any other information relating to the nominating person that would be required to be disclosed in a proxy statement filed with the SEC.
With respect to proposed director nominees, the stockholder’s notice must include all information required to be disclosed in a proxy statement in connection with a contested election of directors or otherwise required pursuant to Regulation 14A under the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected).
For matters other than the election of directors, the stockholder’s notice must also include a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of the stockholder(s) proposing the business.
The stockholder’s notice must be updated and supplemented, if necessary, so that the information required to be provided in the notice is true and correct as of the record date for the meeting and as of the date that is ten business days prior to the meeting.
The Board of Directors, a designated committee thereof or the chairmanchairperson of the meeting will determine if the procedures in our Bylaws have been followed, and if not, declare that the proposal or nomination be disregarded. The nominee must be willing to provide any other information reasonably requested by the Nominating and Corporate Governance Committee in connection with its evaluation of the nominee’s independence. There have been no material changes to the process by which stockholders may recommend nominees to our Board of Directors.
Stockholder Communications with the Board of Directors
Stockholders may send correspondence to the Board of Directors c/o the ChairmanChairperson of the Board at our principal executive offices at the address set forth above. The Company will forward all correspondence addressed to the Board or any individual Board member. Stockholders may also communicate online with our Board of Directors as a group by accessing our website (www.MyoKardia.com) and selecting the “Investors & Media”“Investors” tab.
Director Attendance at Annual Meetings
Directors are encouraged to attend the annual meeting of stockholders. Five of our directors attended the 2019 Annual Meeting.Meeting of Stockholders.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is, or has at any time during the past fiscal year been, an officer or employee of the Company or had any relationship requiring disclosure under Item 404 of Regulation S-K. None of the members of the Compensation Committee has formerly been an officer of the Company. None of our executive officers serve, or in the past fiscal year, have served as a member of the Board of Directors or Compensation Committee of any other entity that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee.
Director Compensation
In October 2015, our Board of Directors adopted a non-employee director compensation policy, which became effective upon the completion of our initial public offering in November 2015, that is designed to provide a total compensation package that enables us to attract and retain, on a long-term basis, high-caliber non-employee directors. In March 2016, the policy was amended to provide for the payment of annual cash retainers for service on the Science and Technology Committee. Under thisEffective January 2018, the policy was amended to provide for an annual cash retainer for service as a lead independent director or non-executive chairperson. In January 2019, the policy was amended as to the cash and equity components of the compensation.
In 2019, the policy provided that all non-employee directors are paidwould receive cash compensation for service on the Board of Directors and committees of the Board of Directors as set forth below, prorated based on days of service during a calendar year.
| | | | Year Ending December 31, 2019 | |
Board of Directors | | Annual
Retainer | | | Annual Retainer | |
All non-employee members | | $ | 35,000 | | |
Chairperson or lead independent director | | | $ | 70,000 | |
All other non-employee members | | | $ | 40,000 | |
| | | Additional Annual Retainer | |
Audit Committee: | | | | | | |
Chairperson | | $ | 15,000 | | | $ | 20,000 | |
Non-Chairperson members | | $ | 7,500 | | | $ | 10,000 | |
| Compensation Committee: | | | | | | |
Chairperson | | $ | 10,000 | | | $ | 15,000 | |
Non-Chairperson members | | $ | 5,000 | | | $ | 7,500 | |
| Nominating and Corporate Governance Committee: | | | | | | |
Chairperson | | $ | 7,500 | | | $ | 10,000 | |
Non-Chairperson members | | $ | 3,500 | | | $ | 5,000 | |
| Science and Technology Committee: | | | | | | |
Chairperson | | $ | 10,000 | | | $ | 15,000 | |
Non-Chairperson members | | $ | 5,000 | | | $ | 7,500 | |
In addition, under the policy, as amended, each new non-employee director who is initially appointed or elected to our Board of Directors will receive (i) an option grant to purchase up to 22,00013,200 shares of our common stock, which will vest in equal monthly installments during the 48 months following the grant date, subject to the director’s continued service on our Board of Directors.Directors through each vesting date and (ii) a grant of restricted stock units (“RSUs”) for 4,500 shares of our common stock, which will vest in equal annual installments during the four years following the grant date, subject to the director’s continued service on our Board of Directors through each vesting date. Thereafter, on the date of each annual meeting of stockholders, each continuing non-employee director will be eligible to receive an annual (i) option grant to purchase up to 11,0006,600 shares of our common stock, which will vest in equal monthly installments during the 12 months following the date of grant, subject to the director’s continued service on our Board of Directors.Directors through each vesting date and (ii) grant of RSUs for 2,300 shares of our common stock, which will vest in a single installment on the first anniversary of the date of grant, subject to the director’s continued service on our Board of Directors through such vesting date. All stock options and RSUs granted to our non-employee directors pursuant to this policy, as amended, are subject to full acceleration of vesting upon the consummation of a sale event.Sale Event (as defined in the 2015 Plan). All of the foregoing options will be granted with ana per share exercise price equal to the fair market value of a share of our common stock on the date of grant and will be exercisable (to the extent vested) for up to one year following the cessation of the director’s service on our Board of Directors, so long as the director was not removed for cause. Our non-employee directors may also be granted such additional stock optionsequity awards in such amounts and on such dates as our Board of Directors may recommend.
In April 2020, the policy was further amended to increase the amounts for the annual retainer for board membership from $70,000 to $77,500 for the chairperson or lead independent director and from $30,000 to $45,000 for all other non-employee members. In addition, under the policy, as amended, each new non-employee director who is initially appointed or elected to our Board of Directors will receive (i) an option grant to purchase 7,400 shares of our common stock, which will vest in equal monthly installments during the 48 months following the grant date, subject to the director’s continued service on our Board of Directors through each vesting date and (ii) a grant of RSUs for 4,800 shares of our common stock, which will vest in equal annual installments during the four years following the grant date, subject to the director’s continued service on our Board of Directors through each vesting date. Thereafter, on the date of each annual meeting of stockholders, each continuing non-employee director will be eligible to receive an annual (i) option grant to purchase 3,700 shares of our common stock, which will vest in equal monthly installments during the 12 months following the date of grant, subject to the director’s continued service on our Board of Directors through each vesting date and (ii) grant of RSUs for 2,400 shares of our common stock, which will vest in a single installment on the first anniversary of the date of grant, subject to the director’s continued service on our Board of Directors through such vesting date. For any director who joins our Board of Directors
within 12 months preceding the date of our annual grants, such annual grants shall be prorated accordingly. All options and RSUs granted to our non-employee directors pursuant to this policy, as amended, are subject to full acceleration of vesting upon the consummation of a Sale Event (as defined in the 2015 Plan). All of the foregoing options will be granted with a per share exercise price equal to the fair market value of a share of our common stock on the date of grant and will be exercisable (to the extent vested) for up to one year following the cessation of the director’s service on our Board of Directors, so long as the director was not removed for cause. Our non-employee directors may also be granted such additional equity awards in such amounts and on such dates as our Board of Directors may recommend.
We have agreed to reimburse all reasonable out-of-pocket expenses incurred by our non-employee directors in attendingto attend meetings of the Board of Directors and committee meetings.
committees thereof.Director Compensation Table—20152019
The following table sets forth information with respect to the compensation earned by or paid to our non-employee directors during the fiscal year ended December 31, 2015.2019. Mr. Gianakakos doeswas an employee during such year and did not receive compensation for his service on the Board of Directors and theDirectors. The compensation paid to Mr. Gianakakos during the fiscal year ended December 31, 2019 as an employee of the Company is set forth under the heading “Compensation“Compensation of Named Executive Officers—2019 Summary Compensation Table”Table” below. Mary B. Cranston and Sunil Agarwal each joined our Board of Directors in 2016, and accordingly, did not receive any compensation from us during the year ended December 31, 2015.
| | | | | | | | | | | | | | | | |
Name | | Fees Earned or
Paid in Cash
($) | | | Option
Awards
($)(1) | | | All Other
Compensation
($) | | | Total
($) | |
Kevin Starr (2) | | $ | 8,791 | | | $ | — | | | $ | — | | | $ | 8,791 | |
Charles Homcy, M.D. (3) | | $ | 8,352 | | | $ | — | | | $ | 38,539 | | | $ | 46,891 | |
Mark Perry (4) | | $ | 36,799 | | | $ | 179,185 | | | $ | — | | | $ | 215,985 | |
Eric Topol, M.D. (5) | | $ | 7,648 | | | $ | 406,421 | | | $ | — | | | $ | 414,069 | |
Sunil Agarwal, M.D. (6) | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Mary Cranston (7) | | | — | | | | — | | | | — | | | | — | |
Name | | Fees Earned or Paid in Cash ($) | | Option Awards ($)(1) | | Stock Awards ($)(1) | | Total ($) | |
Sunil Agarwal, M.D. (2) | | | 62,500 | | | 195,315 | | 109,871 | | | 367,686 | |
Mary Cranston (3) | | | 70,000 | | | 195,315 | | 109,871 | | | 375,186 | |
David Meeker, M.D. (4) | | | 47,500 | | | 195,315 | | 109,871 | | | 352,686 | |
Mark Perry (5) | | | 95,000 | | | 195,315 | | 109,871 | | | 400,186 | |
Kimberly Popovits (6) | | | 45,000 | | | 195,315 | | 109,871 | | | 350,186 | |
Wendy Yarno (7) | | | 57,500 | | | 195,315 | | 109,871 | | | 362,686 | |
(1) | In accordance with SEC rules, this column reflects the aggregate grant date fair value of the option awards and RSUs granted during 2015the fiscal year ended December 31, 2019 computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718 for stock-based compensation transactions (“FASB ASC Topic 718”). Such aggregate grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. Assumptions used in the calculation of these amounts are included in Note 89 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.2019. These amounts do not reflect the actual economic value that may be realized by the directors upon the vesting of the stock options, the exercise of the stock options or the sale of the common stock underlying such stock options. |
(2) | Mr. Starr did not hold any stock options or other equity compensation awards asvesting and settlement of December 31, 2015.the RSUs. |
(3)(2) | Dr. Homcy did not hold any stock options or other equity compensation awards as of December 31, 2015. Amount disclosed under “All Other Compensation” for Dr. Homcy represents principal and interest forgiven in September 2015 under a loan from the Company to Dr. Homcy made in March 2013 in connection with Dr. Homcy’s purchase of shares of restricted common stock. |
(4) | Mr. PerryAgarwal held stock options to purchase an aggregate of 21,80061,600 shares of our common stock and 2,300 RSUs as of December 31, 2015.2019. |
(5)(3) | Dr. Topol was appointed to the Board of Directors in October 2015 andMs. Cranston held stock options to purchase an aggregate of 43,53761,600 shares of our common stock and 2,300 RSUs as of December 31, 2015.2019. |
(6)(4) | Dr. Agarwal was appointedMeeker held options to the Boardpurchase an aggregate of Directors in March 2016.50,600 shares of our common stock and 2,300 RSUs as of December 31, 2019. |
(7)(5) | Ms. Cranston was appointedMr. Perry held options to the Boardpurchase an aggregate of Directors in April 2016.61,400 shares of our common stock and 2,300 RSUs as of December 31, 2019. |
(6) | Ms. Popovits held options to purchase an aggregate of 50,600 shares of our common stock and 2,300 RSUs as of December 31, 2019. |
(7) | Ms. Yarno held options to purchase an aggregate of 50,600 shares of our common stock and 2,300 RSUs as of December 31, 2019. |
Required Vote
The two (2)three (3) nominees receiving the highest number of affirmative votes of all the votes properly cast shall be elected as Class III directors to serve until the 20192023 Annual Meeting of Stockholders or until their successors have been duly elected and qualified.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders vote FOR the election of the two (2)three (3) Class III director nominees listed above.
PROPOSALPROPOSAL 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2016.2020. Representatives of PricewaterhouseCoopers LLP will attend the Annual Meeting and will have the opportunity to make a statement if they desire to do so. They will also be available to respond to appropriate questions.
The Company’s organizational documents do not require that the stockholders ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm, and stockholder ratification is not binding on the Company, the Board or the Audit Committee. The Company requests such ratification, however, as a matter of good corporate practice. The ratification of the selection of PricewaterhouseCoopers LLP requires the affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting. Our Board, including our Audit Committee, values the opinions of our stockholders and, to the extent there is any significant vote against the ratification of the selection of PricewaterhouseCoopers LLP as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and evaluate what actions may be appropriate to address those concerns, although the Audit Committee, in its discretion, may still retain PricewaterhouseCoopers LLP.
The following table shows information about fees billed to the Company by PricewaterhouseCoopers LLP for the fiscal years ended December 31, 20152019 and 2014:2018:
| Fees billed by PricewaterhouseCoopers LLP | | 2015 | | | 2014 | | | 2019 | | | 2018 | |
Audit Fees (1) | | $ | 1,311,249 | | | $ | 572,500 | | | $ | 1,641,500 | | | $ | 2,051,000 | |
Audit Related Fees | | | — | | | | — | | | | — | | | | — | |
Tax Fees | | | — | | | | — | | | | — | | | | — | |
All Other Fees | | | — | | | | — | | |
| | | | | | | |
All Other Fees (2) | | | | 2,700 | | | | — | |
Total | | $ | 1,311,249 | | | $ | 572,500 | | | $ | 1,644,200 | | | $ | 2,051,000 | |
(1) | Includes fees associated with the annual audit of our financial statements, the reviews of our interim financial statements and the issuance of consentconsents and comfort letters in connection with registration statements, including,statements. |
(2) | Fees associated with respectthe annual subscription to the year ended December 31, 2015, the filing of our registration statement on Form S-1 for our initial public offering. Included in the 2015 audit fees is $583,250 of fees billed in connection with our initial public offering.PwC’s accounting research and disclosure checklist tools. |
Audit Committee Pre-Approval Policies
The Audit Committee is directly responsible for the appointment, retention and termination, and for determining the compensation, of the Company’s independent registered public accounting firm. The Audit Committee shall pre-approve all auditing services and the terms thereof and non-audit services (other than non-audit services prohibited under Section 10A(g) of the Exchange Act or the applicable rules of the SEC or the Public Company Accounting Oversight Board), except that pre-approval is not required for the provision of non-audit services if the “de minimus”minimis” provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied. The Audit Committee may delegate to the chairperson of the Audit Committee the authority to grant pre-approvals for audit and non-audit services, provided such approvals are presented to the Audit Committee at its next scheduled meeting. All services provided by PricewaterhouseCoopers LLP during fiscal year 2015 following our initial public offeringyears 2019 and 2018 were pre-approved by the Audit Committee in accordance with the pre-approval policy described above, and all audit fees during fiscal year 2014 were approved by the Board of Directors.above.
Required Vote
The ratification of the selection of PricewaterhouseCoopers LLP requires the affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting (meaning the number of shares voted “for” the proposal
must exceed the number of shares voted “against” the proposal). Abstentions are not considered votes cast for the foregoing purpose and will have no effect on the vote for this proposal.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2016.2020.
PROPOSAL 3
PROPOSAL 3NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
RATIFICATION OF 2015 STOCK OPTION AND INCENTIVE PLANSection 14A of the Exchange Act requires that we provide our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, not less frequently than once every three years, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the SEC. At our 2019 Annual Meeting of Stockholders, our stockholders approved one year as the frequency for holding non-binding advisory votes to approve the compensation of our named executive officers.
Our Board of Directors believes that stock options and other stock-based incentive awardscompensation programs are an important part of compensationdesigned to effectively align our employees and consultants which allow the Company to stay competitive in the market for experienced employees while aligningexecutives' interests with the interests of employeesour stockholders by focusing on long-term equity incentives that correlate with stockholders. As we advancethe growth of sustainable long-term value for our lead product candidate, MYK-461 through completionstockholders.
Stockholders are urged to read the section titled “Compensation Discussion and Analysis” in this proxy statement, which discusses how our executive compensation policies and practices implement our compensation philosophy and contains tabular information and narrative discussion about the compensation of Phase 2 clinical trials, and advance our ongoing preclinical discovery and research programs, we anticipate the need to hire additional personnel while maintaining our existing personnel in order to support these activities. As such, the Board of Directors believes that we need to maintain a competitive position in attracting, retaining and motivating employees and consultants. In order to remain competitive, a major component of employee compensation in the Bay Area market is the award of stock options, and it is incumbent upon the Board of Directors and the Company to ensure that the award of stock options under our 2015 Stock Option and Incentive Plan (the “2015 Plan”) is tax efficient under IRS regulations.
Prior to our initial public offering, thenamed executive officers. Our Board of Directors and our stockholders approved the 2015 Plan. Under pertinent IRS regulations, grants made to “Covered Employees” (as definedCompensation Committee believe that these policies and practices are effective in Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code) under the 2015 Plan prior to the earlier of (i) the material modification of the 2015 Plan or (ii)implementing our 2019 annual meeting of stockholders (the “Reliance Period”) are not subject to the cap on the Company’s tax deduction imposed by Section 162(m) of the Code with respect to compensation philosophy and in excess of $1,000,000 per Covered Employee in any year. The Board of Directors seeks stockholders ratification of the 2015 Plan so that certain grants made to Covered Employees under the 2015 Plan, including stock options, stock appreciation rights and restricted stock awards and restricted stock units subject to performance-based vesting, will continue to qualify as “performance-based compensation” under Section 162(m) of the Code beyond the Reliance Period and therefore be exempt from the cap on the Company’s tax deduction imposed by Section 162(m) of the Code.
Our Board of Directors therefore believes that the ratification of the 2015 Plan is in the best interest ofachieving our stockholders given our current plans on hiring and the highly competitive environment in which we recruit and retain employees and consultants. If the stockholders do not ratify the 2015 Plan, the Company will either not make grants to Covered Employees under the 2015 Plan after the Reliance Period or will seek stockholder approval of a new stock plan before the end of the Reliance Period.
Summary of Material Features of the 2015 Plancompensation program goals.
The material features of the 2015 Plan are:
1,650,000 shares of common stock were initially reserved for issuance under the 2015 Plan and, pursuant to Section 3 of the Plan, the number of shares reserved and available for issuance will automatically increase each January 1, beginningvote on January 1, 2017, by 4% of the number of shares of our common stock issued and outstanding on the immediately preceding December 31 or such lesser number as determined by the Board or the compensation committee (the “Annual Increase”);
Shares of common stock that are forfeited, cancelled, held back upon the exercise or settlement of an award to cover the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without the issuance of common stock or otherwise terminated (other than by exercise) under the 2015 Plan and our 2012 Equity Incentive (the “2012 Plan”) are added back to the shares of common stock available for issuance under the 2015 Plan;
Shares of common stock reacquired by the Company on the open market willthis resolution is not be added to the reserved pool under the 2015 Plan;
The award of stock options (both incentive and non-qualified options), stock appreciation rights, restricted stock awards, restricted stock units, unrestricted stock awards, cash-based awards, performance share awards and dividend equivalent rights is permitted;
No dividends or dividend equivalents may be paid on full value shares subject to performance vesting until such shares are actually earned upon satisfaction of the performance criteria;
Without stockholder approval, the exercise price of stock options and stock appreciation rights will not be reduced and stock options and stock appreciation rights will not be otherwise repriced through cancellation in exchange for cash, other awards or stock options or stock appreciation rights with a lower exercise price;
Any material amendment to the 2015 Plan is subject to approval by our stockholders; and
The term of the 2015 Plan will expire on October 16, 2025.
Based solely on the closing price of our common stock as reported by The NASDAQ Global Select Market on March 31, 2016, and the maximum number of shares that would have been available for awards as of such date, the maximum aggregate market value of the common stock that could potentially be issued under the 2015 Plan is $10,095,375.
Qualified Performance-Based Compensation under Section 162(m) of the Code
To ensure that certain awards granted under the 2015 Plan to Covered Employees qualify as “performance-based compensation” under Section 162(m) of the Code, the 2015 Plan provides that the compensation committee may require that the vesting of such awards be conditioned on the satisfaction of performance criteria that may include any or all of the following: (1) achievement of specified research and development, publication, clinical and/or regulatory milestones, (2) total shareholder return, (3) earnings before interest, taxes, depreciation and amortization, (4) net income (loss) (either before or after interest, taxes, depreciation and/or amortization), (5) changes in the market price of the common stock, (6) economic value-added, (7) funds from operations or similar measure, (8) sales or revenue, (9) acquisitions or strategic transactions, (10) operating income (loss), (11) cash flow (including, but not limited to, operating cash flow and free cash flow), (12) return on capital, assets, equity or investment, (13) return on sales, (14) gross or net profit levels, (15) productivity, (16) expense, (17) margins, (18) operating efficiency, (19) customer satisfaction, (20) working capital, (21) earnings (loss) per share of common stock, (22) sales or market shares and (23) number of customers, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group. The compensation committee will select the particular performance criteria within 90 days following the commencement of a performance cycle. Subject to adjustments for stock splits and similar events, the maximum award granted to any one individual that is intended to qualify as “performance-based compensation” under Section 162(m)address any specific element of compensation; rather, the Code will not exceed 1,750,000 shares of common stock for any performance cycle and options or stock appreciation rights with respect to no more than 1,750,000 shares of common stock may be granted to any one individual during any calendar year period. If a performance-based award is payable in cash, it cannot exceed $2,000,000 for any performance cycle.
The Board of Directors believes that it is important to maintain our flexibility to make awards to Covered Employees beyond the Reliance Period and to preserve our tax deduction for awards that qualify as “performance-based compensation” under Section 162(m) of the Code.
Summary of the 2015 Plan
The following description of certain features of the 2015 Plan is intended to be a summary only. The summary is qualified in its entirety by the full text of the 2015 Plan, which is attached hereto as Appendix A.
Plan Administration. The 2015 Plan is administered by the compensation committee. The compensation committee has full power to select, from among the individuals eligible for awards, the individuals to whomawards will be granted, to make any combination of awards to participants, and to determine the specific terms and conditions of each award, subject to the provisions of the 2015 Plan. The compensation committee may delegate to our chief executive officer the authority to grant awards to employees who are not subject to the reporting and other provisions of Section 16 of the Exchange Act and not subject to Section 162(m) of the Code, subject to certain limitations and guidelines.
Eligibility. Persons eligible to participate in the 2015 Plan are those full or part-time officers, employees, non-employee directors and other key persons (including consultants) of the Company and its subsidiaries as selected from time to time by the compensation committee at its discretion. As of March 31, 2016, approximately 69 individuals are currently eligible to participate in the 2015 Plan, which includes six (6) executive officers, 57 employees who are not officers, and six (6) non-employee directors (including a director who joined our Board of Directors in April 2016).
Plan Limits. The maximum award of stock options or stock appreciation rights granted to any one individual will not exceed 1,750,000 shares of common stock (subject to adjustment for stock splits and similar events) for any calendar year period. If any award of restricted stock, restricted stock units or performance shares granted to an individual is intended to qualify as “performance-based compensation” under Section 162(m) of the Code, then the maximum award shall not exceed 1,750,000 shares of common stock (subject to adjustment for stock splits and similar events) to any one such individual in any performance cycle. If any cash-based award is intended to qualify as “performance-based compensation” under Section 162(m) of the Code, then the maximum award to be paid in cash in any performance cycle may not exceed $2,000,000. In addition, no more than 1,650,000 shares of common stock may be issued in the form of incentive stock options, such number to be cumulatively increased on each January 1 by the lesser of the Annual Increase for such year or 3,300,000 shares of common stock.
Stock Options. The 2015 Plan permits the granting of (1) options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Code and (2) options that do not so qualify. Options granted under the 2015 Plan will be non-qualified options if they fail to qualify as incentive options or exceed the annual limit on incentive stock options. Incentive stock options may only be granted to employees of the Company and its subsidiaries. Non-qualified options may be granted to any persons eligible to receive incentive options and to non-employee directors and key persons. The option exercise price of each option will be determined by the compensation committee but may not be less than 100% of the fair market value of the common stock on the date of grant. Fair market value for this purpose will be the last reported sale price of the shares of common stock on The NASDAQ Global Select Market on the date of grant. The exercise price of an option may not be reduced after the date of the option grant, other than to appropriately reflect changes in our capital structure.
The term of each option will be fixed by the compensation committee and may not exceed ten years from the date of grant. The compensation committee will determine at what time or times each option may be exercised. Options may be made exercisable in installments and the exercisability of options may be accelerated by the compensation committee. In general, unless otherwise permitted by the compensation committee, no option granted under the 2015 Plan is transferable by the optionee other than by will or by the laws of descent and distribution, and options may be exercised during the optionee’s lifetime only by the optionee, or by the optionee’s legal representative or guardian in the case of the optionee’s incapacity.
Upon exercise of options, the option exercise price must be paid in full either in cash, by certified or bank check or other instrument acceptablevote relates to the compensation committee or by delivery (or attestation to the ownership) of shares of common stock that are not then subject to any restrictions under any Company plan. Subject to applicable law, the exercise price may also be delivered to us by a broker pursuant to irrevocable instructions to the broker from the optionee. In addition,our named executive officers, as described in this proxy statement in accordance with the compensation committee may permit non-qualified options to be exercised using a net exercise feature, which reduces the number of shares issued to the optionee by the number of shares with a fair market value equal to the exercise price.
To qualify as incentive options, options must meet additional federal tax requirements, including a $100,000 limit on the value of shares subject to incentive options that first become exercisable by a participant in any one calendar year.
