DAVID R. BETHUNE
Age: 77; Elected Director: 1996; Present Term Ends: 2018 Annual Meeting
David R. Bethune has served as a director of the Company since January 1996. He was Chairman of Zila, Inc., an oral cancer screening company, from August 2007 to September 2009 and Chief Executive Officer of Zila, Inc. from March 2008 to September 2009. He served as a member of the Board of Directors of the CAMBREX Corporation, a life sciences company dedicated to providing products and services that accelerate and improve the discovery and commercialization of human therapeutics, from 2005 to March 2012. Mr. Bethune served as Chairman and Chief Executive Officer of Atrix Laboratories, Inc., the developer of ELIGARD (leuprolide acetate for injectable suspension) for androgen deprivation therapy for advanced prostate cancer, from 1999 until his retirement in 2004. From 1997 to 1998, Mr. Bethune held the positions of President and Chief Operating Officer of the IVAX Corporation. From 1996 to 1997, Mr. Bethune was a consultant to the pharmaceutical industry. From 1995 to 1996, Mr. Bethune was President and Chief Executive Officer of Aesgen, Inc., a generic pharmaceutical company. From 1992 to 1995, Mr. Bethune was Group Vice President of American Cyanamid Company and a member of its Executive Committee until the sale of the company to American Home Products. He had global executive authority for human biologicals, consumer health products, pharmaceuticals and opthalmics, as well as medical research. In 1989 he became president of Lederle Laboratories, a division of American Cyanamid and held that position until 1992. From 1983 to 1989, Mr. Bethune served as President of North American Division for G.D. Searle. Mr. Bethune is a founding trustee of the American Cancer Society Foundation. He is the founding chairman of the Corporate Council of the Children’s Health Fund in New York City and served on the Arthritis Foundation Corporate Advisory Council.
Director Qualifications
Mr. Bethune’s impressive track record of achievements in leadership positions, including with public companies in the pharmaceutical and medical products industries, led to the conclusion that he should serve as a director of the Company and a member of the audit committee.
Age:
68;72; Elected Director: 2016; Present Term Ends:
20182022 Annual Meeting
Mario Eisenberger, M.D. has served as a director of the Company since October 2016. Dr. Eisenberger currently is the Dale Hughes Professor of Oncology at The Johns Hopkins University and has been in the full-time faculty since 1993. From 2010 to 2014, Dr. Eisenberger founded Oncology Trials Insights, Inc., a privately held clinical trials management company. Since 2010, Dr. Eisenberger has also served as an
ad-hoc member of the Oncologic Drugs Advisory Committee of the FDA. Since 1988, he has served in advisory, strategic and data safety monitoring boards, including Bristol-Myers Squibb, Sanofi, Astellas, Schering Plough, Auguron, AKZO, Dupont, Rhone-Poulenc Rorer, Aventis, Jansen, Ipsen, Active Biotech, Medivation, Tokai, Xanthus, Cytogen, Ortho
Biotech, Active Biotech, Merck-Sharp and Dohme, Tyme, Inc., Ferring and Bayer. From 1984 to 1998, Dr. Eisenberger held the position of head of the advanced prostate cancer committee and vice chair of the genitourinary cancer of the Southwest Oncology Group. From 1984 to 1993, he served as Professor of Oncology at The University of Maryland. From 1984 to 1989, he was the Chief of Oncology at the Baltimore VAH. From 1982 to 1984, he was a Senior Investigator at the Cancer Therapy Evaluation Program of the National Institute in charge of coordinating extramural clinical research in urological cancers. From 1976 to 1982, he served in the faculty of the University of Miami. Dr. Eisenberger obtained his M.D. at the Federal University of Rio de Janeiro Brazil in 1972 and is board certified in Internal Medicine and Medical Oncology.
Dr. Eisenberger’s medical background and broad business experience in the pharmaceutical industry led to the conclusion that he should serve as a director of the Company.
HARRY FISCH, M.D., F.A.C.S.
Age:
59;63; Elected Director: 2016; Present Term Ends:
20182022 Annual Meeting
Harry Fisch, M.D., F.A.C.S. has served as a director of the Company since October 2016.2016, as Vice Chairman of the Board since March 2018 and as Chief Corporate Officer of the Company since January 2018. Dr. Fisch was theco-founder of Aspen Park and served as the Chairman of the Board and Chief Scientific Officer of Aspen Park
from July 2014 to October 2016. FromSince 1994, to 2016, Dr. Fisch has served as the Chief Executive Officer and President of Millennium Sciences, Inc. Dr. Fisch has also had numerous academic and clinical appointments including Clinical Professor of Urology and Reproductive Medicine at Weill College of Medicine, Cornell University fromsince 2009, to 2016, Director of the Male Reproductive Center at Albert Einstein College of Medicine/Montefiore Medical Center from 1998 to 1999 and Professor of Clinical Urology at Columbia University, College of Physicians and Surgeons from 1999 to 2009. From 2014 to 2015, Dr. Fisch hosted The Dr. Harry Fisch Show on Men’s Health on Howard Stern’s SiriusXM radio channel 101. Dr. Fisch is a Board Certified Urologist and a Fellow of the American College of Surgeons. Dr. Fisch holds a B.A. in Chemistry from the State University of New York at Binghamton, an M.D. from Mount Sinai School of Medicine, New York, and performed his surgical and urologic training at Albert Einstein College of Medicine/Montefiore Medical Center.
Dr. Fisch’s medical background, experience in the pharmaceutical industry and deep understanding of the
Company’sCompany's industry, business and strategic evolution, as well as his experience as the Chairman of the Board, Chief Scientific Officer and a
co-founder of Aspen Park, all led to the conclusion that he should serve as a director of the Company.
MARY MARGARET FRANK, Ph.D.
MICHAEL L. RANKOWITZ
Age:
49;64; Elected Director:
2004;2018; Present Term Ends:
20182022 Annual Meeting
Mary Margaret Frank, Ph.D.
Michael L. Rankowitz has served as a director of the Company since October 2004. Dr. Frank is the Samuel A. Lewis Sr. Faculty FellowMarch 2018. Mr. Rankowitz has served as a Senior Advisor at Morgan Stanley since 2001. From 1980 to 2001, Mr. Rankowitz was a managing director at Morgan Stanley, where he also served as a co-head of Global High Yield and an Associate Professorwas responsible for risk management, research and sales for high yield, emerging markets, bank debt and distressed securities. Mr. Rankowitz has held directorships with NF Investment Corp., Carlyle Funds, 1st Tee of Accounting at the Darden GraduateMetropolitan New York, Discover Card, Clarent Hospital Corp., New York Racing Authority, International Dyslexia Association - New York Branch, Trinity School of Business at(New York) and Browning School (New York). He has a B.S. in Mathematics from the University of Virginia where she teaches financial, managerialVermont.
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Director Qualifications
Mr. Rankowitz’s extensive experience in investment banking, particularly in corporate finance transactions and tax accountingrisk management, led to the conclusion that he should serve as a director of the Company.
GRACE HYUN, M.D.
Age: 50; Elected Director: 2020; Present Term Ends: 2022 Annual Meeting
Grace Hyun, M.D., has served as a director of the Company since
2002. She also servesAugust 2020. Ms. Hyun has served as a Director of Pediatric Urology at NYU Langone Hospital-Brooklyn and a Clinical Associate Professor at NYU Langone School of Medicine since 2017. From 2011 to 2017, Ms. Hyun served as an
AcademicAssociate Director
for Darden’s Initiative for Business in Society. From 1999 to 2002, Dr. Frank wasof Pediatric Urology at The Mount Sinai Medical Center and as an Assistant Professor at
the University of Chicago BoothThe Mount Sinai School of
Business. During 1997, Dr. Frank was an accounting instructor at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. From 1992 to 1994, Dr. FrankMedicine. She has served as a
Senior Tax Consultant at Arthur Andersen.board member to the New York Section of the American Urological Association, the New York Academy of Medicine and the Societies of Pediatric Urology. She
received her MD from Cornell University Medical School and has
her master’s degree and Ph.D.a B.A. in
accountingHistory from
the University of North Carolina at Chapel Hill and was issued her C.P.A. in 1994.Columbia University.
Director Qualifications
Dr. Frank’s
Ms. Hyun's medical background and
experience in both public accounting and financial education and her qualification as an “audit committee financial expert” under SEC rulesdeep understanding of the Company's industry led to the conclusion that she should serve as a director of the Company.
Age:
43; Elected46; Appointed Director:
2016;2021; Present Term Ends:
20182022 Annual Meeting
Lucy Lu, M.D. has served as a director of the Company since
May 2021 and previously from October
2016.2016 to March 2019. Since February 2015, Dr. Lu has served as
the President, Chief Executive Officer and a director of Avenue Therapeutics, Inc., a company focused on pharmaceutical therapies used in the acute care setting.
SinceFrom February 2012
to June 2017, Dr. Lu
has beenwas the Executive Vice President and Chief Financial Officer of Fortress Biotech, Inc. Prior to working in the biotech industry, Dr. Lu had 10 years of experience in healthcare-related equity research and investment banking. From February 2007 to January 2012, Dr. Lu was a senior biotechnology equity analyst with Citigroup Investment Research. From 2004 until joining Citigroup, she was with First Albany Capital, serving as Vice President from April 2004 until becoming a Principal of First Albany Capital in February 2006. Dr. Lu obtained her M.D. from the New York University School of Medicine and her M.B.A. from the Leonard N. Stern School of Business at New York University. Dr. Lu obtained a B.A. from the University of Tennessee’s College of Arts and Science.
Dr. Lu’s extensive experience in leadership positions in the pharmaceutical and medical products industries and her knowledge of the Company from her previous service as a director led to the conclusion that she should serve as a director of the Company.
JESUS SOCORRO
Age: 42; Elected Director: 2017; Present Term Ends: 2018 Annual Meeting
Since March 2014, Mr. Socorro has been the Managing Principal of the Risk Transaction Advisory practice of Morrison, Brown, Argiz & Farra, LLC, a nationally recognized accounting and advisory firm headquartered in Miami, Florida. From August 1999 to November 2002 and from May 2004 to March 2014, Mr. Socorro was employed by Ernst & Young LLP, including as an Audit Senior Manager. From November 2002 to November 2003, Mr. Socorro served as the Technical Accounting Manager for LNR Property Corporation and from November 2003 to May 2004, he was an Audit Manager with BDO Seidman, LLP. Mr. Socorro received his M.B.A. from Northwestern University J.L. Kellogg School of Management in 2007 and received his C.P.A. in 1999 (although Mr. Socorro is not licensed).
Director Qualifications
Mr. Socorro’s background and experience in public accounting and his qualification as an “audit committee financial expert” under SEC rules led to the conclusion that he should serve as a director of the Company.
MICHAEL L. RANKOWITZ
Age: 60; New Nominee
Michael L. Rankowitz is a new nominee for election as a director of the Company. Mr. Rankowitz has held directorships with NF Investment Corp., Carlyle Funds, 1st Tee of Metropolitan New York, Discover Card, Clarent Hospital Corp., New York Racing Authority, International Dyslexia Association — New York Branch, Trinity School (New York) and Browning School (New York). From 1980 to 2001, Mr. Rankowitz was a managing director at Morgan Stanley, where he also served as aco-head of Global High Yield and was responsible for risk management, research and sales for high yield, emerging markets, bank debt and distressed securities. He has a B.S. in mathematics from the University of Vermont.
Director Qualifications
Dr. Rankowitz’s extensive experience in investment banking, particularly in corporate finance transactions and risk management, led to the conclusion that he should serve as a director of the Company.
The Board of Directors recommends that shareholders voteFOR all nominees.
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DIRECTORS MEETINGS AND COMMITTEES
Directors and Director Attendance
The Board of Directors currently consists of
tensix members:
Elgar Peerschke, Mitchell S. Steiner, M.D., F.A.C.S.,
O.B. Parrish, David R. Bethune, Mario Eisenberger, M.D., Harry Fisch, M.D., F.A.C.S.,
Mary Margaret Frank, Ph.D.Michael L. Rankowitz, Grace Hyun, M.D.,
and Lucy Lu, M.D.
, Georges Makhoul, Ph.D, and Jesus Socorro. At each annual meeting of shareholders, directors are elected for a term of one year to succeed those directors whose terms are expiring.
Our Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.
The Board of Directors held nine meetings during the Company’sCompany's fiscal year ended September 30, 2017. All2021. Each of the incumbent directors attended at least 75%100% of the aggregate of (1) the total number ofall meetings of the Board of Directors and (2) the total number100% of all meetings held by all committees of the Board of Directors on which he or she served, if any.
