We maintain our 2019 Equity Incentive Plan, 2010 Non-Employee Directors’ Stock Award Plan and 2010 Employee Stock Purchase Plan,the ESPP, each of which was approved by the Company’sour 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 Merger approved by the Company'sour security holders.
The following table gives information about equity awards under the applicable foregoing plans as of December 31, 2019, after giving effect to the subsequent Reverse Stock Split:2022:
(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 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 number of shares of common stock in an amount equal to 3% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or such lesser amount of shares (or no shares) approved by the Company’s Board of Directors, was added or will be added to the shares reserved under the 2019 Plan.
(3)The total does not include shares of our common stock issuable in connection with options outstanding under the Lumos Plans assumed at the closing of the Merger. As of the Merger closing, options to purchase 190,112 shares of our common stock with a weighted-average exercise price of $3.34 per share under the Lumos Plans were outstanding.
DIRECTOR COMPENSATION
The following table shows certain information with respect to the compensation of all of our non-employee directors for the fiscal year ended December 31, 2019.
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| | | | | | | |
Name | | Cash Compensation (1) | | | Option Awards ($) (2)(3)(4) | | Total ($) |
Chad A. Johnson | | $64,000 | | | $30,379 | | $94,379 |
Thomas A. Raffin, M.D. | | $106,000 | | | $30,379 | | $136,379 |
Matthew L. Sherman, M.D.* | | $69,500 | | | $30,379 | | $99,879 |
Ernest J. Talarico, III* | | $67,000 | | | $30,379 | | $97,379 |
Lota S. Zoth | | $73,000 | | | $30,379 | | $103,379 |
* Resigned as a member of our board of directors in March 2020 in connection with the closing of the Merger.
2022. | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Cash Compensation (1) | | | Option Awards ($) (2)(3)(4) | | Total ($) |
Chad A. Johnson | | $55,500 | | | $19,692 | | $75,192 |
Thomas A. Raffin, M.D. | | $78,000 | | | $19,692 | | $97,692 |
An van Es-Johansson | | $44,000 | | | $19,692 | | $63,692 |
Lota S. Zoth | | $60,500 | | | $19,692 | | $80,192 |
Kevin Lalande | | $45,500 | | | $19,692 | | $65,192 |
Joseph S. McCracken | | $47,500 | | | $19,692 | | $67,192 |
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| | | | | | | | | | | | | |
(1(1) | ) | | Cash compensation is paid quarterly based on the annual amount of $45,000$40,000 for all non-employee directors with additional annual cash compensation of $27,000$22,000 for Lead Independent Director, $18,000, $18,000, $15,500$15,000, $12,000 and $9,000$8,000 for the Chairs of the Audit, Science, Compensation and Nominating and Corporate Governance Committees, respectively; and $12,000, $10,000, $10,000$7,500, $5,500 and $6,500$4,000 for members of the Audit, Compensation Science and Nominating and Corporate Governance Committees, respectively. |
(2(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 3, 2020.7, 2023. This column reflects compensation expense that would be recorded underthe aggregate grant date fair value of options granted during the year indicated in accordance with 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.Topic 718. |
(3(3) | ) | | The aggregate number of shares subject to stock option awards outstanding for each non-employee director as of December 31, 20192022 are as follows after giving effect to the Reverse Stock Split:follows: |
| | | Option Awards |
| Chad A. Johnson | | 7,00419,029 |
| Thomas A. Raffin, M.D. | | 13,21625,241 |
| Ernest J. Talarico, IIIAn van Es-Johansson | | 11,14212,070 |
| Matthew L. Sherman, M.D.Kevin Lalande | | 7,84412,025 |
| | Joseph S. McCracken | | 12,025 |
| Lota Zoth | | 8,10120,126 |
(4(4) | ) | | GrantReflects the grant date fair value of 25,0003,431 options granted in 2019 at an exercise price of $1.69,$8.18, 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, 20192022 is as described below. For a description of our compensation program in effect for prior years, please refer to the proxy statement for our 20192022 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.
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| | | | |
Director Compensation | | | | 2019 |
Annual retainer fee payable to all non-employee directors | | | $ | 45,000 |
Additional annual retainer fee payable to the Lead Independent Director of our Board | | | $ | 27,000 |
Additional annual retainer fee payable to our Audit Committee Chair | | | $ | 18,000 |
Additional annual retainer fee payable to other Audit Committee members | | | $ | 12,000 |
Additional annual retainer fee payable to our Scientific Committee Chair | | | $ | 18,000 |
Additional annual retainer fee payable to our Compensation Committee Chair | | | $ | 15,500 |
Additional annual retainer fee payable to other Compensation Committee members | | | $ | 10,000 |
Additional annual retainer fee payable to our Nominating and Corporate Governance Committee Chair | | | $ | 9,000 |
Additional annual retainer fee payable to other Nominating and Corporate Governance Committee members | | | $ | 6,500 |
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Director Compensation | | | | 2022 |
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 | |
During 2019, upon election to our Board, each new non-employee director would have been eligible to receive an initial grant of stock options for a number of shares equal to $250,000 divided by the per share grant date fair value that will be used for reporting compensation under applicable accounting guidance. Additionally, during the term of his or her service on our Board, each non-employee director receives an annual grant comprised of stock options for a number of shares equal to $150,000 divided by the per share grant date fair value that will be used for reporting compensation under applicable accounting guidance. During 2019, we made such annual grants pursuant to our 2019 Plan since our 2010 Non-Employee Directors’ Stock Award Plan did not have sufficient shares to cover such grants and the Board elected to reduce0.041% of the number of shares underlyingoutstanding at the 2019date of grant. Additionally, any newly appointed director to our Board will receive an initial grant of stock option grantsoptions for a number of shares equal to 25,000 total option awards for each non-employee director.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 GuidelinesOur stock ownership guidelines for non-employee directors anticipated that each director would, by December 31, 2019, hold shares of our common stock representing at least $150,000 worth of common stock or 10,000 shares, whichever is less. At December 31, 2019, all of our then serving directors met the stock ownership guidelines or were making acceptable progress toward their required level. Following the closure of the Merger, these stock ownership guidelines were suspended by our Board after consideration of the practices of comparable companies in our industry.