Stock Appreciation Rights. The compensation committee may award stock appreciation rights subject to such conditions and restrictions as the compensation committee may determine. Stock appreciation rights entitle
the recipient to shares of common stock equal to the value of the appreciation in the stock price over the exercise price. The exercise price may not be less than the fair market value of the common stock on the date of grant. The maximum term of a stock appreciation right is ten years.
Restricted Stock Awards. The compensation committee may award shares of common stock to participants subject to such conditions and restrictions as the compensation committee may determine. These conditions and restrictions may include the achievement of certain performance goals (as summarized above) and/or continued employment with us through a specified restricted period.
Restricted Stock Units. The compensation committee may award restricted stock units to any participants. Restricted stock units are ultimately payable in the form of shares of common stock and may be subject to such conditions and restrictions as the compensation committee may determine. These conditions and restrictions may include the achievement of certain performance goals (as summarized above) and/or continued employment with the Company through a specified vesting period or for board fees in lieu of cash compensation. In the compensation committee’s sole discretion, it may permit a participant to make an advance election to receive a portion of his or her future cash compensation otherwise due in the form of restricted stock units, subject to the participant’s compliance with the procedures established by the compensation committee and requirements of Section 409A of the Code. During the deferral period, the restricted stock units may be credited with dividend equivalent rights.
Unrestricted Stock Awards. The compensation committee may also grant shares of common stock that are free from any restrictions under the 2015 Plan. Unrestricted stock may be granted to any participant in recognition of past services or other valid consideration and may be issued in lieu of cash compensation due to such participant.
Cash-Based Awards. The compensation committee may grant cash bonuses under the 2015 Plan to participants. The cash bonuses may be subject to the achievement of certain performance goals (as summarized above).
Performance Share Awards. The compensation committee may grant performance share awards to any participant that entitle the recipient to receive shares of common stock upon the achievement of certain performance goals (as summarized above) and such other conditions as the compensation committee shall determine.
Dividend Equivalent Rights. The compensation committee may grant dividend equivalent rights to participants, which entitle the recipient to receive credits for dividends that would be paid if the recipient had held specified shares of common stock. Dividend equivalent rights may be granted as a component of another award (other than a stock option or stock appreciation right) or as a freestanding award. Dividend equivalent rights may be settled in cash, shares of common stock or a combination thereof, in a single installment or installments, as specified in the award.
Sale Event Provisions. The 2015 Plan provides that upon the effectiveness of a “sale event,” as defined in the 2015 Plan, the 2015 Plan and all awards thereunder will terminate, unless the parties to the sale event agree that such awards will be assumed or continued by the successor entity. In the event of such termination, (i) we may make or provide for a cash payment to participants holding options and stock appreciation rights, in exchange for the cancellation thereof, equal to the difference between the per share cash consideration in the saleevent and the exercise price of the options or stock appreciation rights, (ii) each participant shall be permitted, within a specified period of time prior to the consummation of the sale event, as determined by the compensation committee, to exercise all outstanding options and stock appreciation rights (to the extent then exercisable) held by such participant, or (iii) we may fully vest all outstanding awards. Notwithstanding anything to the contrary in the 2015 Plan, in the event of a sale event, all options and stock appreciation rights shall accelerate and become exercisable in full, all other awards with time-based vesting conditions or restrictions shall become fully vestedand nonforfeitable, and all awards with conditions and restrictions relating to the attainment of performance goals may become vested and nonforfeitable in the Committee’s discretion.
Adjustments for Stock Dividends, Stock Splits, Etc. The 2015 Plan requires the compensation committee to make appropriate adjustments to the number of shares of common stock that are subject to the 2015 Plan, to certain limits in the 2015 Plan, and to any outstanding awards to reflect stock dividends, stock splits, extraordinary cash dividends and similar events.
Tax Withholding. Participants in the 2015 Plan are responsible for the payment of any federal, state or local taxes that we are required by law to withhold upon the exercise of options or stock appreciation rights or vesting of other awards. Subject to approval by the compensation committee, participants may elect to have the minimum tax withholding obligations satisfied by authorizing the Company to withhold shares of common stock to be issued pursuant to exercise or vesting.
Amendments and Termination. The Board of Directors may at any time amend or discontinue the 2015 Plan and the compensation committee may at any time amend or cancel any outstanding award for the purpose of satisfying changes in the law or for any other lawful purpose. However, no such action may adversely affect any rights under any outstanding award without the holder’s consent. To the extent required under thedisclosure rules of the NASDAQ Stock Market, any amendments that materially change the terms of the 2015 Plan will be subject to approval by our stockholders. Amendments shall also be subject to approval bySEC.
Accordingly, we are asking our stockholders if andto vote on the following resolution at the Annual Meeting:
RESOLVED, that the stockholders hereby approve, on a non-binding advisory basis, the compensation paid to the extent determined by the compensation committee to be required by the Code to preserve the qualified status of incentive options or to ensure that compensation earned under the 2015 Plan qualifies as performance-based compensation under Section 162(m) of the Code.
Effective Date of 2015 Plan. The Board of Directors initially adopted the 2015 Plan on October 17, 2015 and it was approved by our stockholders on October 17, 2015 and became effective immediately prior to the consummation of our initial public offering. Awards of incentive options may be granted under the 2015 Plan until October 16, 2025. No other awards may be granted under the 2015 Plan after the date that is ten years from the date of stockholder approval.
Plan Benefits
Because the grant of awards under the 2015 Plan is within the discretion of the compensation committee, we cannot determine the dollar value or number of shares of common stock that will in the future be received by or allocated to any participant in the 2015 Plan. Accordingly, in lieu of providing information regarding benefits that will be received under the 2015 Plan, the following table provides information concerning the benefits that were received by the following persons and groups during calendar year 2015: eachCompany's named executive officer; all current executive officers, as a group; all current directors who are not executive officers, as a group; and all employees who are not executive officers, as a group.
| | | | | | | | |
| | | Options | |
Name and Position | | Average
Exercise Price
($) | | | Number (#) | |
Tassos Gianakakos President and Chief Executive Officer | | $ | 1.51 | | | | 431,290 | |
Jonathan C. Fox, M.D., Ph.D. Chief Medical Officer | | $ | 1.51 | | | | 19,047 | |
Jake Bauer Vice President, Business Development and Business Operations | | $ | 1.51 | | | | 36,734 | |
Steven Chan Vice President, Corporate Controller | | $ | 1.51 | | | | 20,407 | |
Joseph Lambing, Ph.D. Senior Vice President, Nonclinical and Pharmaceutical Development | | $ | 1.51 | | | | 57,142 | |
Robert S. McDowell, Ph.D. Senior Vice President of Drug Discovery | | $ | 1.51 | | | | 50,339 | |
All current executive officers, as a group | | $ | 1.51 | | | | 614,959 | |
All current directors who are not executive officers, as a group | | $ | 6.03 | | | | 65,337 | |
All current employees who are not executive officers, as a group | | $ | 4.11 | | | | 444,109 | |
Tax Aspects underdisclosed in the Code
The following is a summaryCompany's proxy statement for the 2020 Annual Meeting of the principal federal income tax consequences of certain transactions under the 2015 Plan. It does not describe all federal tax consequences under the 2015 Plan, nor does it describe state or local tax consequences.
Incentive Options. No taxable income is generally realized by the optionee upon the grant or exercise of an incentive option. If shares of common stock issued to an optioneeStockholders, pursuant to the exercise of an incentive option are sold or transferred after two years from the date of grant and after one year from the date of exercise, then (i) upon sale of such shares, any amount realized in excesscompensation disclosure rules of the option price (the amount paid forSEC, including the shares) will be taxed to the optionee as a long-term capital gain, and any loss sustained will be a long-term capital loss, and (ii) the Company will not be entitled to any deduction for federal income tax purposes. The exercise of an incentive option will give rise to an item of tax preference that may result in alternative minimum tax liability for the optionee.
If shares of common stock acquired upon the exercise of an incentive option are disposed of prior to the expiration of the two-year and one-year holding periods described above (a “disqualifying disposition”), generally (i) the optionee will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares of common stock at exercise (or, if less, the amount realized on a sale of such shares of common stock) over the exercise price thereof and (ii) the Company will be entitled to deduct such amount. Special rules apply where all or a portion of the exercise price of the incentive option is paid by tendering shares of common stock.
If an incentive option is exercised at a time when it no longer qualifies for the tax treatment described above, the option is treated as a non-qualified option. Generally, an incentive option will not be eligible for the
tax treatment described above if it is exercised more than three months following termination of employment (or one year in the case of termination of employment by reason of disability). In the case of termination of employment by reason of death, the three-month rule does not apply.
Non-Qualified Options. No income is realized by the optionee at the time the option is granted. Generally, (i) at exercise, ordinary income is realized by the optionee in an amount equal to the difference between the option pricecompensation tables and the fair market value ofnarrative discussions that accompany the shares of common stock on the date of exercise, and the Company receives a tax deduction for the same amount and (ii) at disposition, appreciation or depreciation after the date ofexercise is treated as either short-term or long-term capital gain or loss depending on how long the shares of common stock have been held. Special rules apply where all or a portion of the exercise price of the non-qualified option is paid by tendering shares of common stock. Upon exercise, the optionee will also be subject to Social Security taxes on the excess of the fair market value over the exercise price of the option.
Other Awards. The Company generally will be entitled to a tax deduction in connection with an award under the 2014 Plan in an amount equal to the ordinary income realized by the participant at the time the participant recognizes such income. Participants typically are subject to income tax and recognize such tax at the time that an award is exercised, vests or becomes non-forfeitable, unless the award provides for a further deferral.
Parachute Payments. The vesting of any portion of an option or other award that is accelerated due to the occurrence of a change in control (such as a sale event) may cause a portion of the payments with respect to such accelerated awards to be treated as “parachute payments,” as defined in the Code. Any such parachute payments may be non-deductible to the Company, in whole or in part, and may subject the recipient to a non-deductible 20% federal excise tax on all or a portion of such payment (in addition to other taxes ordinarily payable).
Limitation on Deductions. Under Section 162(m) of the Code, the Company’s deduction for certain awards under the 2015 Plan may be limited to the extent that the chief executive officer or other executive officer whose compensation is required to be reported in the summary compensation table (other than the principal financial officer) receives compensation in excess of $1 million a year (other than performance-based compensation that otherwise meets the requirements of Section 162(m) of the Code). The 2015 Plan is structured to allow certain awards to qualify as performance-based compensation.tables.
Equity Compensation Plans
The following table sets forth information as of December 31, 2015 regarding shares of common stock that may be issued under our equity compensation plans, consisting of the 2012 Plan, the 2015 Plan and our 2015 Employee Stock Purchase Plan (the “ESPP”).
| | | | | | | | | | | | |
| | | Equity Compensation Plan Information | |
Plan Category | | Number of Securities
to be Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights
(a) | | | Weighted Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights
(b) (1) | | | Number of Securities
Remaining Available
for Future Issuance
under Equity
Compensation Plans
(Excluding
Securities Reflected
in Column (a))
(c) | |
Equity compensation plans approved by security holders (2): | | | 1,318,647 | (3) | | $ | 2.29 | (3) | | | 1,752,071 | (4) |
Equity compensation plans not approved by security holders: | | | — | | | | — | | | | — | |
Total | | | 1,318,647 | | | | | | | | 1,752,071 | |
(1) | The weighted average exercise price is calculated based solely on outstanding stock options. |
(2) | The number of shares of common stock available for issuance under the 2015 Plan will be automatically increased each January 1, beginning with January 1, 2017, by the lesser of (i) 4% of the number of outstanding shares of the Company’s common stock on the immediately preceding December 31, and (ii) an amount as determined by the compensation committee of the Company’s Board of Directors. The number of shares of stock available for issuance under the ESPP will be automatically increased each January 1, beginning with January 1, 2017 and ending on January 1, 2025, by the lesser of: (i) 3,000,000 shares of common stock, (ii) 1% of the number of outstanding shares of common stock on the immediately preceding December 31 or (iii) such lesser amount of shares as determined by the compensation committee of the Company’s Board of Directors. These increases are not reflected in the table above. |
(3) | Does not include purchase rights accruing under the ESPP because the purchase right (and therefore the number of shares to be purchased) will not be determined until the end of the purchase period. |
(4) | Includes 1,497,071 shares of common stock remaining available for issuance under the 2015 Plan and 255,000 shares of common stock remaining available for issuance under the ESPP as of December 31, 2015. |
Required Vote
The ratificationapproval of the 2015 Stock Option and Incentive Planthis advisory non-binding proposal requires the affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting (meaning the number of shares voted “for” the proposal must exceed the number of shares voted “against” the proposal).thereon. Abstentions and broker non-votes are not considered votes cast for the foregoing purpose, and will have no effect on this proposal.
The vote is advisory, which means that the vote foris not binding on the Company, our Board of Directors or our Compensation Committee. To the extent there is any significant vote against our named executive officer compensation as disclosed in this proposal.proxy statement, our Compensation Committee will evaluate whether any actions are necessary to address the concerns of stockholders.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders vote FOR the ratificationapproval, on a non-binding advisory basis, of the 2015 Stock Option and Incentive Plan.compensation of the Company’s named executive officers, as disclosed in this proxy statement.
EXECUTIVE OFFICERS
The names of the executive officers of the Company, their ages as of March 31, 2016,2020, and certain other information about them are set forth below (unless set forth elsewhere in this Proxy Statement).
| | | | | | |
Name | | Age | | | Position |
Tassos Gianakakos | | 47 | 43 | | | President, Chief Executive Officer and Director |
Jonathan C. Fox, M.D., Ph.D.
| | | 59 | | | Chief Medical Officer |
Jake Bauer | | 41 | 37 | | | Vice President,Chief Business Development and Business OperationsOfficer |
Steven ChanWilliam Fairey
| | 55 | 44 | | | Executive Vice President, Corporate ControllerPresident; Chief Commercial Officer |
Joseph Lambing, Ph.D.Taylor C. Harris
| | 44 | 53 | Chief Financial Officer |
Cynthia J. Ladd | | Senior Vice President, Nonclinical and Pharmaceutical Development64 | | General Counsel |
Robert S. McDowell, Ph.D. | | 62 | 58 | | | Senior Vice President of Drug DiscoveryChief Scientific Officer |
Executive Officers
The biographies of our executive officers, other than Mr. Gianakakos, whose biography is set forth above, appear below.
Jonathan C. Fox, M.D., Ph.DJake Bauer. Dr. Fox Mr. Bauer has served as our Chief MedicalBusiness Officer since March 2013. PriorApril 2018, as our Senior Vice President, Finance and Corporate Development from July 2016 to joining us, he served as vice president of clinical development at AstraZeneca plc, a global biopharmaceutical company, from November 2006April 2018, and prior to July 2012 and before that served as an executive director at AstraZeneca from January 2004 to November 2006, with responsibility for the cardiovascular, metabolic and gastrointestinal products portfolio. Prior to AstraZeneca, he served as senior director, clinical cardiovascular research at Merck & Co. and director of clinical pharmacology at GlaxoSmithKline plc., a pharmaceutical company. Dr. Fox was a clinical professor of medicine at the University of Pennsylvania School of Medicine for two decades, and previously supervised a basic research laboratory focused on vascular biology. He serves as a consulting professor at Stanford University’s Cardiovascular Institute, as a consultant on Innovation, Technology and Alliances at the University of California, San Francisco, and is a longstanding Trustee of the Lankenau Institute for Medical Research in Wynnewood, PA. Dr. Fox also served a four-year term as the Industry Representative to the U.S. Food and Drug Administration’s Cardiovascular and Renal Drug Products Advisory Committee. Dr. Fox holds B.A., Ph.D. and M.D. degrees from the University of Chicago, and completed postgraduate training in internal medicine and cardiology at Duke University. We have entered into a Transition Services Agreement with Dr. Fox, pursuant to which Dr. Fox’s employment with the Company will end on September 30, 2016 and Dr. Fox will transition to a consultant position. For more information on the Transition Services Agreement, see “Compensation of Executive Officers—Transition Services Agreement with Jonathan Fox, M.D., Ph.D.”
Jake Bauer. Mr. Bauer has served as our Vice President, Business Development and Business Operations since July 2014. Prior to joining us, he was vice president, business operations and head of corporate development at Ablexis, LLC (“Ablexis”), a biotechnology company, from May 2011 to July 2014. At Ablexis, he led the development and implementation of the company’s corporate strategy and business development activities and oversaw business operations. Prior to Ablexis, Mr. Bauer was a principal at Third Rock Ventures, where he identified, evaluated and developed new opportunities for investment, assisted with startup, corporate development and operations of portfolio companies, and negotiated financings from 2007 to 2011. While at Third Rock Ventures, he was actively involved in a variety of leading biopharmaceutical companies including Agios Pharmaceuticals, Inc., CytomX Therapeutics Inc., Global Blood Therapeutics, Inc. and Zafgen, Inc., all biopharmaceutical companies. Prior to Third Rock Ventures, Mr. Bauer served in roles in the investment group at Royalty Pharma AG and the business development group at Endo Pharmaceuticals Inc., and was previously a management consultant at Putnam Associates. Mr. Bauer holds a B.Sc. in biology and a B.A. in economics from Duke University and an M.B.A. from Harvard Business School. He currently serves on the Board of Directors of Phoenix Tissue Repair, Inc.
Steven ChanWilliam Fairey. Mr. ChanFairey has served as our Executive Vice President, Corporate ControllerChief Commercial Officer since November 2014.January 2019. Prior to joining us and from March 2018 to January 2019, he held senior management positions at Solta Medical,served as executive vice president and chief commercial officer of ChemoCentryx, Inc., a global medical devicebiopharmaceutical company
where focused on discovering, developing and commercializing orally-administered therapeutics to treat autoimmune diseases, inflammatory disorders and cancer. During that time, he was responsible for the sales, marketing, medical affairs and market access functions, including commercialization of late stages compounds. Prior to ChemoCentryx, Mr. Fairey served in various roles at Actelion Pharmaceuticals Ltd. and its subsidiaries including president of Actelion Pharmaceuticals US, Inc., a pharmaceuticals and biotechnology company that specializes in orphan diseases, from April 2013 to December 2017, regional vice president, and corporate controller, responsible for leading day-to-day company-wide accounting and finance operationsAustralia Asia Pacific, of Actelion Pharmaceuticals Ltd. from June 2010July 2008 to July 2014. Prior to Solta Medical, Mr. Chan was viceMarch 2013, president finance at Moody’s Analyticsof Actelion Pharmaceuticals Canada Inc. from June 20072003 to June 2010, worldwide revenue director at Polycom2008, and vice president of sales and managed markets of Actelion Pharmaceuticals US, Inc. from October 2006January 2001 to June 2007, and a regional controller at Logitech International S.A. from August 2002 to October 2006. He started his career at KPMG LLP and has experience managing the accounting and finance functions at companies in varying stages of growth.2003. Mr. Chan is a certified public accountant in California (inactive status) andFairey holds a B.S. in business administrationbiology from the Haas School of Business at the University of California, Berkeley.Oregon and an M.B.A. from Saint Mary’s College of California.
Joseph Lambing, Ph.D. Dr. LambingTaylor C. Harris. Mr. Harris has served as our Senior Vice President, Nonclinical and Pharmaceutical DevelopmentChief Financial Officer since March 2014.April 2018. Prior to joining us and from April 2016 to April 2017, he served as senior vice president and chief financial officer of Zeltiq Aesthetics, Inc., a public company that markets the CoolSculpting cryolipolysis system. During that time, he was responsible for the global finance, accounting, tax, treasury, investor relations, and information technology functions, as well as the company’s commercial operations, including customer service, product support, and inside sales. Zeltiq was acquired by Allergan plc in April 2017. Prior to Zeltiq, Mr. Harris served as vice president and chief financial officer at Thoratec Corporation, a public company that develops, manufactures, and markets proprietary medical devices used for mechanical circulatory support for the treatment of heart failure patients worldwide, from October 2012 until October 2015, when the company was acquired by St. Jude Medical, Inc. Mr. Harris joined Thoratec as
its senior director of investor relations and business development in February 2010, in which capacity he was responsible for developing and executing the company's investor relations strategy, as well as supporting the company's strategic and business development activities. Prior to joining Thoratec, Mr. Harris worked at JPMorgan Chase & Co. for over a decade in several capacities, including as a vice president in the firm's Healthcare Investment Banking and Equity Research departments. Mr. Harris holds a B.A. in physics and economics from the University of North Carolina at Chapel Hill.
Cynthia J. Ladd. Ms. Ladd has served as our General Counsel since January 2018. Prior to joining us and since June 2015, she was senior vice president and general counsel of development for Portola Pharmaceuticals, Inc., aCytomX Therapeutics, an oncology-focused biopharmaceutical company, where he oversaw all preclinical and pharmaceutical development activities since the company’s founding from September 2003 to January 2013.company. Prior to Portola Pharmaceuticals, Dr. Lambing served as director of drug safety and disposition for Millennium Pharmaceuticals, Inc.’s, a biopharmaceutical company, San Francisco siteCytomX, Ms. Ladd was an independent consultant to biotechnology companies from February 20022006 to November 2003,June 2015, advising on corporate strategy, negotiations around collaborations, and clinical and regulatory issues, as a scientistwell as acting as general counsel. Prior to that, she was president and then directorchief executive officer of DMPK and toxicology at CORAGY Therapeutics Inc. from November 1994May 2003 to February 2002. During hisJune 2005, where she guided the company through a venture round and its transition to a clinical organization. Ms. Ladd previously served as senior vice president and general counsel at Pharmacyclics. Earlier in her career, Dr. Lambing has contributed to numerous NDAMs. Ladd held a number of positions at Genentech, Inc., including vice president of corporate law and IND filings for more than a dozen new chemical entities,chief corporate counsel. She began her career as well as numerous filings to support a variety of clinical trials in other countries. Dr. Lambingan associate with Wilson Sonsini Goodrich & Rosati, P.C., and Ware & Freidenrich LLP (now DLA Piper LLP (US)). Ms. Ladd holds a B.S. in chemistryanimal science from Penn State University, an M.S. in animal nutrition and biochemistry from Cornell University, and a Ph.D. in biochemistryJ.D. from the University of Missouri, and was a postdoctoral fellow at the University of California, San Diego.Stanford Law School.
Robert S. McDowell, Ph.D. Dr. McDowell has served as our Chief Scientific Officer since October 2017, and prior to that as our Senior Vice President of Drug Discovery since July 2012. Prior to joining us, Dr. McDowell led drug discovery at 3-V Biosciences, Inc. from October 2008 to July 2012, advancing the company’s lead program into development. Prior to 3-V Biosciences, he served as vice president of research at Sunesis Pharmaceuticals, Inc., a biopharmaceutical company, from January 2000 to 2008, where he oversaw drug discovery, translational research and manufacturing functions. Prior to Sunesis Pharmaceuticals, Dr. McDowell led the structural chemistry group at Axys Pharmaceuticals, Inc. Before joining Axys, Dr. McDowell was a senior scientist at Genentech Inc., where he developed successful strategies for peptidomimetic design. Dr. McDowell has authored more than 40 peer-reviewed manuscripts and is an inventor on more than 20 issued U.S. patents. Dr. McDowell holds a B.S. in chemistry and physics from Butler University and a Ph.D. in chemistry from the University of California, Berkeley.
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and Analysis provides information regarding the 2019 compensation program for (i) each individual who served as our principal executive officer during the fiscal year ended December 31, 2019, (ii) each individual who served as our principal financial officer during the fiscal year ended December 31, 2019, (iii) the three most highly-compensated executive officers (other than the principal executive officer and principal financial officer) who were serving as executive officers on December 31, 2019 and (iv) an individual who would have been included under (iii) but for the fact that such individual was not serving as an executive officer on December 31, 2019 (such individuals collectively referred to as our “Named Executive Officers”). For 2019, our Named Executive Officers were:
| ▪ | Tassos Gianakakos, our President and Chief Executive Officer (our “CEO”); |
| ▪ | Taylor C. Harris, our Chief Financial Officer; |
| ▪ | William C. Fairey, our Executive Vice President, Chief Commercial Officer; |
| ▪ | Jake Bauer, our Chief Business Officer; |
| ▪ | Robert S. McDowell, PhD., our Chief Scientific Officer; and |
| ▪ | June Lee, M.D., our Executive Vice President, Chief Development Officer. |
This Compensation Discussion and Analysis describes the material elements of our executive compensation program during 2019. It also provides an overview of our executive compensation philosophy, including our principal compensation policies and practices. Finally, it analyzes how and why the Compensation Committee of our Board of Directors (the “Compensation Committee”) arrived at the specific compensation decisions for our Named Executive Officers in 2019 and discusses the key factors that the Compensation Committee considered in determining their compensation.
Management Changes
Mr. Fairey was appointed our Executive Vice President, Chief Commercial Officer in January 2019.
On September 30, 2019, it was agreed that Dr. Lee, Executive Vice President, Chief Development Officer, would be ending her employment with the Company following a transition period, which commenced on September 30, 2019 and will end on a date no later than June 30, 2020. During the transition period, Dr. Lee has retained her current title; however, effective September 30, 2019, Dr. Lee ceased to be an executive officer of the Company.
Executive Summary
Who We Are
We are a clinical-stage biopharmaceutical company pioneering a precision medicine approach to discover, develop and commercialize targeted therapies for the treatment of serious cardiovascular diseases. Precision medicine involves discovering and developing therapies that target the biological basis of disease for patient populations whose condition is defined by shared underlying defects and/or disease characteristics. By targeting the biomechanical defects underlying a given condition, we believe our therapeutic candidates can correct or offset the downstream disruption in cardiac muscle function that drives disease progression.