The chart below identifies the current members of each of these committees, along with the number of meetings held by each committee during the fiscal year ended September 30, 2017:
| | | | | | | | | | | | |
| | Audit | | | Compensation | | | Nominating and Corporate Governance | |
Number of Meetings: | | | 6 | | | | 4 | | | | 5 | |
Name of Member: | | | | | | | | | | | | |
David R. Bethune | | | | | | | | | | | X | * |
Mary Margaret Frank, Ph.D. | | | | | | | | | | | X | |
Mario Eisenberger, M.D. | | | | | | | | | | | X | |
Lucy Lu, M.D. | | | | | | | X | | | | | |
Georges Makhoul, Ph.D. | | | X | | | | X | | | | | |
Elgar Peerschke | | | X | | | | X | * | | | | |
Jesus Socorro | | | X | * | | | | | | | | |
2021:
Number of Meetings: | | | 6 | | | 6 | | | 4 |
Name of Member:
| | | | | | | | | |
Mario Eisenberger, M.D. | | | X | | | X | | | X* |
Michael L. Rankowitz | | | X | | | X* | | | X |
Grace Hyun | | | — | | | — | | | X |
Lucy Lu | | | X* | | | X | | | — |
X = committee member; * = current committee chairperson
The responsibilities of the Audit Committee, in addition to such other duties as may be specified by our Board of Directors, include the following: (1) responsibility for selecting, evaluating and, where appropriate, replacing the independent registered public accounting firm for the Company; (2) review of the timing, scope and results of the independent registered public accounting
firm’sfirm's audit examination; (3) review of periodic comments and recommendations by the independent registered public accounting firm and of our response thereto; (4) review of our financial statements; and (5) review of the scope and adequacy of our internal accounting controls. The
Board’s Audit Committee is an audit committee for purposes of Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The Audit
Committee’sCommittee's report required by the rules of the SEC appears on page
11.9.
The Compensation Committee (1) reviews and approves the goals and objectives relating to the compensation of our Chief Executive Officer and other executive officers, and determines the compensation of those executive officers, including salary rates, participation in incentive compensation and benefit plans, fringe benefits,
non-cash perquisites and other forms of compensation; (2) reviews and makes recommendations to our Board of Directors with respect to incentive compensation plans and equity-based plans; (3) administers our stock incentive, equity-based and other employee benefit plans in accordance with the responsibilities assigned to the Committee under any and all such plans; and (4) reviews and makes recommendations to our Board of Directors with respect to the compensation of our outside directors. The Compensation
Committee’sCommittee's charter requires that the Company provide the Compensation Committee with adequate funding to engage any compensation consultants or other advisers the Compensation Committee deems it appropriate to engage. During fiscal
20172021 and fiscal
20182022 to date, the Compensation Committee did not engage any consultants to assist it in reviewing the
Company’sCompany's compensation practices and levels.
Management plays a significant role in assisting the Compensation Committee in its oversight of compensation. Management’sManagement's role includes assisting the Compensation Committee with evaluating employee
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performance, establishing individual performance targets and objectives, recommending salary levels and equity incentive grants, and providing financial data on company performance, calculations and reports on achievement of performance objectives, and other information requested by the Compensation Committee. The Chief Executive Officer works with the Compensation Committee in making recommendations regarding overall compensation policies and plans as well as specific compensation levels for the named executive officers and other key employees, other than the Chief Executive Officer. Members of management who were present during a part of the Compensation Committee meetings in fiscal 20172021 and the first part of fiscal 20182022 included the Chairman, President and Chief Executive Officer and the Chief Financial Officer and Chief Administrative Officer. The Compensation Committee makes all decisions regarding the compensation of the Chief Executive Officer without the Chief Executive Officer or any other member of management present.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee, in addition to such other duties as may be specified by our Board of Directors,
nominates individualsidentifies and recommends to our Board of Directors nominees for election to the Board of Directors,
at each annual meeting shareholders, appoints individuals to become directors by fill vacancies and newly created directorships, reviews and makes recommendations to our Board of Directors regarding the size and composition of the Board of Directors and the committees of our Board of Directors and reviews and recommends to our Board of Directors corporate governance policies and practices for the Company.
The Board of Directors has adopted, and may amend from time to time, a written charter for each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. We make available on our website for investors at www.veruhealthcare.com/www.verupharma.com/investors, free of charge, copies of each of these charters. We are not including the information contained on or available through our website as a part of, or incorporating such information by reference into, this Proxy Statement.
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CORPORATE GOVERNANCE MATTERS
We are committed to establishing and maintaining high standards of corporate governance, which are intended to serve the long-term interests of the Company and our shareholders. Our Board of Directors has adopted Corporate Governance Guidelines which can be found on our website for investors at
www.veruhealthcare.com/www.verupharma.com/investors.
Our Board of Directors has reviewed the independence of the nominees for election to the Board of Directors at the Annual Meeting under the applicable standards of the NASDAQ Stock Market. Based on this review, our Board of Directors determined that each of the following directors
and/or nominees is independent under the listing standards of the NASDAQ Stock Market:
(1)
| | |
(1) David R. Bethune
| | (5) Georges Makhoul
|
(2) Mario Eisenberger, M.D.
|
(3)
| (6) Elgar Peerschke Grace Hyun, M.D. |
(3) Mary Margaret Frank, Ph.D. (4)
| | (7) Jesus Socorro
|
(4) Lucy Lu, M.D.
| | (8) Michael L. Rankowitz
|
Based upon such standards, Mitchell S. Steiner, M.D., F.A.C.S.
, and Harry Fisch, M.D., F.A.C.S.
and O.B. Parrish are the only directors who are not independent because Dr. Steiner is our
President and Chief Executive Officer
and Dr. Fisch is an employee and a significant shareholder of the
Company, and Mr. Parrish was employed by the Company during the past three years.In addition, based on such standards, the following persons who served as directors during the year ended September 30, 2017 but are no longer directors were independent: Donna Felch, William R. Gargiulo, Jr., Andrew S. Love and Sharon Meckes.
Company.
Board Leadership Structure
Historically, we have generally had the same person serving as the Chief Executive Officer and as Chairman of the Board of Directors. Following the changes in the membership of our Board of Directors in connection with the completion of our merger transaction with Aspen Park on October 31, 2016, we separated the positions of Chief Executive Officer and Chairman of the Board. However, with the retirement of Elgar Peerschke, who is currently Chairman of the Board, from the Board as of the Annual Meeting, we expect to appoint Mitchell S. Steiner, M.D., F.A.C.S., our President and Chief Executive Officer, to the position ofhas also served as Chairman of the Board. We also expect to appoint O.B. Parrish as Lead Director in addition to his current position of Vice ChairmanBoard since March 2018. Although we believe that the combination of the Board. WeChairman and Chief Executive Officer roles is appropriate under current circumstances, we will continue to review this issue periodically to determine the most appropriate Board leadership structure based on the relevant facts and circumstances. We do not have a director who serves as lead independent director or a similar position.
The Board’sBoard's Role in Risk Oversight
The role of our Board of Directors in our risk oversight process includes receiving reports from members of our senior management on areas of material risk to the Company, including operational, financial, legal and regulatory,
cybersecurity, and strategic and reputational risks. The Board has authorized the Audit Committee to oversee and periodically review our enterprise risk assessment and enterprise risk management policies.
Board Self-Assessments
We have implemented a process for the Board of Directors and each of the committees to conduct an annual written self-assessment which is then reviewed by the Nominating and Corporate Governance Committee and the Board of Directors. Most recently, the Board of Directors conducted this self-assessment in December 2021. Among other things, this process helps inform the Nominating and Corporate Governance Committee and the Board of Directors in determining whether the size of the Board is appropriate, whether the mix of skills on the Board of Directors is appropriate, whether additional skills are needed, whether the composition of the committees is appropriate, whether communication between the Board and management is appropriate, whether materials prepared for the Board of Directors and committees are timely and well-prepared, and whether the Board of Directors and the committees are functioning at a high level and in the best interests of the shareholders.
We have a standing Nominating and Corporate Governance Committee. Based on the review described under “Corporate Governance Matters — Director Independence,” our Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is independent under the applicable standards of the NASDAQ Stock Market.
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The Nominating and Corporate Governance Committee will consider director nominees recommended by our shareholders. A shareholder who wishes to recommend a person or persons for consideration as a nominee for election to the Board of Directors must send a written notice by mail, c/o Secretary, Veru Inc.,
4400 Biscayne Boulevard,2916 North Miami Avenue, Suite
888,1000, Miami, Florida
33137-3212,33127, that sets forth: (1) the name, address (business and residence), date of birth and principal occupation or employment (present and for the past five years) of each person whom the shareholder proposes to be considered as a nominee; (2) the number of shares of our Common Stock beneficially owned (as defined by Section 13(d) of the Securities Exchange Act of 1934) by each such proposed nominee; (3) any other information regarding such proposed nominee that would be required to be disclosed in a definitive proxy statement to shareholders prepared in connection with an election of directors pursuant to Section 14(a) of the Securities Exchange Act of 1934; and (4) the name and address (business and residential) of the shareholder making the recommendation and the number of shares of our Common Stock beneficially owned (as defined by Section 13(d) of the Securities Exchange Act of 1934) by the shareholder making the recommendation. We may require any proposed nominee to furnish additional information as may be reasonably required to determine the qualifications of such proposed nominee to serve as a director of the Company. Shareholder recommendations will be considered only if received no less than 120 days nor more than 150 days before the date of the proxy statement sent to shareholders in connection with the previous
year’syear's annual meeting of shareholders.
The Nominating and Corporate Governance Committee will consider any nominee recommended by a shareholder in accordance with the preceding paragraph under the same criteria as any other potential nominee. The Nominating and Corporate Governance Committee believes that a nominee recommended for a position on our Board of Directors must have an appropriate mix of director characteristics, experience, diverse perspectives and skills. For new potential board members, the Nominating and Corporate Governance Committee will in the first instance consider the independence of the potential member and the appropriate size of the board and then the qualifications of the proposed member. Qualifications of a prospective nominee that may be considered by the Nominating and Corporate Governance Committee include:
personal integrity and high ethical character;
accountability and responsiveness;
absence of conflicts of interest;
fresh intellectual perspectives and ideas; and
relevant expertise and experience and the ability to offer advice and guidance to management based on that expertise and experience.
The nomination of Michael L. Rankowitz
Lucy Lu, M.D. was recommended for appointment to the
Company’sCompany's Board of Directors
resulted fromby Dr. Steiner, our Chief Executive Officer and Chairman of our Board of Directors and appointed to the
recommendationBoard of
a shareholder.Directors effective May 14, 2021 after consideration by the Nominating and Corporate Governance Committee.
We do not have a formal policy for the consideration of diversity by our Nominating and Corporate Governance Committee in identifying nominees for director. Diversity is one of the factors the Nominating and Corpo-
rateCorporate Governance Committee may consider and in this respect diversity may include race, gender, national origin or other characteristics.
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Our Board is one-third female and also one-third non-white. Also, we have a female chairperson of our Audit Committee as well as female and non-white representation on each of the standing committees of our Board of Directors. The table below provides certain highlights of the composition of our Board members and nominees as of January 18, 2022. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f).
| Board Diversity Matrix (As of January 18, 2022) | |
| Total Number of Directors | | | 6 | |
| | | | Female | | | Male | | | Non-Binary | | | Gender
Undisclosed | |
| Gender: | |
| Number of directors based on gender identity | | | 2 | | | 4 | | | | | | | |
| Demographic Background
Number of directors who identify in any of the categories below: | |
| African American or Black | | | | | | | | | | | | | |
| Alaskan Native or Native American | | | | | | | | | | | | | |
| Asian | | | 2 | | | | | | | | | | |
| Hispanic or Latinx | | | | | | | | | | | | | |
| Native Hawaiian or Pacific Islander | | | | | | | | | | | | | |
| White | | | | | | 4 | | | | | | | |
| Two or More Races or Ethnicities | | | | | | | | | | | | | |
| LGBTQ+ | | | | | | | | | | | | | |
| Did Not Disclose Demographic Background | | | | | | | | | | | | | |
Communications between Shareholders and the Board of Directors
We have placed on our website for investors located at
www.veruhealth.com/www.verupharma.com/investors a description of the procedures for shareholders to communicate with our Board of Directors, a description of our policy for our directors and nominee directors to attend the Annual Meeting and the number of directors who attended last
year’syear's annual meeting of shareholders.
We have adopted a Code of Business Ethics that applies to all of our employees, including our principal executive officer, principal financial officer and principal accounting officer. A copy of the Code of Business Ethics is available on our website for investors which is located at www.veruhealth.com/www.verupharma.com/investors. We also intend to disclose any amendments to, or waivers from, the Code of Business Ethics on our website.
Our insider trading policy prohibits our directors and employees, including our executive officers, from purchasing any financial instrument, or otherwise engaging in any transaction, that is designed to hedge or offset any decrease in the market value of our Common Stock, including prepaid forward contracts, equity swaps, zero-cost collars and forward sale contracts. All transactions in our securities by directors and executive officers must be pre-cleared with our Executive Vice President – General Counsel under our insider trading policy.
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Report of the Audit Committee
The Audit Committee is currently comprised of three members of our Board of Directors. Based upon the review described above under “Corporate Governance Matters — Director Independence,” our Board of Directors has determined that each member of the Audit Committee is independent as defined in the listing standards of the NASDAQ Stock Market and the rules of the SEC. The duties and responsibilities of our Audit Committee are set forth in the Audit Committee Charter.
reviewed and discussed our audited financial statements for the fiscal year ended September 30, 2017,2021, with our management and with our independent registered public accounting firm;
discussed with our independent registered public accounting firm the matters required to be discussed by SAS No. 61, “Communications with Audit Committees,” as amended (American Institutethe applicable requirements of Certified Public Accountants, Professional Standards Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T; and
the SEC;received and discussed with our independent registered public accounting firm the written disclosures and the letter from our independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’sfirm's communications with the audit committee concerning independence.