EXECUTIVE OFFICERS
Our executive officers are appointed by and serve at the direction of our Board. The following table lists the names and positions of our current executive officers:
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Name | Age | | Position(s) |
Richard J. Hawkins(1)Hawkins | 7174 | | President, Chief Executive Officer and ChairmanChair |
Carl W. LangrenLori D. Lawley | 6439 | | Chief Financial Officer |
Eugene P. Kennedy,John McKew, Ph.D. | 58 | | President and Chief Scientific Officer |
David Karpf, M.D. | 5168 | | Chief Medical Officer |
John McKew, Ph.D.(1) | 55 | | Chief Operating Officer and Chief Scientific Officer |
Bradley J. Powers | 4144 | | General Counsel |
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Richard J. Hawkins, see Mr. Hawkin's biography in "Proposal Number 1-Election of Directors."
Lori D. Lawley
36 | | Sr. VP, Finance and Controller | (1) Appointed as an executive officer in March 2020 in connection with the Merger. Service as an executive officer prior to such appointment noted in such officer’s biography includes service with Private Lumos. For a brief biography of Mr. Hawkins, please see “Board of Directors” above.
Carl W. Langren has served as our Chief Financial Officer since July 2018.2021. Previously, heMs. Lawley was ourSenior Vice President - Finance and Controller and the principal accounting officer since March 2020 and served the Company in various roles of Finance since November 2011 and has also been Chief Financial Officer of our subsidiary BioProtection Systems Corporation since February 2005.increasing responsibilities from 2015 to 2020. Prior to NewLink, Mr. Langren previously served as Chief Financial Officerjoining the Company, Ms. Lawley worked at Ernst and Young LLP for eachover 8 years where she was a Senior Manager. Ms. Lawley is a licensed certified public accountant. Ms. Lawley received her Bachelor of Housby Mixer Group from 1998 to 2002Business Administration and Equity Dynamics, Inc. from 1988 to 1989. He also served as a PrincipalMaster’s in Capital Management Solutions, President of Iowa Machinery and Supply, Treasurer of DFM Corporation, and Tax Manager with McGladrey Pullen and Company. Mr. Langren received his B.A. degreeProfessional Accounting from the University of Iowa.Texas.
Eugene P. Kennedy, M.D., FACS, has served as our Chief Medical Officer since November 2017, where he leads clinical development across all immuno-oncology product candidates as well as investigator initiated trials. From January 2014 to November 2017, Dr. Kennedy served as our Vice President for Clinical and Medical Affairs. Prior to joining NewLink, he was on faculty and clinical staff at Thomas Jefferson University in Philadelphia, Pennsylvania where he served as Associate Professor of Surgery and held leadership positions as Chief of the Section of Pancreaticobiliary Surgery and co-director of the Jefferson Pancreas, Biliary, and Related Cancers Center from January 2006 to December 2013. Previously, Dr. Kennedy held faculty positions at Johns Hopkins Hospital and the Louisiana State University School of Medicine. Dr. Kennedy obtained his undergraduate education at the University of Virginia and received his medical degree from the Medical College of Virginia. He completed a residency and fellowship in Surgery and Surgical Oncology as well as a research fellowship in tumor immunology at the Johns Hopkins Hospital.
John McKew, Ph.D., has served as our President since August 2021. Dr. McKew served as our Chief Scientific and Chief Operating Officer from March 2020 until August 2021 and served as the Chief Scientific Officer of Private Lumos sincefrom 2016 and as our Chief Scientific Officer and Chief Operating Officer sincethrough 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.
David Karpf, M.D., has served as our Chief Medical Officer since August 2021. Previously, Dr. Karpf served as Vice President of Clinical Development at Ascendis Pharma from 2015 to 2020. Prior to that, Dr. Karpf served as Chief Medical officer at Virobay, Inc. from 2011 to 2015 and Metabolex from 2004 to 2010. Dr. Karpf has also served as an Adjunct Clinical Professor in the Division of Endocrinology at Stanford University School of Medicine since 1997. Dr. received his B.A. from the University of California, Berkley and his M.D. from the University of California, San Diego. He completed both his internal medicine residency and fellowship in Endocrinology, Diabetes & Metabolism at the UCLA School of Medicine/Cedars-Sinai Medical Center and completed a post-fellowship program in metabolic bone disease at the UCSF School of Medicine.
Bradley J. Powers has served as our General Counsel since August 2015. Prior to joining NewLink,the Company, Mr. Powers served 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 a M.S. degree in bioinformatics and computational biology from Iowa State University and a J.D. from Drake University Law School.
Lori D. Lawley
has served as our Senior Vice President - Finance and Controller and the principal accounting officer since March 2020. Previously, Ms. Lawley served as NewLink’s Manager of SEC Reporting and Accounting Policy from April 2015 until January 2017, Director of SEC and Financial Reporting from January 2017 to November 2017, Corporate Controller from November 2017 until July 2018 and Vice President - Finance and Controller from July 2018 until March 2020. Prior to
joining NewLink, Ms. Lawley worked as an auditor at Ernst and Young LLP where she served in increasing capacities from 2007 through April 2015, including as Manager from October 2011 to September 2014, and Senior Manager from October 2014 until April 2015. 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.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding compensation earned during the years ended December 31, 20192022 and December 31, 2018,2021, by the executive officers identified below, who are referred to in this proxy statement as our “named executive officers.”