2019 Business Highlights
We made significant progress on several program and corporate milestones during 2019, including the following:
Mavacamten for HCM
Completed enrollment in EXPLORER-HCM. Enrollment of 251 patients was completed in August 2019 in the pivotal EXPLORER-HCM Phase 3 clinical trial. The EXPLORER-HCM study is designed to assess the effect of mavacamten in treating patients with symptomatic, obstructive hypertrophic cardiomyopathy (“HCM”). We now anticipate reporting topline data from the EXPLORER-HCM trial in the second quarter of 2020.
Presented 48-week data from PIONEER-OLE study of mavacamten. At the American Heart Association Scientific Sessions 2019, 48-week data from the PIONEER open-label extension (“OLE”) study of 12 patients with obstructive HCM were presented. Mavacamten was generally well-tolerated, and patients experienced sustained clinical benefit, including reductions in left ventricular outflow tract (“LVOT”) gradient, improvements in New York Heart Association (“NYHA”) functional class and improvement of multiple biomarkers toward normal ranges. These data were consistent with results reported at 12, 24 and 36 weeks.
Reported positive topline data from Phase 2 MAVERICK-HCM study. In the 16-week dose-ranging MAVERICK-HCM Phase 2 study, mavacamten was generally well-tolerated in patients with non-obstructive HCM. Statistically significant reductions in NT-proBNP, a marker of cardiac wall stress, were observed in patients across both mavacamten drug concentration cohorts. Clear signals of clinical benefit were also seen in subgroups of patients with elevated cardiac filling pressure at baseline and those at higher risk for morbidity and mortality.
Danicamtiv (MYK-491) for DCM
Announced positive interim data from the Phase 2a clinical trial of danicamtiv (formerly MYK-491). In an interim analysis of 26 patients with stable heart failure in the Phase 2a clinical multiple-ascending dose study, danicamtiv showed an improvement in systolic contractility, without impacting diastolic function. These results are consistent with data from our Phase 1 single-ascending dose studies of danicamtiv in both healthy volunteers and DCM patients. Based on the clinical and preclinical data generated to date, we plan to advance danicamtiv into a Phase 2 study in patients with genetic dilated cardiomyopathy. Results from the Phase 2a study, including additional cohorts, are anticipated in the second quarter of 2020.
MYK-224
Commenced dosing healthy volunteers in a Phase 1 study of MYK-224. We initiated a randomized, placebo-controlled Phase 1 study to assess the safety, tolerability and pharmacokinetics of MYK-224. In preclinical studies, MYK-224 was shown to attenuate hyperactive myosin proteins containing known pathogenic HCM mutations and modulated cardiac myosin without affecting myosin-actin cross-bridge kinetics or altering calcium homeostasis.
Corporate
Completed $270M financing. We completed a follow-on offering of 5,663,750 shares of common stock, including the full exercise of the underwriters’ over-allotment option, at a public offering price of $51.00 per share, raising approximately $271.2 million in net proceeds. We anticipate using net proceeds from the offering to support the ongoing registration studies, regulatory approval process, and commercial preparations for mavacamten for the potential treatment of obstructive HCM and to fund ongoing research and development efforts, as well as general corporate purposes.
Regained rights to HCM programs and danicamtiv (MYK-491) from Sanofi: We regained global commercial rights to all programs in its portfolio when the company’s collaboration with Sanofi ended at the beginning of 2019. In July, we reacquired U.S. royalty rights to mavacamten and MYK-224 from Sanofi for $80 million.
Executive Compensation Highlights
Based on our overall operating environment and achievements for the year, the Compensation Committee took the following key actions with respect to the compensation of our Named Executive Officers for and during 2019:
| ▪ | Base Salaries—Adjusted their annual base salaries by amounts ranging from zero percent to 13.2% for our Named Executive Officers other than our CEO, in addition to adjusting the annual base salary of our CEO by 7%. |
| ▪ | Annual Cash Incentive Bonuses—Based upon the levels of achievement of the corporate performance goals and individual performance goals established under our senior management cash incentive bonus plan for 2019, approved for our Named Executive Officers other than our CEO annual cash bonuses in amounts ranging from 102% to 107% of their target annual cash bonus opportunities, and an annual cash bonus for our CEO equal to 102% of his target annual cash bonus opportunity. |
| ▪ | Long-Term Incentive Compensation—Granted long-term incentive compensation opportunities in the form of options to purchase shares of our common stock and RSU awards that may vest and be settled for shares of our common stock with aggregate grant date fair values ranging from approximately $1,930,890 to approximately $2,549,933 for our Named Executive Officers (other than Mr. Fairey) other than our CEO, as well as an option to purchase shares of our common stock and an RSU award for our CEO with an aggregate grant date fair value of approximately $9,236,551. |
| ▪ | Compensation Arrangements with Mr. Fairey—In connection with his appointment as our Executive Vice President, Chief Commercial Officer, we entered into an employment offer letter dated January 5, 2019 (the “Employment Offer Letter”) with Mr. Fairey. Pursuant to the Employment Offer Letter, our initial compensation arrangements with Mr. Fairey were as follows: |
| ▪ | an initial annualized base salary of $500,000; |
| ▪ | a target annual cash incentive bonus opportunity equal to 45% of his annual base salary, based on his achievement relative to certain performance goals to be recommended by our CEO and approved by our Board of Directors; |
| ▪ | a sign-on bonus in the amount of $225,000, subject to reimbursement of the Company in the event that he should terminate his employment with us within 12 months of his hire date; |
| ▪ | an option to purchase 69,500 of shares of our common stock with an exercise price equal to the fair market value of our common stock on the date of grant, and with such option to vest (and become exercisable) over a four year period beginning with 25% of the shares of our common stock subject to the option vesting on the first anniversary of his employment start date and the remaining shares subject to the option vesting in equal monthly installments thereafter over the next 36 months, contingent upon him remaining continuously employed by us through each applicable vesting date; and |
| ▪ | an RSU award for 32,500 shares of our common stock, with such award to vest as to 25% of the shares of our common stock subject to the award on the first anniversary of his employment start date and the remaining shares subject to the award vesting in equal annual installments thereafter over the next three years, contingent upon him remaining continuously employed by us through each applicable vesting date. |
In addition, the Employment Offer Letter provides that Mr. Fairey is eligible to receive certain payments and benefits in the event that his employment is terminated without cause (as defined in the Employment Offer Letter) as described in more detail in “Potential Payments Upon Termination or Change in Control” below.
The Employment Offer Letter was negotiated on our behalf by our CEO and approved by the Compensation Committee. In establishing these initial compensation arrangements, we took into consideration the requisite experience and skills that a qualified candidate would need to work in a growing business in a dynamic and ever-changing environment, the competitive market for similar positions at other comparable companies based on a review of peer group compensation data, and the need to integrate Mr. Fairey into the executive compensation structure that we had developed since our initial public offering of our equity securities, balancing both competitive and internal equity considerations. For a summary of the material terms and conditions of the Employment Offer Letter, see “Potential Payments Upon Termination or Change in Control” below.
Pay-for-Performance
We believe our executive compensation program is reasonable and competitive, and appropriately balances the goals of attracting, motivating, rewarding, and retaining our executive officers with the goal of aligning their interests with those of our stockholders. To ensure this alignment and to motivate and reward individual initiative and effort, a significant portion of our executive officers’ annual target total direct compensation is both variable in nature and “at-risk.”
We emphasize variable compensation that appropriately rewards our executive officers, including our Named Executive Officers, through three separate compensation elements:
| ▪ | First, we provide the opportunity to participate in our senior management cash bonus planwhich provides cash payments if they produce short-term operational and strategic results that meet or exceed the objectives established by our Board of Directors at the beginning of the year. |
| ▪ | In addition, we grant options to purchase shares of our common stock, which comprise a significant portion of their target total direct compensation, the value of which depends entirely on appreciation in the value of our common stock, aligning their interests with those of our stockholders. |
| ▪ | Finally, we grant RSU awards, the value of which depends entirely on the value of our common stock, thereby incentivizing them to build sustainable long-term value for the benefit of our stockholders. |
These variable pay elements ensure that, each year, a significant portion of our executive officers’ target total direct compensation is contingent (rather than fixed) in nature, with the amounts ultimately payable subject to variability above or below target levels commensurate with our actual performance.
We believe that this design provides balanced incentives for our executive officers to drive financial and operational performance and, thereby, create long-term growth.
Executive Compensation Policies and Practices
We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. The Compensation Committee evaluates our executive compensation program on a regular basis to ensure that it is consistent with our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for executive talent. During 2019, we maintained the following executive compensation policies and practices, including both policies and practices we have implemented to drive performance and policies and practices that either prohibit or minimize behavior that we do not believe serve our stockholders’ long-term interests:
What We Do
| ▪ | Pay for Performance. Total compensation for our executive officers is heavily weighted towards annual incentive compensation and equity awards, both of which encourage financial and operational performance to drive the creation of stockholder value. |
| ▪ | Maintain an Independent Compensation Committee. The Compensation Committee consists solely of independent directors who establish our compensation policies and practices. |
| ▪ | Retain an Independent Compensation Consultant. The Compensation Committee has engaged its own compensation consultant to provide information, analysis, and other advice on executive and director compensation independent of management. This compensation consultant performed no other consulting or other services for us in 2019. |
| ▪ | Annual Executive Compensation Review. The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review and determination of our compensation peer group used for comparative purposes and a review of our compensation-related risk profile to ensure that our compensation programs do not encourage excessive or inappropriate risk-taking and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on us. |
| ▪ | Compensation “At-Risk”. Our executive compensation program is designed so that a significant portion of our executive officer’s total direct compensation is “at risk” based on corporate performance, as well as equity-based, to align the interests of our executive officers and stockholders. |
| ▪ | “Double-Trigger” Required. A “double trigger” is required before our executive officers receive change-in-control severance payments and benefits. |
| ▪ | Succession Planning. We review the risks associated with our key executive officer positions to ensure adequate succession plans are in place. |
What We Do Not Do
| ▪ | No Guaranteed Bonuses. We do not provide guaranteed bonuses to our executive officers. |
| ▪ | No Executive Retirement Plans. We do not currently offer, nor do we have plans to offer, defined benefit pension plans or any non-qualified deferred compensation plans or arrangements to our executive officers other than the plans and arrangements that are available to all employees. Our executive officers are eligible to participate in our Section 401(k) retirement savings plan on the same basis as our other employees.
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| ▪ | No Hedging or Pledging. We prohibit our employees, including our executive officers, and the non-employee members of our Board of Directors from hedging or pledging our securities. |
| ▪ | No Excise Tax Payments on Future Post-Employment Compensation Arrangements. We do not provide any contractual rights for excise tax reimbursement payments (including “gross-ups”) on payments or benefits contingent upon a change in control of the Company. |
| ▪ | No Special Welfare or Health Benefits. We do not provide our executive officers with any welfare or health benefit programs, other than participation in our broad-based employee programs on the same basis as our other employees. |
| ▪ | No Perquisites. We do not provide perquisites or personal benefits to our executive officers. |
| ▪ | No Option Re-pricing. We do not re-price stock options without stockholder approval. |
Stockholder Advisory Votes on Named Executive Officer Compensation
At our 2019 Annual Meeting of Stockholders, we conducted a non-binding stockholder advisory vote on the compensation of our Named Executive Officers (commonly known as a “Say-on-Pay” vote). Approximately 99.0% of the votes cast approved our named executive officer compensation for 2018. Our Board of Directors and the Compensation Committee consider the result of the Say-on-Pay vote in determining the compensation of our executive officers, including our Named Executive Officers. Based on the strong level of support for our executive compensation program demonstrated by the result of last year’s Say-on-Pay vote, among other factors, our Board of Directors and the Compensation Committee determined not to implement significant changes to our executive compensation program for 2019.
We value the opinion of our stockholders. Our Board of Directors and the Compensation Committee will continue to consider the result of the Say-on-Pay vote, as well as feedback received throughout the year, when making compensation decisions for our executive officers.
In addition, consistent with the recommendation of our Board of Directors and the preference of our stockholders as reflected in the non-binding stockholder advisory vote on the frequency of future Say-on-Pay votes held at our 2019 Annual Meeting of Stockholders, we intend to hold future Say-on-Pay votes on an annual basis. Accordingly, our next Say-on-Pay vote will be conducted at our 2021 Annual Meeting of Stockholders.
Executive Compensation Objectives
The principal objectives of our executive compensation program, policies and practices are to:
| ▪ | offer competitive compensation which enables us to attract and retain high-caliber executives; |
| ▪ | reward the achievement of our business objectives by directly linking rewards to the achievement of objectives that build long-term stockholder value; |
| ▪ | recognize both corporate and individual performance by providing opportunities for above-median short-term and long-term compensation based on measurable corporate and individual performance; and |
| ▪ | align the interests of our executives with those of our stockholders by incentivizing and rewarding the creation of stockholder value. |
Our executive compensation program has reflected, and we expect that it will continue to reflect, the fact that we are a biopharmaceutical company whose product candidates are in pre-clinical and clinical development and subject to regulatory approval. As a result, our revenues have been and will continue to be limited, and we expect to continue to incur net losses for at least the next several years. In an effort to preserve cash resources, our historical compensation programs have focused on long-term incentive compensation in the form of equity awards relative to cash compensation. This approach seeks to place a substantial portion of executive compensation at risk by rewarding our Named Executive Officers, in a manner comparable to our stockholders, for achieving our business and financial objectives.
In addition to long-term incentive compensation, we have also implemented a cash bonus plan for our Named Executive Officers. Payments under this cash bonus plan are based on our level of achievement of pre-established corporate performance goals and, with the exception of our CEO, individual performance goals.
We design and implement an executive compensation program that combines both cash and incentive elements based on annual performance objectives and long-term equity elements. The Compensation Committee has not, however, adopted any formal or informal policies or guidelines for allocating compensation between current and long-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation.
Compensation-Setting Process
Role of Compensation Committee
The Compensation Committee discharges the responsibilities of our Board of Directors relating to the compensation of our executive officers, including our Named Executive Officers.The Compensation Committee has overall responsibility for overseeing our compensation and benefits policies generally, and overseeing and evaluating the compensation plans, policies, and practices applicable to our CEO and other executive officers.
The Compensation Committee is responsible for determining the compensation programs for our executive officers and making recommendation to the Board of Directors regarding compensation programs for the non-employee members of our Board of Directors and reports to our Board of Directors on its discussions, decisions, and other actions. Typically, our CEO makes recommendations to the Compensation Committee, often attends committee meetings, and is involved in the determination of compensation for the respective executive officers that report to him, except that our CEO does not make recommendations or participate in deliberations as to his own compensation. These recommendations are based on our results, an executive officer’s individual contribution toward these results, and an executive officer’s performance toward individual goal achievement. The Compensation Committee then reviews the recommendations and other data and makes decisions as to total direct compensation for each executive officer, including our CEO, as well as each individual compensation element.
In carrying out its responsibilities, the Compensation Committee evaluates our compensation policies and practices with a focus on the degree to which these policies and practices reflect our executive compensation philosophy, develops strategies and makes decisions that it believes further our philosophy or align with developments in best compensation practices, and reviews the performance of our executive officers when making decisions with respect to their compensation.
Pursuant to our 2015 Plan, the Compensation Committee may delegate to our CEO all or part of its authority to approve certain grants of equity awards to certain individuals, subject to certain limitations including the amount of awards that can be granted pursuant to such delegated authority. The Compensation Committee has delegated to our CEO the authority to approve certain grants of awards under the 2015 Plan to certain employees below the level of Vice President in connection with their hiring or promotion, subject to certain limitations as set forth in our Equity Award Grant Policy. See “Other Compensation Policies – Equity Award Grant Policy” below.
The Compensation Committee retains a compensation consultant (as described below) to provide support in its review and assessment of our executive compensation program.
The Compensation Committee’s authority, duties, and responsibilities are further described in its charter. See “Board of Directors and Committees of the Board – Compensation Committee” above.
Role of Management
In discharging its responsibilities, the Compensation Committee works with members of our management, including our CEO. Our management assists the Compensation Committee by providing information on corporate and individual performance, competitive market data, and management’s perspective on compensation matters. The Compensation Committee solicits and reviews our CEO’s proposals with respect to program structures, as well as his recommendations for adjustments to annual cash compensation, long-term incentive compensation opportunities, and other compensation-related matters for our executive officers, including our Named Executive Officers (except with respect to his own compensation) based on his evaluation of their performance for the prior year.
At the beginning of each year, our CEO reviews the performance of our other executive officers for the previous year, and then shares these evaluations with, and makes recommendations to, the Compensation Committee for each element of compensation. These recommendations concern the base salary, annual cash incentive compensation, and long-term incentive compensation for each of our executive officers (other than himself) based on our results, the individual executive officer’s contribution to these results, and his or her performance toward achieving his or her individual performance objectives.
The Compensation Committee reviews and discusses his proposals and recommendations with our CEO and considers them as one factor in determining and approving the compensation of our other executive officers, including our other Named Executive Officers. Our CEO also attends meetings of our Board of Directors and the Compensation Committee at which executive compensation matters are addressed, except with respect to discussions involving his own compensation.
Role of Compensation Consultant
Pursuant to its charter, the Compensation Committee may engage an external compensation consultant to assist it by providing information, analysis, and other advice relating to our executive compensation program and the decisions resulting from its annual executive compensation review. The compensation consultant reports directly to the Compensation Committee and its chair, and serves at the discretion of the Compensation Committee, which reviews the engagement annually.
For 2019, the Compensation Committee retained Compensia, Inc. (“Compensia”), a national compensation consulting firm, to serve as its compensation advisor to advise on executive compensation matters, including competitive market pay practices for our executive officers, and with the data analysis and selection of the compensation peer group.
During 2019, Compensia attended the meetings of the Compensation Committee (both with and without management present) as requested and provided various services, including the following:
| ▪ | review, research, and updating of our compensation peer group; |
| ▪ | analysis of competitive market data based on the compensation peer group for our executive positions and evaluation on how the compensation we pay our executive officers compares both to our performance and to how the companies in our compensation peer group compensate their executives; |
| ▪ | review and analysis of the base salary levels, annual incentive bonus opportunities, and long-term incentive compensation opportunities of our executive officers; |
| ▪ | review and analysis of the compensation arrangements of the non-employee members of our Board of Directors against the companies in the compensation peer group; |
| ▪ | review and analysis of the post-employment compensation arrangements for our executive officers; |
| ▪ | assessment of executive compensation trends within our industry, and updating on corporate governance and regulatory issues and developments; |
| ▪ | consulting services to the Compensation Committee chair and other members between Compensation Committee meetings; and |
| ▪ | support on other ad hoc matters throughout the year. |
The terms of Compensia’s engagement includes reporting directly to the Compensation Committee chair. Compensia also coordinated with our management for data collection and job matching for our Named Executive Officers. In 2019, Compensia did not provide any other services to us other than the consulting services to the Compensation Committee.
The Compensation Committee regularly reviews the objectivity and independence of the advice provided by its compensation consultant on executive compensation matters. The Compensation Committee has evaluated Compensia’s engagement, and based on the six factors for assessing independence and identifying potential conflicts of interest that are set forth in Exchange Act Rule 10C-1(b)(4) and Rule 5605(d)(3)(D) of the NASDAQ Marketplace Rules, and such other factors as were deemed relevant under the circumstances, has determined that its relationship with Compensia and the work of Compensia on behalf of the Compensation Committee did not raise any conflict of interest, and that Compensia is independent.
Competitive Positioning
For purposes of assessing our executive compensation against the competitive market, the Compensation Committee reviews and considers the compensation levels and practices of a select group of peer companies. This compensation peer group consists of biopharmaceutical companies that are similar to us in terms of market capitalization, stage of development, therapeutic focus, and number of employees. The competitive data drawn from this compensation peer group is only one of several factors that the Compensation Committee considers, however, in making its decisions with respect to the compensation of our executive officers, including our Named Executive Officers.
The companies in the compensation peer group for 2019 were approved in October 2018 based on their similarity to us, as determined using the following criteria:
| ▪ | market capitalization – approximately 0.33x to approximately 4.0x our market capitalization of approximately $2.5 billion (approximately $825 million to $10.0 billion); |
| ▪ | industry sector – biotechnology and pharmaceuticals; and |
| ▪ | stage of lead drug candidate – phase III, pending approval. |
We also considered several key secondary factors, including a company’s therapeutic focus (with a preference for companies addressing cardiovascular diseases), business model, and its employee headcount.
Based on a review of the analysis prepared by Compensia, taking into account the above factors, the Compensation Committee approved the following compensation peer group for 2019:
Acceleron Pharma, Inc. | | Global Blood Therapeutics, Inc. |
Aerie Pharmaceuticals Inc. | | Immunomedics, Inc. |
Agios Pharmaceuticals Inc. | | Aimmune Therapeutics, Inc. |
Insmed, Inc. | | Blueprint Medicines Corporation |
Alder BioPharmaceuticals, Inc. | | Amicus Therapeutics, Inc. |
Atara Biotherapeutics, Inc. | | ImmunoGen, Inc. |
Portola Pharmaceuticals, Inc. | | FibroGen, Inc. |
Sage Therapeutics, Inc. | | Ultragenyx Pharmaceutical Inc. |
bluebird bio, Inc. | | Spark Therapeutics, Inc. |
Xencor, Inc. | | Loxo Oncology, Inc. |
The compensation practices of the compensation peer group were the primary guide used by the Compensation Committee in 2019 to compare the competitiveness of each of our compensation elements (base salary, target annual cash bonus opportunities, and long-term incentive compensation) and their overall compensation levels. The Compensation Committee used data drawn from public filings (primarily proxy statements) of the companies in our compensation peer group and/or additional data drawn from the Radford Global Life Science Survey to evaluate the competitive market when determining the total direct compensation packages for our executive officers.
The Compensation Committee reviews our compensation peer group each year (unless there have been significant changes to either our developmental phase or market capitalization, in which case the Compensation Committee may review more frequently) and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group.
Setting Target Total Direct Compensation
The Compensation Committee reviews the base salary levels, annual cash bonus opportunities, and long-term incentive compensation opportunities of our executive officers, including our Named Executive Officers, at the beginning of each year, or more frequently as warranted. Adjustments are generally effective at the beginning of the fiscal year.
The Compensation Committee does not establish a specific target for formulating the target total direct compensation opportunities of our executive officers. In making decisions about the compensation of our executive officers, the members of the Compensation Committee rely primarily on their considerations of various factors, including the following:
| ▪ | our executive compensation program objectives; |
| ▪ | our performance against the financial, operational, and strategic objectives established by the Compensation Committee and our Board of Directors; |
| ▪ | each individual executive’s knowledge, skills, experience, qualifications, and tenure; |
| ▪ | the scope of each executive’s role and responsibilities compared to other similarly situated executives at the companies in our compensation peer group; |
| ▪ | the prior performance of each individual executive, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, and work as part of a team, all of which reflect our core values; |
| ▪ | the potential of each individual executive to contribute to our long-term financial, operational, and strategic objectives; |
| ▪ | our CEO’s compensation relative to that of our executives, and compensation parity among our executives; |
| ▪ | our financial performance relative to our compensation peers; |
| ▪ | the compensation practices of our compensation peer group and the positioning of each executive’s compensation in a ranking of peer company compensation levels based on an analysis of competitive market data; and |
| ▪ | the recommendations of our CEO with respect to the compensation of our other executives. |
These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each executive officer. No single factor is determinative in setting compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable.
The Compensation Committee does not weight these factors in any predetermined manner, nor does it apply any formulas in developing its decisions. The members of the Compensation Committee consider all of this information in light of their individual experience, knowledge of the Company, knowledge of the competitive market, knowledge of each executive officer, and business judgment in making their decisions.
The Compensation Committee also considers the potential risks in our business when designing and administering our executive compensation program, and we believe our balanced approach to performance measurement and pay delivery works to avoid misaligned incentives for individuals to undertake excessive or inappropriate risk.
The Compensation Committee does not engage in formal benchmarking against other companies’ compensation programs or practices to establish our compensation levels or make specific compensation decisions with respect to our executive officers, including our Named Executive Officers. Instead, in making its determinations, the Compensation Committee reviews information summarizing the compensation paid at a representative group of peer companies, to the extent that the executive positions at these companies are considered comparable to our positions and informative of the competitive environment to gain a general understanding of market compensation levels.
Compensation Elements
In 2019, the principal elements of our executive compensation program, and the purposes for each element, were as follows:
| | | |
Element | Type of Element | Compensation Element | Objective |
Base Salary | Fixed | Cash | Designed to attract and retain highly talented executives by providing fixed level of cash compensation that is competitive in the market and rewards performance of responsibilities |
Annual Cash Incentive Bonus Awards | Variable | Cash | Designed to motivate our executives to achieve our principal business goals and provide financial incentives based on our level of achievement with respect to both corporate and individual performance goals |
Long Term Incentive Compensation | Variable | Equity awards in the form of options to purchase shares of our common stock and RSU awards that may vest and be settled for shares of our common stock | Designed to incentivize and reward our executives for long-term corporate performance based on the value of our common stock and, thereby, to align the interests of our executives and our stockholders by motivating them to create sustainable long-term stockholder value |
Base Salary
Generally, we establish the initial base salaries of our executive officers through arm’s-length negotiation at the time we hire the individual, taking into account his or her position, qualifications, experience, expectations based on prior positions or experience, and the base salaries of our other executive officers. Thereafter, the Compensation Committee reviews the base salaries of our executive officers each year as part of its annual compensation review and makes adjustments as it determines to be reasonable and necessary based on the factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above.