Based on such review and discussions with management and the independent registered public accounting firm, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report on Form
10-K for the fiscal year ended September 30,
20172021 for filing with the SEC.
AUDIT COMMITTEE:
Jesus Socorro
Lucy Lu. M.D. (Chairperson)
Elgar Peerschke
Georges Makhoul, Ph.D.
Michael L. Rankowitz
Fees of Independent Registered Public Accounting Firm
The following table summarizes the fees we paid for audit and
non-audit services rendered by our independent registered public accounting firm, RSM US LLP, during fiscal
20172021 and
2016: | | | | | | | | |
Service Type | | Fiscal 2017 | | | Fiscal 2016 | |
Audit Fees(1) | | $ | 509,491 | | | $ | 395,410 | |
Audit-Related Fees(2) | | | 7,621 | | | | 86,620 | |
Tax Fees(3) | | | 75,800 | | | | 85,479 | |
All Other Fees | | | — | | | | — | |
| | | | | | | | |
Total Fees | | $ | 592,912 | | | $ | 567,509 | |
| | | | | | | | |
2020 :Audit Fees(1) | | | $479,300 | | | $507,000 |
Audit-Related Fees | | | — | | | — |
Tax Fees(2) | | | 128,000 | | | 61,400 |
All Other Fees | | | — | | | — |
Total Fees | | | $607,300 | | | $568,400 |
(1)
| Consists of fees for the audit of the Company’s consolidated financial statements for the years ended September 30, 20172021 and 2016, integrated audit of the Company’s internal control over financial reporting as of September 30, 2016,2020, review of financial information included in the Company’s quarterly reports on Form10-Q for fiscal 20172021 and fiscal 2016,2020, fees for the statutory audits of the foreign entities and consents and assistance with documents filed by the Company with the SEC and fees for the statutory audits of the foreign entities. SEC. |
(2)
| Consists primarily of fees relating to due diligence and accounting consultations relating to the transaction with Aspen Park.
|
(3) | Consists of fees relating to the preparation of the Company’sCompany's corporate income tax returns and related informational filings, review of foreign tax structuring and preparation of foreign income tax returns. |
The Audit Committee of the Board of Directors of the Company considered that the provision of the services and the payment of the fees described above are compatible with maintaining the independence of RSM US LLP.
The Audit Committee is responsible for reviewing andpre-approving anynon-audit services to be performed by our independent registered public accounting firm. The Audit Committee has delegated itspre-approval authority to the Chairperson of the Audit Committee to act between meetings of the Audit Committee. Anypre-approval given by the Chairperson of the Audit Committee pursuant to this delegation is presented to the full Audit Committee at its next regularly scheduled meeting. The Audit Committee or Chairperson of the Audit
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Committee reviews and, if appropriate, approves
non-audit service engagements, taking into account the proposed scope of the
non-audit services, the proposed fees for the
non-audit services, whether the
non-audit services are permissible under applicable law or regulation and the likely impact of the
non-audit services on the independence of the independent registered public accounting firm.
Each new engagement of our independent registered public accounting firm to perform
non-audit services set forth in the table above has been approved in advance by the Audit Committee or the Chairperson of the Audit Committee pursuant to the foregoing procedures.
Audit Committee Financial Expert
Our Board of Directors has determined that one of the members of the Audit Committee, Jesus SocorroLucy Lu, M.D. qualifies as an “audit committee financial expert” as defined by the rules of the SEC based on hisher work experience and education.
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The names of, and certain information regarding, executive officers of the Company who are not directors or director nominees as of the date of this Proxy Statement, are set forth below.
Name
| | Age | | | Position
|
Michele Greco | | | 5963 | | | Executive Vice President of FinanceChief Financial Officer and Chief Administrative Officer of the Company |
Brian Groch
K. Gary Barnette | | | 5154 | | | Chief CommercialScientific Officer of the Company |
Age:
59; Executive Vice President of Finance63; Chief Financial Officer and Chief Administrative Officer
Ms. Greco has served
as Chief Financial Officer of the Company since March 2018 and as Chief Administrative Officer of the Company since December
2017 and2017. Ms. Greco served as Executive Vice President of Finance of the Company
sincefrom October
2016. Ms. Greco served2016 to March 2018, as Executive Vice President and Chief Financial Officer of the Company from December 2014 to October 2016 and
served as Vice President and Chief Financial Officer of the Company from January 2013 to December 2014. Ms. Greco is a CPA with nearly 30 years of experience in public accounting with Ernst & Young LLP. From January 2011 to February 2012, Ms. Greco provided consulting services to Systems Research Incorporated as a recruiter of finance professionals. From March 2009 to January 2011, Ms. Greco was involved in a series of personal business ventures. From 1994 to March 2009, Ms. Greco served as an audit partner with Ernst & Young LLP. Ms. Greco joined Ernst & Young LLP in 1981.
BRIAN GROCH
K. GARY BARNETTE
Age:
51;54; Chief
CommercialScientific Officer
Mr. Groch
Dr. Barnette has served as Chief CommercialScientific Officer of the Company since January 2017. Mr. GrochSeptember 2018. Dr. Barnette served as Chief Commercial OfficerSenior Vice President of Telesta Therapeutics Inc.Scientific and Regulatory Affairs of Camargo Pharmaceutical Services (“Camargo”), a biotechnology company,provider of drug development services specializing in the 505(b)(2) approval pathway, from October 2015 until December 2016 overseeing the commercial strategy including, the prelaunch and launch plan for the first immunotherapeutic for bladder cancer in 25 years. From 2014 until 2015, Mr. Groch servedto September 2018, as Vice President Market Access for Horizon Therapeutics,of Scientific and Regulatory Affairs of Camargo from January 2016 to October 2016, and as Vice President of Drug Development of Camargo from May 2012 to January 2016. Dr. Barnette was also the co-founder of GTx, Inc., a pharmaceuticalmen's health and oncology public company, focused on rare diseases. Mr. Grochwhere he served in various roles from 2001 to 2012. From 1998 to 2001, Dr. Barnette worked for Solvay Pharmaceuticals, Inc., eventually serving as Director of Regulatory Affairs. From 1995 until 1998, Dr. Barnette served as HeadClinical Pharmacology and Biopharmaceutics Reviewer for the U.S. Food and Drug Administration. Dr. Barnette earned his Doctor of Market Access for Dendreon Corporation, a biotechnology company that developedPhilosophy, Basic Pharmaceutical Sciences from West Virginia University in 1995 and launched PROVENGE® for metastatic prostate cancer, from 2010 until 2013. Mr. Groch began his career at Merck & Co., where he rose through the sales and marketing ranks from 1989 to 2002 and was part of the product launches and promotion for ZOCOR®, PRILOSEC®, PLENDIL®, COZAAR®, HYZAAR®, TRUSOPT®, FOSAMAX®, MAXALT® and PROSCAR® (a drug to treat benign prostatic hyperplasia). Mr. Groch served as Regional Sales Director and then Director of Health Policy for Oncology, Osteoporosis, and Ophthalmology products including ZADITOR® and VISUDYNE®from 2002 until 2008. Mr. Groch earned a Master of Science degree in Healthcare Administration and Marketing and a Bachelor of Science degreefrom Salem College in Physiology from Central Michigan University.1989.
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The following table sets forth information regarding beneficial ownership of our Common Stock as of January 12, 201818, 2022 with respect to (1) each person known to the Company to own beneficially more than 5% of our Common Stock, (2) each named executive officer (as defined below under the heading “Executive Compensation”) and each director and director nominee, and (3) all directors, nominees and executive officers as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. Unless otherwise indicated, the persons and entities included in the table have sole voting and investment power with respect to all shares beneficially owned, except to the extent authority is shared by spouses under applicable law. Shares of our Common Stock subject to options that are either currently exercisable or exercisable within 60 days of January 12, 201818, 2022 are treated as outstanding and beneficially owned by the holder for the purpose of computing the percentage ownership of the holder. However, these shares are not treated as outstanding for the purpose of computing the percentage ownership of any other person. This table lists applicable percentage ownership based on 53,512,94680,049,082 shares of Common Stock outstanding as of January 12, 2018.
| | | | | | | | |
| | Common Stock | |
Name and Address of Beneficial Owner(1) | | Number of Shares | | | Percent of Class | |
Elgar Peerschke(2) | | | 1,104,560 | | | | 2.1 | % |
Mitchell S. Steiner, M.D., F.A.C.S.(3) | | | 7,864,767 | | | | 14.7 | % |
O.B. Parrish(4) | | | 1,078,350 | | | | 2.0 | % |
David R. Bethune(5) | | | 575,982 | | | | 1.1 | % |
Mario Eisenberger, M.D. | | | — | | | | * | |
Harry Fisch, M.D., F.A.C.S.(6) | | | 7,861,240 | | | | 14.7 | % |
Mary Margaret Frank, Ph.D.(7) | | | 75,344 | | | | * | |
Lucy Lu, M.D.(8) | | | 5,000 | | | | * | |
Georges Makhoul, Ph.D.(9) | | | 1,167,524 | | | | 2.2 | % |
Michael L. Rankowitz(10) | | | 50,000 | | | | * | |
Jesus Socorro(11) | | | 7,100 | | | | * | |
Daniel Haines(12) | | | 200,598 | | | | * | |
Michele Greco(13) | | | 78,678 | | | | * | |
Brian Groch | | | — | | | | * | |
All directors, nominees and executive officers, as a group (13 persons)(2), (3), (4), (5), (6), (7), (8), (9), (10), (11), (13) | | | 19,868,545 | | | | 37.0 | % |
18, 2022.Mitchell S. Steiner, M.D., F.A.C.S.(2) | | | 8,786,854 | | | 10.8% |
Harry Fisch, M.D., F.A.C.S.(3) | | | 8,567,185 | | | 10.6% |
Mario Eisenberger, M.D.(4) | | | 194,999 | | | * |
Michael L. Rankowitz(5) | | | 251,666 | | | * |
Lucy Lu, M.D.(6) | | | 9,800 | | | * |
Grace Hyun, M.D.(7) | | | 31,457 | | | * |
Michele Greco(8) | | | 905,073 | | | 1.1% |
K. Gary Barnette(9) | | | 611,308 | | | * |
All directors and executive officers, as a group (8 persons)(10) | | | 19,358,342 | | | 23.1% |
(1)
| Unless otherwise indicated, the address of each beneficial owner is 4400 Biscayne Blvd.,48 NW 25th Street, Suite 888,102, Miami, Florida 33137-3212. 33127. |
(2)
| Consists of 1,104,560 shares of Common Stock owned directly by Mr. Peerschke.
|
(3) | Consists of (a) 7,764,7677,184,767 shares of Common Stock owned directly by Dr. Steiner, and (b) 100,000190,000 shares of Common Stock held in trusts for the benefit of Dr. Steiner’sSteiner's adult children of which Dr. Steiner’sSteiner's brother is the trustee. |
(4) | Includes 233,501 shares owned by Phoenix of Illinois. Under the rules of the SEC, Mr. Parrish may be deemed to have votingtrustee, and dispositive power as to such shares since Mr. Parrish is an officer, director and the majority shareholder of Phoenix of Illinois. Also includes 844,849 shares of Common Stock owned directly by Mr. Parrish.
|
(5) | Consists of 435,982 shares of Common Stock owned directly by Mr. Bethune and 140,000(c) 1,412,087 shares of Common Stock subject to stock options held by Mr. Bethune. options. |
(6)(3)
| Consists of (a) 81,000222,881 shares of Common Stock held directly by Dr. Fisch, (b) 541,144 shares of Common Stock held jointly by Dr. Fisch and his spouse, and (c) 7,239,096 shares of Common Stock held by K&H Fisch Family Partners, LLC, of which Dr. Fisch is the sole manager. manager, and (d) 564,064 shares of Common Stock subject to stock options. |
(7)(4)
| Consists of 45,344194,999 shares of Common Stock subject to stock options. |
(5)
| Consists of (a) 100,000 shares of Common Stock owned directly by Mr. Rankowitz and (b) 151,666 shares of Common Stock subject to stock options. |
(6)
| Consists of 9,800 shares of Common Stock owned directly by Dr. Frank and 30,000 shares of Common Stock subject to stock options held by Dr. Frank.Lu. |
(8)(7)
| Consists of 5,000(a) 14,790 shares of Common Stock owned directly by Dr. Lu. Hyun and (b) 16,667 shares of Common Stock subject to stock options. |
(9)(8)
| Consists of 1,167,524(a) 96,178 shares of Common Stock owned directly by Dr. Makhoul. |
(10) | Consists of 50,000 shares of Common Stock owned directly by Mr. Rankowitz.
|
(11) | Consists of 7,100 shares of Common Stock owned directly by Mr. Socorro.
|
(12) | Consists of (a) 83,931 shares of Common Stock owned directly by Mr. HainesMs. Greco and (b) 116,667808,895 shares of Common Stock subject to stock options held by Mr. Haines. options. |
(13)(9)
| Includes (a) 71,178 sharesConsists of Common Stock held directly by Ms. Greco and (b) 7,500611,308 shares of Common Stock subject to stock optionsoptions.
|
(10)
| Includes (a) 190,000 shares of Common Stock held in trusts for the benefit of Dr. Steiner's adult children of which Dr. Steiner's brother is the trustee, (b) 541,144 shares of Common Stock held jointly by Dr. Fisch and his spouse, (c) 7,239,096 shares of Common Stock held by Ms. Greco.K&H Fisch Family Partners, LLC, of which Dr. Fisch is the sole manager, and (d) 3,759,686 shares of Common Stock subject to stock options. |
The above beneficial ownership information is based on information furnished by the specified
personpersons and is determined in accordance with Rule
13d-3 under the Securities Exchange Act of 1934, as amended, as required for purposes of this Proxy Statement. This information should not be construed as an admission of beneficial ownership for other purposes.