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Name and Principal Position | Year | Salary($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | | Total ($) |
Richard J. Hawkins | 2022 | 582,185 | 45,090 | 252,060 | 350,656 | 42,882 | (5) | 1,272,873 |
Chief Executive Officer | 2021 | 570,769 | 40,408 | 362,710 | 314,160 | 65,392 | (6) | 1,353,439 |
John C. McKew | 2022 | 535,096 | 15,030 | 99,685 | 374,969 | 33,398 | (7) | 1,058,178 |
President and Chief Scientific Officer | 2021 | 490,308 | 170,703 | 420,881 | 262,500 | 52,176 | (8) | 1,396,568 |
Lori Lawley | 2022 | 389,923 | 10,020 | 85,444 | 170,476 | 36,166 | (9) | 692,029 |
Chief Financial Officer | 2021 | 324,438 | 43,577 | 254,588 | 145,200 | 49,472 | (10) | 817,275 |
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Name and Principal Position | Year | Salary($) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | | Total ($) |
Charles J. Link, Jr., M.D.* | 2019 | 365,483 | 1,064,009 | 220,521 | 70,234 | (4) | 1,720,247 |
Former Chief Executive & Scientific Officer | 2018 | 593,910 | 1,745,244 | 374,200 | 76,135 | (5) | 2,789,489 |
Nicholas N. Vahanian, M.D.* | 2019 | 406,778 | 239,648 | 133,877 | 439,000 | (6) | 1,219,303 |
Former President | 2018 | 495,002 | 712,173 | 180,915 | 24,126 | (7) | 1,412,216 |
Eugene P. Kennedy, M.D. | 2019 | 435,298 | 234,835 | 192,610 | 57,299 | | 920,042 |
Chief Medical Officer | 2018 | 425,000 | 589,073 | 170,000 | 24,640 | | 1,208,713 |
Carl W. Langren | 2019 | 368,192 | 234,835 | 163,020 | 54,467 | | 820,514 |
Chief Financial Officer | 2018 | N/A | N/A | N/A | N/A | | N/A |
Bradley J. Powers | 2019 | 336,346 | 100,613 | 151,800 | 45,365 | | 634,124 |
General Counsel and Former Principal Executive Officer | 2018 | N/A | N/A | N/A | N/A | | N/A |
*Our former Chief Executive Officer and Chief Scientific Officer, Dr. Link, retired from his position as an executive and a member of our Board on August 3, 2019, and our former President, Dr. Vahanian, retired from his position as President and a member of our Board on September 27, 2019.
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(1(1) | ) | | This 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, 2023. |
(2) | | | This column reflects the aggregate grant date fair value of options 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 3, 2020. 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.7, 2023. |
(2(3) | ) | | 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 following the close of the fiscal year. |
(3(4) | ) | | Unless otherwise indicated, amounts in this column represent our contributions under our 401(k) plan. |
(4(5) | ) | | Amount includes: (i) a $39,000 contribution under our 401(k) plan; and (ii) $31,234Includes $632 in personal benefits received by Dr. Link that we reimbursed or paid on his behalf in 2019, including rent for an apartment near our Texas office.life insurance premiums. |
(5(6) | ) | | Amount includes: (i) a $24,035 contribution under our 401(k) plan;Includes $100 vaccine bonus and (ii) $52,100$727 in personal benefits received by Dr. Link that we reimbursed or paid on his behalf in 2018, including rent for an apartment near our Texas office.life insurance premiums. |
(6(7) | ) | | Amount includes: (i) a $39,000 contribution under our 401(k) plan; and (ii) $400,000 supplemental payoutIncludes $2,196 in connection with his retirement.life insurance premiums. |
(7(8) | ) | | Amount includes: (i) a $22,615 contribution under our 401(k) plan;Includes $100 vaccine bonus and (ii) $1,511$1,106 in perquisiteslife insurance premiums. |
(9) | | | Includes $1,416 in life insurance premiums. |
(10) | | | Includes $100 vaccine bonus and personal benefits received by Dr. Vahanian that we reimbursed or paid on his behalf$1,199 in 2018, including rent for an apartment near our Texas office.life insurance premiums. |
Narrative Disclosure to Summary Compensation Table
Our executive 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.
Short-Term Cash Incentives
Our performance-based cash incentives are designed to provide executive officers with the opportunity to earn annual cash awards based upon the achievement of pre-specified corporate and individual performance objectives which align with and 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.
For 2019,2022, based upon recommendations of our Compensation Committee with the assistance of Radford,Setren & Associates, our Board maintained target bonus amounts for Dr. Link, Dr. Vahanian,Mr. Hawkins, Mr. McKew and Dr. KennedyMs. Lawley equal to 70%55%, 50%, and 40% of their respective base salaries. Our Board reserved the ability to grant bonuses in excess of the executives’ target bonus percentages for extraordinary performance.
20192022 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 2019,2022, the Company had the following corporate goals:
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| | | | | | |
Metric | Weight | Exceeds |
Meets ExpectationsClinical:
(100%•Execute enrollment strategy of randomized patients in OraGrowtH210 (20%)
•210 Interim analysis data set by end of Q4 (at 50% enrollment + six months treatment), permitting analysis results early 1Q2023 (10%) •212 Interim analysis of at least annualized height velocity at six months on treatment(10 subjects) by Q4 (20%) | Partially Meets Expectations
(50%)
| Low
(0%) 50% |
Pediatric brain tumorsBusiness Development: •Continued evaluation of in-license opportunities through presentation of opportunities to the Board for review or integration of one in-licensed asset (10%) •Develop preliminary strategic commercial plan for LUM-201 in the major markets (10%) | 30% | First patient in for Phase 2 trial | Obtain FDA feedback on development plan and execute in accordance with feedback | Complete Data Analysis and prepare FDA communication - Type B meeting request, possible Break Through Designation | Not Accomplished20% |
NLG207 in Ovarian cancer | 30% | Finalize plan for 207 drug supply | Develop Phase 2 protocol in refractory ovarian | Engage GOG or other KOLs for feedbackFinance: •All SEC filings on time and protocol design input | Not Accomplished |
Evaluate external opportunities and execute on transactions that have the ability to transform NewLink’s portfolio, provide the company with optionality and strategic diversification | 20% | Complete merger and partner a candidate | Complete merger or terminate for cause and identify new target by the end of the year | Terminate merger negotiations for cause and do not identify a new target by the end of the year | Not Accomplished |
Achieveaccurate (10%)•Acheive use-of-cash targets per the operating plan, excluding the effects of new acquisitions or business development initiatives (10%) | 20% |
Extend cash runway of the company into 2022 by raising additional fundsR&D and Business Development: •Advance LUM-201 lifecycle planning | Use <$45M | >$45M to <$50M | >$50M10% |
At the end of the fiscal year, our Compensation Committee assesses the accomplishments of each executive versus each of the aforementioned goals and recommends earned bonus amounts to the Board for approval. The Compensation Committee retains the ability to apply negative discretion to adjust bonus amounts higher or lower based on other corporate performance factors.