In February 2019, the Compensation Committee reviewed the base salaries of our incumbent executive officers, including our Named Executive Officers, taking into consideration a competitive market analysis and the recommendations of our CEO (except with respect to his own base salary), as well as Dr. Lee’s promotion to Executive Vice President in 2019 and Mr. Bauer’s promotion to Chief Business Officer in 2018, and the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above. Following this review, the Compensation Committee approved base salary increases for our incumbent executive officers, effective retroactively as of January 1, 2019. The base salaries of our incumbent Named Executive Officers for 2019 were as follows:
Named Executive Officer | | 2018 Base Salary ($) | | | 2019 Base Salary ($) | | | | Percentage Adjustment |
Mr. Gianakakos | | | 575,000 | | | | 615,000 | | | | | 7.0 | % |
Mr. Harris | | | 415,000 | | | | 425,800 | | | | | 2.6 | % |
Mr. Fairey | | | — | | | | 500,000 | | (1) | | | — | |
Mr. Bauer | | | 339,000 | | | | 383,900 | | | | | 13.2 | % |
Dr. McDowell | | | 393,000 | | | | 412,700 | | | | | 5.0 | % |
Dr. Lee | | | 414,000 | | | | 465,800 | | | | 12.5 | % |
(1) | Mr. Fairey commenced employment with us in 2019. His initial base salary was established at $500,000 pursuant to the terms of his employment offer letter dated January 28, 2019. |
In connection with his appointment as our Executive Vice President, Chief Commercial Officer in January 2019, the Compensation Committee approved an initial annual base salary for Mr. Fairey in the amount of $500,000, effective January 28, 2019.
The base salaries paid to our Named Executive Officers during 2019 are set forth in the “2019 Summary Compensation Table” below.
Annual Cash Bonuses
We use an annual cash incentive bonus plan to motivate our employees, including our Named Executive Officers, to achieve our key annual business objectives. Our annual cash bonuses, other than that of our CEO, are tied to the achievement of annual corporate and individual performance goals pursuant to our Senior Executive Cash Incentive Bonus Plan adopted by the Compensation Committee in February 2016 (the “Cash Bonus Plan”). Our annual cash bonus for our CEO is tied entirely to corporate performance goals, to reflect to overall responsibility for our corporate performance. The Cash Bonus Plan provides that:
| ▪ | the Compensation Committee will establish the annual corporate performance goals and weighting; |
| ▪ | the Compensation Committee will establish a target bonus opportunity for each eligible participant under the Cash Bonus Plan, including our Named Executive Officers; |
| ▪ | annual cash bonuses must be based on objectively determinable bonus formulas adopted by the Compensation Committee that tie such bonuses to achievement of the annual corporate performance goals; |
| ▪ | annual cash bonuses may not be paid unless and until the Compensation Committee makes a determination with respect to achievement of the annual corporate performance goals; and |
| ▪ | the Compensation Committee may adjust annual cash bonuses based on achievement of individual performance goals and based on such other terms and conditions as it may in its discretion determine. |
Target Annual Cash Incentive Bonus Opportunities
In accordance with the Cash Bonus Plan, 2019 cash bonus payments to our senior executives, including the Named Executive Officers, were based upon a specific percentage of each participant’s base salary. In February 2019, the Compensation Committee reviewed the target annual cash incentive bonus opportunities of our incumbent executive officers, including our Named Executive Officers, taking into consideration the recommendations of our CEO (except with respect to his own target annual cash incentive bonus opportunity) as well as the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above. Following this review, the Compensation Committee decided to maintain the target annual cash incentive bonus opportunities of our Named Executive Officers at their 2018 levels. The dollar value of each Named Executive Officer’s target annual cash incentive bonus opportunity increased, however, as a result of the increases to their 2019 base salaries.
For 2019, the target annual cash incentive bonus opportunities for our Named Executive Officers were as follows:
Named Executive Officer | | 2019 Target Annual Cash Bonus Opportunity (% of Base Salary) | | | 2019 Target Annual Cash Bonus Opportunity ($) |
Mr. Gianakakos | | | 60% | | | | 369,000 |
Mr. Harris | | | 40% | | | | 170,320 |
Mr. Fairey | | | 45% | | | | 225,000 |
Mr. Bauer | | | 40% | | | | 153,560 |
Dr. McDowell | | | 40% | | | | 165,080 |
Dr. Lee | | | 45% | | | | 209,610 |
In connection with his appointment as our Executive Vice President, Chief Commercial Officer in January 2019, the Compensation Committee approved a target annual cash incentive bonus opportunity for Mr. Fairey equal to 45% of his annual base salary, effective January 28, 2019.
Corporate Performance Goals
Participants in the Cash Bonus Plan are eligible to receive a bonus payment based upon the attainment of one or more corporate performance goals recommended by our CEO and approved by our Board of Directors which relate to financial, operational, and strategic metrics that were important to us. In February 2019, our Board of Directors approved the corporate performance goals as presented and discussed with our CEO. Generally, these goals related to our progress on advancing our clinical programs, demonstrating research leadership, strengthening our organization and culture and growing value for our stockholders, as follows:
Transform the lives of patients with HCM—fully mine mechanistic potential of mavacamten (weighted 60%);
Leverage HCM platform to create novel targeted therapies in DCM and diastolic disease – drive to 2025 (weighted 30%); and
Corporate activities to support priorities—extend cash runway and successfully onboard and engage new employees (weighted 10%).
Each corporate performance goal was weighted according to our Board of Directors’ assessment of its relative importance to the successful execution of our annual operating plan. For each of our Named Executive Officers, the corporate performance goals had a threshold and a maximum performance level of 70% and 150%, respectively.
For purposes of the 2019 Cash Bonus Plan, our Board of Directors reserved the discretion to consider other corporate achievements during 2019 when determining the actual funding level for this component of the plan.
Individual Performance Goals
In addition, at the beginning of each year, our CEO, in consultation with each of our other executive officers, including each of our other Named Executive Officers, established individual performance goals for each of such executive officers. The individual performance goals are generally designed to align the goals of our executive officers and his or her department with the corporate goals. Our CEO does not have individual performance goals. Rather, his annual cash bonus was based entirely on the achievement of our corporate goals in recognition of his overall responsibility for our corporate performance. The individual performance goals involved both quantitative and qualitative metrics that were connected to the achievement of our corporate performance goals as well as the functional area for which our other executive officers were responsible. For each of our Named Executive Officers other than our CEO, the individual performance goals had a threshold and a maximum performance level of 60% and 200%, respectively.
2019 Annual Cash Bonus Decisions
In February 2020, the Compensation Committee reviewed our performance with respect to each of the corporate performance goals listed above and determined the extent to which each goal had been achieved during the year. The Compensation Committee determined that we had achieved the corporate performance goals at a 102% achievement level based on the percentages pre-assigned to each of the goals.
The Compensation Committee then reviewed the individual performance of each of our executive officers based on an evaluation conducted by our CEO of their performance against their individual performance goals. Based on the recommendations of our CEO (except with respect to his own performance), the Compensation Committee then assigned each Named Executive Officer an individual performance achievement percentage ranging from 100% to 120%, based on the performance and achievements of each individual.
The following table sets forth the target annual cash bonus opportunities, the actual achievement level for corporate and individual performance, the actual cash bonus payments made to our Named Executive Officers for 2019, and the percentage that the actual cash bonus payment represented of their target annual cash bonus opportunity:
Named Executive Officer | | 2019 Annual Base Salary ($) | | | Target Annual Cash Bonus Opportunity (% of base salary) | | 2019 Corporate Performance Achieved (1) | | 2019 Individual Performance Achieved (1) | | Actual Annual Cash Bonus Earned ($) | | | Actual % of Target Annual Cash Bonus Opportunity Earned |
Mr. Gianakakos | | | 615,000 | | | | 60 | % | | | 102 | % | (2) | | N/A | | | $ | 376,000 | | | | 102 | % |
Mr. Harris | | | 425,800 | | | | 40 | % | | | 102 | % | | | 115 | % | | $ | 179,000 | | | | 105 | % |
Mr. Fairey (3) | | | 500,000 | | | | 45 | % | | | 102 | % | | | 105 | % | | $ | 213,000 | | | | 103 | % |
Mr. Bauer | | | 383,900 | | | | 40 | % | | | 102 | % | | 120 | % | | $ | 164,000 | | | 107 | % |
Dr. McDowell | | | 412,700 | | | | 40 | % | | | 102 | % | | | 100 | % | | $ | 168,00 | | | | 102 | % |
Dr. Lee (4) | | | 465,800 | | | | 45 | % | | | — | | | | — | | | | — | | | | — | |
(1) | Unless otherwise noted, the weighting of corporate performance was 75% and individual performance was 25%. |
(2) | The weighting was 100% corporate performance. |
(3) | The cash incentive bonus payment for Mr. Fairey was prorated for his employment start date. |
(4) | In accordance with the terms of her Transition Agreement (as described in “Potential Payments upon Termination or Change in Control—Change in Control and Severance Policy—June Lee, M.D.” below), Dr. Lee was not eligible to receive a cash incentive bonus payment for 2019. |
The annual cash bonus payments made to our Named Executive Officers for 2019 are set forth in the “2019 Summary Compensation Table” below.
Long-Term Incentive Compensation
We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program. Typically, these equity awards are granted in the form of options to purchase shares of our common stock and RSU awards that may vest and be settled for shares of our common stock. We believe that stock options, when granted with exercise prices equal to the fair market value of our common stock on the date of grant, provide an appropriate long-term incentive for our executive officers, since the stock options reward them only to the extent that our stock price increases and stockholders realize value following their grant date. We further believe that RSU awards help us to achieve our retention objectives (even in the event of a decline in our share price) and provide an incentive to grow the value of our common stock. In addition, RSU awards enable our executive officers to accumulate stock ownership in the Company.
Typically, we have granted equity awards to our executive officers as part of the Compensation Committee’s annual review of our executive compensation program. To date, the Compensation Committee has not applied a rigid formula in determining the size of these equity awards. Instead, the Compensation Committee determines the amount of the equity award for each executive officer after taking into consideration a compensation analysis performed by its compensation consultant, the equity award recommendations of our CEO (except with respect to his own award), the amount of equity compensation held by the executive officer (including the current economic value of his or her unvested equity and the ability of these unvested holdings to satisfy our retention objectives), and the factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above.
In February 2019, the Compensation Committee determined to grant options to purchase shares of our common stock (weighted 75%) and RSU awards that may vest and be settled for shares of our common stock (weighted 25%) to our executive officers, including our Named Executive Officers (other than Mr. Fairey, who received a new hire equity grant), in amounts that it considered to be consistent with our compensation philosophy and which also recognized the performance of each of our executive officers.
In connection with his appointment as our Executive Vice President, Chief Commercial Officer in January 2019, the Compensation Committee granted Mr. Fairey an option to purchase 69,500 shares of our common stock with an exercise price equal to the fair market value of our common stock on the date of grant and an RSU award that may vest and be settled for 32,500 shares of our common stock. As a new hire grant, the option vests (and becomes exercisable) over a four-year period beginning with 25% of the shares of our common stock subject to the option vesting on the first anniversary of his employment start date with the remaining shares subject to the option vesting in equal monthly installments thereafter over the next 36 months, contingent upon Mr. Fairey remaining continuously employed by us through each applicable vesting date. As a new hire grant, the RSU award vests as to 25% of the shares of our common stock subject to the award on the first anniversary of his employment start date and the remaining shares subject to the award vesting in equal annual installments thereafter over the next three years, contingent upon Mr. Fairey remaining continuously employed by us through each applicable vesting date.
The equity awards granted to our Named Executive Officers in 2019 were as follows:
Named Executive Officer | | Options to Purchase Shares of Common Stock (#of shares) (1) | | | RSU Awards for Shares of Common Stock (# of shares) (2) | | | Aggregate Grant Date Fair Value ($)(3) |
Mr. Gianakakos | | | 236,500 | | | | 81,200 | | | | 9,236,551 |
Mr. Harris | | | 49,400 | | | | 17,000 | | | | 1,930,890 |
Mr. Fairey (4) | | | 69,500 | | | | 32,500 | | | | 3,185,151 |
Mr. Bauer | | | 57,400 | | | | 19,800 | | | | 2,245,468 |
Dr. McDowell | | | 57,400 | | | | 19,800 | | | | 2,245,468 |
Dr. Lee | | | 65,000 | | | | 22,600 | | | | 2,549,933 |
(1) | The options to purchase shares of our common stock vest and become exercisable over a four-year period, with 1/48th of the shares of our common stock subject to the options vesting in equal monthly installments following the vesting commencement date (January 1, 2019), contingent upon the Named Executive Officer remaining continuously employed by us through each applicable vesting date. |
(2) | The RSU awards that may be settled for shares of our common stock vest over a four-year period, with 1/4th of the shares of our common stock subject to the awards vesting in equal annual installments on each anniversary of the vesting commencement date (January 1, 2019), contingent upon the Named Executive Officer remaining continuously employed by us through each applicable vesting date. |
(3) | In accordance with SEC rules, this column reflects the aggregate grant date fair value of the option awards and RSUs granted during the fiscal year ended December 31, 2019 computed in accordance with FASB ASC Topic 718. Such aggregate grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. Assumptions used in the calculation of these amounts are included in Note 9 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. These amounts do not reflect the actual economic value that may be realized by the directors upon the exercise of the options or the sale of the common stock underlying such options or vesting and settlement of the RSUs. |
(4) | Mr. Fairey did not receive an annual grant for 2019. He only received a new hire equity grant of 69,500 options and 32,500 RSUs discussed below. |
Welfare and Health Benefits
We have established a tax-qualified Section 401(k) retirement savings plan for our executive officers, including our Named Executive Officers, and other employees who satisfy certain eligibility requirements. Under this plan, eligible employees may elect to make pre-tax contributions of eligible compensation, not to exceed the statutory income tax limits. Employees’ pre-tax contributions are allocated to their individual accounts and then invested in selected investment alternatives according to a participant’s direction. Employees are immediately and fully vested in their contributions. We provide for discretionary matching contributions in the plan, up to an annual limit of $1,000 per employee. We intend for the plan to qualify under Section 401(a) of the Internal Revenue Code (the “Code”), with the related trust intended to be tax-exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions by participants to the plan, and income earned on plan contributions, are not taxable to participants until distributed from the Section 401(k) Plan.
Additional benefits received by our executive officers, including our Named Executive Officers, include medical, dental, and vision insurance, health savings account, an employee assistance program, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, and reimbursement for mobile phone use for business purposes. These benefits are provided to our executive officers on the same basis as to all of our employees.
We design our employee benefits programs to be affordable and competitive in relation to the market as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market.
Perquisites and Other Personal Benefits
Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our executive officers, including our Named Executive Officers, except as generally made available to our employees, or in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make him or her more efficient and effective, and for recruitment and retention purposes. During 2019, none of our Named Executive Officers received perquisites or other personal benefits that were, in the aggregate, $10,000 or more for each individual.
In the future, we may provide perquisites or other personal benefits in limited circumstances, such as those described in the preceding paragraph. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee.
Employment Arrangements
We have entered into written employment offer letters with our CEO and each of our other executive officers, including our other Named Executive Officers. Each of these arrangements was approved on our behalf by our Board of Directors or by the Compensation Committee. We believe that these arrangements were necessary to induce these individuals to forego other employment opportunities or leave their then-current employer for the uncertainty of a demanding position in a new and unfamiliar organization.
In filling each of our executive positions, our Board of Directors or the Compensation Committee, as applicable, recognized that it would need to develop competitive compensation packages to attract qualified candidates in a dynamic labor market. At the same time, our Board of Directors and the Compensation Committee were sensitive to the need to integrate new executives into the executive compensation structure that we were seeking to develop, balancing both competitive and internal equity considerations.
Each of our employment offer letters provides for “at will” employment (meaning that either we or the executive officer may terminate the employment relationship at any time without cause) and sets forth the initial compensation arrangements for the executive officer, including an initial base salary, eligibility for a discretionary bonus in an amount up to a specified percentage of the executive officer’s base salary, participation in our employee benefit programs, eligibility for future equity awards pursuant to our equity incentive plans, and, in some cases, reimbursement or payment of relocation expenses. These employment arrangements also prohibit the executive officers from engaging directly or indirectly in competition with us or disclosing our confidential information or business practices and require the executive officers to executive our standard form of employee proprietary information, confidentiality and assignment agreement.
For detailed descriptions of the employment arrangements we maintained with our Named Executive Officers during 2019, see “Compensation of Named Executive Officers—Potential Payments on Termination or Change in Control” below.
Post-Employment Compensation
We consider it essential to the best interests of our stockholders to foster the continuous employment of our key management personnel. Accordingly, we believe that reasonable and competitive post-employment compensation arrangements are essential to attracting and retaining highly-qualified executives. We further believe that when recruiting executive talent these arrangements are necessary to offer compensation packages that are competitive. The Compensation Committee does not consider the specific amounts payable under these post-employment compensation arrangements, however, when determining the annual compensation of our Named Executive Officers.
In October 2015, our Board of Directors adopted a Change in Control and Severance Policy (as amended in October 2018 and February 2019, the “CIC Policy”). The CIC Policy applies to our senior management employees, including our Named Executive Officers, and provides certain protections in the event of certain qualifying terminations of employment, including a qualifying termination of employment in connection with a change in control of the Company. We believe that these protections are necessary to induce these individuals to leave their former employment for the uncertainty of a demanding position in a new and unfamiliar organization and help from a retention standpoint. These arrangements are designed to provide reasonable compensation to the executive if their employment is terminated under certain circumstances to facilitate their transition to new employment. Further, we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing executive to sign a separation and release agreement acceptable to us as a condition to receiving post-employment compensation payments or benefits.
We also believe that these arrangements help maintain our senior management employees’ continued focus and dedication to their assigned duties to maximize stockholder value if there is a potential transaction that could involve a change in control of the Company. In this event, these arrangements keep our most senior executives focused on pursuing all corporate transaction activity in the best interests of our stockholders regardless of whether those transactions may result in their own job loss. Thus, these arrangements align the interests of our Named Executive Officers and our stockholders when considering our long-term future.
In determining payment and benefit levels under the various circumstances triggering post-employment compensation provisions under the CIC Policy, our Board of Directors has drawn a distinction between (i) voluntary terminations of employment without “good reason” or terminations of employment for “cause” and (ii) terminations of employment without “cause” or voluntary terminations of employment for “good reason” (as each such term is defined in our CIC Policy). Payment in the latter circumstances has been deemed appropriate in light of the benefits described in the prior paragraph, as well as the likelihood that an executive officer’s departure is due, at least in part, to circumstances not within his or her control. In contrast, we believe that payments are not appropriate in the event of a termination of employment for cause or a voluntary resignation without good reason because such events often reflect either performance challenges or an affirmative decision by the executive to end his or her relationship without fault by the Company.
Under the CIC Policy, all payments and benefits in the event of a change in control of the Company are payable only if there is a subsequent loss of employment by an executive officer (a so-called “double-trigger” arrangement). In the case of the acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention value following a change in control of the Company and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction.
In the event of a change in control of the Company, to the extent Section 280G or 4999 of the Code is applicable to an executive officer, such individual is entitled to receive either:
| ▪ | payment of the full amounts specified in the CIC Policy to which he or she is entitled; or |
| ▪ | payment of such lesser amount that does not trigger the excise tax imposed by Section 4999, whichever results in him or her receiving a higher amount after taking into account all federal, state, and local income, excise and employment taxes. |
We do not use excise tax payments (or “gross-ups”) relating to a change in control of the Company and have no such obligations in place with respect to any of our executive officers.
To receive payments and benefits under the CIC Policy, an executive officer must execute and not subsequently revoke a severance agreement within 60 days following the date of the termination of employment, including a general release of claims acceptable to us or our successor or acquirer.
For a summary of the material terms and conditions of the post-employment compensation arrangements we maintained with our Named Executive Officers during 2019, as well as an estimate of the potential payments and benefits that they would have been eligible to receive if a hypothetical change in control or other trigger event had occurred on December 31, 2019, see “Potential Payments on Termination or Change in Control” below.
Other Compensation Policies
Equity Award Grant Policy
Under our Equity Award Grant Policy, we grant equity awards on a regularly scheduled basis, as follows:
| ▪ | Grants of equity awards by the Board or the Compensation Committee in conjunction with the hiring of a new employee or the promotion of an existing employee will be effective on the date of approval by the Board or the Compensation Committee, or such later date as specified in such approval. |
| ▪ | Grants of equity awards to existing employees (other than in connection with a promotion) will generally be made, if at all, on an annual basis; provided, that (a) employees hired from January 1 through September 30 of a particular year will be eligible for pro-rated annual grants in the subsequent year and (b) employees hired from October 1 through December 31 of a particular year will not be eligible for annual grants in the subsequent year. |
| ▪ | Special timing rules apply to new hire, promotional and annual equity awards granted to employees by our CEO (which awards may not be granted to individuals who are executive officers of the Company or individuals who are employed at or above the level of Vice President). |
| ▪ | The exercise price of all stock options will be equal to (or, if specified in the approval of the stock option award, greater than) the closing market price on the NASDAQ Global Market of a share of our common stock on the effective date of grant. |
Currently, we have not implemented a policy regarding retroactive adjustments to any cash or equity-based incentive compensation paid to our Named Executive Officers and other employees where the payments were predicated upon the achievement of financial results that were subsequently the subject of a financial restatement. We intend to adopt a general compensation recovery (“clawback”) policy covering our annual and long-term incentive award plans and arrangements once the SEC adopts final rules implementing the requirement of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Hedging and Pledging Restrictions
Under the Special Trading Procedures for Insiders addendum to our Insider Trading Policy, our executive officers, and members of our Board of Directors, as well as certain designated employees, are prohibited from:
| ▪ | selling any of our securities that are not owned by such individual at the time of the sale (a “short sale”); |
| ▪ | buying or selling puts, calls, other derivative securities of the Company or any derivative securities that provide the economic equivalent of ownership of any of our securities or an opportunity, direct or indirect, to profit from any change in the value of our securities or engage in any other hedging transaction with respect to our securities, at any time unless such transaction has been approved by the Audit Committee of our Board of Directors; |
| ▪ | using our securities as collateral in a margin account; or |
| ▪ | pledging our securities as collateral for a loan (or modifying an existing pledge). |
Tax and Accounting Considerations
We take the applicable tax and accounting requirements into consideration in designing and operating our executive compensation program.
Deductibility of Executive Compensation
Generally, Section 162(m) of the Code (“Section 162(m)”) disallows public companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid to their chief executive officer, chief financial officer, and each of the three other most highly-compensated executive officers whose compensation may be required to be disclosed to stockholders under the Exchange Act in any taxable year. Remuneration in excess of $1 million paid to such covered employees is exempt from this deduction limit if it qualifies as “performance-based compensation” within the meaning of Section 162(m) with respect to taxable years before January 1, 2018 and is payable pursuant to a binding written agreement in effect on November 2, 2017 that has not been modified in any material respect on or after that date.
While the transition relief applicable to certain binding written performance-based compensation arrangements that were in effect as of November 2, 2017 may help minimize the effect of the Section 162(m) deduction limit in the short-term, we expect that, going forward, some portion of our Named Executive Officers’ compensation might not be fully deductible by us for federal income tax purposes.
In approving the amount and form of compensation for our Named Executive Officers, the Compensation Committee considers all elements of our cost of providing such compensation, including the potential impact of Section 162(m). The Compensation Committee may, in its judgment, approve compensation for our Named Executive Officers that is not deductible for federal income tax purposes when it believes that such compensation is in the best interests of the Company and our stockholders.
Accounting for Stock-Based Compensation
The Compensation Committee takes accounting considerations into account in designing compensation plans and arrangements for our executive officers and other employees. Chief among these is FASB ASC Topic 718, the standard which governs the accounting treatment of certain stock-based compensation. Among other things, FASB ASC Topic 718 requires us to record a compensation expense in our income statement for all equity awards granted to our executive officers and other employees. This compensation expense is based on the grant date “fair value” of the equity award and, in most cases, will be recognized ratably over the award’s requisite service period (which, generally, will correspond to the award’s vesting schedule). This compensation expense is also reported in the compensation tables below, even though recipients may never realize any value from their equity awards.