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DELINQUENT SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company’sCompany's officers and directors, and persons who own more than 10% of a registered class of the
Company’sCompany's equity securities, to file reports of ownership and changes in ownership with the SEC on Forms 3, 4 and 5. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on a review of the copies of such forms furnished to the Company, or written representations that no Forms 5 were required, the Company believes that during the fiscal year ended September 30, 20172021 all reports required by Section 16(a) to be filed by the Company’sCompany's officers, directors and more than 10% shareholders were filed on a timely basis except for the following: Dr. Fisch filed a Form 4 on May 22, 2017 reporting a stock purchase that occurred on May 17, 2017.basis.
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Summary Compensation Table
The table shown below provides information for the
Company’sCompany's last two fiscal years regarding compensation paid by the Company to the
two personsperson who served as Chief Executive Officer during fiscal
20172021 and
threethe other
two persons who served as executive officers of the Company
during fiscal 2017 whose total compensation exceeded $100,000.as of September 30, 2021. The individuals listed in this table are referred to elsewhere in this proxy statement as the “named executive officers.”
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | | Salary | | | Stock Awards(1) | | | Option Awards(1) | | | Nonequity Incentive Plan Compensation(2) | | | All Other Compensation(3) | | | Total | |
Mitchell S. Steiner, | | | 2017 | | | $ | 406,250 | | | | — | | | $ | 229,433 | | | $ | 188,419 | | | | — | | | $ | 824,102 | |
President and Chief Executive Officer(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
O.B. Parrish, | | | 2017 | | | $ | 14,319 | | | | — | | | | — | | | | — | | | | — | | | $ | 14,319 | |
Former Chairman and Chief Executive Officer(5) | | | 2016 | | | $ | 169,908 | | | | — | | | | — | | | | — | | | $ | 5,252 | | | $ | 175,161 | |
| | | | | | | |
Daniel Haines, | | | 2017 | | | $ | 270,833 | | | | — | | | $ | 229,433 | | | $ | 80,888 | | | $ | 8,125 | | | $ | 589,279 | |
Former Chief Financial Officer(6) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Brian Groch, | | | 2017 | | | $ | 225,000 | | | | — | | | $ | 196,656 | | | $ | 97,335 | | | $ | 6,750 | | | $ | 525,741 | |
Chief Commercial Officer(7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Michele Greco | | | 2017 | | | $ | 286,585 | | | | — | | | $ | 29,362 | | | $ | 78,508 | | | $ | 8,428 | | | $ | 402,883 | |
Executive Vice President of Finance and Chief Administrative Officer(8) | | | 2016 | | | $ | 217,436 | | | $ | 39,800 | | | $ | 11,700 | | | | — | | | $ | 6,851 | | | $ | 275,787 | |
Mitchell S. Steiner,
Chairman, President and Chief Executive Officer
| | | 2021 | | | $618,000 | | | $578,772 | | | $790,298 | | | $17,997 | | | $2,005,067 |
| 2020 | | | $501,913 | | | $388,707 | | | $367,680 | | | $5,003 | | | $1,263,303 |
| | | | | | | | | | | | | | | | | | |
Michele Greco,
Chief Financial Officer and Chief Administrative Officer
| | | 2021 | | | $382,500 | | | $176,043 | | | $263,790 | | | $13,335 | | | $835,668 |
| 2020 | | | $316,107 | | | $105,284 | | | $116,359 | | | $11,252 | | | $549,002 |
| | | | | | | | | | | | | | | | | | |
K. Gary Barnette,
Chief Scientific Officer
| | | 2021 | | | $397,500 | | | $180,866 | | | $226,706 | | | $12,496 | | | $817,568 |
| 2020 | | | $350,000 | | | $116,612 | | | $145,215 | | | $11,800 | | | $623,627 |
(1)
| The amount in this column equals the grant date fair value of the award, computed in accordance with theFinancial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic718-10 (formerly FAS No. 123R), of the award. 718. Assumptions used in the calculation of the grant date fair value are included in Note 711 to our audited consolidated financial statements, included in our Annual Report on Form10-K filed with the SEC on JanuaryDecember 2, 2018.2021.
|
(2)
| The Company has an annual incentive bonus program which provides participating named executive officers with the opportunity to receive annual payouts in cash and/or options to purchase shares of Common Stock, at the Company’s option.Stock. Participants are eligible to receive payouts upon achievement of corporate goals and individual goals. Corporate goals for fiscal 20172020 and fiscal 2021 included specific objectives relating to general corporate matters, product development for our drug candidates and theour FC2 business.and PREBOOST businesses. Payouts are equal to each participant’sparticipant's target amount multiplied by the weighted percentage achievement of the participant’scorporate goals with a payout of up to 100%and the participant's individual goals. All of the target amount. Payoutspayout to Ms. Greco and $40,000 of the participating named executive officerspayout to Dr. Steiner for fiscal 20172020 performance under the annual incentive bonus program were made in the form of stock option grants on December 14, 2017November 13, 2020 at a value of $1.00 for each option share.share, while the balance of the payout to Dr. Steiner and all of the payout to Dr. Barnette were made in cash. Each of these options vest in full on December 14, 2018,November 13, 2021, have aten-year term and have an exercise price of $1.22$2.75 per share, the closing price of the Company’s Common Stock on December 14, 2017. All of the options vest upon the occurrence of a “change of control” (as defined in the Company’s 2017 Equity Incentive Plan). |
(3) | The amount of “All Other Compensation” for Mr. Parrish consists of premiums paid by the Company for term life insurance under which Mr. Parrish or his designee is the beneficiary and for Mr. Haines, Mr. Groch and Ms. Greco consists of matching contributions by the Company under the Company’s Simple Individual Retirement Account plan for its employees.
|
(4) | Dr. Steiner joined the Company as Chief Executive Officer and President effective October 31, 2016.
|
(5) | Effective as of October 31, 2016, O.B. Parrish resigned from his position as Chairman of the Board and Chief Executive Officer of the Company, although Mr. Parrish remains on the Board of Directors of the Company and is Vice Chairman of the Board. See “Director Compensation and Benefits” for information regarding Mr. Parrish’s compensation as a director after his retirement from his position as Chairman of the Board and Chief Executive Officer.
|
(6) | Mr. Haines joined the Company as Chief Financial Officer effective October 31, 2016 and resigned effective January 4, 2018.
|
(7) | Mr. Groch joined the Company as Chief Commercial Officer effective January 1, 2017.
|
(8) | Ms. Greco was an executive officer of the Company through October 31, 2016 when she served as Chief Financial Officer. She continued to be employed by the Company as anon-executive officer after October 31, 2016. Ms. Greco became an executive officer again effective January 4, 2018 when Mr. Haines resigned and his duties as Chief Financial Officer were assigned to Ms. Greco.
|
Equity Awards
During the fiscal year ended September 30, 2017, the Company granted stock options to the named executive officers as set forth on the table below. In addition, as described under “Summary Compensation Table” above, the named executive officers received stock options in December 2017 in payment of amounts under the Company’s incentive compensation program for performance during the fiscal year ended September 30, 2017. No stock options were exercised by the named executive officers during the fiscal year ended September 30, 2017.
The following table provides information regarding stock options held by the named executive officers at September 30, 2017.
| | | | | | | | | | | | | | | | |
| | Option Awards | |
| | Number of Shares Underlying Unexercised Options | | | Option Exercise Price | | | Option Expiration Date | |
Name | | Exercisable | | | Unexercisable | | | |
Mitchell S. Steiner | | | — | | | | 350,000 | (2) | | $ | 1.20 | | | | 8/2/2027 | |
O.B. Parrish(1) | | | — | | | | — | | | | — | | | | — | |
Daniel Haines | | | — | | | | 350,000 | (2) | | $ | 1.20 | | | | 8/2/2027 | |
Brian Groch | | | — | | | | 300,000 | (2) | | $ | 1.20 | | | | 8/2/2027 | |
Michele Greco | | | — | | | | 44,792 | (2) | | $ | 1.20 | | | | 8/2/2027 | |
(1) | See “Director Compensation and Benefits” for information regarding stock options granted to Mr. Parrish as director compensation.
|
(2) | Options forone-third of the shares vest on each of August 2, 2018, August 2, 2019 and August 2,November 13, 2020. All of the options vest upon the occurrence of a “change of control” (as defined in the Company’s 2017applicable Equity Incentive Plan). All of the payout in fiscal 2021 to all executive officers was made in cash. |
(3)
| The amount of “All Other Compensation” consists of matching contributions by the Company under the Company's retirement plan for its employees. |
During the fiscal year ended September 30, 2021, the Company granted stock options to the named executive officers as set forth in the table below. No stock options were exercised by the named executive officers during the fiscal year ended September 30, 2021. All options vest upon the occurrence of a “change of control” (as defined in the applicable Equity Incentive Plan).
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The following table provides information regarding stock options held by the named executive officers at September 30, 2021.
Mitchell S. Steiner | | | 350,000 | | | — | | | $1.20 | | | 8/2/2027 |
| | | 188,419 | | | — | | | $1.22 | | | 12/14/2027 |
| | | 210,800 | | | — | | | $1.89 | | | 5/2/2028 |
| | | 125,802 | | | — | | | $1.38 | | | 12/11/2028 |
| | | 143,733 | | | 71,867(1) | | | $1.60 | | | 5/13/2029 |
| | | 116,666 | | | 233,334(2) | | | $1.92 | | | 11/14/2029 |
| | | — | | | 40,000(3) | | | $2.75 | | | 11/13/2030 |
| | | — | | | 360,000(4) | | | $2.75 | | | 11/13/2030 |
| | | | | | | | | | | | |
Michele Greco | | | 15,000 | | | — | | | $1.82 | | | 4/4/2026 |
| | | 44,792 | | | — | | | $1.20 | | | 8/2/2027 |
| | | 105,208 | | | — | | | $1.05 | | | 12/4/2027 |
| | | 78,508 | | | — | | | $1.22 | | | 12/14/2027 |
| | | 90,000 | | | — | | | $1.89 | | | 5/2/2028 |
| | | 83,025 | | | — | | | $1.38 | | | 12/11/2028 |
| | | 61,400 | | | 30,700(1) | | | $1.60 | | | 5/13/2029 |
| | | 31,600 | | | 63,200(2) | | | $1.92 | | | 11/14/2029 |
| | | 114,903 | | | — | | | $1.92 | | | 11/14/2029 |
| | | — | | | 116,359(3) | | | $2.75 | | | 11/13/2030 |
| | | — | | | 109,500(4) | | | $2.75 | | | 11/13/2030 |
| | | | | | | | | | | | |
K. Gary Barnette | | | 300,000 | | | — | | | $1.87 | | | 9/4/2028 |
| | | 66,000 | | | 33,000(1) | | | $1.60 | | | 5/13/2029 |
| | | 35,000 | | | 70,000(2) | | | $1.92 | | | 11/14/2029 |
| | | 137,808 | | | — | | | $1.92 | | | 11/14/2029 |
| | | — | | | 112,500(4) | | | $2.75 | | | 11/13/2030 |
(1)
Options for shares vest on May 13, 2022.
(2)
| Options for one-half of the shares vest on each of November 14, 2021 and November 14, 2022. |
(3)
| Options for the shares vest on November 13, 2021. |
(4)
| Options for one-third of the shares vest on each of November 13, 2021, November 13, 2022 and November 13, 2023. |
The Company entered into an Employment Agreement with Dr. Steiner on April 5, 2016 that took effect on October 31, 2016 (as amended on July 18, 2016 and November 4, 2016, the “Steiner Employment Agreement”). Under the Steiner Employment Agreement, Dr. Steiner’sSteiner's position with the Company is President and Chief Executive Officer. The initial term of the Steiner Employment Agreement is for three years from October 31, 2016, with automaticone-year renewals thereafter. Pursuant to the Steiner Employment Agreement, Dr. Steiner receives a minimum annual base salary of $375,000, is eligible to receive an annual bonus under the Company’sCompany's annual incentive bonus program and is entitled to participate in our equity incentive plan.plans. Dr. Steiner is also entitled to participate in all of our employee benefit plans, practices and programs on a basis no less favorable than other similarly situated employees. In the event that Dr. Steiner’sSteiner's employment is terminated by the Company without “cause” or by Dr. Steiner for “good reason” (each as defined in the Steiner Employment Agreement), Dr. Steiner will be entitled to continuation of his base salary and medical and dental insurance coverage for a period of one year following termination. The Steiner Employment Agreement contains customary noncompetition, nonsolicitation and nondisclosure covenants on the part of Dr. Steiner.