2019
2022 Earned Bonuses
For 2019,2022, the Compensation Committee tookcontinued 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 theirthe stated performance goals. Secondly, in light of current events and the refocus of the companybiotech 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 their discretion, determined that Dr. McKew should receive a supplemental bonus because he provided contributions to the Company that will increase shareholder value in the near term. Among these, the identification of novel improvements, which will provide improved formulations for patients receiving LUM-201 and may also significantly extend the patent protection covering the LUM-201 formulation we choose to commercialize. In addition, Dr. McKew made extensive contributions during the analysis and reporting of our interim analysis for our OraGrowtH210 and OraGrowtH212 Trials.
For 2019,2022, the Compensation Committee determined that executives had achieved different percentagesmet each of their bonusthe company objectives for 2019,2022, and bonuses were paid accordingly.
Final bonus payouts for 20192022 performance were as follows:
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Executive | 2019 Target Bonus | 2019 Earned Bonus |
%(1) | $ | % | | %(4) | $ |
Charles J. Link, Jr., M.D. | 70 | $415,740 | N/A | | 37 | $220,521 |
Nicholas N. Vahanian, M.D. | 40 | $190,000 | N/A | | 28 | $133,877 |
Eugene P. Kennedy, M.D. | 40 | $175,100 | 110 | | 44 | $192,610 |
Carl W. Langren | 40 | $148,200 | 110 | | 44 | $163,020 |
Bradley J. Powers | 40 | $138,000 | 110 | | 44 | $151,800 |
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Executive | 2022 Target Bonus | 2022 Earned Bonus | Supplemental Bonus(4) | Total Bonus Payout |
%(1) | $ | %(2) | | %(3) | $ |
Richard J. Hawkins | 55 | $320,443 | 109.4 | | 60.2 | $350,656 | $0 | $350,656 |
John C. McKew | 50 | $267,750 | 109.4 | | 54.7 | $292,919 | $82,050 | $374,969 |
Lori Lawley | 40 | $156,400 | 109.4 | | 43.8 | $170,476 | $0 | $170,476 |
(1) Target bonus percentage represents a percentage of base salary.
(2) Dr. Link and Dr. Vahanian each received a prorated bonus under the terms of their separation agreement.
(3) Bonus awarded at 110%109.4% in consideration of the successful closing of the merger.exceeding corporate objectives.
(3) Represents bonus percentage actually awarded.
(4) Represents a supplemental bonus percentageaward at the discretion of target bonus actually awarded.the Board.
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.
In 2019,2022, target long-term incentive awards were delivered in the form of time-based stock options and performance-basedRSUs. The Compensation Committee looked to the successful nature of meeting company objectives and granted stock options weighted equally betweenand RSUs are a means to help retain executives and drive the two award types.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 shareholderstockholder value is created and important business milestones are met.
The awards had the following vesting and performance criteria:
executive remains with the company.
Time-vesting Options - 50% of the option award vests and becomes exercisable in a series of 48 successive equal monthly installments.
Performance-based Options - The remaining 50% of the stock options vest and become exercisable as follows:
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| |
a) | 25% of such shares shall vest as to 8.34%, 8.33% and 8.33% on the 1st day of the month following an increase of closing share price on Nasdaq Stock Market by at least 33.33%, 66.66% and 100%, respectively, above the exercise price of the options when measured over 30 consecutive calendar days, provided such increase occurs within four years of the Date of Grant, otherwise such options shall be cancelled; |
b) | 12.50% of such shares shall vest on the 1st day of the month following the expansion of the Company pipeline with an in-license, merger acquisition or the internal development of novel candidate; |
c) | 12.50% of such shares shall vest on the 1st day of the month following enrollment of the first patient in a clinical trial that is registration eligible, the completion of each to be determined by the Board; and |
20192022 Equity Grants
On MarchFebruary 1, 2019,2022, our Compensation Committee granted the following equity awards to our executives as follows (giving effect to the Reverse Stock Split):follows:
| | | | | | | | | | | | | | |
Executive | Time-vesting Stock Options (#) | RSUs (#) |
Richard J. Hawkins | 35,400 | 4,500 |
John C. McKew | 14,000 | 1,500 |
Lori Lawley | 12,000 | 1,000 |
|
| | | | |
Executive | Time-vesting Stock Options (#) | Performance-based Stock Options (#) |
Charles J. Link, Jr., M.D. | 27,777 | 27,777 |
Nicholas N. Vahanian, M.D. | 10,277 | 10,277 |
Eugene P. Kennedy, M.D. | 10,277 | 10,277 |
Carl W. Langren | 10,277 | 10,277 |
Bradley J. Powers | 4,444 | 4,444 |
Executive Stock Ownership Guidelines
In March 2017, we adopted stock ownership guidelines for our executive officers requiring each individual serving as an executive officer to maintain beneficial ownership of a dollar amount of shares of our common stock equal to three times base salary for our Chief Executive Officer, two times base salary for our President and one-time base salary for other executive officers. For the purposes of determining stock ownership levels, the following forms of equity interests are included: shares owned by the executive officer directly or through a broker, or held in trust for the benefit of, the executive officer or his or her immediate family members; 50% of shares held as restricted stock; 50% of shares underlying restricted stock units; and 50% of the in-the-money value of vested stock options granted under our equity plans; and other stock or stock equivalent awards determined by the Compensation Committee. The applicable guidelines must be met within three years from the date he or she becomes subject to the stock ownership guidelines to achieve compliance. At December 31, 2019, all of our then serving executive officers met the stock ownership guidelines or were making acceptable progress toward their required level. Following the closing of the Merger, these stock ownership guidelines were suspended by our Board after consideration of the practices of comparable companies in our industry.