COMPENSATION OF NAMEDEXECUTIVE OFFICERS
2019 Summary Compensation Table
The following table presents information regarding the total compensation, for services rendered in all capacities, awarded to, earned by each individual who served asor paid to our chief executive officer at any timeNamed Executive Officers during the fiscal year ended December 31, 2015 and our two other most highly compensated executive officers who were serving as executive officers as of December 31, 2015. We refer to these officers in this Proxy Statement as our named executive officers.2019. The following table also sets forth information regarding total compensation awarded to, earned by andor paid to certain of our named executive officersNamed Executive Officers during the fiscal year endingyears ended December 31, 2014,2018 and 2017, to the extent they were named executive officersour Named Executive Officers during 2014.such fiscal years.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | | Salary
($) | | | Stock
Awards
($) (1) | | | Option
Awards
($) (1) | | | Non-Equity
Incentive Plan
Compensation
($) (2) | | | All Other
Compensation
($) | | | Total
($) | |
Tassos Gianakakos | | | 2015 | | | | 405,600 | | | | — | | | | 836,432 | (3) | | | 185,570 | | | | 500 | (6) | | | 1,427,603 | |
President, Chief Executive Officer and Director | | | 2014 | | | | 375,000 | | | | — | | | | — | | | | 112,875 | | | | 500 | | | | 488,875 | |
| | | | | | | |
Robert McDowell | | | 2015 | | | | 304,500 | | | | — | | | | 77,301 | (4) | | | 113,236 | | | | 500 | (6) | | | 495,037 | |
Senior Vice President of Drug Discovery | | | 2014 | | | | 285,375 | | | | — | | | | 10,078 | | | | 61,418 | | | | 500 | | | | 357,371 | |
| | | | | | | |
Joseph Lambing | | | 2015 | | | | 307,290 | | | | — | | | | 113,678 | (5) | | | 103,518 | | | | 500 | (6) | | | 524,486 | |
Senior Vice President, Nonclinical and Pharmaceutical Development | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | Salary ($) | | | Bonus ($) | | | | | Stock Awards ($)(1) | | | Option Awards ($)(1) | | | Non-Equity Incentive Plan Compensation ($)(2) | | | All Other Compensation ($)(3) | | | Total ($) | |
Tassos Gianakakos | | 2019 | | | 610,018 | | | | — | | | | | | 3,256,932 | | | | 5,979,619 | | | | 376,000 | | | | 1,000 | | | | 10,223,569 | |
President, Chief Executive Officer and Director | | 2018 | | | 569,204 | | | | 43,250 | | (4) | | | | 1,591,200 | | | | 6,373,376 | | | | 396,750 | | | | 1,000 | | | | 8,974,780 | |
| | 2017 | | | 505,450 | | | | — | | | | | | — | | | | 2,406,603 | | | | 297,205 | | | | 1,000 | | | | 3,210,258 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Taylor C. Harris | | 2019 | | | 424,471 | | | | — | | | | | | 681,870 | | | | 1,249,020 | | | | 179,000 | | | | 1,000 | | | | 2,535,361 | |
Chief Financial Officer(5) | | 2018 | | | 306,728 | | | | — | | | | | | 727,500 | | | | 3,258,070 | | | | 137,620 | | | | 1,000 | | | | 4,430,918 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
William Fairey Executive Vice President, Chief Commercial Officer(6) | | 2019 | | | 466,025 | | | | 225,000 | | (7) | | | | 1,389,375 | | | | 1,795,776 | | | | 213,000 | | | | 1,000 | | | | 4,090,176 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Jake Bauer | | 2019 | | | 382,196 | | | | — | | | | | | 794,178 | | | | 1,451,290 | | | | 164,000 | | | | 1,000 | | | | 2,792,664 | |
Chief Business Officer | | 2018 | | | 359,600 | | | | — | | | | | | 296,400 | | | | 1,177,049 | | | | 172,119 | | | | 1,000 | | | | 2,006,168 | |
| | 2017 | | | 322,700 | | | | — | | | | | | — | | | | 610,550 | | | | 178,030 | | | | 1,000 | | | | 1,112,280 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert S. McDowell, Ph.D. | | 2019 | | | 410,194 | | | | — | | | | | | 794,178 | | | | 1,451,290 | | | | 168,000 | | | | 1,000 | | | | 2,824,662 | |
Chief Scientific Officer | | 2018 | | | 387,562 | | | | — | | | | | | 400,400 | | | | 1,592,479 | | | | 180,780 | | | | 1,000 | | | | 2,562,221 | |
| | 2017 | | | 327,749 | | | | — | | | | | | — | | | | 814,463 | | | | 117,000 | | | | 1,000 | | | | 1,260,212 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
June Lee, M.D. | | 2019 | | | 459,281 | | | | — | | | | | | 906,486 | | | | 1,643,447 | | | | — | | | | 1,000 | | | | 3,010,214 | |
Executive Vice President, Chief Development Officer | | 2018 | | | 411,583 | | | | — | | | | | | 572,000 | | | | 2,298,708 | | | | 190,440 | | | | 1,000 | | | | 3,473,731 | |
| | 2017 | | | 352,917 | | | | 50,000 | | | | | | — | | | | 1,352,618 | | | | 215,088 | | | | 1,000 | | | | 1,971,623 | |
(1) | In accordance with SEC rules, these columns reflect the aggregate full grant date fair value of restricted stockRSUs and option awards granted during the applicable year in accordance with FASB ASC Topic 718. Pursuant to FASB ASC Topic 718, the amounts shown exclude the impact ofSuch aggregate grant date fair values do not take into account any estimated forfeitures related to service-based vesting conditions. For additional information onservice-vesting conditions. Assumptions used in the valuation assumptions underlying the valuecalculation of these restricted stock and options, see Part II, Item 8 “Financial Statements and Supplementary Data” ofamounts are included in Note 9 to our 2015consolidated financial statements included in our Annual Report on Form 10-K infor the Notes to Consolidated Financial Statements, Note 8, “Stock-based Compensation”.fiscal year ended December 31, 2019. The amounts do not reflect the actual economic value that may be realized by the named executive officers upon the vesting and settlement of RSUs, exercise of the options or the sale of the common stock underlying such equity awards. |
(2) | The amounts reported for 2015 reflect the cash incentive compensation determined byearned under our annual cash incentive bonus plan. These amounts reported for a year were paid in the following year. |
(3) | The amounts reported reflect the matching contributions under our 401(k) plan. |
(4) | The amount reported reflects the discretionary bonus awarded to Mr. Gianakakos in 2018 for his exceptional performance during the year. |
(5) | Mr. Harris was not a Named Executive Officer for the fiscal year ended December 31, 2017. |
(6) | Mr. Fairey commenced employment with us in January 2019 and was not a Named Executive Officer for the fiscal years ended December 31, 2018 and December 31, 2017. Mr. Fairey’s annual base salary and cash incentive compensation were pro-rated accordingly. |
(7) | Mr. Fairey received a signing bonus in connection with his commencement of employment with us. |
Grants of Plan-Based Awards for Fiscal Year 2019
The following table sets forth the individual awards made to each of our Named Executive Officers during 2019. For a description of the types of awards indicated below, please see our “Compensation Discussion and Analysis” above.
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | All Other Stock Awards: Number of Shares of Stock or Units | | | All Other Option Awards: Number of Securities Underlying Options | | | Exercise or Base Price of Option Awards | | | Grant Date Fair Value of Stock and Option Awards | |
Name | | Grant Date | | Threshold($) | | | Target($) | | | Maximum($) | | | (#)(2) | | | (#)(3) | | | ($/sh)(4) | | | ($) | |
Tassos Gianakakos | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annual Cash Bonus | | | | | 258,300 | | | | 369,000 | | | | 553,500 | | | | | | | | | | | | | | | | | |
RSUs | | 02/08/2019 | | | | | | | | | | | | | | | 81,200 | | | | | | | | | | | | 3,256,932 | |
Options | | 02/08/2019 | | | | | | | | | | | | | | | | | | | 236,500 | | | | 40.11 | | | | 5,979,619 | |
Taylor C. Harris | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annual Cash Bonus | | | | | 114,966 | | | | 170,320 | | | | 276,770 | | | | | | | | | | | | | | | | | |
RSUs | | 02/08/2019 | | | | | | | | | | | | | | | 17,000 | | | | | | | | | | | | 681,870 | |
Options | | 02/08/2019 | | | | | | | | | | | | | | | | | | | 49,400 | | | | 40.11 | | | | 1,249,020 | |
William Fairey | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annual Cash Bonus | | | | | 125,827 | | | | 186,410 | | | | 302,916 | | | | | | | | | | | | | | | | | |
RSUs | | 02/01/2019 | | | | | | | | | | | | | | | 32,500 | | | | | | | | | | | | 1,389,375 | |
Options | | 02/01/2019 | | | | | | | | | | | | | | | | | | | 69,500 | | | | 40.99 | | | | 1,795,776 | |
Jake Bauer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annual Cash Bonus | | | | | 103,653 | | | | 153,560 | | | | 249,535 | | | | | | | | | | | | | | | | | |
RSUs | | 02/08/2019 | | | | | | | | | | | | | | | 19,800 | | | | | | | | | | | | 794,178 | |
Options | | 02/08/2019 | | | | | | | | | | | | | | | | | | | 57,400 | | | | 40.11 | | | | 1,451,290 | |
Robert S. McDowell, Ph.D. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annual Cash Bonus | | | | | 111,429 | | | | 165,080 | | | | 268,255 | | | | | | | | | | | | | | | | | |
RSUs | | 02/08/2019 | | | | | | | | | | | | | | | 19,800 | | | | | | | | | | | | 794,178 | |
Options | | 02/08/2019 | | | | | | | | | | | | | | | | | | | 57,400 | | | | 40.11 | | | | 1,451,290 | |
Dr. June Lee | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annual Cash Bonus | | | | | 141,487 | | | | 209,610 | | | | 340,616 | | | | | | | | | | | | | | | | | |
RSUs | | 02/08/2019 | | | | | | | | | | | | | | | 22,600 | | | | | | | | | | | | 906,486 | |
Options | | 02/08/2019 | | | | | | | | | | | | | | | | | | | 65,000 | | | | 40.11 | | | | 1,643,447 | |
(1) | The amounts shown reflect the threshold, target and maximum annual cash bonuses payable pursuant to our Cash Bonus Plan. Actual payments for 2019 are provided in the “2019 Summary Compensation Committee based on achievement of certain research and development, clinical, financial and operational metrics relatedTable” above. |
(2) | The amounts shown reflect the RSUs granted pursuant to our 2015 corporate objectives, as specified byPlan. |
(3) | The amounts shown reflect the options granted pursuant to our Board2015 Plan. |
(4) | The exercise price of Directors. These amounts were paid in 2016. |
(3) | Includes (a) $698,612 representingthese stock options is equal to the market price of our common stock on the grant date fair value of an option to purchase 208,162 shares of common stock subject to time-based vesting and (b) $137,820 representing the grant date fair value of an option based on probable outcome to purchase 111,564 shares of common stock subject to vesting upon the achievement of certain performance criteria. The grant date fair value of the stock options granted to Mr. Gianakakos during 2015 with performance-based vesting assuming achievement of highest level of performance is $519,271.date. |
(4) | Includes $77,301 representing the grant date fair value of an option to purchase 23,129 shares of common stock subject to time-based vesting. The grant date fair value of an additional stock option granted to Dr. McDowell during 2015 with performance-based vesting assuming achievement of the highest level of performance is $93,034. |
(5) | Includes $113,678 representing the grant date fair value of an option to purchase 34,013 shares of common stock subject to time-based vesting. The grant date fair value of an additional stock option granted to Dr. Lambing during 2015 with performance-based vesting assuming achievement of the highest level of performance is $79,081. |
(6) | Represents contributions by us in connection with 401(k) plan benefits. |
Cash Incentive Compensation. In January 2016, the Board of Directors adopted the Company’s Senior Executive Cash Incentive Bonus Plan (the “Incentive Plan”), which applies to certain key executives (the
“Covered Executives”), that are recommended by the Compensation Committee and selected by the Board of Directors. The Incentive Plan provides for bonus payments based upon the attainment of performance objectives established by the Compensation Committee and related to operational and financial metrics with respect to the Company or any of its subsidiaries (the “Corporate Performance Goals”), which may include achievement of specified research and development, publication, clinical and/or regulatory milestones, total shareholder return, earnings before interest, taxes, depreciation and amortization, net income (loss) (either before or after interest, taxes, depreciation, stock compensation expense, restructuring charges and/or amortization), changes in the market price of the Company’s common stock, economic value-added, funds from operations or similar measure, sales or revenue, acquisitions or strategic transactions, operating income (loss), cash flow (including, but not limited to, operating cash flow and free cash flow), return on capital, assets, equity, or investment, return on sales, gross or net profit levels, productivity, expense, margins, operating efficiency, customer satisfaction, working capital, earnings (loss) per share of the Company’s common stock; bookings, new bookings or renewals; sales or market shares; number of customers, number of new customers or customer references; operating income and/or net annual recurring revenue. Any bonuses paid under the Incentive Plan will be based upon objectively determinable bonus formulas that tie such bonuses to one or more performance targets relating to the Corporate Performance Goals. The bonus formulas will be adopted in each performance period by the Compensation Committee and communicated to each Covered Executive. No bonuses will be paid under the Incentive Plan unless and until the Compensation Committee makes a determination with respect to the attainment of the performance objectives. Notwithstanding the foregoing, the Compensation Committee may adjust bonuses payable under the Incentive Plan based on achievement of individual performance goals or pay bonuses (including, without limitation, discretionary bonuses) to Covered Executives under the Incentive Plan based on individual performance goals and/or upon such other terms and conditions as the Compensation Committee may in its discretion determine.
Equity Incentive Compensation. We generally grant stock options to our employees, including our named executive officers, in connection with their initial employment with us. Prior to the pricing of our initial public offering in October 2015, we have also granted to employees, including certain of our named executive officers, at their election, shares of restricted stock purchased at fair market value, as determined by our Board of Directors at the time of grant.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information with respect to outstanding equity awards held by each of our named executive officersNamed Executive Officers as of December 31, 2015.2019.
| | | | Option Awards | | Stock Awards | | | Option Awards | | | Stock Awards | |
Name | | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number of
shares of
stock that
have not
vested (#) | | Market value
of shares of
stock
that have not
vested ($) (9) | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | | | Option Exercise Price ($/sh) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | | | Market Value of Shares or Units of Stock That Have Not Vested (#) ($)(1) | |
Tassos Gianakakos | | — | (1) | | 208,162 | (1) | | | — | | | 1.51 | | | 6/3/2025 | | | | — | | | | — | | | | 161,017 | (2) | | | | | — | | | | | | 1.51 | | | 6/4/2025 | | | | — | | | | | | — | |
| | — | (2) | | | — | | | 111,564 | (2) | | 1.51 | | | 6/3/2025 | | | | — | | | | — | | | | 60,037 | (4) | | | | | 12,525 | (4) | | | | | 9.08 | | | 2/2/2026 | | | | — | | | | | — | |
| | — | (3) | | | — | | | 111,564 | (3) | | 1.51 | | | 6/3/2025 | | | | — | | | | — | | | | 221,302 | (5) | | | | | 82,198 | (5) | | | | | 12.25 | | | 1/18/2027 | | | | — | | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | 313,912 | (4) | | 4,601,949.92 | | | | 88,214 | (8) | | | | | 95,886 | (8) | | | | | 52.00 | | | 1/16/2028 | | | | — | | | | | — | |
Robert S. McDowell, Ph.D. | | — | (1) | | 23,129 | (1) | | | — | | | 1.51 | | | 6/3/2025 | | | | — | | | | — | | |
| | — | (2) | | | — | | | 27,210 | (2) | | 1.51 | | | 6/3/2025 | | | | — | | | | — | | | | 54,197 | (11) | | | | | 182,303 | (11) | | | | | 40.11 | | | 2/8/2029 | | | | — | | | | | — | |
| | 14,457 | (5) | | 26,359 | (5) | | | — | | | 0.33 | | | 7/23/2024 | | | | — | | | | — | | | | — | | | | | | — | | | | | | — | | | | — | | | 22,950 | (6) | | | | | 1,672,826 | |
| | 74,376 | (6) | | 12,698 | (6) | | | — | | | 0.18 | | | 12/5/2022 | | | | — | | | | — | | | | — | | | | | | — | | | | | | — | | | | — | | | 81,200 | (7) | | | | | 5,918,668 | |
Joseph Lambing | | | — | | | | — | | | | — | | | | — | | | | — | | | 34,013 | (7) | | 498,630.58 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Taylor C. Harris | | | | 41,666 | (9) | | | | | 58,334 | (9) | | | | | 48.50 | | | 4/4/2028 | | | | — | | | | | | — | |
| | — | (2) | | | — | | | 23,129 | (2) | | 1.51 | | | 6/3/2025 | | | | — | | | | — | | | | 11,320 | (11) | | | | | 38,080 | (11) | | | | | 40.11 | | | 2/8/2029 | | | | — | | | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | 48,979 | (8) | | 718,032.14 | | | | — | | | | | | — | | | | | | — | | | | — | | | 28,250 | (9) | | | | | 2,059,143 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
William Fairey | | | | — | | | | | | 69,500 | (12) | | | | | 40.99 | | | 2/1/2029 | | | | — | | | | | | — | |
| | | | — | | | | | | — | | | | | | — | | | | — | | | 32,500 | (8) | | | | | 2,368,925 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Jake Bauer | | | | 26,530 | (2) | | | | | — | | | | | | 1.51 | | | 6/4/2025 | | | | — | | | | | | — | |
| | | | 8,039 | (4) | | | | | 709 | (4) | | | | | 9.08 | | | 2/2/2026 | | | | — | | | | | | — | |
| | | | 18,940 | (5) | | | | | 16,210 | (5) | | | | | 12.25 | | | 1/18/2027 | | | | — | | | | | | — | |
| | | | 16,291 | (8) | | | | | 17,709 | (8) | | | | | 52.00 | | | 1/16/2028 | | | | — | | | | | | — | |
| | | | 13,154 | (11) | | | | | 44,246 | (11) | | | | | 40.11 | | | 2/8/2029 | | | | — | | | | | | — | |
| | | | — | | | | | | — | | | | | | — | | | | — | | | 4,275 | (6) | | | | | 311,605 | |
| | | | — | | | | | | — | | | | | | — | | | | — | | | 19,800 | (7) | | | | | 1,443,222 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert McDowell, Ph.D. | | | | 87,074 | (2) | | | | | — | | | | | | 0.18 | | | 12/6/2022 | | | | — | | | | | | — | |
| | | | 40,816 | (2) | | | | | — | | | | | | 0.33 | | | 7/24/2024 | | | | — | | | | | | — | |
| | | | 36,735 | (3) | | | | | — | | | | | | 1.51 | | | 6/4/2025 | | | | — | | | | | | — | |
| | | | 26,644 | (4) | | | | | 567 | (4) | | | | | 9.08 | | | 2/2/2026 | | | | — | | | | | | — | |
| | | | 58,223 | (5) | | | | | 21,627 | (5) | | | | | 12.25 | | | 1/18/2027 | | | | — | | | | | | — | |
| | | | 20,000 | (3) | | | | | — | (3) | | | | | 13.90 | | | 7/20/2027 | | | | — | | | | | | — | |
| | | | 22,041 | (8) | | | | | 23,959 | (8) | | | | | 52.00 | | | 1/16/2028 | | | | — | | | | | | — | |
| | | | 13,154 | (11) | | | | | 44,246 | (11) | | | | | 40.11 | | | 2/2/2029 | | | | — | | | | | | — | |
| | | | — | | | | | | — | | | | | | — | | | | — | | | 5,775 | (6) | | | | | 420,940 | |
| | | | — | | | | | | — | | | | | | — | | | | — | | | 19,800 | (7) | | | | | 1,443,222 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
June Lee, M.D. | | | | 40,863 | (10) | | | | | 40,625 | (10) | | | | | 11.95 | | | 2/1/2027 | | | | — | | | | | | — | |
| | | | 31,816 | (8) | | | | | 34,584 | (8) | | | | | 52.00 | | | 1/16/2028 | | | | — | | | | | | — | |
| | | | 14,895 | (11) | | | | | 50,105 | (11) | | | | | 40.11 | | | 2/8/2029 | | | | — | | | | | | — | |
| | | | — | | | | | | — | | | | | | — | | | | — | | | 8,250 | (6) | | | | | 601,343 | |
| | | | — | | | | | | — | | | | | | — | | | | — | | | 22,600 | (7) | | | | | 1,647,314 | |
(1) | 25%Market value is based on the fair market value of our common stock on December 31, 2019, the last trading day of fiscal 2019, which was $72.89. |
(2) | The shares underlying the options are fully vested and were granted under our 2012 Equity Incentive Plan (the “2012 Plan”). |
(3) | The shares underlying the options are fully vested and were granted under the 2015 Plan. |
(4) | 1/48th of the shares underlying this optionthe options vest in equal monthly installments over four years from February 1, 2016 to February 1, 2020, subject to the applicable named executive officer’s continued employment with the Company through each applicable vesting date. These options were granted under our 2015 Plan. |
(5) | 1/48th of the shares underlying the options vest in equal monthly installments over four years from January 1, 2017 to January 1, 2021, subject to the applicable named executive officer’s continued employment with the Company through each applicable vesting date. These options were granted under our 2015 Plan. |
(6) | 25% of the underlying stock awards vested on June 4, 2016,January 1, 2019, while the remaining 75% of shares underlying this optionthe award vest in equal annual installments from January 1, 2019 to January 1, 2022, subject to the applicable named executive officer’s continued employment with the Company through each applicable vesting date. These stock awards were granted under our 2015 Plan. |
(7) | 25% of the underlying stock awards vest on January 1, 2020, while the remaining 75% of shares underlying the award vest in equal annual installments from January 1, 2020 to January 1, 2023, subject to the applicable named executive officer’s continued employment with the Company through each applicable vesting date. These stock awards were granted under our 2015 Plan. |
(8) | 1/48th of the shares underlying the options vest in equal monthly installments over four years from January 1, 2018 to January 1, 2022, subject to the applicable named executive officer’s continued employment with the Company through each applicable vesting date. These options were granted under our 2015 Plan. |
(9) | 25% of the underlying stock awards vested on April 4, 2019, while the remaining 75% of shares underlying the award vest in equal annual installments from April 4, 2019 to April 4, 2022, subject to the applicable named executive officer’s continued employment with the Company through each applicable vesting date. These stock awards were granted under our 2015 Plan. |
(10) | 25% of the shares underlying the options vested on January 31, 2018, while the remaining 75% of shares underlying the options vest in equal monthly installments over three years from July 4, 2016January 31, 2018 to June 4, 2019.January 31, 2021, subject to the applicable named executive officer’s continued employment with the Company through each applicable vesting date. These options were granted under our 2015 Plan. |
(2)(11) | The shares underlying this option will vest with respect to 25% of the underlying shares upon the achievement of each of four (4) specified regulatory and clinical milestones on or before certain specified dates, as determined by the Board of Directors. |
(3) | The shares underlying the option will vest with respect to all of the underlying shares upon, and only upon, the Company’s initial achievement, on or before the date twenty-four months after the closing of the Company’s initial public offering, of a market capitalization of at least $2.0 billion based on a 20 consecutive trading-day sample simple moving average price for the Company’s Common Stock as reported on NASDAQ. |
(4) | The shares of restricted stock vest in equal monthly installments from January 7, 2016 to October 7, 2017. |
(5) | 25% of the shares underlying this option vestedthe options vest on July 1, 2015,January 31, 2020, while the remaining 75% of shares underlying this optionthe options vest in equal monthly installments over three years from August 1,January 31, 2020 to January 31, 2024, subject to the applicable named executive officer’s continued employment with the Company through each applicable vesting date. These options were granted under our 2015 to July 1, 2018.Plan. |
(6)(12) | 25% of the shares underlying this option vestedstock awards vest on July 16, 2013,February 1, 2020, while the remaining 75% of shares underlying this optionthe award vest in equal monthlyannual installments over three years from August 16, 2013February 1, 2020 to July 16, 2016.January 1, 2024, subject to the applicable named executive officer’s continued employment with the Company through each applicable vesting date. These stock awards were granted under our 2015 Plan. |
Option Exercises and Stock Vested
The following table sets forth the number of shares acquired, and the value realized upon exercises of stock options and vesting of RSUs during the fiscal year ended December 31, 2019 by each of our Named Executive Officers.
| | Option Awards | | | Stock Awards | |
Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(2) | |
Tassos Gianakakos | | | — | | | | — | | | | 7,650 | | | | 320,918 | |
Taylor C. Harris | | | — | | | | — | | | | 3,750 | | | | 199,687 | |
William Fairey | | | — | | | | — | | | | — | | | | — | |
Jake Bauer | | | 37,200 | | | | 2,410,077 | | | | 1,425 | | | | 59,779 | |
Robert McDowell, Ph.D. | | | — | | | | — | | | | 1,925 | | | | 80,754 | |
June Lee, M.D. | | | 49,758 | | | | 2,375,034 | | | | 2,750 | | | | 115,363 | |
(7)(1) | 25%The value realized upon the exercise of stock options is calculated by (a) subtracting the stock option exercise price from the market price on the date of exercise to get the realized value per share, and (b) multiplying the realized value per share by the number of shares underlying the stock options exercised. |
(2) | The value realized upon vesting of restricted stock vest on June 4, 2016, whileand RSUs is calculated by multiplying the remaining 75%number of shares of restricted stock vest in equal monthly installments over three years from July 4, 2016 to June 4, 2019. |
(8) | The shares of restricted stock vest in equal monthly installments from January 10, 2016 to March 10, 2018. |
(9) | This amount reflectsand RSUs vested by the closing market price of a share of our common stock as of December 31, 2015, multiplied byon the amount shown in the column “Stock Awards—Number of shares of stock that have not vested.”vest date. |
401(k) Savings Plan and Other Benefits
Potential Payments on Termination or Change in Control
We maintain a tax-qualified retirement plan, or the 401(k) Plan, that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to defer eligible
compensation subject to applicable annual Code limits. Employees’ pre-tax or Roth contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Employees are immediately and fully vested in their contributions. Our 401(k) Plan is intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”) with our 401(k) Plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to our 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from our 401(k) Plan. We make a matching contribution of $500 per year per employee. We also pay, on behalf of our employees, a portion of the premiums for health, life and disability insurance.