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The Company entered intoand Ms. Greco are parties to an Executive Employment Agreement, with Mr. Groch on December 20, 2016 that took effect on January 1, 2017dated as of March 21, 2018 (the “GrochGreco Employment Agreement”)., which superseded Ms. Greco's previous Employment Agreement dated as of October 4, 2017. Under the GrochGreco Employment Agreement, Mr. Groch’sMs. Greco's position with the Company is Chief CommercialFinancial Officer and Chief Administrative Officer. The GrochGreco Employment Agreement does not have a definite term. Pursuant to the terms of the GrochGreco Employment Agreement, Mr. GrochMs. Greco receives a minimum annual base salary of $300,000, is eligible to receive an annual bonus equal to 50% of his base salary under the Company’s annual incentive bonus program and is entitled to participate in our equity incentive plan. Mr. Groch is also entitled to participate in all of our employee benefit plans, practices and programs on a basis no less favorable than other similarly situated employees. In the event that Mr. Groch’s employment is terminated by the Company without “cause” or by Mr. Groch for “good reason” (each as defined in the Groch Employment Agreement), Mr. Groch will be entitled to continuation of his base salary for a period of one year following termination, payment of any unpaid annual bonus for any completed fiscal year, payment of apro-rated payment of his target bonus for the year in which the termination occurs and continuation of medical and dental insurance coverage until the earliest of (i) one year following termination, (ii) the date Mr. Groch is no longer eligible to receive COBRA or comparable state law continuation coverage or (iii) the date on which Mr. Groch becomes eligible to receive substantially similar coverage from another employer or another source. If Mr. Groch’s employment is terminated by the Company without “cause” or by Mr. Groch for “good reason” within six months following a “change in control” (as defined in the Groch Employment Agreement), then in addition to the benefits described in the preceding sentence Mr. Groch will be entitled to the accelerated vesting of all unvested equity compensa-
tion awards. The Groch Employment Agreement contains customary noncompetition, nonsolicitation and nondisclosure covenants on the part of Mr. Groch.
The Company and Ms. Greco are parties to an Executive Employment Agreement, dated as of October 4, 2017 (the “Greco Employment Agreement”), which superseded Ms. Greco’s previous Employment Agreement dated as of April 5, 2016, as amended. The Greco Employment Agreement does not have a definite term. Pursuant to the terms of the Greco Agreement, Ms. Greco receives a minimum annual base salary of $223,958, is eligible to receive an annual bonus equal to 50%45% of her base salary under the Company’sCompany's annual incentive bonus program and is entitled to participate in the Company’sCompany's equity incentive plan.plans. Ms. Greco is also entitled to participate in all of the Company’sCompany's employee benefit plans, practices and programs on a basis no less favorable than other similarly situated employees. In the event that Ms. Greco’sGreco's employment is terminated by the Company without “cause” or by Ms. Greco for “good reason” (each as defined in the Greco Employment Agreement), Ms. Greco will be entitled to continuation of her base salary for a period of one year following termination, payment of any unpaid annual bonus for any completed fiscal year, payment of a pro ratedpro-rated payment of her target bonus for the year in which the termination occurs and continuation of medical and dental insurance coverage until the earliest of (i) one year following termination, (ii) the date Ms. Greco is no longer eligible to receive COBRA or comparable state law continuation coverage or (iii) the date on which Ms. Greco becomes eligible to receive substantially similar coverage from another employer or another source. If Ms. Greco’sGreco's employment is terminated by the Company without “cause” or by Ms. Greco for “good reason” within six months following a “change in control” (as defined in the Greco Employment Agreement), then in addition to the benefits described in the preceding sentence, Ms. Greco will be entitled to the accelerated vesting of all unvested equity compensation awards. The Greco Employment Agreement contains customary noncompetition, nonsolicitation and nondisclosure covenants on the part of Ms. Greco.
The Company and Dr. Barnette are parties to an Employment Agreement dated as of September 4, 2018 (the “Barnette Employment Agreement”). Under the Barnette Employment Agreement, Dr. Barnette's position with the Company is Chief Scientific Officer. The Barnette Employment Agreement does not have a definite term. Pursuant to the terms of the Barnette Employment Agreement, Dr. Barnette receives a minimum annual base salary of $330,000, is eligible to receive an annual bonus equal to 45% of his base salary under the Company's annual incentive bonus program and is entitled to participate in our equity incentive plans. Dr. Barnette is also entitled to participate in all of our employee benefit plans, practices and programs on a basis no less favorable than other similarly situated employees. In the event that Dr. Barnette's employment is terminated by the Company without “cause” or by Dr. Barnette for “good reason” (each as defined in the Barnette Employment Agreement), Dr. Barnette will be entitled to continuation of his base salary for a period of six months following termination, payment of any unpaid annual bonus for any completed fiscal year, payment of a pro-rated payment of his target bonus for the year in which the termination occurs and continuation of medical and dental insurance coverage until the earliest of (i) six months following termination, (ii) the date Dr. Barnette is no longer eligible to receive COBRA or comparable state law continuation coverage or (iii) the date on which Dr. Barnette becomes eligible to receive substantially similar coverage from another employer or another source. If Dr. Barnette's employment is terminated by the Company without “cause” or by Dr. Barnette for “good reason” within six months following a “change in control” (as defined in the Barnette Employment Agreement), then in addition to the benefits described in the preceding sentence Dr. Barnette will be entitled to the accelerated vesting of all unvested equity compensation awards. The Barnette Employment Agreement contains customary noncompetition, nonsolicitation and nondisclosure covenants on the part of Dr. Barnette.
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DIRECTOR COMPENSATION AND BENEFITS
The Company does not currently have any arrangement in place to pay a retainer or other cash compensation to
non-employee directors generally for their service as Board members.
Non-employee directors are eligible to participate in our equity incentive
planplans and each
non-employee director received a stock option award in
August 2017. In addition, on October 31, 2016, David R. BethineNovember 2020, except Dr. Lu who received
ana stock option award
of restricted stock, stock options, stock appreciation rights and restricted stock units for providing special assistance to management in
connection with designated projects.May 2021 when she joined our Board.
As described below, Harry Fisch, M.D., F.A.C.S. and William R. Gargiulo, Jr. received consulting feescompensation as an employee during fiscal 2017.2021.
Director Summary Compensation Table
The following table provides information concerning the compensation paid by the Company in fiscal
20172021 to each person who served as a director during fiscal
20172021 who was not an executive officer of the Company on September 30,
2017. | | | | | | | | | | | | | | | | |
Name | | Stock Awards(1) | | | Option Awards(2) | | | All other Compensation(3) | | | Total | |
William R. Gargiulo, Jr.(4) | | | — | | | | — | | | $ | 5,333 | | | $ | 5,333 | |
David R. Bethune | | $ | 232,400 | (5) | | $ | 268,214 | (5) | | | — | | | $ | 500,614 | |
Mary Margaret Frank, Ph.D. | | | — | | | $ | 29,498 | | | | — | | | $ | 29,498 | |
Donna Felch(4) | | | — | | | | — | | | | — | | | | — | |
Andrew S. Love(4) | | | — | | | | — | | | | — | | | | — | |
Sharon Meckes(4) | | | — | | | | — | | | | — | | | | — | |
Elgar Peerschke | | | — | | | $ | 36,054 | | | | — | | | $ | 36,054 | |
O.B. Parrish | | | — | | | $ | 26,221 | | | | — | | | $ | 26,221 | |
Mario Eisenberger | | | — | | | $ | 29,498 | | | | — | | | $ | 29,498 | |
Harry Fisch, M.D., F.A.C.S. | | | — | | | $ | 36,054 | | | $ | 135,000 | | | $ | 171,054 | |
Lucy Lu, M.D. | | | — | | | $ | 29,498 | | | | — | | | $ | 29,498 | |
Georges Makhoul | | | — | | | $ | 32,776 | | | | — | | | $ | 32,776 | |
Jesus Socorro | | | — | | | $ | 36,054 | | | | — | | | $ | 36,054 | |
2021.Mario Eisenberger | | | — | | | $112,539 | | | — | | | $112,539 |
Harry Fisch, M.D., F.A.C.S. | | | — | | | $168,809 | | | $648,118(2) | | | $816,927 |
Lucy Lu, M.D. | | | — | | | $357,126 | | | — | | | $357,126 |
Michael L. Rankowitz | | | — | | | $112,539 | | | — | | | $112,539 |
Grace Hyun, M.D. | | | — | | | $124,238 | | | — | | | $124,238 |
Jesus Socorro | | | — | | | $120,578 | | | $384,450(3) | | | $505,028 |
(1)
| The amounts reflect the grant date fair value of restricted stock and restricted stock unit awards during fiscal 2017, computed in accordance with Accounting Standards Codification Topic718-10 (formerly FAS No. 123R) excluding estimated forfeitures.
|
(2) | The amounts reflect the grant date fair value of the stock option awards during fiscal 2017 and, in the case of Mr. Bethune, stock option and stock appreciation right awards during fiscal 2017,2021, computed in accordance with Accounting Standards CodificationASC Topic718-10 (formerly FAS No. 123R) excluding estimated forfeitures. 718. |
(3)(2)
| Through OctoberEffective December 31, 2016, Mr. Gargiulo was a consultant to2017, Dr. Fisch became an employee of the Company and served as the Corporate Secretary. In this role, he was responsible for scheduling all board and board committee meetings and distribution of material and preparation and approval of minutes for each meeting. In addition, he was responsible for the Company’s relationship with its transfer agent and the issuance of shares. Mr. Gargiulo also assisted Ms. Greco with investor relations. Mr. Gargiulo’s compensation for the execution of these responsibilities from October 1, 2016 through October 31, 2016, consisted of a consulting fee of $5,333. Commencing as of October 31, 2016, Dr. Fisch was a consultant to the Company and servedserves as Chief Corporate Officer. In that role, heAs Chief Corporate Officer, Dr. Fisch provides consulting services regarding the marketing of the Company’s products. Dr. Fisch’s compensationCompany's products and also assists with investor relations, public relations, setting strategy for the execution of these responsibilitiesCompany, and medical affairs. Dr. Fisch's compensation in fiscal 2021 consisted of (a) salary paid to Dr. Fisch and (b) stock options issued to Dr. Fisch as a consulting fee of $135,000. payout under the Company’s annual incentive bonus program for performance during fiscal 2021. See note (2) to the Summary Compensation Table for additional information regarding the Company’s annual incentive bonus program and payouts for fiscal 2021 performance. |
(4)(3)
| EachThis amount reflects the incremental value of Mr. Gargiulo, Ms. Felch, Mr. Love and Ms. Meckes retireddue to the acceleration of vesting of stock option awards in connection with Mr, Socorro's departure from the Board as of October 31, 2016.
|
(5) | The amounts for Mr. Bethune include 140,000 restricted stock units and 140,000 stock appreciation rights that were originally granted to Mr. Bethune on October 31, 2016 (when the closing price of the Common Stock was $0.95 per share), but are treated as having a grant date of July 28, 2017 (when the closing price of the Common Stock was $1.27 per share)Directors effective May 14, 2021, computed in accordance with Accounting Standards CodificationASC Topic718-10 (formerly FAS No. 123R) because settlement of these awards in stock rather than cash was contingent on the approval by shareholders of the Company’s 2017 Equity Incentive Plan at the Special Meeting of Shareholders held on July 28, 2017. 718. |
The Company and Dr. Fisch are parties to an Employment Agreement dated as of December 31, 2017 (the “Fisch Employment Agreement”). Under the Fisch Employment Agreement, Dr. Fisch's position with the Company is Chief Corporate Officer. The Fisch Employment Agreement does not have a definite term. Pursuant to the terms of the Fisch Agreement, Dr. Fisch will receive a minimum annual base salary of $180,000 and is eligible to receive an annual bonus equal to 45% of his base salary under the Company's annual incentive bonus program. Dr. Fisch is also entitled to participate in all of our employee benefit plans, practices and programs on a basis no less favorable than other similarly situated employees. In the event that Dr. Fisch's employment is terminated by the Company without “cause” or by Dr. Fisch for “good reason” (each as defined in the Fisch Employment Agreement), Dr. Fisch is entitled to continuation of his base salary for a period of six months following termination, payment of any unpaid annual bonus for any completed fiscal year, payment of a pro-rated payment of his target bonus for the year in which the termination occurs and continuation of medical and dental insurance coverage until the earliest of (i) six months following termination, (ii) the date Dr. Fisch is no longer eligible to receive COBRA or comparable state law continuation coverage or (iii) the date on which Dr. Fisch becomes eligible to receive substantially similar coverage from another employer or another source. If Dr. Fisch's employment is terminated by the Company without “cause” or by Dr. Fisch for “good reason” within six months following a “change in control” (as defined in the Fisch Employment Agreement), then in addition to the benefits described in the preceding sentence Dr. Fisch is entitled to the accelerated vesting of all unvested equity compensation awards. The Fisch Employment Agreement contains customary noncompetition, nonsolicitation and nondisclosure covenants on the part of Dr. Fisch.