Anti-Hedging and Anti-Pledging Policies
We have adopted a Policy on Stock Trading by Employees, Officers and Directors. That policy expressly prohibits our employees and directors from: (i) engaging in hedging transactions or (ii) pledging our stock as collateral.
Federal Tax Considerations
Section 162(m) of the Internal Revenue Code generally disallows public companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid to the chief executive officer and certain other highly compensated executive officers in any taxable year. For tax years beginning before January 1, 2018, remuneration in excess of $1 million was deductible if it qualified as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code. The exemption from Section 162(m)’s deduction limit for performance-based compensation was repealed, effective for taxable years beginning after December 31, 2017, such that the compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017, that have not been subsequently materially modified. While our Compensation Committee is mindfulconsiders tax deductibility as one of the benefit of being able to fully deductfactors in determining executive compensation, the compensation paid to our named executive officers, our 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 believes that such payments are appropriate to attract and retain executive talent or meet other business objectives. Our Compensation Committee intends to continue to compensate our named executive officers in a manner consistent with the best interests of our Company and our stockholders even if any portion of such compensation is non-deductible.
In addition to considering the tax consequences, the Compensation Committee considers the accounting consequences of its decisions, including the impact of expenses being recognized in connection with equity-based awards, in determining the size and form of different equity-based awards.
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, with an additional 2% discretionary contribution, or the Safe Harbor Contribution, with a possibility of additional discretionary contributions.
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.
Our former CEO and former President also received reimbursement or payment on their behalf for rent on an apartment near our Texas office.
Employment Agreements
We have entered into employment agreements with each of the named executive officers. The material terms of the agreements that were in effect during fiscal 20192022 for the named executive officers are summarized below. Each of these agreements also contains severance and change of control provisions discussed under the heading “Potential Payments Upon Termination or Change in Control” beginning on page 3430 of this proxy statement.
Employment Agreement with Dr. Eugene KennedyRichard J. Hawkins
Pursuant to the employment agreement between us and Dr. KennedyMr. Hawkins dated September 30, 2019, Dr. KennedyMarch 27, 2020, Mr. Hawkins earns an annual base salary, which is subject to annual review and adjustment by our Board. For 2019, Dr. Kennedy2022, Mr. Hawkins earned an annual base salary of $437,750. Dr. Kennedy$582,624. Mr. Hawkins is also eligible to receive an annual performance bonus based on his achievement of certain milestones and performance objectives. In 2019, Dr. Kennedy’s2022, Mr. Hawkins’ target bonus was set at 40%55% of his annual base salary.salary, which was the same level as 2021.
The employment agreement with Dr. KennedyMr. Hawkins also provides that his employment with us is at-will and may be altered or terminated by either Dr. KennedyMr. Hawkins or us at any time. However, if we terminate Dr. Kennedy’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. KennedyMr. 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 34 of this proxy statement.Control.”
The employment agreement with Dr. KennedyMr. Hawkins further provides that if we (or any surviving or acquiring corporation) terminate Dr. Kennedy’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. KennedyMr. 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 34 of this proxy statement.Control.”
Employment Agreement with Carl W. LangrenJohn C. McKew
Pursuant to the employment agreement between us and Mr. LangrenDr. McKew dated September 30, 2019, Mr. LangrenMarch 27, 2020, as amended August 1, 2021, Dr. McKew earns an annual base salary, which is subject to annual review and adjustment by our Board. For 2019, Mr. Langren2022, Dr. McKew earned an annual base salary of $370,500. Mr. Langren$535,500. Dr. McKew is also eligible to receive an annual performance bonus based on his achievement of certain milestones and performance objectives. For 2019, Mr. Langren’sIn 2022, Dr. McKew’s target bonus was set at 40%50% of his annual base salary.salary, which was the same level as 2021.
The employment agreement with Mr. LangrenDr. McKew also provides that his employment with us is at-will and may be altered or terminated by either Mr. LangrenDr. McKew or us at any time. However, if we terminate Mr. Langren’sDr. McKew’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. LangrenDr. McKew 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 34 of this proxy statement.Control.”
The employment agreement with Mr. LangrenDr. McKew further provides that if we (or any surviving or acquiring corporation) terminate Mr. Langren’sDr. McKew’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. LangrenDr. McKew 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 34 of this proxy statement.Control.”
Employment Agreement with Bradley J. PowersLori Lawley
Pursuant to the employment agreement between us and Mr. PowersMs. Lawley dated September 30, 2019, Mr. Powersas amended June 30, 2021, Ms. Lawley earns an annual base salary, which is subject to annual review and adjustment by our Board. For 2019, Mr. Powers2022, Ms. Lawley earned an annual base salary of $345,000. Mr. Powers$391,000. Ms. Lawley is also eligible to receive an annual performance bonus based on hisher achievement of certain milestones and performance objectives. For 2019, Mr. Powers’2022, Ms. Lawley’ target bonus was set at 30%40% of hisher annual base salary.salary, which was the same level as 2021.
The employment agreement with Mr. PowersMs. Lawley also provides that hisher employment with us is at-will and may be altered or terminated by either Mr. PowersMs. Lawley or us at any time. However, if we terminate Mr. Powers’Ms. 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. PowersMs. 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 34 of this proxy statement.Control.”
The employment agreement with Mr. PowersMs. Lawley further provides that if we (or any surviving or acquiring corporation) terminate Mr. Powers’Ms. 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. PowersMs. 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 34 of this proxy statement.Control.”
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.