Employment Arrangements with Our Named Executive Officers
Change in Control and Severance Policy
We consider it essential to the best interests of our stockholders to foster the continuous employment of our key management personnel. In this regard, we recognize that the possibility of a change in control may exist and that the uncertainty and questions that it may raise among management could result in the departure or distraction of management personnel to the detriment of the Company and our stockholders. In order to reinforce and encourage the continued attention and dedication of certain key members of management, in October 2015, our Board of Directors adopted a Changethe CIC Policy, which was subsequently amended in Control Policy (the “Policy”). October 2018 and further amended in February 2019 to incorporate severance benefits. Pursuant to the CIC Policy, in the event the employment of any of our named executive officers is terminated by us or our acquirer or successor without Causeexperiences an Involuntary Termination (as such term is defined in the 2015 Plan) within one year after the consummation ofbelow), including a sale event,Sale Event Termination (as defined below), he or she will be entitled to receive the following payments and benefits, as applicable, subject, in either case, to his or her execution and non-revocation of a severance agreement within 60 days following the date of such termination, including a general release of claims:
Involuntary Termination Benefits
a lump sum cash payment equal to 9 months (or 12 months in the case of Mr. Gianakakos as our Chief Executive Officer) of the named executive officer’s then-current base salary;
if the named executive officer elects to continue his or her group healthcare benefits, payment of an amount equal to the monthly employer contribution we would have made to provide the named executive officer with health insurance if he or she had remained employed by us until the earlier of (i) 9 months (or 12 months in the case of Mr. Gianakakos as our Chief Executive Officer) following the date of termination or (ii) the end of the named executive officer’s COBRA health continuation period; and
no automatic acceleration of vesting of outstanding stock options or other equity awards with time-based vesting.
Sale Event Termination Benefits
a lump sum cash payment equal to 12 months (or 18 months in the case of Mr. Gianakakos as our CEO)Chief Executive Officer) of the named executive officer’s then-current base salary;
payment of the named executive officer’s target annual incentive compensation;compensation (or 1.5x in the case of Mr. Gianakakos as our Chief Executive Officer);
if the named executive officer elects to continue his or her group healthcare benefits, payment of an amount equal to the monthly employer contribution we would have made to provide the named executive officer with health insurance if he or she had remained employed by us until the earlier of (i) 12 months (or 18 months in the case of Mr. Gianakakos as our CEO)Chief Executive Officer) following the date of termination or (ii) the end of the named executive officer’s COBRA health continuation period; and
all stock options and other stock-based awards with time-based vesting conditions granted to the named executive officer will become fully exercisable and non-forfeitable as of the date of the named executive officer’s termination.
In addition, upon a sale event,Sale Event, to the extent Section 280G of the Internal Revenue Code of 1986, as amended, is applicable, each named executive officer who is then employed with us will be entitled to receive the better treatment of:either: (i) payment of the full amounts set forth above to which the named executive officer is entitled or (ii) payment of such lesser amount that does not trigger excise taxes under Section 280G.280G of the Code, whichever results in the employee receiving a higher amount after taking into account all federal, state and local income, excise and employment taxes.
Employees who are party“Good Reason” means that the affected employee followed the “Good Reason Process” (as defined below) following the occurrence of (a) a material diminution in the employee’s job responsibilities (provided that a mere change in title or reporting relationship shall not be deemed a material diminution in job responsibilities), (b) a 10% or greater reduction in the employee’s base salary (except for across-the-board salary reductions in the salaries of all similarly situated employees based on the Company’s financial performance), or (c) the relocation of the employee’s principal place of business to an agreementa location that is more than 50 miles from the employee’s then-current location of employment.
“Good Reason Process” means that (i) the employee reasonably determines in good faith that a “Good Reason” condition has occurred; (ii) the employee notifies the Company or an arrangementits successor in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such a condition; (iii) the employee cooperates in good faith with the Company’s or its successor’s efforts for a period of not fewer than 30 days following such notice (the “Cure Period”) to remedy the condition; (iv) notwithstanding such efforts, the Good Reason continues to exist; and (v) termination of the employee’s employment occurs no later than seven days following the expiration of the Cure Period.
“Involuntary Termination” means termination of employment or other service relationship with the Company that provides greater benefits(or its successor or acquirer) without Cause (as defined in the aggregate2015 Plan) or for Good Reason other than set fortha Sale Event Termination.
“Involuntary Termination Benefits” means the benefits payable following an Involuntary Termination.
“Sale Event” means ‘Sale Event’ as defined in the Policy are not eligible to receive any payments or2015 Plan.
“Sale Event Termination” means an Involuntary Termination that occurs within one year following completion of a Sale Event.
“Sale Event Termination Benefits” means the benefits under the Policy.payable following a Sale Event Termination.
In addition, we have also entered into a written employment agreement with each of our named executive officers that provides for other compensation and benefits, as described below.
Tassos Gianakakos
We entered into an employment offer letter agreement with Mr. Gianakakos in September 2013, pursuant to which he began serving as, and continues to serve as, our President and CEOChief Executive Officer in October 2013. The letter agreement entitled Mr. Gianakakos
to an initial annual base salary of $375,000, subject to adjustment pursuant to our employee compensation policies in effect from time to time, and an initial option grant. Mr. Gianakakos’ annual base salary is currently set at $459,545.in 2019 was $615,000, which was increased to $658,000 effective as of January 1, 2020. Pursuant to the terms of his letter agreement and the Company’s Senior Executive Cash Incentive Bonus Plan (the “Incentive Plan”), Mr. Gianakakos is considered annually for a bonus target of up to 35%representing a percentage of his annual base salary, as determined by our boardBoard of directorsDirectors based on a combination of our achievement of certain performance goals and Mr. GianakakosGianakakos’ achievement of certain individual goals. In connection withThe target annual bonus for Mr. Gianakakos is currently 60% of his appointment as CEO, we granted Mr. Gianakakos’ options to purchase 684,897 shares of our common stock pursuant to the terms of the 2012 Equity Incentive Plan and an option award agreement dated December 5, 2013.base salary.
Mr. Gianakakos is also eligible to receive certain post-termination compensation and benefits in accordance with the CIC Policy described above.
Robert S. McDowell, Ph.D.Jake B. Bauer
We entered into an employment offer letter agreement with Mr. Bauer in July 2014, pursuant to which he began serving as our Vice President, Business Development and Operations. Mr. Bauer currently serves as our Chief Business Officer. The agreement entitled Mr. Bauer to an initial annual base salary of $265,000, subject to adjustment pursuant to our employee compensation policies in effect from time to time and an initial option. Pursuant to the terms of his agreement and the Incentive Plan, Mr. Bauer is considered annually for a bonus target of his annual base salary, as determined by the Board of Directors based on a combination of our achievement of certain performance goals and Mr. Bauer’s achievement of certain individual performance goals. During 2019, the target annual bonus for Mr. Bauer was 40%. Mr. Bauer’s annual base salary in 2019 was $370,000, which was increased to $443,000 effective as of January 1, 2020.
Mr. Bauer is also eligible to receive certain post-termination compensation and benefits in accordance with the CIC Policy described above.
Taylor C. Harris
We entered into an employment offer letter agreement with Mr. Harris in April 2018, pursuant to which he began serving as, and continues to serve as, our Chief Financial Officer. The agreement entitled Mr. Harris to an initial annual base salary of $415,000, subject to adjustment pursuant to our employee compensation policies in effect from
time to time. Pursuant to the terms of his agreement and the Incentive Plan, Mr. Harris is considered annually for a bonus target of 40% of his annual base salary, as determined by the Board of Directors based on a combination of our achievement of certain performance goals and Mr. Harris’ achievement of certain individual performance goals. Mr. Harris’ annual base salary in 2019 was $425,800, which was increased to $447,000 effective as of January 1, 2020.
Mr. Harris is also eligible to receive certain post-termination compensation and benefits in accordance with the CIC Policy described above.
Robert McDowell, M.D.
We entered into an employment offer letter agreement with Dr. McDowell in June 2012, pursuant to which he assumed the role of Vice President of Drug Discovery in July 2012. Dr. McDowell currently serves as our Chief Scientific Officer. The agreement entitlesentitled Dr. McDowell to an initial annual base salary of $260,000, subject to adjustment pursuant to our employee compensation policies in effect from time to time and. Dr. McDowell’s annual base salary is currently set at $318,203. in 2019 was $412,700 which was increased to $423,000 effective as of January 1, 2020. Pursuant to the terms of his agreement and the Incentive Plan, Dr. McDowell is considered annually for a bonus target of 20% of his annual base salary, as determined by the boardBoard of directorsDirectors, based on a combination of our achievement of certain performance goals and Dr. McDowell’s achievement of individual performance goals. Pursuant toDuring 2019, the terms of his agreement,target annual bonus for Dr. McDowell was issued an option to purchase 87,074 shares of our common stock on December 6, 2012 pursuant to the terms of the 2012 Equity Incentive Plan and an option award agreement.40%.
Dr. McDowell is also eligible to receive certain post-termination compensation and benefits in accordance with the CIC Policy described above.
Joseph Lambing, Ph.D.William Fairey
We entered into an employment offer letter agreement with Dr. LambingMr. Fairey in February 2014,January 2019, pursuant to which he assumed the role of SeniorExecutive Vice President, Non-Clinical and Pharmaceutical Development in March 2014. Chief Commercial Officer. The agreement entitles Dr. Lambing Mr. Fairey to an initial annual base salary of $300,000,$500,000, subject to adjustment pursuant to our employee compensation policies in effect from time to time and Dr. Lambing’s. Effective January 1, 2020, Mr. Fairley annual base salary is currently set at $316,509. was increased to $513,000. Pursuant to the terms of his agreement and the Incentive Plan, Dr. Lambing Mr. Fairey is considered annually for a bonus target of 25% of his annual base salary, as determined by the boardBoard of directorsDirectors, based on a combination of our achievement of certain performance goals and Dr. Lambing’s Mr. Fairey’s achievement of individual performance goals. The target annual bonus for Mr. Fairey is currently 45% of his base salary.
Pursuant to the terms of his agreement, Dr. LambingMs. Fairy was paid a lump-sum sign-on bonus of $225,000 within 60 days of his start date. If Mr. Fairey leaves the Company within 12 months of his hire date, he will be required to return the signing bonus. Pursuant to the terms of his agreement, Mr. Fairey was also issued an option to purchase 87,07469,500 shares of our common stock on June 10, 2014and 32,500 RSUs, each granted pursuant to the terms of the 2012 Equity Incentive2015 Plan and an optionapplicable award agreement.agreements thereunder and subject to time-based vesting.
Dr. LambingMr. Fairey is also eligible to receive certain post-termination compensation and benefits in accordance with the CIC Policy described above.
Transition Services Agreement with Jonathan Fox,June Lee, M.D., Ph.D.
We entered into a Transition Services Agreementan employment offer letter agreement with Dr. Fox, who was oneLee in February 2017, pursuant to which she assumed the role of our named executive officersChief Operating Officer. The agreement entitled Dr. Lee to an initial annual base salary of $385,000, subject to adjustment pursuant to our employee compensation policies in effect from time to time. Pursuant to the terms of her agreement and the Incentive Plan, Dr. Lee is considered annually for 2014,a bonus target of 40% of her annual base salary, as determined by the Board of Directors based on February 18, 2016a combination of our achievement of certain performance goals and Dr. Lee’s achievement of certain individual performance goals. Dr. Lee’s annual base salary in 2019 was $465,800. On September 30, 2019, we agreed with Dr. Lee that she would end her employment with us following a transition period.
On October 4, 2019, we entered into a transition agreement with Dr. Lee (the “Transition“Lee Transition Agreement”). Pursuant to the Lee Transition Agreement, Dr. Fox’s employment with us will end on September 30, 2016, unless earlier terminated pursuantLee agreed to his resignation or termination by us (the “Separation Date”). Following the Separation Date, Dr. Fox will serve as senior advisor to the company for a consultant to us pursuant to a consulting agreement. Underperiod of up June 30, 2020 (the “Transition Period”). During the Transition Agreement,period, Dr. FoxLee will continue to receive hisher annual base salary, Company-paid COBRA continuation coverage, and benefits and, so long as he is providing services to us,any outstanding equity awards will continue to vest until her separation or resignation from the Company. Pursuant to the Lee Transition Agreement, in his outstandingthe event that Dr. Lee provides service to us through the Transition Period and is not terminated by us for “cause”, upon her termination she will be eligible to receive an amount equal to twelve (12) months of base salary, less the amount of salary paid to Dr. Lee during the transition period, subject to Dr. Lee’s execution and non-revocation of a supplemental release in favor of the Company.
The following table quantifies the potential payments that would have become due to our Named Executive Officers assuming that one of the triggering events above occurred as of December 31, 2019 and that in the event of a Sale Event, all equity awards throughof the earlierCompany are assumed, continued or substituted by the successor entity.
Name | | | Involuntary Termination | | | | Sale Event Termination | |
Tassos Gianakakos | | | | | | | | | | |
| Cash Severance Payment | | | 658,072 | (1) | | | | 987,108 | (2) |
| Annual Incentive Compensation | | | — | | | | | 592,265 | (3) |
| COBRA Premiums | | | 32,942 | (4) | | | | 49,412 | (5) |
| Accelerated Equity Vesting | | | — | | | | | 21,354,151 | (6) |
Taylor C. Harris | | | | | | | | | | |
| Cash Severance Payment | | | 335,337 | (7) | | | | 447,116 | (1) |
| Annual Incentive Compensation | | | — | | | | | 178,846 | (8) |
| COBRA Premiums | | | 24,706 | (9) | | | | 32,942 | (4) |
| Accelerated Equity Vesting | | | — | | | | | 4,730,171 | (6) |
William Fairey | | | | | | | | | | |
| Cash Severance Payment | | | 384,522 | (7) | | | | 512,695 | (1) |
| Annual Incentive Compensation | | | — | | | | | 230,713 | (8) |
| COBRA Premiums | | | 24,706 | (9) | | | | 32,942 | (4) |
| Accelerated Equity Vesting | | | — | | | | | 4,585,975 | (6) |
Jake Bauer | | | | | | | | | | |
| Cash Severance Payment | | | 332,587 | (7) | | | | 443,449 | (1) |
| Annual Incentive Compensation | | | — | | | | | 177,380 | (8) |
| COBRA Premiums | | | 16,183 | (9) | | | | 21,577 | (4) |
| Accelerated Equity Vesting | | | — | | | | | 4,291,763 | (6) |
Robert McDowell, Ph.D. | | | | | | | | | | |
| Cash Severance Payment | | | 317,225 | (7) | | | | 422,966 | (1) |
| Annual Incentive Compensation | | | — | | | | | 169,187 | (8) |
| COBRA Premiums | | | 5,165 | (9) | | | | 6,887 | (4) |
| Accelerated Equity Vesting | | | — | | | | | 5,162,691 | (6) |
June Lee, M.D. | | | | | | | | | | |
| Cash Severance Payment | | | 349,313 | (7) | | | | 465,750 | (1) |
| Annual Incentive Compensation | | | — | | | | | 186,300 | (8) |
| COBRA Premiums | | | 24,706(9) | | | | | 32,942 | (4) |
| Accelerated Equity Vesting | | | — | | | | | 7,089,246 | (6) |
(1) | Represents 12 months of the Named Executive Officer’s then-current base salary. |
(2) | Represents 18 months of the Named Executive Officer’s then-current base salary. |
(3) | Represents 1.5x the Named Executive Officer’s target annual incentive compensation. |
(4) | Represents payment of an amount equal to the monthly employer contribution we would have made to provide the Named Executive Officer with health insurance if he remained employed by us until 12 months following the date of termination. |
(5) | Represents payment of an amount equal to the monthly employer contribution we would have made to provide the Named Executive Officer with health insurance if he remained employed by us until 18 months following the date of termination. |
(6) | Represents acceleration of vesting of 100% of the total number of shares underlying outstanding and unvested time-based equity awards. For stock options with a per share exercise price greater than the fair market value of a share of our common stock on December 31, 2019 ($72.89), no amounts have been included with respect to such stock options. |
(7) | Represents 9 months of the Named Executive Officer’s then-current base salary. |
(8) | Represents 1x the Named Executive Officer’s target annual incentive compensation. |
(9) | Represents payment of an amount equal to the monthly employer contribution we would have made to provide the Named Executive Officer with health insurance if he remained employed by us until 9 months following the date of termination. |
CEO Pay Ratio
In accordance with Item 402(u) of March 31, 2017 or the termination of his consulting agreement
with us, except with respectRegulation S-K, we are providing disclosure relating to the option grant maderatio of the median of the annual total compensation of all of our employees (other than our Chief Executive Officer) and the annual total compensation of our Chief Executive Officer, Tassos Gianakakos.
For 2019:
The median of the annual total compensation of all our employees was $268,172;
The annual total compensation of our Chief Executive Officer, Mr. Gianakakos, was $10,223,569; and
The ratio of the annual total compensation of our Chief Executive Officer to Dr. Foxthe median of the annual total compensation of our employees was 38 to 1.
This ratio is a reasonable estimate calculated in a manner consistent with SEC rules.
To identify our median employee, we took the following steps:
We selected December 31, 2019 as the determination date for identifying our median employee. As of December 31, 2019, our employee population consisted of approximately 235 individuals (excluding our CEO) with all but one employee located within the United States. This population includes all employees whether employed on June 4, 2015, which stock option will lapse ona full-time, part-time, temporary or seasonal basis. We did not include any contractors or other non-employee workers in our employee population.
In determining the Separation Date. Dr. Fox will remain eligible for cash incentivemedian employee, we used a consistently applied compensation for 2016 to be determined by our Boardmeasure of Directors, which will be paid when 2016 cash incentive compensation is paid to other Company executives.
Following the Separation Date, unless the termination of Dr. Fox’s employment resulted from his voluntary resignation or a termination for cause, Dr. Fox will continue to receive hisactual base salary until June 30, 2017. If he electspaid for 2019, actual 2019 bonus earned, and the grant-date fair value of all equity awards granted during the full 12-month period of fiscal 2019. Target base salary and annual bonus values were used for new hire employees that commenced employment in 2019 to continue his group healthcare benefits,reflect a full year of compensation.
Once the median employee was identified, we determined this employee’s annual total compensation in the same manner that we calculated the total compensation of our Chief Executive Officer for purposes of the Summary Compensation Table.
This annual total compensation amount for our median employee was then compared to the extent authorizedannual total compensation of our Chief Executive Officer as reported in the “Total” column of our 2019 Summary Compensation Table in this Proxy Statement to determine the pay ratio.
Because the SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by and consistent with COBRA, we will pay the monthly employer contribution until the earlier of (1) June 30, 2017 or (2) the date Dr. Fox becomes eligible for insurance through another employer or otherwise becomes ineligible for COBRA.other companies may not be comparable to ours.
Securities Authorized for Issuance under Equity Compensation Plans
ForThe following table sets forth information as of December 31, 2019 regarding shares of common stock that may be issued under our equity compensation plans, in effectconsisting of our 2012 Plan, our 2015 Plan and our 2015 Employee Stock Purchase Plan (the "ESPP").
Plan Category | | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) | | | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (b)(1) | | | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(c) | | | |
Equity compensation plans approved by securityholders (2) | | | 5,315,254 | (3) | | | $ | 31.81 | | | | 1,825,976 | (4) | | |
Equity compensation plans not approved by securityholders | | | — | | | | | — | | | | — | | | |
Total | | | 5,315,254 | | | | | | | | | 1,825,976 | | | |
(1) | The weighted average exercise price is calculated based solely on outstanding stock options. |
(2) | Includes the 2012 Plan, the 2015 Plan and the ESPP. |
(3) | Does not include purchase rights accruing under the ESPP during the current purchase period, which commenced on November 1, 2019 because the purchase right (and therefore the number of shares to be purchased) will not be determined until the end of the purchase period on April 30, 2020. Subject to the number of shares remaining in the share reserve, the maximum number of shares purchasable by any participant in the ESPP on any one purchase date for any purchase period, including the current purchase period, may not exceed 2,500 shares. |
(4) | Includes 685,435 shares of common stock remaining available for issuance under the 2015 Plan and 1,140,541 shares of common stock remaining available for issuance under the ESPP as of December 31, 2019. Our 2015 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2017, by the lesser of (i) 4% of the number of outstanding shares of the Company’s common stock on the immediately preceding December 31, and (ii) an amount as determined by the compensation committee of the Company’s Board of Directors. The number of shares of stock available for issuance under the ESPP will be automatically increased each January 1, beginning with January 1, 2017 and ending on January 1, 2025, by the lesser of: (i) 3,000,000 shares of common stock, (ii) 1% of the number of outstanding shares of common stock on the immediately preceding December 31 or (iii) such lesser amount of shares as determined by the compensation committee of the Company’s Board of Directors. On January 1, 2020, the number of shares available for issuance under our 2015 Plan and our ESPP increased by 1,855,162 shares and 463,790 shares, respectively, pursuant to these provisions. These increases are not reflected in the table above. We no longer grant new awards under our 2012 Plan, and any awards previously granted under such plan prior to our initial public offering that are forfeited, canceled, reacquired by us prior to vesting satisfied without the issuance of stock or otherwise terminated (other than by exercise) are added to shares available for issuance under the 2015 Plan. |
COMPENSATION COMMITTEE REPORT
The following Compensation Committee Report is not considered proxy solicitation material and is not deemed filed with the Securities and Exchange Commission. Notwithstanding anything to the contrary set forth in any of our filings made under the Securities Act of 1933 or the Exchange Act that might incorporate our filings under those statutes, the Compensation Committee Report shall not be incorporated by reference into any of our prior filings or into any of our future filings under those statutes.
The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the Company’s management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors, and the Board of Directors approved, that the Compensation Discussion and Analysis be included in this Proxy Statement for the Annual Meeting and incorporated by reference in the Company’s Annual Report for the fiscal year ended December 31, 2015, see “Proposal 3—Ratification of 2015 Stock Option and Incentive Plan—Equity Compensation Plans.”
2019.COMPENSATION COMMITTEE
WENDY L. YARNO, CHAIRPERSON
SUNIL AGARWAL
MARK L. PERRY
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Other than the compensation agreements and other arrangements described under “Compensation of Named Executive Officers” and the transactions described below, since January 1, 2015,2019, there has not been and there is not currently proposed, any transaction or series of similar transactions to which we were, or will be, a party in which the amount involved exceeded, or will exceed, $120,000 and in which any director, executive officer, holder of five percent or more of any class of our capital stock or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest.
AgreementsTransactions with StockholdersSanofi S.A.
In September 2012,
Until December 31, 2018 we had an exclusive License and Collaboration Agreement (Collaboration Agreement) with Aventis Inc., a wholly-owned subsidiary of Sanofi S.A. (“Sanofi”). On December 31, 2018, Sanofi notified us of their intent to terminate our collaboration; specifically, Sanofi elected not to continue with the Company began receiving consultingHCM-1 and management services pursuantdanicamtiv programs. As a result, cost sharing and Sanofi’s reimbursement of our research and development costs for mavacamten and MYK-224 ended in the first half of 2019. At that time Sanofi had continuing rights to an unwritten agreement with Third Rock Ventures, which owned 85%royalties in the event of commercialization of the Company’s redeemable convertible preferred stock outstanding at December 31, 2014. Kevin Starr and Charles Homcy, both directors of the Company, are general partner and partner, respectively, of Third Rock Ventures. The consulting fees paid to Third Rock Ventures were incurred by the Company in the ordinary course of business, and were $89,000 and $270,000HCM-1 program. In July 2019, we repurchased those rights from Sanofi for the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, the Company had an outstanding liability to Third Rock Ventures of $13,000 and $33,000, respectively. The services provided by Third Rock Ventures under this agreement included the services of Dr. Homcy, as well as other personnel, and the supervision of our financial, legal, and executive recruitment.
Forgiveness of Loan to Member of the Board of Directors
In March 2013,$80.0 million. Neither we loaned $37,500.00 in principal amount to Dr. Charles Homcy, a member of our board of directors, in connection with Dr. Homcy’s purchase of restricted shares of our common stock. The loan was evidenced by a Full Recourse Secured Promissory Note and Pledge Agreement,nor Sanofi have any material continuing rights or the Note, and bore interest at an annual rate of 1.09%. The loan was secured by 204,081 shares of our common stock and,obligations under the original terms of the Note, was due immediately prior to filing a registration statement for this offering. In September 2015, our board of directors approved the forgiveness of all principal and accrued interest under the loan in the amount of $38,539 and the cancellation of the Note in full.Collaboration Agreement.
Participation in Initial Public Offering
In November 2015, certain of our directors, officers and a holder of more than five percent of our outstanding capital stock purchased an aggregate of 904,350 shares of our common stock in our initial public offering at the initial public offering price, which included the following purchase in an amount that exceeded $120,000:
| | | | | | | | |
Beneficial Owner | | Shares Purchased
in Offering | | | Aggregate
Purchase
Price ($) | |
Aventis Inc. | | | 900,000 | | | | 9,000,000 | |
Participation Series B Preferred Stock Financing
In April 2015, we entered into a securities purchase agreement with various investors, pursuant to which we agreed to issue, in April 2015, an aggregate of 17,068,646 shares of our Series B redeemable convertible preferred stock at a price of $2.6950 per share.