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As of September 30,
2017,2021, the directors listed on the Director Summary Compensation Table who are not named executive officers held the following number of stock
options, stock appreciation rights (“SARs”), unvested restricted stock units (“RSUs”) and shares of unvested restricted stock: | | | | | | | | | | | | |
| | Option/SAR Awards | | | Restricted Stock | |
Name | | Vested | | | Unvested | | | and RSUs | |
William R. Gargiulo, Jr. | | | — | | | | — | | | | — | |
David R. Bethune | | | — | | | | 330,000 | (1) | | | 280,000 | (2) |
Mary Margaret Frank, Ph.D. | | | 30,000 | (3) | | | 45,000 | (4) | | | — | |
Donna Felch | | | — | | | | — | | | | — | |
Andew S. Love | | | — | | | | — | | | | — | |
Sharon Meckes | | | — | | | | — | | | | — | |
Elgar Peerschke | | | — | | | | 55,000 | (4) | | | — | |
O.B. Parrish | | | — | | | | 40,000 | (4) | | | — | |
Mario Eisenberger | | | — | | | | 45,000 | (4) | | | — | |
Harry Fisch, M.D., F.A.C.S. | | | — | | | | 55,000 | (4) | | | — | |
Lucy Lu, M.D. | | | — | | | | 45,000 | (4) | | | — | |
Georges Makhoul | | | — | | | | 50,000 | (4) | | | — | |
Jesus Socorro | | | — | | | | 55,000 | (4) | | | — | |
options:Mario Eisenberger | | | 153,332 | | | 126,668(1) |
Harry Fisch, M.D., F.A.C.S. | | | 369,947 | | | 331,117(2) |
Lucy Lu, M.D. | | | — | | | 70,000(3) |
Michael L. Rankowitz | | | 109,999 | | | 125,001(4) |
Grace Hyun, M.D. | | | — | | | 55,000(5) |
Jesus Socorro | | | 50,000 | | | — |
(1)
| Represents (a) 140,0001,667 stock options which vested on October 31, 2017, (b) 140,000 SARs whichthat vest on October 31, 2018March 26, 2022, (b) 18,334 stock options that vest on May 13, 2022, (c) 36,667 stock options that vest one-half on each of November 14, 2021 and November 14, 2022, and (d) 70,000 stock options that vest one-third on each of November 13, 2021, November 13, 2022 and November 13, 2023. |
(2)
| Represents (a) 33,000 stock options that vest on May 13, 2022, (b) 68,000 stock options that vest one-half on each of November 14, 2021 and November 14, 2022, (c) 125,117 stock options that vest on November 13, 2021, and (d) 105,000 stock options that vest one-third on each of November 13, 2021, November 13, 2022 and November 13, 2023. |
(3)
| Represents 70,000 stock options that vest one-third on each of on each of May 14, 2022, May 14, 2023 and May 14, 2024. |
(4)
| Represents (a) 18,334 stock options that vest on May 13, 2022, (b) 36,667 stock options that vest one-half on each of November 14, 2021 and November 14, 2022, and (c) 70,000 stock options that vest one-third on each of November 13, 2021, November 13, 2022 and November 13, 2023 |
(5)
| Represents (a) 50,000 stock options whichthat vestone-third on each of August 2, 2018, August 2, 2019November 13, 2021, November 13, 2022 and August 2, 2020. |
(2) | Represents (a) 140,000 shares of restricted stock which vested on October 31, 2017November 13, 2023 and (b) the right to receive 140,000 shares on October 31, 2018 pursuant to RSUs.
|
(3) | Represents 30,000 stock options which expire May 29, 2019.
|
(4) | Represents5,000 stock options that vestone-third on each of August 2, 2018, August 2, 2019March 23, 2022, March 23, 2023, and August 2, 2020. March 23, 2024. |
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the
Company’sthe Company's acquisition of Aspen Park,
(the “APP Acquisition”) on October 31, 2016, each of Harry Fisch, M.D., a director of the Company, Karen Fisch (Dr. Fisch’s spouse), K&H Fisch Family Partners, LLC (a company controlled by Dr. Fisch) and Mitchell Steiner, M.D., the Company’s President and Chief Executive Officer and a director, has entered into an Amended and RestatedLock-Up Agreement with the Company which generally prohibits each such holder from transferring 75% of the shares of Common Stock the holder received in the APP Acquisition for a period of 18 months following the closing of the APP Acquisition.The shares of Common Stock that are subject to theLock-Up Agreements were required to be held in escrow for a period of one-year following the closing of the APP Acquisition as the sole remedy for APP’s indemnification obligations set forth in the Amended and Restated Agreement and Plan of Merger pursuant to the terms of an Escrow Agreement. Seventy-five percent of the shares held in escrow were eligible for release from escrow six months after the closing of the APP Acquisition and the remaining shares were eligible for release from escrow at the end of the term of the Escrow Agreement.
In connection with the APP Acquisition, the Company entered into a Registration Rights Agreement with the former Aspen Park stockholders, including Harry Fisch, M.D., K&H Fisch Family Partners, LLC and Mitchell Steiner, M.D., grantingwhich granted them certain “Demand” and “Piggyback” registration rights for a period of up to 5 years. This 5-year term of the Registration Rights Agreement expired on October 31, 2021.
The Company will pay fordaughter of Dr. Mitchell S. Steiner, the expensesChairman, President and Chief Executive Officer of registration and related costs but not the selling expenses related thereto. The Company is only required to use its best efforts and in the event the registration does not occur, the Company, is not required to pay anyemployed by the Company in a non-executive officer position and earned total compensation toof $194,251 for her services in fiscal 2021.
The son of Dr. Harry Fisch, the former Aspen Park stockholders.Vice Chairman of the Board and Chief Corporate Officer of the Company, is employed by the Company in a non-executive officer position and earned total compensation of $147,377 for his services in fiscal 2021.
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PROPOSAL 2: RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board of Directors has appointed RSM US LLP, independent registered public accounting firm, as auditors to audit our financial statements for the fiscal year ending September 30,
2018.2022. Our Board of Directors proposes that the shareholders ratify this appointment. RSM US LLP audited our financial statements for the fiscal year ended September 30,
2017.2021. We expect that representatives of RSM US LLP will be present at the Annual Meeting, with the opportunity to make a statement if they so desire, and will be available to respond to appropriate questions.
In the event that ratification of the appointment of RSM US LLP as the independent registered public accounting firm for the Company is not obtained at the Annual Meeting, the Audit Committee of our Board of Directors will reconsider its appointment, and may retain that firm or another firm without resubmitting the matter to our shareholders. Even if the appointment is ratified, the Audit Committee may, in its discretion, direct the appointment of a different firm at any time
during the fiscal year if it determines that such change would be in our best interests.
Under Wisconsin law, the ratification of the appointment of the independent registered public accounting firm requires the number of votes cast in favor of this proposal, whether in person or by proxy, to exceed the number of votes cast against this proposal, assuming a quorum is present.
The Board of Directors recommends that shareholders voteFOR the ratification of RSM US LLP as the independent registered public accounting firm for the Company for the fiscal year ending September 30, 2018.2022.
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PROPOSAL 3: APPROVAL OF
THE AMENDMENT TO THE 2018 EQUITY INCENTIVE PLAN
Summary of
We ask our shareholders to support this proposal given its importance to the
ProposalProposed Adoption. SubjectCompany’s core strategy. If shareholders do not approve this proposal, we will continue to shareholder approval,have the Board has adopted and approved the 2018 Equity Incentive Plan.
Purpose of the 2018 Equity Incentive Plan. The purpose ofauthority to grant awards under the 2018 Equity Incentive Plan, is to assistbut the Companyproposed 7,500,000 share increase in attracting, motivating, retaining and rewarding high-quality executives and other employees, offi-
cers, directors, consultants and service providers by enabling such persons to acquire or increase a proprietary interest in the Company. If the Company’s shareholders approve the 2018 Equity Incentive Plan atshare limit will not be effective and could result in a serious disruption of our compensation programs and will seriously limit our ability to pursue our aggressive drug development strategy because we will be unable to attract the Annual Meeting,highly skilled and experienced new talent that we need to complete our potential transformation to a commercial-stage oncology company and we will similarly be unable to provide retention incentives to the very valuable and highly experienced executives and other key employees who have led Veru through its current successful transformation into a global biopharmaceutical company.
Equity awards are a significant component of total compensation for our executive officers and other employees and are vital to our ability to attract and retain outstanding and highly skilled individuals in the extremely competitive labor markets in which we must compete. If shareholders do not approve the proposal, we would need to grant cash and other non-equity rewards to these individuals. We believe that such alternative forms of compensation do not align employee interests with those of shareholders as efficiently as equity-based awards, and we feel it is important to provide compensation that continues to effectively align employees with shareholders and which provides a total compensation package that is competitive with other companies.
At Veru, we have seen significant growth in our share price, market capitalization, revenue, number of clinical trials and number of employees and we have now even doubled our commercial-stage products. See Performance Highlights on page 2 above for a summary of our recent achievements. We strongly believe that the approval of this proposal is instrumental to our continued success and our ability to continue to provide increased value to you, our shareholders. We encourage our shareholders to read the succeeding sections which will provide important context to our request. Transformational Impact from Our Equity Compensation Program
The equity incentive plan underpins our strategy and is integral to shareholder value creation. We have transformed our Company into a global oncology biopharmaceutical company with multiple late-stage development assets focused on premium, multi-billion dollar market opportunities, while also being opportunistic in pursuing a potential late-stage COVID indication for one of our oncology assets. We have been able to use the significant revenue – Veru had yet another record revenue year in Fiscal 2021 – from our Sexual Health Division to help fund our clinical development operations which, we believe, has minimized dilution and overhang for our shareholders from our 2018 Equity Inventive Plan. We believe we are in a very unique position as a clinical-stage biopharmaceutical company that also has significant revenue and we continually strive to increase the revenue of our Sexual Health Division – including by achieving approval of a new drug, ENTADFI, in December 2021 – so that we can continue to be good stewards of the shareholders’ equity.
The primary driver of our headcount growth and, we believe, the main reasons we have seen our share price and market capitalization more than triple in Fiscal 2021 has been our research and development operations. We have aggressively pursued our goal of becoming a global biopharmaceutical company.
We in-licensed enobosarm in December 2020 and doubled the size of our key oncology assets, expanding our oncology focus to two potential franchises – both prostate cancer and breast cancer.
In the last four years, we have seen our R&D employee headcount increase by 500%. In the last year alone, since we acquired our potential breast cancer franchise, our R&D employee headcount increased by 200%.
During these four years, we have seen our total number of clinical trials increase from three to five and we also launched three Phase 3 clinical trials in 2021 with a total of 2,000,000 shares of Common Stock (subject9 clinical trials, including a fourth Phase 3 trial, planned for 2022.
We believe we have a rare opportunity right now, and so we have aggressively hired excellent and highly skilled people to
adjustmentput us in a position to potentially maximize our drug development program in the
eventextremely competitive oncology landscape. As the charts below show, we have substantially increased our R&D headcount while at the same time keeping the headcount of
stock splitscorporate and other
similar events) will be authorized for issuance under the 2018 Equity Incentive Plan.We recognize the importance of attracting, retaining and motivating those personsemployees who make (or are expected to make) important contributions to the Company by providing such persons with equity opportunities and performance-based incentives. The Board believes thathave been participating in the 2018 Equity Incentive Plan (such participating employees, “Eligible Employees”) relatively stable – which, we believe, is critically importantindicative of our commitment to sensible growth while being good stewards of shareholder capital.
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Granting equity compensation under our broad-based program is necessary for us to continue retaining and attracting innovation and talent. In order to achieve the furtherancerecord growth that Veru has produced and to provide the increased value to our shareholders that we have so far provided, we have had to hire highly skilled and experienced people from the kind of companies that we want to become – and we will need to continue to recruit from these objectives. Thekinds of companies. We believe it is vital to our continued growth that we are competitive in being able to recruit new talent from companies that have successfully done what we are trying to do – namely, successfully develop premium-market oncology drugs, obtain FDA approval of those drugs and then successfully commercialize them in the U.S. and globally. This kind of talent – indeed, the kind of talent that we have hired over the last several years – is in very high demand. We believe Veru has a very bright future, but, as a primarily clinical-stage company, Veru can be a high-risk decision for the kind of highly skilled and experienced employees who we wish to recruit and retain, and so highly competitive equity awards are a critical and substantial incentive to join us. In addition, our Board alsostrongly believes that through the 2018 Equity Incentive Plan, we will be able to enhance the prospects for our business activities and objectives and more closelyequity grants align the interestslong-term incentives of those persons who provide services to the Companyour executives and employees with those of our shareholders by offering such personsin a way that cash and other non-equity awards never could. Our Board believes equity compensation is the opportunity to participate inmost critical part of our future through proprietary interests in the Company.pay-for-performance philosophy.
The key
shareholder-focused features of the 2018 Equity Incentive Plan
– which include many best practices for equity plan governance – are summarized below:
The 2,000,0007,500,000 additional shares to be authorized for issuance under the amendment to the 2018 Equity Incentive Plan represent approximately 3.7%9.4% of the shares of Common Stock outstanding as of January 12, 2018.