Outstanding Equity Awards at December 31, 20192022
The following table provides information about outstanding stock options and restricted stock unitsRSUs held by each of our named executive officers at December 31, 2019, after giving effect to the Reverse Stock Split.2022. All of these options or restricted stock unitsRSUs were granted under our 2019 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 | — | — |
| | 38,118 | | | 23,956 | | | 4/1/2020 | $ | 7.87 | | 3/31/2030 | — | — |
| | 51,882 | | | 20,414 | | | 4/1/2020 | $ | 7.87 | | 3/31/2030 | — | — |
| | | | | 4/1/2020 | | | 12,500 | 45,125 |
| | 13,051 | | | 15,424 | | | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | | | | | 2/1/2021 | | | 1,747 | 6,307 |
| | 7,375 | | | 28,025 | | | 2/1/2022 | $ | 10.02 | | 1/31/2032 | — | — |
| | | | | | 2/1/2022 | | | 4,500 | 16,245 |
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 | — | — |
| 42,079 | | | 21,667 | | | 4/1/2020 | $ | 7.87 | | 3/31/2030 | — | — |
| 1,254 | | | — | | | 4/1/2020 | $ | 7.87 | | 3/31/2030 | — | — |
| | | | | 4/1/2020 | | | 6,500 | 23,465 |
| | 4,583 | | | 5,417 | | | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | 6,038 | | | 7,137 | | | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | 5,000 | | | — | | (5) | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | — | | | 5,000 | | (6) | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | | | | | 2/1/2021 | | | 809 | 2,920 |
| | | | | | 8/1/2021 | | | 15,000 | 54,150 |
| | 2,916 | | | 11,084 | | | 2/1/2022 | $ | 10.02 | | 1/31/2032 | — | — |
| | | | | | 2/1/2022 | | | 1,500 | 5,415 |
Lori Lawley | | | | | | | | | |
| | 2,776 | | | — | | | 8/1/2018 | $ | 28.53 | | 7/31/2028 | — | — |
| | 2,138 | | | 119 | | | 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 | — | — |
| | — | | | 462 | | (7) | 3/1/2019 | $ | 16.20 | | 2/28/2029 | — | — |
| | — | | | 462 | | (8) | 3/1/2019 | $ | 16.20 | | 2/28/2029 | — | — |
| | — | | | 694 | | (9) | 3/1/2019 | $ | 16.20 | | 2/28/2029 | — | — |
| | 1,282 | | | — | | (10) | 7/31/2019 | $ | 15.93 | | 7/30/2026 | — | — |
| | 16,666 | | | 8,334 | | | 4/1/2020 | $ | 7.87 | | 3/31/2030 | — | — |
| | | | | | 4/1/2020 | | | 2,250 | 8,123 |
| | 4,869 | | | 5,756 | | | 2/1/2021 | $ | 17.35 | | 1/31/2031 | — | — |
| | | | | | 2/1/2021 | | | 652 | 2,354 |
| | 7,083 | | | 14,167 | | | 8/1/2021 | $ | 7.60 | | 7/31/2031 | — | — |
| | | | | | 8/1/2021 | | | 2,813 | 10,155 |
| | 2,500 | | | 9,500 | | | 2/1/2022 | $ | 10.02 | | 1/31/2032 | — | — |
| | | | | | 2/1/2022 | | | 1,000 | 3,610 |
|
| | | | | | | | | | | | | | | |
| | Number of Shares Underlying Unexercised Options(1) | | | | |
Name | (#) Exercisable |
| | (#) Unexercisable (2) | Number of Shares Underlying Unvested Restricted Stock Units (3) | Option Grant Date | Option Exercise Price | Option Expiration Date |
Charles J. Link, Jr., M.D. | 9,259 |
| | — |
| | — |
| | 3/1/2019 | $ | 16.20 |
| 8/3/2021 |
| 36,806 |
| | — |
| | — |
| | 8/2/2019 | $ | 15.39 |
| 8/3/2021 |
Nicholas N. Vahanian, M.D. | 4,282 |
| | — |
| | — |
| | 3/1/2019 | $ | 16.20 |
| 11/11/2021 |
| 1,773 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 5,291 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 11 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 586 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 794 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 174 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 45 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 439 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 1,080 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 95 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 1,254 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 449 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(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, 2022. |
(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 $3.61, the closing market price of our common stock on December 31, 2022. |
(5) | These options vested following enrollment reaching 50% of total patients enrolled for the LUM-201 trial as defined by the Board. |
(6) | These options vest following completion of the LUM-201 trial as defined by the Board. |
(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 66.66% above exercise price of the stock options, when measured over 30 consecutive calendar days (must occur within four years of the Date of Grant or such shares will be forfeited). |
(8) | 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 four years of the Date of Grant or such shares will be forfeited). |
(9) | These options vest upon enrollment of the first patient in a clinical trial that is registration eligible. |
(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. |
|
| | | | | | | | | | | | | | | |
| 1,014 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 9,328 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 1,085 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 1,085 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 397 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 1,085 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 1,225 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 2,713 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 1,085 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
| 1,493 |
| | — |
| | — |
| | 7/31/2019 | $ | 15.93 |
| 11/11/2021 |
Eugene P. Kennedy, M.D. | — |
| | — |
| | 122 |
| | 1/4/2016 | $ | 312.57 |
| |
| | 1,927 |
| | 8,350 |
| | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 1,712 |
| (4) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 2,569 |
| (5) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 1,714 |
| (7) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 1,712 |
| (8) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 2,569 |
| (6) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 271 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 26 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 243 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 737 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 36 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 8 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 509 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 52 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 781 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 7 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 19 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 1,736 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 280 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 1,765 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 77 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 763 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 505 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 19 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 509 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 477 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 1,851 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 258 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 2,700 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 524 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 34 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 1,327 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 536 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 1,018 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 763 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 27 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 509 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 868 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
Carl W. Langren | — |
| | — |
| | 87 |
| | 1/4/2016 | $ | 312.57 |
| |
| | 1,927 |
| | 8,350 |
| | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 1,712 |
| (4) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 2,569 |
| (7) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 1,714 |
| (5) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
|
| | | | | | | | | | | | | | | |
| | — |
| | 2,569 |
| (8) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 1,712 |
| (6) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 1,004 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 541 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 256 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 31 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 36 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 254 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 2,694 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 132 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 254 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 1,273 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 65 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 608 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 509 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 382 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 1,302 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 36 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 1,043 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 387 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 393 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 225 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 925 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 382 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 245 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 254 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 477 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 347 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 1,588 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 535 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 318 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 182 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 30 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 743 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
