minus Grant Date Fair Value of Options Awards and Stock Awards Granted in Fiscal Year | $ | (98,517) | |
Plus Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | $ | 66,018 | |
Plus Change in Fair Value of Outstanding and Unvested Options Awards and Stock Awards Granted in Prior Fiscal Years | $ | (19,117) | |
Plus Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | $ | 9,423 | |
Plus Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $ | (13,685) | |
Minus Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $ | — | |
Plus Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | $ | — | |
Compensation Actually Paid | $ | 896,991 | |
| | | | | |
NEOs | |
Prior FYE | 12/31/22 |
Current FYE | 12/31/23 |
Fiscal Year | 2023 |
SCT Total | $ | 737,283 | |
Minus Change in Pension Value and Above Market Non-Qualified Deferred Compensation | $ | — | |
Minus Grant Date Fair Value of Options Awards and Stock Awards Granted in Fiscal Year | $ | (37,978) | |
Plus Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | $ | 25,220 | |
Plus Change in Fair Value of Outstanding and Unvested Options Awards and Stock Awards Granted in Prior Fiscal Years | $ | (11,439) | |
Plus Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | $ | 3,726 | |
Plus Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $ | (6,483) | |
Minus Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $ | — | |
Plus Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | $ | — | |
Compensation Actually Paid | $ | 710,330 | |
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Total Shareholder Return ("TSR")
The following chart sets forth the relationship between Compensation Actually Paid ("CAP") to our PEO, the average of Compensation Actually Paid to our Non-CEO NEOs, and the Company's TSR over the three most recently completed fiscal years.
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Net Loss
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and the Company’s net loss over the three most recently completed fiscal years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
We have not been a party since January 1, 20132023 to any transactions, in which the amount involved in the transaction exceeds $120,000 (which is less than 1% of the average of our total assets at the end of the last two completed fiscal years), and in which any of our directors, executive officers or to our knowledge, beneficial owners of more than 5% of our capital stock had or will have a direct or indirect material interest, other than compensation, termination and change in control arrangements, which are described in more detail in the Compensation Discussion and Analysissection entitled "Executive Compensation" beginning on page 2224 of this proxy statement.
Policies and Procedures for Related Person Transactions
Our Board has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which we are a participant, the amount involved exceeds $120,000 and one of our executive officers, directors, director nominees or 5% stockholders (or their immediate family members), each of whom we refer to as a “related"related person,”" has a direct or indirect material interest.
If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a “related"related person transaction,”" the related person must report the proposed related person transaction to our Audit Committee. The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by our Audit Committee. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, our Audit Committee will review, and, in its discretion, may ratify the related person transaction. Any related person transactions that are ongoing in nature will be reviewed annually.
A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by our Audit Committee after full disclosure of the related person’s interest in the transaction. As appropriate for the circumstances, our Audit Committee will review and consider:
•the related person’sperson's interest in the related person transaction;
•the approximate dollar value of the amount involved in the related person transaction;
•the approximate dollar value of the amount of the related person’sperson's interest in the transaction without regard to the amount of any profit or loss;
•whether the transaction was undertaken in the ordinary course of our business;
•whether the terms of the transaction are no less favorable to us than terms that could have been reached with an unaffiliated third party;
•the purpose of, and the potential benefits to us of, the transaction; and
•any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.
Our Audit Committee may approve or ratify the transaction only if the committeeAudit Committee determines that, under all of the circumstances, the transaction is in, or is not inconsistent with, our best interests. Our Audit Committee may impose any conditions on the related person transaction that it deems appropriate.
In addition to the transactions that are excluded by the instructions to the SEC’s related person transaction disclosure rule, our Board has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:
•interests arising solely from the related person’s position as an executive officer of another entity (whether or not the person is also a director of such entity), that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction or (c) the amount involved in the transaction equals less than the greater of $200,000 or 5% of the annual consolidated gross revenues of our receiving payment under the transaction; and
•a transaction that is specifically contemplated by provisions of our certificate of incorporation or bylaws.
The policy provides that transactions involving compensation of executive officers shall be reviewed and approved by our Compensation Committee in the manner specified in its charter.
Limitation of Liability and Indemnification
Our amended and restated bylawsBylaws require us to indemnify our directors to the fullest extent not prohibited by law and permit us to indemnify our officers, employees and other agents as set forth under Delaware law. We will indemnify any such person in connection with a proceeding initiated by such person only if such indemnification is expressly required by law, the proceeding was authorized by our Board, the indemnification is provided by us, in our sole discretion, pursuant to the Delaware General Corporation Law or other applicable law or is otherwise expressly required by our amended and restated bylaws.Bylaws. Section 145 of the Delaware General Corporation Law permits indemnification of officers, directors and other agents under specified circumstances and subject to specified limitations. Delaware law also permits a corporation not to hold its directors personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for:
•breach of their duty of loyalty to the corporation or its stockholders;
•acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
•unlawful payments of dividends or unlawful stock repurchases or redemptions; and
•any transaction from which the director derived an improper personal benefit.
These limitations of liability do not affect the availability of equitable remedies such as injunctive relief or rescission.