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The 2018 Equity Incentive Plan would authorizeauthorizes the Company to grant various forms of long-term incentives, including stock options, restricted stock, stock appreciation rights, restricted stock units, performance unit awards, and other stock-based awards. The Company believes that this will allowallows it the flexibility to tailor the long-term incentives to its business conditions.
Any full-value awards (i.e., other than options and stock appreciation rights) count as two shares for every share issued for purposes of the Authorized Shares and the Individual Annual Limit (the “Fungible Ratio”).
The 2018 Equity Incentive Plan has a fixed maximum number of authorized shares that cannot be increased without shareholder approval.
The 2018 Equity Incentive Plan has a maximum term of 10 years. No stock option or stock appreciation right can be issued under the 2018 Equity Incentive Plan with a term of more than 10 years and no award may be granted under the 2018 Equity Incentive Plan after the plan expires on March 20, 2028.
Awards under the 2018 Equity Incentive Plan may not vest sooner than 12 months from the date of grant, subject to exceptions for:
○ | a maximum of 10% of the total number of Shares authorized under the 2018 Equity Incentive Plan |
○ | any awards made to directors or employees in lieu of any cash retainer in the case of directors or cash compensation in the case of employees |
○ | awards to directors which may become fully exercisable on the first anniversary of the date of grant or, if earlier, on the date of our next regular annual meeting of our shareholders, or |
○ | acceleration of vesting in accordance with the provisions of the 2018 Equity Incentive Plan. |
The Company may clawback any Award in the event of certain financial statement non-compliance issues, as further described in the 2018 Equity Incentive Plan.
Dividends and dividend equivalents may only be paid when an underlying Award vests.
The 2018 Equity Incentive Plan prohibitsre-pricing of stock options or stock appreciation rights and requires that all stock options and stock appreciation rights have an exercise price that will be equal to or exceed the fair market value of a share of Common Stock on the date the option or stock appreciation right is granted.
The 2018 Equity Incentive Plan will beis administered by our Compensation Committee, which is comprised solely of independent,non-employee directors.
Even though, as the chart below shows, our headcount of Eligible Employees who have been participating in the 2018 Equity Incentive Plan has risen substantially in the last four years, we have carefully managed the 2018 Equity Incentive Plan to ensure that our shareholders are subject to minimal dilution and that there is as little overhang as possible on our common stock. In fact, as the chart below shows, our headcount of participating employees increased by 39% over the last three fiscal years and 24% in just the last fiscal year, and yet we have successfully decreased the overhang percentage to below where it was prior to this headcount growth and we have maintained a low burn rate for this period as well, finishing the 2021 fiscal year with a lower burn rate than at the start of this four-year period.
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Awards outstanding under the 2018 Equity Incentive Plan are comprised of highly retentive options, most of which are currently in-the-money and would therefore require delivering sustained outperformance over the long-term in order for management to see increased value, thus continuing to align management and shareholder interests in seeking continued strong performance.
Historic Overhang Percentage and Comparison to Pharmaceutical and Biotechnology Companies in the Russell 3000
The following table sets forth our overhang under the 2018 Equity Incentive Plan, as well as all other plans under which awards are still outstanding (including our 2017 Equity Incentive Plan and 2008 Stock Incentive Plan) and also shows the 75th percentile overhang for pharmaceutical and biotechnology companies in the Russell 3000:
Overhang:
| | | | | | | | | |
Options and awards available for grants | | | 3,017,128 | | | 6,004,569 | | | 2,890,787 |
Options and awards outstanding | | | 9,663,368 | | | 10,975,841 | | | 10,650,680 |
Total overhang | | | 12,680,496 | | | 16,980,410 | | | 13,541,467 |
Common outstanding shares | | | 65,038,247 | | | 69,863,681 | | | 79,969,748 |
Overhang percentage | | | 19.5% | | | 24.3% | | | 16.9% |
Pharma and biotech 75th percentile overhang(1) | | | 20.0% | | | 20.4% | | | 19.3% |
(1)
| Equilar, Compensation Consultant, January 2022 |
The Board believescarefully monitors our annual burn rate, dilution and equity expense to ensure that we maximize shareholder value. We consistently manage our burn rate in a disciplined manner despite sequential revenue growth, in most cases more conservatively than industry practices throughout the adoptionyears, so that we can redeploy capital to advance R&D and reinvest for the future. Our disciplined capital allocation during strong financial results have enabled us to successfully transform the business from a single product company into an oncology biopharmaceutical company which has the ability to continue to advance a deep late clinical stage drug pipeline portfolio. The ability to operate our equity incentive program has significant implications for us and our shareholders. Absent approval of the plan increase, we will be extremely restricted in using equity awards and may have to use cash that can cause volatility in quarterly results, reduce alignment between employees and shareholders and reduce our cash resources.
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Historic Burn Rate and Comparison to Pharmaceutical and Biotechnology Companies in the Russell 3000
The following table sets forth our burn rate under the 2018 Equity Incentive Plan and 2017 Equity Incentive Plan for the past three fiscal years and also shows the 75th percentile burn rate for pharmaceutical and biotechnology companies in the Russell 3000:
Equity awards granted | | | 2,295,407 | | | 2,228,827 | | | 3,568,625 |
Basic weighted average common shares outstanding | | | 63,323,127 | | | 66,753,450 | | | 76,272,853 |
Burn rate | | | 3.6% | | | 3.3% | | | 4.7% |
Pharma and biotech 75th percentile burn rate(1) | | | 5.1% | | | 5.9% | | | 5.4% |
(1)
| Equilar, Compensation Consultant, January 2022 |
We now seek shareholder approval of the amendments described below so that we will be in a position to continue our substantial growth as we seek to execute on our 2022 and longer-term strategic goals.
Proposed Adoption. Subject to shareholder approval, the Board has adopted and approved amendments to the 2018 Equity Incentive Plan to: increase the number of shares of Common Stock authorized for issuance under the 2018 Equity Incentive Plan from 11,000,000 shares to 18,500,000 shares (the “Authorized Shares”); increase the annual limit on shares awarded to any individual to 1,000,000 shares (the “Individual Annual Limit”); provide that any full-value award (i.e., awards other than options or stock appreciation rights) shall count toward the Authorized Shares and the Individual Annual Limit as two shares for every one share issued (the “Fungible Ratio”) and provide that, with certain exceptions, all awards shall have a minimum 12-month vesting requirement.
Purpose of the 2018 Equity Incentive Plan. The purpose of the 2018 Equity Incentive Plan is to assist the Company in attracting, motivating, retaining and rewarding high-quality executives and other employees, officers, directors, consultants and service providers by enabling such persons to acquire or increase a proprietary interest in the Company. If the Company's shareholders approve the amendment to the 2018 Equity Incentive Plan at the Annual Meeting, a total of 7,500,000 additional shares of Common Stock (subject to adjustment in the event of stock splits and other similar events) will be authorized for issuance under the 2018 Equity Incentive Plan.
We recognize the importance of attracting, retaining and motivating those persons who make (or are expected to make) important contributions to the Company by providing such persons with equity opportunities and performance-based incentives. The Board believes that the amendment to the 2018 Equity Incentive Plan is critically important to the furtherance of these objectives. The Board also believes that, through the 2018 Equity Incentive Plan, as amended, we will be able to enhance the prospects for our business activities and objectives and more closely align the interests of those persons who provide services to the Company with those of our shareholders by offering such persons the opportunity to participate in our future through proprietary interests in the Company.
The Board believes that amending the 2018 Equity Incentive Plan to increase the number of shares of Common Stock authorized for issuance under the 2018 Equity Incentive Plan, to increase the Annual Individual Limit, to create the Fungible Ratio and to add a minimum 12-month vesting requirement for all awards (subject to certain exceptions described below) is in the best interests of the Company and its shareholders and recommends a vote “FOR” the approval of the Equity Incentive Plan
Amendment Proposal.
The Company believes in using equity awards as a large part of its compensation both to incentivize its directors, officers, employees and other service providers and to reduce cash compensation expense. In July 2017, the Company’sCompany's shareholders approved the Company’s 2017 Equity Inventive Plan under which a total of 4,700,000 shares of Common Stock were authorized for grants. As of January 12,grants and in March 2018 awards coveringthe Company’s shareholders approved the Company’s 2018 Equity Incentive Plan under which a total of 3,782,1152,000,000 shares of Common Stock are outstandingwere authorized for grants. In March 2019, the Company's shareholders approved an increase in the number of
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shares that may be issued under the 2018 Equity Incentive Plan to 6,000,000. In March 2020, the Company's shareholders approved an increase in the number of shares that may be issued under the 2018 Equity Incentive Plan to 11,000,000. As of January 18, 2022, a total of 15,014,979 shares of Common Stock have been issued or are subject to outstanding awards under the 2017 Equity Incentive Plan and the 2018 Equity Incentive Plan, leaving a total of only 917,885685,021 shares of Common Stock available for future grants under those plans. If the 2017 Equity Incentive Plan. Ifamendment to the 2018 Equity Incentive Plan is approved by our shareholders at the Annual Meeting, an additional 2,000,0007,500,000 shares will be available for equity awards.
The 2017 Equity Incentive Plan would also remain in effect andCommon Stock (which is the Company would be able to make equitysecurity that underlies grants of awards under either the 2017 Equity Incentive Plan or the 2018 Equity Incentive Plan.Plan) is listed on the NASDAQ Capital Market under the symbol “VERU.” On January 18, 2022, the last reported sale price of the Common Stock was $5.52 per share.
The following table presents information regarding issued but unexercised stock options, and stock appreciation rights unvested restricted stock units and restricted stock, and Common Stock outstanding as of January 18, 2022:
Stock options | | | 12,727,112 | | | 3.79 | | | 7.8 |
Stock appreciation rights | | | 50,000 | | | 0.95 | | | 4.8 |
Common Stock outstanding | | | 80,049,082 | | | | | | |
Eligible participants in the 2018 Equity Incentive Plan consist of employees, officers, directors, consultants and other persons who provide services to the Company, any subsidiary of the Company or any entity designated by the Board in which the Company or a subsidiary of the Company holds a substantial ownership interest, directly or indirectly.
As of January 18, 2022, we had approximately 226 employees (including officers) and four non-employee directors of the Company and its subsidiaries that would be eligible to participate in the 2018 Equity Incentive Plan. Our consultants are also eligible to participate in the 2018 Equity Incentive Plan. The number of our consultants generally fluctuates, but as of January 18, 2022, there were less than 25 consultants of the Company and its subsidiaries that would be eligible to participate in the 2018 Equity Incentive Plan. We have made awards to only one consultant under the 2018 Equity Incentive Plan and we have no current plans to make any future awards to any other consultants under the 2018 Equity Inventive Plan. Determination of awards under the Plan will be made by the Compensation Committee based on factors such as the recipient’s contributions to the Company, longevity of service, and retention incentives. Information about the number and roles of employees may also be found in our Annual Report on Form 10-K filed on December
31, 2017: | | | | | | | | | | | | |
| | Outstanding | | | Weighted Average Exercise Price | | | Weighted Average Remaining Term | |
Stock options | | | 4,013,836 | | | $ | 1.23 | | | | 9.51 years | |
Stock appreciation rights | | | 190,000 | | | $ | 0.95 | | | | 8.83 years | |
Unvested restricted stock units | | | 190,000 | | | | — | | | | — | |
Common Stock outstanding | | | 53,512,946 | | | | N/A | | | | N/A | |
2, 2021, copies of which were distributed to shareholders with this Proxy Statement.
Description of the 2018 Equity Incentive Plan
A brief description of the 2018 Equity Incentive Plan,
after giving effect to the proposed amendments, appears below. The following description of the 2018 Equity Incentive Plan is qualified in its entirety by reference to the text of the 2018 Equity Incentive Plan, which is attached as
Annex AAppendix B to this proxy statement.
Key Provisions.
Key provisions of the 2018 Equity Incentive Plan include the following:Plan Effective Date: March 20, 2018.
Plan Termination Date: 10 years (March 20, 2028).
Shares Authorized: 18,500,000 shares of Common Stock.
○ | • | | Plan Effective Date: The 2018 Equity Incentive Plan will become effect on the date it is approved by the shareholders of the Company, which is expected to occur on the date of the Annual Meeting, (March 20, 2018). Stock options (including both incentive stock options and non-qualified stock options); |
○ | • | | Plan Termination Date: 10 years (March 20, 2028). Stock appreciation rights; |
○ | • | | Eligible Participants: Employees, officers, directors, consultants and other persons who provide services to the Company, any subsidiary of the Company or any entity designated by the Board in which the Company or a subsidiary of the Company holds a substantial ownership interest, directly or indirectly. Restricted stock; |
○ | • | | Shares Authorized: 2,000,000 shares of Common Stock. Restricted stock units; |
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○ | • | | Award Types: Common Stock as a bonus or in lieu of obligations to pay cash; |
Stock options (including both incentive stock options andnon-qualified stock options);
Stock appreciation rights;
Common Stock as a bonus or in lieu of obligations to pay cash;
Performance unit awards; and
○ | Performance unit awards; and |
○ | Other stock-based awards on terms and conditions determined by the Compensation Committee. |
Fungible Ratio: All awards other than stock options and stock appreciation rights shall count against the Authorized Shares and the Individual Annual Limit as two shares for every share awarded.