Bradley J. Powers | — |
| | 3,703 |
| | — |
| | 8/1/2018 | $ | 28.53 |
| 8/1/2028 |
| | 1,851 |
| | — |
| | — |
| | 8/1/2018 | $ | 28.53 |
| 8/1/2028 |
| | 833 |
| | 3,611 |
| | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 740 |
| (4) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 740 |
| (5) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 1,111 |
| (7) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 741 |
| (6) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 1,111 |
| (8) | — |
| | 3/1/2019 | $ | 16.20 |
| 3/1/2029 |
| | — |
| | 16 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 219 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 37 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 14 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 94 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 11 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 258 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 11 |
| (9) | — |
| | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 95 |
| (9) | — | | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 254 |
| (9) | — | | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 57 |
| (9) | — | | 7/31/2019 | 15.93 |
| 7/31/2026 |
| | — |
| | 46 |
| (9) | — | | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
|
| | | | | | | | | | | | | | | |
| | — |
| | 4 |
| (9) | — | | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 277 |
| (9) | — | | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 62 |
| (9) | — | | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 421 |
| (9) | — | | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
| | — |
| | 11 |
| (9) | — | | 7/31/2019 | $ | 15.93 |
| 7/31/2026 |
(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, 2019. |
(3) | 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. |
(4) | 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 33.33% above exercise price of the stock options, when measured over 30 consecutive calendar days (must occur within four years of the Date of Grant or such shares will be forfeited). |
(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 66.66% above exercise price of the stock options, when measured over 30 consecutive calendar days (must occur within four 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 four years of the Date of Grant or such shares will be forfeited). |
(7) | These options vested upon expansion of the Company pipeline with an in-license, merger, acquisition or the internal development of a novel candidate. |
(8) | These options vest upon enrollment of the first patient in a clinical trial that is registration eligible. |
(9) | 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 2019 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, 2019,2020, 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 12 or 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; (iv) depending on the named executive officer and as described in the tables below, payment of such named executive officer’s COBRA premiums for 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 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, 2019,2021, 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 12 or 912 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; (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 12 or 612 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, 2019.2022. 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, 20192022 and (ii) the stock price was $2.53 (or $22.77 after giving effect to the subsequent Reverse Stock Split),$3.61, which was the per share closing price of our common stock on the NASDAQ Global Market on December 31, 2019.2022.
|
| | | | | | | | | | | | |
Eugene P. Kennedy | 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 | — | | $ | 437,750 |
| (1) | $ | 630,360 |
| (2) |
Long-Term Incentives | | | | | | |
RSUs and Stock Options (Unvested and Accelerated) | — | | 75,137 | (3)(4) | 269,519 | (3)(4) |
Benefits and Perquisites | | | | | | |
Accrued Obligations | 47,142 | (5) | 47,142 | (5) | 47,142 | (5) |
Benefits Continuation | — | | — | (6) | — | (6) |
Total Payments Upon Termination | $ | 47,142 |
| | $ | 560,029 |
| | $ | 947,021 |
| |
| | | | | | | | | | | | | | | | | | | | |
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 | — | | $ | 933,280 | | (1) | $ | 1,866,560 | | (2) |
Long-Term Incentives | | | | | | |
RSUs and Stock Options (Unvested and Accelerated) | — | | 67,677 | (3)(4) | 67,677 | (3)(4) |
Benefits and Perquisites | | | | | | |
Accrued Obligations | 100,839 | (5) | 100,839 | (5) | 100,839 | (5) |
Benefits Continuation | — | | 19,140 | | (6) | 38,281 | | (7) |
Total Payments Upon Termination | $ | 100,839 | | | $ | 1,120,936 | | | $ | 2,073,357 | | |
|
| | | | |
(1 | )(1) | Amount represents 12 months of his base salary in effect as of January 1, 2019.2022 and an amount equal to his most recent annual bonus. |
(2 | )(2) | Amount represents 1224 months of his base salary in effect as of January 1, 20192022 and an amount equal to two times his most recent annual bonus. |
(3 | )(3) | Amount represents the value of unvested restricted stock units (RSUs)RSUs as of December 31, 2019,2022, using the valueclosing price per share of our common stock on December 31, 2019.2022. As per the terms of Dr. Kennedy'sMr. 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 | )(4) | Amount represents the in-the-money value of in-the-money unvested stock options as of December 31, 2019,2022, 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, 2019 based on the value of our common stock used for purposes of calculating compensation expense under FASB ASC topic 718.2022. The number of shares underlying such stock options and the exercise price thereof are reflected in the Outstanding Equity Awards section of this proxy statement. |
(5 | )(5) | Amount represents $47,142 in accrued vacation. |
(6(6) | )Amount represents 12 months of COBRA premiums. |
(7) | Dr. Kennedy has voluntarily waivedAmount represents 24 months of COBRA coverage.premiums. |
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 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 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:
Our Audit Committee may approve or ratify the transaction only if the Audit 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:
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 bylaws 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. 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 bylaws 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 (the Court), captioned Abramson v. NewLink Genetics Corp., et al., Case 1:16-cv-3545 (the Securities Action). Subsequently, the Court appointed Michael and Kelly Nguyen as lead plaintiffs and approved their selection of Kahn, Swick & Foti, LLC as lead counsel in the Securities Action. On October 31, 2016, the lead plaintiffs filed an amended complaint asserting claims under the federal securities laws against the Company, the Company’s Chief Executive Officer Charles J. Link, Jr., and the Company’s Chief Medical Officer and President Nicholas Vahanian (collectively, the Defendants). The amended complaint alleges the Defendants made material false and/or misleading statements that caused losses to the Company’s investors. The Defendants filed a motion to dismiss the amended complaint on July 14, 2017. On March 29, 2018, the Court dismissed the amended complaint for failure to state a claim, without prejudice, and gave the lead plaintiffs until May 4, 2018 to file any amended complaint attempting to remedy the defects in their claims. On May 4, 2018, the lead plaintiffs filed a second amended complaint asserting claims under the federal securities laws against the Defendants. Like the first amended complaint, the second amended complaint alleges that the Defendants made material false and/or misleading statements or omissions relating to the Phase 2 and 3 trials and efficacy of the product candidate algenpantucel-L that caused losses to the Company’s investors. The lead plaintiffs do not quantify any alleged damages in the second amended complaint but, in addition to attorneys’ fees and costs, they sought to recover damages on behalf of themselves and other persons who purchased or otherwise acquired the Company’s stock during the putative class period of September 17, 2013 through May 9, 2016, inclusive, at allegedly inflated prices and purportedly suffered financial harm as a result. The Defendants filed a motion to dismiss the second amended complaint on July 31, 2018. On February 13, 2019, the Court dismissed the second amended complaint for failure to state a claim, with prejudice, and closed the case. On March 14, 2019, lead plaintiffs filed a notice of appeal. The briefing on lead plaintiffs' appeal was completed in early July 2019 and oral argument before the Second Circuit Court of Appeals was held on October 21, 2019. The Company intends to continue defending the Securities Action vigorously.