The following table summarizes the participation in the Series B redeemable convertible preferred stock financing by any of our directors, executive officers, holders of more than 5% of our voting securities, or any member of the immediate family of the foregoing persons:
| | | | | | | | | | | | |
Name | | Shares of
Series B
Preferred | | | Aggregate
Purchase Price
Paid | | | Date
Purchased | |
Fidelity Select Portfolios: Biotechnology Portfolio | | | 8,237,477 | | | $ | 22,200,000.52 | | | | 4/20/2015 | |
Fidelity Advisors Series VII: Fidelity Advisor Biotechnology Fund | | | 1,781,076 | | | $ | 4,799,999.82 | | | | 4/20/2015 | |
Aventis Inc. (1) | | | 1,855,288 | | | $ | 5,000,001.16 | | | | 4/28/2015 | |
(1) | Katherine Bowdish, was at the time of the sale of the Series B redeemable convertible preferred stock a member of our board of directors and is affiliated with Aventis. |
Executive Officer and Director Compensation
Employment Agreements and Transition Agreement
We have entered into offer letters or employment agreements with each of our named executive officers and certain of our other executive officers, as well as a transition agreement with one of our named executive officers. For more information regarding these arrangements, see “Compensation of Named Executive Officers—Employment Arrangements with Our Named Executive Officers.”
Restricted Stock and Stock Option Awards
For information regarding stock option awards and other equity incentive awards granted to our named executive officers and directors, see “Election of Directors—Director Compensation” and “Compensation of Named Executive Officers.”
Indemnification Agreements
We have entered into agreements to indemnify our directors and executive officers. These agreements will, among other things, require us to indemnify these individuals for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts reasonably incurred by such person in any action or proceeding, including any action by or in our right, on account of any services undertaken by such person on behalf of our company or that person’s status as a member of our Board of Directors to the maximum extent allowed under Delaware law.
Procedures for Approval of Related Person Transactions
The Audit Committee conducts an appropriate review of all related party transactions for potential conflict of interest situations on an ongoing basis, and the approval of the Audit Committee is required for all such transactions. The Audit Committee follows the policies and procedures set forth in our Related Person Transaction Policy in order to facilitate such review. The Related Person Transaction Policy is written.
SECURITY OWNERSHIP OF CERTAIN BENEFICIALBENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth the beneficial ownership information of our common stock by:
each person known to us to be the beneficial owner of more than 5% of our common stock as of March 31, 2016;2020;
each named executive officer;
each of our directors; and
all of our executive officers and directors as a group.
We have based our calculation of the percentage of beneficial ownership of 27,016,08146,612,186 shares of common stock outstanding on March 31, 2016.2020.
Each individual or entity shown in the table has furnished information with respect to beneficial ownership. The information with respect to our executive officers and directors is as of March 31, 20162020 unless otherwise noted. The information with respect to certain significant stockholders is based on filings by the beneficial owners with the SEC pursuant to section 13(d) and 13(g) of the Exchange Act. We have determined beneficial ownership in accordance with the SEC’s rules. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of common stock issuable pursuant to the exercise of stock options that are either immediately exercisable or exercisable on or before May 30, 2016,2020, which is 60 days after March 31, 2016.2020. These shares are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
| | | | | | | | |
Beneficial Owner (1) | | Number of Shares
Beneficially Owned | | | Percentage
of Shares
Beneficially
Owned | |
5% or Greater Stockholders: | | | | | | | | |
Entities affiliated with Wellington Management Company (1) | | | | | | | | |
280 Congress Street Boston, MA 02110 | | | 1,467,089 | | | | 5.4 | % |
Entities affiliated with Third Rock Ventures (2) | | | | | | | | |
29 Newbury Street, Boston, Massachusetts 02116 | | | 10,884,352 | | | | 40.3 | % |
Entities affiliated with Fidelity (3) | | | | | | | | |
245 Summer Street Boston, MA 02210 | | | 3,936,446 | | | | 14.6 | % |
Entities affiliated with Sanofi (4) | | | | | | | | |
54 Rue La Boetie, 75008 Paris (France) | | | 3,218,899 | | | | 11.9 | % |
Named Executive Officers and Directors: | | | | | | | | |
T. Anastasios Gianakakos (5) | | | 899,104 | | | | 3.30 | % |
Robert S. McDowell, M.D. (6) | | | 149,658 | | | | * | |
Joseph Lambing, Ph.D. (7) | | | 123,354 | | | | * | |
Mark Perry (8) | | | 23,586 | | | | * | |
Charles Homcy, M.D. (9) | | | 204,081 | | | | * | |
Kevin P. Starr (10) | | | 10,884,352 | | | | 40.3 | % |
Eric J. Topol, M.D. (11) | | | 7,256 | | | | * | |
Sunil Agarwal (12) | | | 916 | | | | * | |
Mary B. Cranston (13) | | | — | | | | — | |
All directors and executive officers as a group (12 persons) (14) | | | 12,687,053 | | | | 46.1 | % |
Beneficial Owner(1) | | Number of Shares Beneficially Owned | | Percentage of Shares Beneficially Owned |
5% or Greater Stockholders: | | | | | |
Entities affiliated with Wellington Management Company (2) | | | | | |
280 Congress Street, Boston, MA 02110 | | 3,490,484 | | 7.5 | % |
Entities affiliated with Fidelity (3) | | | | | |
245 Summer Street, Boston, MA 02210 | | 6,933,887 | | 14.9 | % |
Entities affiliated with Vanguard (4) | | | | | |
100 Vanguard Blvd., Malvern, PA 19355 | | 3,951,583 | | 8.5 | % |
Entities affiliated with Blackrock, Inc. (5) | | | | | |
55 East 52nd Street, New York, NY 10055 | | 4,142,810 | | 8.9 | % |
T. Rowe Price Associates, Inc. (6) | | | | | |
100 E. Pratt Street, Baltimore, MD 21202 | | 3,578,708 | | 7.7 | % |
Named Executive Officers and Directors: | | | | | |
T. Anastasios Gianakakos (7) | | 1,339,957 | | 2.8 | % |
Jake Bauer (8) | | 150,675 | | * | |
Taylor C. Harris (9) | | 81,129 | | * | |
William C. Fairey (10) | | 93,806 | | * | |
June Lee, M.D.(11) | | 137,889 | | * | |
Robert McDowell (12) | | 332,960 | | * | |
Mark L. Perry (13) | | 86,258 | | * | |
Sunil Agarwal (14) | | 61,050 | | * | |
Mary B. Cranston (15) | | 61,050 | | * | |
Wendy L. Yarno (16) | | 46,874 | | * | |
Kimberly Popovits (17) | | 45,466 | | * | |
David P. Meeker, M.D. (18) | | 45,008 | | * | |
All directors and executive officers as a group (13 persons) (19) | | 24,473,348 | | 5.2 | % |
* | Represents beneficial ownership of less than 1% of the shares of common stock. |
(1) | Unless otherwise indicated, the address for each beneficial owner is c/o MyoKardia, Inc., 1000 Sierra Point Parkway, Brisbane, CA 94005. |
(2) | Based on Schedule 13G13G/A filed on February 16, 2016January 27, 2020 and consists of 1,467,0893,490,484 shares of common stock heldowned of record by clients of one or more investment advisers identified in Exhibit A thereto directly or indirectly owned by Wellington Management Group LLP (“Wellington”). Wellington may be deemed to beneficially own these shares in its capacity as investment adviser. The address of the beneficial owner is c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210.LLP. |
(2)(3) | Based solely on a report on Schedule 13G filed with the SEC on February 10, 2016, which indicates that (i) Third Rock Ventures II, L.P. (“TRV II”) directly owned, and had shared voting power and dispositive power over, 9,387,754 shares of common stock and (ii) Third Rock Ventures III, L.P. (“TRV III”) directly owned, and had shared voting power and dispositive power over 1,496,598 shares of common stock. Each of Third Rock Ventures GP II, L.P. (“TRV GP II”), the sole general partner of TRV II, and TRV GP II, LLC (“TRV GP II LLC”), the sole general partner of TRV GP II, and Mark Levin, Kevin P. Starr and Robert I. Tepper, the managing members of TRV GP II LLC, may be deemed to have voting and investment power over the shares held of record by TRV II, and each of Third Rock Ventures GP III, LP (“TRV GP III”), the sole general partner of TRV III, and TRV GP III, LLC (“TRV GP III LLC”), the sole general partner of TRV GP III, and Mark Levin, Kevin P. Starr and Robert I. Tepper, the managing managers of TRV GP III LLC, may be deemed to have voting and investment power over the shares held of record by TRV III. |
(3) | Based solely on a report on Schedule 13G/A filed with the SEC on February 12, 2016,7, 2020, which indicates that (i) FMR, LLC has sole dispositive power over 3,936,4466,933,887 shares of common stock and (ii) Abigail P. Johnson had sole dispositive power over 3,936,4466,933,887 shares of common stock and (iii) Select Biotechnology Portfolio has sole voting power over 2,620,490 shares of common stock.and. Abigail P. Johnson is a Director, the Vice Chairman, and the Chief Executive Officer and the President of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of |
| FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company (“FMR Co”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. |
(4) | Based solely on a report on Schedule 13G/A filed with the SEC on February 12, 2016,2020. |
(5) | Based solely on a report on Schedule 13G/A filed with the SEC on February 5, 2020, which indicates that Sanofi hadBlack Rock, Inc. has sole voting power with respect to 4,064,142 shares of common stock and sharedsole dispositive power with respect to 3,218,8994,142,810 shares of common stock.stock |
(5)(6) | Based solely on a report on Schedule 13G/A filed with the SEC on February 14, 2020, which indicates that T. Rowe Price Associates, Inc. has sole voting power with respect to 564,996 shares of common stock and sole dispositive power with respect to 3,578,708 shares of common stock |
(7) | Consists of: (i) 204,081586,073 shares of common stock held by The Tassos Gianakakos 2015 Annuity Trust, Dated September 25, 2015,trusts, (ii) 480,81581,796 shares of common stock of which 271,106 shares are subject to our right of repurchase as of March 31, 2016 held by Mr. Gianakakos and (iii) options to purchase 214,208672,088 shares of common stock that are exercisable within 60 days of March 31, 2016,2020, held by Mr. Gianakakos. Mr. Gianakakos as trustee has sole dispositive power over the |
(8) | Consists of: (i) 57,491 shares of common stock held by the Tassos Gianakakos 2015 Annuity Trust, Dated September 25, 2015. |
(6) | Consists of:Mr. Bauer and (ii) options to purchase 149,65893,184 shares of common stock that are exercisable within 60 days of March 31, 20162020 held by Dr. McDowell.Mr. Bauer. |
(7)(9) | Consists of: 121,087(i) 4,993 shares of common stock of which 77,550 are subject to our right to repurchase as of March 31, 2016, andheld by Mr. Harris, (ii) options to purchase 2,26776,136 shares of common stock that are exercisable within 60 days of March 31, 20162020 held by Dr. LambingMr. Harris and (iii) RSUs for 3,750 shares of common stock that are schedule to vest within 60 days of March 31, 2020. |
(8)(10) | Consists of: 20,408(i) 5,226 shares of common stock held by Mr. PerryFairey and (ii) options to purchase 3,17826,417 shares of common stock that are exercisable within 60 days of March 31, 20162020 held by Mr. Perry.Fairey. |
(9)(11) | Consists of: 198,639(i) 24,127 shares of common stock held by Dr. Homcy,Lee and 5,442 shares of common stock held by the Charles J. Homcy Irrevocable Trust UA February 18, 1999 Thomas P. Reilly TR FBO of Joseph Homcy. Dr. Homcy is affiliated with TRV II LP and TRV III LP. |
(10) | Mr. Starr is affiliated with TRV II LP and TRV III LP. Each of TRV II GP, the general partner of TRV II LP, and TRV II LLC, the general partner of TRV II GP, and Mark Levin, Kevin Starr and Robert Tepper, the managers of TRV II LLC, may be deemed to have voting and investment power over the shares held of record by TRV II LP, and each of TRV III GP, the general partner of TRV III LP, and TRV III LLC, the general partner of TRV III GP, and Mark Levin, Kevin Starr and Robert Tepper, the managers of TRV III LLC, may be deemed to have voting and investment power over the shares held of record by TRV III LP. No stockholder, director, officer, manager, member or employee of TRV II GP, TRV III GP, TRV II LLC or TRV III LLC has beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of any shares held by TRV II LP or TRV III LP. |
(11) | Consists of(ii) options to purchase 7,256113,762 shares of common stock that are exercisable within 60 days of March 31, 20162020 held by Dr. Topol.Lee. |
(12) | Consists of: (i) 5,383 shares of common stock held by Dr. Topol joined our Board on September 17, 2015. |
(12) | Consists ofMcDowell and (ii) options to purchase 916327,577 shares of common stock that are exercisable within 60 days of March 31, 20162020 held by Dr. Agarwal.McDowell. |
(13) | Consists of: (i) 25,408 shares of common stock held by Mr. Perry and (ii) options to purchase 60,850 shares of common stock that are exercisable within 60 days of March 31, 2020 held by Mr. Perry. |
(14) | Consists of options to purchase 61,050 shares of common stock that are exercisable within 60 days of March 31, 2020 held by Dr. Agarwal was appointedAgarwal. |
(15) | Consists of options to the Boardpurchase 61,050 shares of Directors incommon stock that are exercisable within 60 days of March 2016.31, 2020 held by Ms. Cranston. |
(13)(16) | Consists of: (i) 1,408 shares of common stock held by Ms. Cranston was appointedYarno and (ii) options to the Boardpurchase 45,466 shares of Directors in April 2016.common stock that are exercisable within 60 days of March 31, 2020 held by Ms. Yarno. |
(14)(17) | Consists of options to purchase 45,466 shares of common stock that are exercisable within 60 days of March 31, 2020 held by Ms. Popovits. |
(18) | Consists of options to purchase 45,008 shares of common stock that are exercisable within 60 days of March 31, 2020 held by Dr. Meeker. |
(19) | Includes the number of shares beneficially owned by the named executive officers and directors listed in the above table, as well as (i) 81,6322,851 shares of common stock of which 47,619 shares are subject to our right of repurchase as of March 31, 2016held by Cynthia J. Ladd and (ii) options to purchase 19,16090,955 shares of common stock that are exercisable within 60 days of March 31, 2016,2020 held by Jacob Bauer, (ii) 236,190 shares of common stock held by Jonathan C. Fox, and (iii) 40,816 shares of common stock, of which 27,211 are subject to our right to repurchase as of March 31, 2016 and options to purchase 16,948 shares of common stock that are exercisable within 60 days of March 31, 2016, held by Steven Chan.Cynthia J. Ladd. |
SECTIONDELINQUENTSECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership (Forms 3, 4 and 5) with the SEC. Officers, directors and greater than 10% stockholders are required to furnish us with copies of all such forms which they file.
To our knowledge, based solely on our review of such reports or written representations from certain reporting persons, we believe that all of the filing requirements applicable to our officers, directors, greater than 10% beneficial owners and other persons subject to Section 16 of the Exchange Act were complied with during the year ended December 31, 2015.
2019, except that certain transactions involving the partial exercise of options to purchase common stock by Dr. June Lee and a sale to cover withholding taxes in connection with the vesting of RSUs by Mr. Gianakakos were reported late on each respective Form 4 due to administrative error.The following Audit Committee Report is not considered proxy solicitation material and is not deemed filed with the Securities and Exchange Commission. Notwithstanding anything to the contrary set forth in any of the Company’s filings made under the Securities Act of 1933 or the Exchange Act that might incorporate filings made by the Company under those statutes, the Audit Committee Report shall not be incorporated by reference into any prior filings or into any future filings made by the Company under those statutes.
AUDIT COMMITTEECOMMITTEE REPORT
The Audit Committee of the Board of Directors (the “Audit Committee”) has furnished this report concerning the independent audit of the Company’s financial statements. Each member of the Audit Committee meets the enhanced independence standards established by the Sarbanes-Oxley Act of 2002 and rulemaking of the Securities and Exchange Commission (the “SEC”)SEC and the NASDAQ Stock Market regulations. A copy of the Audit Committee Charter is available on the Company’s website at http://www.MyoKardia.com.
The Audit Committee’s responsibilities include assisting the Board of Directors regarding the oversight of the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence, and the performance of the Company’s internal audit function and the independent registered public accounting firm.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the Company’s financial statements for the fiscal year ended December 31, 20152019 with the Company’s management and PricewaterhouseCoopers LLP. In addition, the Audit Committee has discussed with PricewaterhouseCoopers LLP, with and without management present, their evaluation of the Company’s internal accounting controls and overall quality of the Company’s financial reporting. The Audit Committee also discussed with PricewaterhouseCoopers LLP the matters required to be discussed by Statement on Auditing Standards No. 114 (formerly SAS 61), as amended (AICPA,Professional Standards, Vol. 1 AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.and the SEC. The Audit Committee also received the written disclosures and the letter from PricewaterhouseCoopers LLP required by the Public Company Accounting Oversight Board Rule 3526 and the Audit Committee discussed the independence of PricewaterhouseCoopers LLP with that firm.
Based on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to the Board of Directors, and the Board of Directors approved, that the audited financial statements be included in the Company’s Annual Report for the fiscal year ended December 31, 2015.2019.
The Audit Committee and the Board of Directors have recommended the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2016.2020.
AUDIT COMMITTEE(1)
KEVIN STARR, FORMER CHAIRMANMARY CRANSTON, CHAIRPERSON
MARK L. PERRY
SUNIL AGARWAL, M.D.WENDY L. YARNO
(1) | Mr. Starr, Mr. Perry and Dr. Agarwal participated in the review, discussion and analysis of the Company’s financial statements for the fiscal year ended December 31, 2015 contained in the Annual Report. Upon Ms. Cranston’s appointment as Chair of the Audit Committee in April 2016, Mr. Starr resigned as Chair of the Audit Committee but continues to serve as a member of the Audit Committee. |
HOUSEHOLDING OF PROXY MATERIALS
We have made available a procedure approved by the SEC known as “householding.” This procedure allows multiple stockholders residing at the same address the convenience of receiving a single copy of our Notice, Annual Report on Form 10-K and proxy materials, as applicable. This allows us to save money by reducing the number of documents we must print and mail, and it helps protect the environment as well.
Householding is available to both registered stockholders (i.e., those stockholders with certificates registered in their name) and streetnamestreet name holders (i.e., those stockholders who hold their shares through a brokerage).
Registered Stockholders
If you are a registered stockholder and would like to consent to a mailing of proxy materials and other stockholder information only to one account in your household, as identified by you, we will deliver or mail a single copy of our Annual Report and proxy materials for all registered stockholders residing at the same address. Your consent will be perpetual unless you revoke it, which you may do at any time by contacting the Householding Department of Broadridge Corporate Issuer Solutions, Inc. (“Broadridge”), at 1717 Arch Street, Suite 1300, Philadelphia, PA 19103.
Registered stockholders who have not consented to householding will continue to receive copies of Annual Reports and proxy materials for each registered stockholder residing at the same address. As a registered stockholder, you may elect to participate in householding and receive only a single copy of Annual Reports or proxy statements for all registered stockholders residing at the same address by contacting Broadridge as outlined above.
Street Name Holders
Stockholders who hold their shares through a brokerage may elect to participate in householding or revoke their consent to participate in householding by contacting their respective brokers.
OTHER MATTERSMATTERS
We are not aware of any matters that may come before the meeting other than those referred to in the notice. If any other matter shall properly come before the Annual Meeting, however, the persons named in the accompanying proxy intend to vote all proxies in accordance with their best judgment.
Accompanying this Proxy Statement is our Annual Report. Copies of our Annual Report are available free of charge on our website at www.MyoKardia.com or you can request a copy free of charge by calling Investor Relations at (650) 351-4705 or sending an e-mail request to IR@myokardia.com. Please include your contact information with the request.
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By Order of the Board of Directors, |
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MyoKardia, Inc. |
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/s/ T. Anastasios Gianakakos |
T. Anastasios Gianakakos |
President and Chief Executive Officer |
April 28, 2016
Appendix A
MYOKARDIA, INC.
2015 STOCK OPTION AND INCENTIVE PLAN24, 2020
SECTION | 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS |
VOTE BY INTERNET Before The nameMeeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on June 17, 2020. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/MYOK2020 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on June 17, 2020. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. MYOKARDIA, INC. 1000 SIERRA POINT PARKWAY BRISBANE, CA 94005 D15957-P40023 For All Withhold All For All Except To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the plan isnominee(s) on the MyoKardia, Inc. 2015 Stock Option and Incentive Plan (the “Plan”).line below. MYOKARDIA, INC. The purposeBoard of Directors recommends you vote FOR the Plan is to encourage and enablefollowing: 1.To elect the officers, employees, Non-Employeethree Class II directors Nominees: 01)David P. Meeker, M.D. 02)Mark L. Perry 03)Wendy L. Yarno For Against Abstain The Board of Directors and Consultantsrecommends you vote FOR the following proposals: 2.To ratify the appointment of MyoKardia, Inc. (the “Company”), a Delaware corporation, and its Subsidiaries upon whose judgment, initiative and effortsPricewaterhouseCoopers LLP as the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company’s welfare will assure a closer identification of their interests with thoseindependent registered public accounting firm of the Company andfor its stockholders, thereby stimulating their effortsfiscal year ending December 31, 2020. 3.To recommend, on the Company’s behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
“Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Administrator” means either the Board ora non-binding advisory basis, the compensation committee of the BoardCompany's named executive officers as disclosed in the proxy statement. NOTE: To transact such other business as may properly come before the meeting or a similar committee performingany adjournment or postponement thereof. In their discretion, the functions ofproxies are authorized to vote upon such other business as may properly come before the compensation committee and which is comprised of not less than twoNon-Employee Directors who are independent.
“Award” or“Awards,” except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock Awards, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards and Dividend Equivalent Rights.
“Award Certificate” means a written or electronic document setting forth the terms and provisions applicable to an Award granted under the Plan. Each Award Certificate is subject to the terms and conditions of the Plan.
“Board” means the Board of Directors of the Company.
“Cash-Based Award” means an Award entitling the recipient to receive a cash-denominated payment.
“Cause” means dismissalAnnual Meeting. This proxy, when properly executed, will be voted as a result of (i) any material breachdirected herein by the grantee of any agreement between the grantee and the Company; (ii) the conviction of, indictment for or plea of nolo contendere by the grantee to a felony or a crime involving moral turpitude; or (iii) any material misconduct or willful and deliberate non-performance (other than by reason of disability) by the grantee of the grantee’s duties to the Company.
“Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.
“Consultant” means any natural person that provides bona fide services to the Company, and such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.
“Covered Employee” means an employee whoundersigned Stockholder. If no direction is a “Covered Employee” within the meaning of Section 162(m) of the Code.
“Dividend Equivalent Right” means an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other award to which it relates) if such shares had been issued to and held by the grantee.
“Effective Date” means the date on which the Plan becomes effective as set forth in Section 21.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“Fair Market Value” of the Stock on any given date means the fair market value of the Stock determined in good faith by the Administrator; provided, however, that if the Stock is admitted to quotation on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), NASDAQ Global Market or another national securities exchange, the determination shall be made, by reference to market quotations. If there are no market quotations for such date, the determination shall be made by reference to the last date preceding such date for which there are market quotations; provided further, however, that if the date for which Fair Market Value is determined is the first day when trading prices for the Stock are reported on a national securities exchange, the Fair Market Value shall be the “Price to the Public” (or equivalent) set forth on the cover page for the final prospectus relating to the Company’s Initial Public Offering.
“Incentive Stock Option” means any Stock Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code.
“Initial Public Offering” means the consummation of the first underwritten, firm commitment public offering pursuant to an effective registration statement under the Act covering the offer and sale by the Company of its equity securities, or such other event as a result of or following which the Stock shall be publicly held.
“Non-Employee Director” means a member of the Board who is not also an employee of the Company or any Subsidiary.
“Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.
“Option” or“Stock Option” means any option to purchase shares of Stock granted pursuant to Section 5.
“Performance-Based Award” means any Restricted Stock Award, Restricted Stock Units, Performance Share Award or Cash-Based Award granted to a Covered Employee that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code and the regulations promulgated thereunder.
“Performance Criteria” means the criteria that the Administrator selects for purposes of establishing the Performance Goal or Performance Goals for an individual for a Performance Cycle. The Performance Criteria (which shall be applicable to the organizational level specified by the Administrator, including, but not limited to, the Company or a unit, division, group, or Subsidiary of the Company) thatthis proxy will be used to establish Performance Goals are limited to the following: researchvoted "FOR ALL NOMINEES" in Proposal 1 and development, publication, clinical and/or regulatory milestones, total shareholder return, earnings before interest, taxes, depreciation"FOR" Proposals 2 and amortization, net income (loss) (either before or after interest, taxes, depreciation and/or amortization), changes in the market price of the Stock, economic value-added, funds from operations or similar measure, sales or revenue, acquisitions or strategic transactions, operating income (loss), cash flow (including, but not limited to, operating cash flow and free cash flow), return on capital, assets, equity, or investment, return on sales, gross or net profit levels, productivity, expense, margins, operating efficiency, customer satisfaction, working capital, earnings (loss) per share of Stock, sales or market shares and number of customers, any of which may be measured either in absolute terms or3. Please sign exactly as compared to any incremental increase oryour name(s) appear(s) hereon. When signing as compared to results of a peer group. The Committee may appropriately adjust any evaluation performance under a Performance Criterion to exclude any of the following events that occurs during a Performance Cycle: (i) asset write-downs or impairments, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principlesattorney, executor, administrator, or other such laws or provisions affecting reporting results, (iv) accruals for reorganizations and restructuring programs, and (v) any item of an unusual nature or offiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a type that indicates infrequency of occurrence, or both, including those described in the Financial Accounting Standards Board’s authoritative guidance and/or in management’s discussion and analysis of financial condition of operations appearing the Company’s annual report to stockholders for the applicable year.
“Performance Cycle” means one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Criteria will be measured for the purpose of determining a grantee’s right to and the payment of a Restricted Stock Award, Restricted Stock Units, Performance Share Award or Cash-Based Award, the vesting and/or payment of which is subject to the attainment of one or more Performance Goals. Each such period shall not be less than 12 months.