Our amended and restated bylawsBylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in this capacity. We have obtained directors’ and officers’ liability insurance to cover certain liabilities described above.
We have entered into indemnity agreements with each of our directors that require us to indemnify such persons against any and all expenses, including attorneys’ fees, witness fees, judgments, fines, settlements and other amounts incurred, including expenses of a derivative action, in connection with any action, suit or proceeding or alternative dispute resolution mechanism, inquiry hearing or investigation, whether threatened, pending or completed, to which any such person may be made a party by reason of the fact that such person is or was one of our directors, officers or employees, provided that such person’s conduct did not constitute a breach of his or her duty of loyalty to us or our stockholders, and was not an act or omission not in good faith or which involved intentional misconduct or a knowing violation of laws. The indemnity agreements also set forth procedures that will apply in the event of a claim for indemnification thereunder. We believe that these provisions and agreements are necessary to attract and retain qualified persons as our directors.
On or about May 12, 2016, Trevor Abramson filed a putative securities class action lawsuit in the United States District Court for the Southern District of New York captioned Abramson v. NewLink Genetics Corp., et al., Case 1:16-cv-3545. The plaintiff asserts claims under the federal securities laws against the Company, our Chief Executive Officer, Dr. Link and our Chief Medical Officer, Dr. Vahanian. The Company is indemnifying Dr. Link and Dr. Vahanian in the action. Additional detail concerning this matter is included in our Company's previous filings with the SEC. At present, other than the previously mentioned matter,matters, there is no pending litigation or proceeding involving any or our directors or officers for which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted by directors, executive officers or persons controlling us, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
OTHER INFORMATION
Stockholder Communications with Our Board of Directors
Our Board has adopted a formal process by which stockholders may communicate with our Board or any of its directors. This information is available on our website at www.newlinkgenetics.comwww.lumos-pharma.com in the “Investors & Media - Corporate Governance - Contact the Board” section.
Stockholder Proposals and Nominations of Directors
Stockholders who wish to submit a proposal for our 20182025 Annual Meeting of Stockholders must submit any such proposal by November 29, 2017,December 13, 2024, to Corporate Secretary, NewLink Genetics CorporationLumos Pharma, Inc., 2503 South Loop Drive, Ames, Iowa 500104200 Marathon Boulevard #200, Austin, TX 78756. If you wish to submit a director nomination or a proposal at next year’s annual meeting that is not to be included in next year’s proxy materials, you must do so by no later than the close of business on February 12, 2018,March 2, 2025, nor earlier than the close of business on
January 12, 2018,31, 2025, and you must comply with the requirements of Section 5(b) in the our Bylaws, including submitting written notice to our Corporate Secretary as set forth above. Also, if you intend to solicit proxies in support of director nominees other than the Company’s nominees, then we must receive notice providing the information required by Rule 14a-19 of the Exchange Act postmarked no later than April 1, 2025, and you must comply with the applicable requirements in our Bylaws.
The Company has not yet selected the date of the annual meeting of stockholders for next year but is considering holdingcurrently plans to hold the meeting in May 2018.2025. If the date of the 20182025 annual meeting is advanced or delayed more than 30 days before or after the anniversary of the date of this Annual Meeting, notice by the stockholder to be timely must be so received notno earlier than the close of business on the 120th day prior to such 20182025 annual meeting and not later than the close of business on the later of the 90th day prior to such 20182025 annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director, a representation that the nominating stockholder is a beneficial or record holder of our common stock and such other information as is required under Section 5(b) of our Bylaws. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for NoticesNotice of Internet Availability of Proxy Materials or other Annual Meeting materialswith respect to two or more stockholders sharing the same address by delivering a single Notice of Internet Availability of Proxy Materials or other Annual Meeting materialsaddressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are NewLink Genetics CorporationLumos stockholders will be “householding” our proxy materials. A single Notice of Internet Availability of Proxy Materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate Notice of Internet Availability of Proxy Materials, please notify your broker or NewLink Genetics Corporation.Lumos. Direct your written request to Corporate Secretary, NewLink Genetics Corporation, 2503 South Loop Drive, Ames, IA 50010Lumos Pharma, Inc., 4200 Marathon Boulevard #200, Austin, TX 78756 or contact our Corporate Secretary at (515)598-2561.(512) 215-2630. We undertake to promptly deliver, upon written or oral request, a separate copy of our Notice of Internet Availability of Proxy Materials to stockholders at a shared address to which a single copy of such documents was delivered. Stockholders who currently receive multiple copies of the NoticesNotice of Internet Availability of Proxy Materials at their addresses and would like to request “householding” of their communications should contact their brokers.
OTHER MATTERS
Our Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ John B. Henneman, IIILori Lawley
John B. Henneman, IIILori Lawley
SecretaryChief Financial Officer
March 31, 2017April 12, 2024
A copy of our Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 20162023 is available without charge upon written request to: Corporate Secretary, NewLink Genetics Corporation, 2503 South Loop Drive, Suite 5100, Ames, IA 50010.
Lumos Pharma, Inc., 4200 Marathon Boulevard #200, Austin TX 78756.