On or about April 26, 2017, Ronald Morrow filed a shareholder derivative lawsuit on behalf of the Company in the United States District Court for the Southern District of New York, or the Court, against the Company’s Chief Executive Officer Charles J. Link, Jr., the Company’s Chief Medical Officer and President Nicholas Vahanian, and Company directors Thomas A. Raffin, Joseph Saluri, Ernest J. Talarico, III, Paul R. Edick, Paolo Pucci, and Lota S. Zoth (collectively, the Morrow Defendants), captioned Morrow v. Link., et al., Case 1:17-cv-03039 (the Morrow Action). The complaint alleges that the Morrow Defendants caused the
Company to issue false statements in its 2016 proxy statement regarding risk management and compensation matters in violation of federal securities law. The complaint also asserts state law claims against the Morrow Defendants for breaches of fiduciary duties, unjust enrichment, abuse of control, insider trading, gross mismanagement, and corporate waste, alleging that the Morrow Defendants made material misstatements or omissions related to the Phase 2 and 3 trials and efficacy of the product candidate algenpantucel-L, awarded themselves excessive compensation, engaged in illegal insider trading, and grossly mismanaged the Company. The plaintiff does not quantify any alleged damages in the complaint but seeks restitution for damages to the Company, attorneys’ fees, costs, and expenses, as well as an order directing that proposals for strengthening board oversight be put to a vote of the Company’s shareholders. The language for such proposals is not specified in the complaint. The plaintiff also contemporaneously filed a statement of relatedness, informing the Court that the Morrow Action is related to Abramson v. NewLink Genetics Corp., et al., Case 1:16-cv-3545. On May 19, 2017, the plaintiff dismissed the Morrow Action without prejudice. Also on May 19, 2017, plaintiffs’ counsel in the Morrow Action filed a new shareholder derivative complaint that is substantively identical to the Morrow Action, except that the plaintiff is Rickey Ely. The latter action is captioned Ely v. Link, et al., Case 17-cv-3799, or the Ely Action. By agreement of the parties and order dated June 26, 2017, the Court temporarily stayed the Ely Action until the Securities Action is dismissed or otherwise finally resolved. Under the terms of the stay, the plaintiff in the Ely Action had until March 15, 2019 (30 days after dismissal of the Securities Action with prejudice) to file an amended derivative complaint or rest upon the current derivative complaint. By further agreement of the parties, dated March 15, 2019, the Ely Action will continue to be stayed pending the outcome of the appeal in the Securities Action. If the Securities Action continues to be dismissed in its entirety following its appeal plaintiff in the Ely Action has agreed to withdraw or dismiss the action, with prejudice. The Company disputes the claims in the Ely Action and intends to defend against them vigorously.
At present, other than the previously mentioned 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.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 20212024 Annual Meeting of Stockholders must submit any such proposal by February 25, 2021,December 1, 2023, to Corporate Secretary, Lumos Pharma, Inc., 4200 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 April 29, 2021,February 9, 2024, nor earlier than the close of business on March 25, 2021,January 11, 2024, 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 March 11, 2024, 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 2021.2024. If the date of the 20212024 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 20212024 annual meeting and not later than the close of business on the later of the 90th day prior to such 20212024 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 theNotice of Internet Availability of Proxy Materials or other Annual Meeting materials with respect to two or more stockholders sharing the same address by delivering a single setNotice of theInternet Availability of Proxy Materials or other Annual Meeting materials addressed 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 Lumos stockholders will be “householding” our proxy materials. A single setNotice 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 setNotice of Internet Availability of Proxy Materials, please notify your broker or Lumos. Direct your written request to Corporate Secretary, Lumos Pharma, Inc., 4200 Marathon Boulevard #200, Austin, TX 78756 or contact our Corporate Secretary at (512) 215-2630. We undertake to promptly deliver, upon written or oral request, a separate setcopy 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 setscopies of Notice 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/ Carl W. LangrenLori Lawley
Carl W. LangrenLori Lawley
Chief Financial Officer
June 23, 2020March 31, 2023
A copy of our Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 2019 and a copy of our Form 10-K/A filed on April 29, 20202022 is available without charge upon written request to: Corporate Secretary, Lumos Pharma, Inc., 4200 Marathon Boulevard #200, Austin TX 78756.