“Performance Goals” means, for a Performance Cycle, the specific goals established in writing by the Administrator for a Performance Cycle based upon the Performance Criteria.
“Performance Share Award” means an Award entitling the recipient to acquire shares of Stock upon the attainment of specified performance goals.
“Restricted Shares” means the shares of Stock underlying a Restricted Stock Award that remain subject to a risk of forfeiture or the Company’s right of repurchase.
“Restricted Stock Award” means an Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant.
“Restricted Stock Units” means an Award of stock units subject to such restrictions and conditions as the Administrator may determine at the time of grant.
“Sale Event” shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power and outstanding stock immediately prior to such transaction do not own a majority of the outstanding voting power and outstanding stock or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, (iii) the sale of all of the Stock of the Company to an unrelated person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company’s outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company.
“Sale Price” means the value as determined by the Administrator of the consideration payable, or otherwise to be received by stockholders, per share of Stock pursuant to a Sale Event.
“Section 409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.
“Stock” means the Common Stock, par value $0.0001 per share, of the Company, subject to adjustments pursuant to Section 3.
“Stock Appreciation Right” means an Award entitling the recipient to receive shares of Stock having a value equal to the excess of the Fair Market Value of the Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.
“Subsidiary” means any corporation or other entity (other than the Company)partnership, please sign in which the Company has at least a 50 percent interest, either directlyfull corporate or indirectly.
“Ten Percent Owner” means an employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation.
“Unrestricted Stock Award” means an Award of shares of Stock free of any restrictions.
SECTION 2. | ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS |
(a)Administration of Plan. The Plan shall be administeredpartnership name by the Administrator.
(b)Powers of Administrator. The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority:
(i) to select the individuals to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards and Dividend Equivalent Rights, or any combination of the foregoing, granted to any one or more grantees;
(iii) to determine the number of shares of Stock to be covered by any Award;
(iv) to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the forms of Award Certificates;
(v) to accelerate at any time the exercisability or vesting of all or any portion of any Award in circumstances involving the grantee’s death, disability, retirement or termination of employment, or a change in control (including a Sale Event);
(vi) subject to the provisions of Section 5(c), to extend at any time the period in which Stock Options may be exercised; and
(vii) at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan grantees.
(c)Delegation of Authority to Grant Awards. Subject to applicable law, the Administrator, in its discretion, may delegate to the Chief Executive Officer of the Company all or part of the Administrator’s authority and duties with respect to the granting of Awards to individuals who are (i) not subject to the reporting and other provisions of Section 16 of the Exchange Act and (ii) not Covered Employees. Any such delegation by the Administrator shall include a limitation as to the amount of Stock underlying Awards that may be granted during the period of the delegation and shall contain guidelines as to the determination of the exercise price and the vesting criteria. The Administrator may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Administrator’s delegate or delegates that were consistent with the terms of the Plan.
(d)Award Certificate. Awards under the Plan shall be evidenced by Award Certificates that set forth the terms, conditions and limitations for each Award which may include, without limitation, the term of an Award and the provisions applicable in the event employment or service terminates.
(e)Indemnification. Neither the Board nor the Administrator, nor any member of either or any delegate thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under the Company’s certificate of incorporation or bylaws or any directors’ and officers’ liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.
(f)Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Administrator, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3(a) hereof; and (v) take any action, before or after an Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.authorized officer.
SECTION | 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION |
(a)Stock Issuable. The maximum number of shares of Stock reserved and available for issuance under the Plan shall be 1,650,000 shares (the “Initial Limit”), subject to adjustment as provided in this Section 3), plus on January 1, 2017 and each January 1 thereafter, the number of shares of Stock reserved and available for issuance under the Plan shall be cumulatively increased by four percent (4%) of the number of shares of Stock issued and outstanding on the immediately preceding December 31 or such lesser number of shares of Stock as determined by the Administrator (the “Annual Increase”). Subject to such overall limitation, the maximum aggregate number of shares of Stock that may be issued in the form of Incentive Stock Options shall not exceed the Initial Limit cumulatively increased on January 1, 2017 and on each January 1 thereafter by the lesser of the Annual Increase for such year or 3,300,000 shares of Stock, subject in all cases to adjustment as provided inSection 3(c). The shares of Stock underlying any Awards under the Plan and under the Company’s 2012 Equity Incentive Plan, as amended, that are forfeited, canceled, held back upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) shall be added back to the shares of Stock available for issuance under the Plan. In the event the Company repurchases shares of Stock on the open market, such shares shall not be added to the shares of Stock available for issuance under the Plan. Subject to such overall limitations, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award; provided, however, that Stock Options or Stock Appreciation Rights with respect to no more than 1,750,000 shares of Stock may be granted to any one individual grantee during any one calendar year period. The shares available for issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company.
(b)Changes in Stock. Subject to Section 3(d) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the
outstanding shares of Stock are converted into or exchanged for securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance under the Plan, including the maximum number of shares that may be issued in the form of Incentive Stock Options, (ii) the number of Stock Options or Stock Appreciation Rights that can be granted to any one individual grantee and the maximum number of shares that may be granted under a Performance-Based Award, (iii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (iv) the repurchase price, if any, per share subject to each outstanding Restricted Stock Award, and (v) the exercise price for each share subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Stock Options and Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation Rights remain exercisable. The Administrator shall also make equitable or proportionate adjustments in the number of shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event. The adjustment by the Administrator shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional shares.
(c)Mergers and Other Transactions. In the case of and subject to the consummation of a Sale Event, the parties thereto may cause the assumption or continuation of Awards theretofore granted by the successor entity, or the substitution of such Awards with new Awards of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree. To the extent the parties to such Sale Event do not provide for the assumption, continuation or substitution of Awards, upon the effective time of the Sale Event, the Plan and all outstanding Awards granted hereunder shall terminate. In such case, except as may be otherwise provided in the relevant Award Certificate, all Options and Stock Appreciation Rights that are not exercisable immediately prior to the effective time of the Sale Event shall become fully exercisable as of the effective time of the Sale Event, all other Awards with time-based vesting, conditions or restrictions shall become fully vested and nonforfeitable as of the effective time of the Sale Event, and all Awards with conditions and restrictions relating to the attainment of performance goals may become vested and nonforfeitable in connection with a Sale Event in the Administrator’s discretion or to the extent specified in the relevant Award Certificate. In the event of such termination, (i) the Company shall have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the grantees holding Options and Stock Appreciation Rights, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the Sale Price multiplied by the number of shares of Stock subject to outstanding Options and Stock Appreciation Rights (to the extent then exercisable at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding Options and Stock Appreciation Rights; or (ii) each grantee shall be permitted, within a specified period of time prior to the consummation of the Sale Event as determined by the Administrator, to exercise all outstanding Options and Stock Appreciation Rights (to the extent then exercisable) held by such grantee. The Company shall also have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the grantees holding other Awards in an amount equal to the Sale Price multiplied by the number of vested shares of Stock under such Awards.
Notwithstanding anything to the contrary herein, in the event a grantee’s service relationship is terminated by the Company or any successor without Cause within one year following the consummation of a Sale Event, any Awards assumed or substituted in a Sale Event which are subject to vesting conditions, the lapse or achievement of any conditions and/or a right of repurchase in favor of the Company or a successor entity, shall accelerate in full, and any Awards accelerated in such manner with conditions and restrictions relating to the attainment of performance goals will be deemed achieved at one hundred percent (100%) of target levels.
Grantees under the Plan will be such full or part-time officers and other employees, Non-Employee Directors and Consultants of the Company and its Subsidiaries as are selected from time to time by the Administrator in its sole discretion.
(a)Award of Stock Options. The Administrator may grant Stock Options under the Plan. Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f) of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.
Stock Options granted pursuant to this Section 5 shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable. If the Administrator so determines, Stock Options may be granted in lieu of cash compensation at the optionee’s election, subject to such terms and conditions as the Administrator may establish.
(b)Exercise Price. The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5 shall be determined by the Administrator at the time of grant but shall not be less than 100 percent of the Fair Market Value on the date of grant. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the option price of such Incentive Stock Option shall be not less than 110 percent of the Fair Market Value on the grant date.
(c)Option Term. The term of each Stock Option shall be fixed by the Administrator, but no Stock Option shall be exercisable more than ten years after the date the Stock Option is granted. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the term of such Stock Option shall be no more than five years from the date of grant.
(d)Exercisability; Rights of a Stockholder. Stock Options shall become exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date. The Administrator may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.
(e)Method of Exercise. Stock Options may be exercised in whole or in part, by giving written or electronic notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods except to the extent otherwise provided in the Option Award Certificate:
(i) In cash, by certified or bank check or other instrument acceptable to the Administrator;
(ii) Through the delivery (or attestation to the ownership following such procedures as the Company may prescribe) of shares of Stock that are not then subject to restrictions under any Company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date;
(iii) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Company shall prescribe as a condition of such payment procedure; or
(iv) With respect to Stock Options that are not Incentive Stock Options, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price.
Payment instruments will be received subject to collection. The transfer to the optionee on the records of the Company or of the transfer agent of the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Option Award Certificate or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligated to withhold with respect to the optionee). In the event an optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the optionee upon the exercise of the Stock Option shall be net of the number of attested shares. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Stock Options, such as a system using an internet website or interactive voice response, then the paperless exercise of Stock Options may be permitted through the use of such an automated system.
(f)Annual Limit on Incentive Stock Options. To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.
SECTION | 6. STOCK APPRECIATION RIGHTS |
(a)Award of Stock Appreciation Rights. The Administrator may grant Stock Appreciation Rights under the Plan. A Stock Appreciation Right is an Award entitling the recipient to receive shares of Stock having a value equal to the excess of the Fair Market Value of a share of Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.
(b)Exercise Price of Stock Appreciation Rights. The exercise price of a Stock Appreciation Right shall not be less than 100 percent of the Fair Market Value of the Stock on the date of grant.
(c)Grant and Exercise of Stock Appreciation Rights. Stock Appreciation Rights may be granted by the Administrator independently of any Stock Option granted pursuant to Section 5 of the Plan.
(d)Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined from time to time by the Administrator. The term of a Stock Appreciation Right may not exceed ten years.
SECTION | 7. RESTRICTED STOCK AWARDS |
(a)Nature of Restricted Stock Awards. The Administrator may grant Restricted Stock Awards under the Plan. A Restricted Stock Award is any Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees.
(b)Rights as a Stockholder. Upon the grant of the Restricted Stock Award and payment of any applicable purchase price, a grantee shall have the rights of a stockholder with respect to the voting of the Restricted Shares and receipt of dividends; provided that if the lapse of restrictions with respect to the Restricted Stock Award is tied to the attainment of performance goals, any dividends paid by the Company during the performance period shall accrue and shall not be paid to the grantee until and to the extent the performance goals are met with respect to the Restricted Stock Award. Unless the Administrator shall otherwise determine, (i) uncertificated Restricted
Shares shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Restricted Shares are vested as provided in Section 7(d) below, and (ii) certificated Restricted Shares shall remain in the possession of the Company until such Restricted Shares are vested as provided in Section 7(d) below, and the grantee shall be required, as a condition of the grant, to deliver to the Company such instruments of transfer as the Administrator may prescribe.
(c)Restrictions. Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the Restricted Stock Award Certificate. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, if a grantee’s employment (or other service relationship) with the Company and its Subsidiaries terminates for any reason, any Restricted Shares that have not vested at the time of termination shall automatically and without any requirement of notice to such grantee from or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its original purchase price (if any) from such grantee or such grantee’s legal representative simultaneously with such termination of employment (or other service relationship), and thereafter shall cease to represent any ownership of the Company by the grantee or rights of the grantee as a stockholder. Following such deemed reacquisition of Restricted Shares that are represented by physical certificates, a grantee shall surrender such certificates to the Company upon request without consideration.
(d)Vesting of Restricted Shares. The Administrator at the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Restricted Shares and the Company’s right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Shares and shall be deemed “vested.”
SECTION | 8. RESTRICTED STOCK UNITS |
(a)Nature of Restricted Stock Units. The Administrator may grant Restricted Stock Units under the Plan. A Restricted Stock Unit is an Award of stock units that may be settled in shares of Stock upon the satisfaction of such restrictions and conditions at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees. Except in the case of Restricted Stock Units with a deferred settlement date that complies with Section 409A, at the end of the vesting period, the Restricted Stock Units, to the extent vested, shall be settled in the form of shares of Stock. Restricted Stock Units with deferred settlement dates are subject to Section 409A and shall contain such additional terms and conditions as the Administrator shall determine in its sole discretion in order to comply with the requirements of Section 409A.
(b)Election to Receive Restricted Stock Units in Lieu of Compensation. The Administrator may, in its sole discretion, permit a grantee to elect to receive a portion of future cash compensation otherwise due to such grantee in the form of an award of Restricted Stock Units. Any such election shall be made in writing and shall be delivered to the Company no later than the date specified by the Administrator and in accordance with Section 409A and such other rules and procedures established by the Administrator. Any such future cash compensation that the grantee elects to defer shall be converted to a fixed number of Restricted Stock Units based on the Fair Market Value of Stock on the date the compensation would otherwise have been paid to the grantee if such payment had not been deferred as provided herein. The Administrator shall have the sole right to determine whether and under what circumstances to permit such elections and to impose such limitations and other terms and conditions thereon as the Administrator deems appropriate. Any Restricted Stock Units that are elected to be received in lieu of cash compensation shall be fully vested, unless otherwise provided in the Award Certificate.
(c)Rights as a Stockholder. A grantee shall have the rights as a stockholder only as to shares of Stock acquired by the grantee upon settlement of Restricted Stock Units; provided, however, that the grantee may be
credited with Dividend Equivalent Rights with respect to the stock units underlying his Restricted Stock Units, subject to the provisions of Section 13 and such terms and conditions as the Administrator may determine.
(d)Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, a grantee’s right in all Restricted Stock Units that have not vested shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION | 9. UNRESTRICTED STOCK AWARDS |
Grant or Sale of Unrestricted Stock. The Administrator may grant (or sell at par value or such higher purchase price determined by the Administrator) an Unrestricted Stock Award under the Plan. An Unrestricted Stock Award is an Award pursuant to which the grantee may receive shares of Stock free of any restrictions under the Plan. Unrestricted Stock Awards may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such grantee.
SECTION | 10. CASH-BASED AWARDS |
Grant of Cash-Based Awards. The Administrator may grant Cash-Based Awards under the Plan. A Cash-Based Award is an Award that entitles the grantee to a payment in cash upon the attainment of specified Performance Goals. The Administrator shall determine the maximum duration of the Cash-Based Award, the amount of cash to which the Cash-Based Award pertains, the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Administrator shall determine. Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Administrator. Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and may be made in cash.
SECTION | 11. PERFORMANCE SHARE AWARDS |
(a)Nature of Performance Share Awards. The Administrator may grant Performance Share Awards under the Plan. A Performance Share Award is an Award entitling the grantee to receive shares of Stock upon the attainment of performance goals. The Administrator shall determine whether and to whom Performance Share Awards shall be granted, the performance goals, the periods during which performance is to be measured, which may not be less than one year except in the case of a Sale Event, and such other limitations and conditions as the Administrator shall determine.
(b)Rights as a Stockholder. A grantee receiving a Performance Share Award shall have the rights of a stockholder only as to shares of Stock actually received by the grantee under the Plan and not with respect to shares subject to the Award but not actually received by the grantee. A grantee shall be entitled to receive shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the Performance Share Award Certificate (or in a performance plan adopted by the Administrator).
(c)Termination. Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 18 below, in writing after the Award is issued, a grantee’s rights in all Performance Share Awards shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION | 12. PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES |
(a)Performance-Based Awards. The Administrator may grant one or more Performance-Based Awards in the form of a Restricted Stock Award, Restricted Stock Units, Performance Share Awards or Cash-Based Award payable upon the attainment of Performance Goals that are established by the Administrator and relate to one or more of the Performance Criteria, in each case on a specified date or dates or over any period or periods determined by the Administrator. The Administrator shall define in an objective fashion the manner of
calculating the Performance Criteria it selects to use for any Performance Cycle. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, or an individual. Each Performance-Based Award shall comply with the provisions set forth below.
(b)Grant of Performance-Based Awards. With respect to each Performance-Based Award granted to a Covered Employee, the Administrator shall select, within the first 90 days of a Performance Cycle (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) the Performance Criteria for such grant, and the Performance Goals with respect to each Performance Criterion (including a threshold level of performance below which no amount will become payable with respect to such Award). Each Performance-Based Award will specify the amount payable, or the formula for determining the amount payable, upon achievement of the various applicable performance targets. The Performance Criteria established by the Administrator may be (but need not be) different for each Performance Cycle and different Performance Goals may be applicable to Performance-Based Awards to different Covered Employees.
(c)Payment of Performance-Based Awards. Following the completion of a Performance Cycle, the Administrator shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Cycle have been achieved and, if so, to also calculate and certify in writing the amount of the Performance-Based Awards earned for the Performance Cycle. The Administrator shall then determine the actual size of each Covered Employee’s Performance-Based Award.
(d)Maximum Award Payable. The maximum Performance-Based Award payable to any one Covered Employee under the Plan for a Performance Cycle is 1,750,000 shares of Stock (subject to adjustment as provided in Section 3(c) hereof) or $2,000,000 in the case of a Performance-Based Award that is a Cash-Based Award.
SECTION | 13. DIVIDEND EQUIVALENT RIGHTS |
(a)Dividend Equivalent Rights. The Administrator may grant Dividend Equivalent Rights under the Plan. A Dividend Equivalent Right is an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other Award to which it relates) if such shares had been issued to the grantee. A Dividend Equivalent Right may be granted hereunder to any grantee as a component of an award of Restricted Stock Units or Performance Share Award or as a freestanding award. The terms and conditions of Dividend Equivalent Rights shall be specified in the Award Certificate. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a combination thereof, in a single installment or installments. A Dividend Equivalent Right granted as a component of an Award of Restricted Stock Units or Performance Share Award shall provide that such Dividend Equivalent Right shall be settled only upon settlement or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award.
(b)Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, a grantee’s rights in all Dividend Equivalent Rights shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION | 14. TRANSFERABILITY OF AWARDS |
(a)Transferability. Except as provided in Section 14(b) below, during a grantee’s lifetime, his or her Awards shall be exercisable only by the grantee, or by the grantee’s legal representative or guardian in the event of the grantee’s incapacity. No Awards shall be sold, assigned, transferred or otherwise encumbered or disposed
of by a grantee other than by will or by the laws of descent and distribution or pursuant to a domestic relations order. No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be null and void.
(b)Administrator Action. Notwithstanding Section 14(a), the Administrator, in its discretion, may provide either in the Award Certificate regarding a given Award or by subsequent written approval that the grantee (who is an employee or director) may transfer his or her Non-Qualified Stock Options to his or her immediate family members, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Award. In no event may an Award be transferred by a grantee for value.
(c)Family Member. For purposes of Section 14(b), “family member” shall mean a grantee’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee’s household (other than a tenant of the grantee), a trust in which these persons (or the grantee) have more than 50 percent of the beneficial interest, a foundation in which these persons (or the grantee) control the management of assets, and any other entity in which these persons (or the grantee) own more than 50 percent of the voting interests.
(d)Designation of Beneficiary. To the extent permitted by the Company, each grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the grantee’s death. Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator. If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate.
SECTION | 15. TAX WITHHOLDING |
(a)Payment by Grantee. Each grantee shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the grantee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee. The Company’s obligation to deliver evidence of book entry (or stock certificates) to any grantee is subject to and conditioned on tax withholding obligations being satisfied by the grantee.
(b)Payment in Stock. Subject to approval by the Administrator, a grantee may elect to have the Company’s minimum required tax withholding obligation satisfied, in whole or in part, by authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due. The Administrator may also require Awards to be subject to mandatory share withholding up to the required withholding amount. For purposes of share withholding, the Fair Market Value of withheld shares shall be determined in the same manner as the value of Stock includible in income of the Participants.
SECTION | 16. SECTION 409A AWARDS |
To the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “409A Award”), the Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order to comply with Section 409A. In this regard, if any amount under a 409A Award is payable upon a “separation from service” (within the meaning of
Section 409A) to a grantee who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. Further, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.
SECTION | 17. TERMINATION OF EMPLOYMENT, TRANSFER, LEAVE OF ABSENCE, ETC. |
(a)Termination of Employment. If the grantee’s employer ceases to be a Subsidiary, the grantee shall be deemed to have terminated employment for purposes of the Plan.
(b) For purposes of the Plan, the following events shall not be deemed a termination of employment:
(i) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or
(ii) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.
SECTION | 18. AMENDMENTS AND TERMINATION |
The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder’s consent. Except as provided in Section 3(d) or 3(e), without prior stockholder approval, in no event may the Administrator exercise its discretion to reduce the exercise price of outstanding Stock Options or Stock Appreciation Rights or effect repricing through cancellation and re-grants or cancellation of Stock Options or Stock Appreciation Rights in exchange for cash or other Awards. To the extent required under the rules of any securities exchange or market system on which the Stock is listed, to the extent determined by the Administrator to be required by the Code to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code, or to ensure that compensation earned under Awards qualifies as performance-based compensation under Section 162(m) of the Code, Plan amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 18 shall limit the Administrator’s authority to take any action permitted pursuant to Section 3(d) or 3(e).
SECTION | 19. STATUS OF PLAN |
With respect to the portion of any Award that has not been exercised and any payments in cash, Stock or other consideration not received by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.
SECTION | 20. GENERAL PROVISIONS |
(a)No Distribution. The Administrator may require each person acquiring Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof.
(b)Delivery of Stock Certificates. Stock certificates to grantees under this Plan shall be deemed delivered for all purposes when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company. Uncertificated Stock shall be deemed delivered for all purposes when the Company or a Stock transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic “book entry” records). Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed, quoted or traded. All Stock certificates delivered pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Stock is listed, quoted or traded. The Administrator may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, regulations, or requirements. The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.
(c)Stockholder Rights. Until Stock is deemed delivered in accordance with Section 20(b), no right to vote or receive dividends or any other rights of a stockholder will exist with respect to shares of Stock to be issued in connection with an Award, notwithstanding the exercise of a Stock Option or any other action by the grantee with respect to an Award.
(d)Other Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary.
(e)Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to the Company’s insider trading policies and procedures, as in effect from time to time.
(f)Clawback Policy. Awards under the Plan shall be subject to the Company’s clawback policy, as in effect from time to time.
SECTION | 21. EFFECTIVE DATE OF PLAN |
This Plan shall become effective upon the effectiveness of the registration statement filed by the Company under the Act in connection with the Initial Public Offering, following stockholder approval of the Plan in accordance with applicable state law, the Company’s bylaws and certificate of incorporation, and applicable stock exchange rules or pursuant to written consent. No grants of Stock Options and other Awards may be made hereunder after the tenth anniversary of the Effective Date and no grants of Incentive Stock Options may be made hereunder after the tenth anniversary of the date the Plan is approved by the Board.
This Plan and all Awards and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware applied without regard to conflict of law principles.
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| | VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you may consent to receive all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in the future.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: x
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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| | | | The Board of Directors recommends you vote FOR the following:
| | For
All
| | Withhold
All
| | For All
Except
| | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |  | | 
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| | | | 1. | | Election of Two (2) Class I Directors | | | | | | | | | | | |
| | | | | | Nominees
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| | | | 01
| | Sunil Agarwal, M.D. 02 Kevin Starr
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| | | | The Board of Directors recommends you vote FOR the following proposals:
| | For
| | Against
| | Abstain
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| | | | 2
| | To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2016.
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| | | | 3
| | To ratify the Company’s 2015 Stock Option and Incentive Plan.
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| | | | NOTE:The proxy holders are also authorized in their discretion to act upon such other business as may properly come before the meeting or any adjournment thereof. If no direction is made, this proxy will be voted “FOR ALL” in Proposal 1 and “FOR” each of Proposals 2 and 3.
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| | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | |  | | |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Proxy Statement, and Annual Report on Form 10-K and Shareholder Letter are available atwww.proxyvote.com
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| | MYOKARDIA, INC.
Proxy for Annual Meeting of Stockholders on June 7, 2016
Solicited on Behalf of the Board of Directors
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| The undersigned hereby appoints Tassos Gianakakos and Jacob Bauer as proxies, each with the power to appoint his substitute, and hereby authorizes such proxies to represent and vote, as designated on the reverse side hereof, all the shares of common stock of MyoKardia, Inc. held of record by the undersigned at the close of business on April 15, 2016 at the Annual Meeting of Stockholders to be held June 7, 2016 at 10:00 a.m. Pacific Time at 333 Allerton Avenue, South San Francisco, California 94080, www.proxyvote.com. D15958-P40023 MYOKARDIA, INC. Proxy for Annual Meeting of Stockholders on June 18, 2020 Solicited on Behalf of the Board of Directors The undersigned hereby appoints Cynthia Ladd and Taylor Harris as proxies, each with the power to appoint his or her substitute, and hereby authorizes such proxies to represent and vote, as designated on the reverse side hereof, all the shares of common stock of MyoKardia, Inc. held of record by the undersigned at the close of business on April 20, 2020 at the Annual Meeting of Stockholders to be held on June 18, 2020 at 9:00 AM Pacific Time, virtually via live webcast at www.virtualshareholdermeeting.com/MYOK2020, and at any adjournment or postponement thereof.
(Continued and to be signed on reverse side) | | |