Award Limits: Awards to any single participant are limited to 1,000,000 shares of Common Stock per fiscal year. In addition, an outside director may not be granted awards covering more than 100,000 shares of Common Stock in any fiscal year.
Minimum Vesting: Subject to certain exceptions described below, no award shall have an initial vesting period shorter than 12 months. Other than that initial vesting requirement, vesting is determined by the Compensation Committee.Committee at the time of grant.
| • | | Repricing Prohibited: The Company is prohibited from repricing any stock options or stock appreciation rights without obtaining shareholder approval. Exercise Price: All stock options and stock appreciation rights must have an exercise price equal to or greater than the fair market value of a share of Common Stock on the date the option or stock appreciation right is granted. Adjustments.Award Limits: Awards to any single participant are limited to 400,000 shares of Common Stock per year. In addition, an outside director may not be granted awards covering more than 55,000 shares of Common Stock in any year. |
| • | | Vesting: Vesting is determined by the Compensation Committee at the time of grant.
|
| • | | Repricing Prohibited: The Company is prohibited from repricing any stock options or stock appreciation rights without obtaining shareholder approval.
|
| • | | Exercise Price: All stock options and stock appreciation rights must have an exercise price equal to or greater than the fair market value of a share of Common Stock on the date the option or stock appreciation right is granted
|
Adjustments. In the event of an extraordinary dividend, other distribution, recapitalization, forward or reverse split, reorganization, merger, consolidation,spin-off, combination, repurchase, share exchange, liqui-
dation,liquidation, dissolution or other similar corporate transaction or event affecting the Common Stock, the Compensation Committee may, in its discretion, adjust the number and kind of shares granted under the 2018 Equity Incentive Plan, the number and kind of shares subject to awards and the exercise price, grant price or purchase price relating to any award.
Stock Options.
Options granted under the 2018 Equity Incentive Plan may benon-qualified options or incentive stock options under the Code. Grantees of stock options receive the right to purchase a specified number of shares of Common Stock or other awards at a specified exercise price and subject to the terms and conditions as are specified in the option grant. The exercise price of stock options granted under the 2018 Equity Incentive Plan may not be less than the fair market value of the Common Stock on the date of grant, and no stock option will be exercisable more than ten years after the date it is granted. The Compensation Committee will determine at the time of grant when each stock option becomes exercisable. Payment of the exercise price of a stock option may be in cash, withholding shares otherwise issuable with the consent of the Compensation Committee or such other method of payment permitted by the Compensation Committee. The options will expire at such time as the Compensation Committee determines.
Stock Appreciation Rights.
A stock appreciation right is an award entitling the holder on exercise to receive Common Stock, other awards, cash or other property in an amount determined by reference to appreciation in the fair market value of a share of Common Stock from the date of grant until the date of exercise. The grant price of stock appreciation rights granted under the 2018 Equity Incentive Plan may not be less than the fair market value of the Common Stock on the date of grant, and no stock appreciation right will be exercisable more than ten years after the date it is granted.
Restricted Stock.
Restricted stock awards provide for the grant to recipients of shares of Common Stock. In connection with the grant of restricted stock, the Compensation Committee may establish vesting criteria based on continued employment or such other factors or criteria as the Compensation Committee may determine. A grantee may not transfer any shares of restricted stock until any applicable vesting criteria have been satisfied, and restricted stock may be subject to forfeiture to the Company if a grantee’s employment or service relationship with the Company or any of its subsidiaries terminates before the end of the restriction period or if any of the other conditions precedent to the delivery of the shares subject to the award are not satisfied.
Restricted Stock Units. Restricted stock units provide a recipient with the right to receive shares of Common Stock, other awards, cash or other property after the vesting or other conditions to the right to receive the shares, other awards, cash or other property are satisfied. In connection with the grant of restricted stock units, the
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Compensation Committee may establish vesting criteria based on continued employment or such other factors or criteria as the Compensation Committee may determine. Restricted stock units may be subject to forfeiture to the Company if a
grantee’sgrantee's employment or service relationship with the Company or any of its subsidiaries terminates before the end of the restriction period or if any of the other conditions precedent to the delivery of the shares subject to the award are not satisfied.
Other Common Stock Awards.
The 2018 Equity Incentive Plan authorizes the Compensation Committee to grant shares of Common Stock as a bonus, or to grant shares of Common Stock or other awards in lieu of obligations to pay cash or other property to recipients, all on terms determined by the Compensation Committee.
Dividend Equivalents
. Dividend equivalents provide for the grant to recipients the right to receive cash, shares of Common Stock or other awards or property equal in value to dividends paid with respect to a specified number of shares of Common Stock. Any dividends otherwise payable with respect to an award that has not vested will be withheld by the Company for the account of the participant holding such award, and such dividends will be subject to the restrictions and a risk of forfeiture to the same extent as such award, will be distributed to the participant upon the vesting of such award and, if such award is forfeited prior to its vesting, the participant will have no right to such dividends or any interest thereon.
Performance Unit Awards. The 2018 Equity Incentive Plan authorizes the Compensation Committee to grant performance awards in cash, Common Stock or other awards based on specific performance criteria specified by the Compensation Committee.
Other Stock-Based Awards. In addition to the other types of awards described in this proxy statement, the 2018 Equity Incentive Plan authorizes the Compensation Committee to grant other stock-based awards denominated or payable in, valued in whole or in party by reference to, or otherwise based on or related to shares of Common Stock, as deemed by the Compensation Committee to be consistent with the terms and conditions of the 2018 Equity Incentive Plan.
Minimum Vesting. Awards under the 2018 Equity Incentive Plan may not vest sooner than 12 months from the date of grant, subject to exceptions for a maximum of 10% of the total number of Shares authorized under the 2018 Equity Incentive Plan, for any awards made to directors or employees in lieu of any cash retainer in the case of directors or cash compensation in the case of employees, for awards to directors which may become fully exercisable on the first anniversary of the date of grant or, if earlier, on the date of our next regular annual meeting of our shareholders, and for acceleration of vesting in accordance with the provisions of the 2018 Equity Incentive Plan.
Transferability.
Except as otherwise authorized by the Compensation Committee, no award granted under the 2018 Equity Incentive Plan may be sold, assigned, transferred, pledged or otherwise encumbered other than by will or the laws of descent and distribution.
Termination of Employment.
The Compensation Committee will determine the period of time for which any awards under the 2018 Equity Incentive Plan will continue to be exercisable and the terms of exercise upon termination of a participant’s employment or service with the Company or its subsidiaries.
Change of Control
. In the event of a “Change of Control,” the Compensation Committee, in its sole discretion and without any requirement that any participants be treated consistently, may accelerate the vesting of any award or otherwise cause any restrictions on any award to lapse and consider any performance goals and conditions under any award to have been satisfied.The 2018 Equity Incentive Plan generally defines a “Change of Control” as follows: (a) the acquisition by any person of beneficial ownership of more than 50% of either the value of the outstanding equity securities of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally at the election of directors, (b) during any two consecutive years, individuals who constitute the Board on the 2018 Equity Incentive Plan effective date cease to constitute a majority of the Board, (c) the consummation of a reorganization, merger, statutory share exchange, consolidation or similar transaction involving the Company or any of its subsidiaries or a sale or other disposition of all or substantially all of the assets of the Company or any of its subsidiaries, in each case, unless following such transaction: (1) beneficial owners of the outstanding equity securities of the Company and the outstanding voting securities of the Company entitled to vote generally at the election of directors immediately prior to such transaction beneficially own, directly or indirectly, more than 50% of the value of the outstanding equity securities and combined voting
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power of the then outstanding voting securities entitled to vote generally at the election of directors of the entity resulting from such transaction in the same proportions as their ownership of the Company prior to such transaction, (2) no person beneficially owns, directly or indirectly, 50% or more of the value of the then outstanding equity securities of the entity resulting from such transaction or the combined voting power of the then outstanding voting securities entitled to vote generally at the election of directors of the entity resulting from such transaction, except to the extent such level of ownership existed prior to such transaction and (3) at least a majority of the Board of the entity resulting from such transaction were members of the Board at the time of the execution of the initial transaction agreement or Board action in respect of such transaction, or (d) approval by the shareholders of a complete liquidation or dissolution of the Company.
Administration.Administration. The 2018 Equity Incentive Plan is administered by the Compensation Committee. As the administrator, the Compensation Committee will select the participants who shall receive awards, determine the number of shares covered thereby, and establish the terms, conditions and other provisions of the grants. The Compensation Committee may interpret the 2018 Equity Incentive Plan and establish, amend and rescind any rules relating to the 2018 Equity Incentive Plan. Amendments.Amendments. The Board may at any time amend, alter, suspend, discontinue or terminate the 2018 Equity Incentive Plan, or the Compensation Committee’sCommittee's authority to grant awards thereunder, provided that no such action may be taken by the Board without the approval of the Company’sCompany's shareholders to the extent necessary to comply with applicable laws or the rules of any stock exchange on which the Common Stock is listed. No such Board action in respect of the 2018 Equity Incentive Plan may materially and adversely affect the rights of any grantee with respect to any outstanding award without the consent of that grantee.
Material U.S. Federal Income Tax Consequences
The following is a general summary of the material U.S. federal income tax consequences of the grant and exercise and vesting of awards under the 2018 Equity Incentive Plan and the disposition of shares acquired pur-
suantpursuant to the exercise of such awards. This summary is intended to reflect the current provisions of the Code and the regulations thereunder. However, this summary is not intended to be a complete statement of applicable law, nor does it address foreign, state, local and payroll tax considerations. Moreover, the U.S. federal income tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular circumstances of such participant.
Stock Options.
There are a number of requirements that must be met for a particular stock option to be treated as an incentive stock option under the Code. One such requirement is that Common Stock acquired through the exercise of an incentive stock option cannot be disposed of before the later of (i) two years from the date of grant of the stock option, or (ii) one year from the date of its exercise. Holders of incentive stock options will generally incur no federal income tax liability at the time of grant or upon exercise of those stock options. However, the spread at exercise will be an “item of tax preference,” which may give rise to “alternative minimum tax” liability for the taxable year in which the exercise occurs. If the holder does not dispose of the shares before the later of two years following the date of grant and one year following the date of exercise, the difference between the exercise price and the amount realized upon disposition of the shares will constitute long-term capital gain or loss, as the case may be. Assuming both holding periods are satisfied, no deduction will be allowed to the Company for federal income tax purposes in connection with the grant or exercise of the incentive stock option. If, within two years following the date of grant or within one year following the date of exercise, the holder of shares acquired through the exercise of an incentive stock option disposes of those shares, the participant will generally realize taxable compensation at the time of such disposition equal to the difference between the exercise price and the lesser of the fair market value of the share on the date of exercise or the amount realized on the subsequent disposition of the shares, and that amount will generally be deductible by the Company for federal income tax purposes, subject to the possible limitations on deductibility under Section 280G and 162(m) of the Code for compensation paid to executives designated in those Sections. Finally, if an otherwise incentive stock option becomes first exercisable in any one year for shares having an aggregate value in excess of $100,000 (based on the date of grant value), the portion of the incentive stock option in respect of those excess shares will be treated as anon-qualified stock option for federal income tax purposes.No income will be realized by a participant upon grant of anon-qualified stock option. Upon the exercise of anon-qualified stock option, the participant will recognize ordinary compensation income in an amount equal to the excess, if any, of the fair market value of the underlying exercised shares over the exercise price paid at the
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time of exercise. Such income will be subject to income tax withholdings, and the participant will be required to pay to the Company the amount of any required withholding taxes in respect to such income. The Company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Stock Appreciation Rights.
No income will be realized by a participant upon grant of stock appreciation rights. Upon the exercise of stock appreciation rights, the participant will recognize ordinary compensation income in an amount equal to the fair market value of the payment received in respect of the stock appreciation rights. Such income will be subject to income tax withholdings, and the participant will be required to pay to the Company the amount of any required withholding taxes in respect to such income. The Company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Restricted Stock and Performance Shares. A participant will not be subject to tax upon the grant of an award of restricted stock or performance shares unless the participant otherwise elects to be taxed at the time of grant pursuant to Section 83(b) of the Code. On the date an award of restricted stock or performance shares becomes transferable or is no longer subject to a substantial risk of forfeiture, the participant will recognize ordinary compensation income equal to the difference between the fair market value of the shares on that date over the amount the participant paid for such shares, if any. Such income will be subject to income tax withholdings, and the participant will be required to pay to the Company the amount of any required withholding taxes in respect to such income. If the participant made an election under Section 83(b) of the Code, the participant will recognize ordinary compensation income at the time of grant equal to the difference between the fair market value of the shares on the date of grant over the amount the participant paid for such shares, if any, and any subsequent
appreciation in the value of the shares will be treated as a capital gain upon sale of the shares. Special rules apply to the receipt and disposition of shares of restricted stock received by officers and directors who are subject to Section 16(b) of the Securities Exchange Act of 1934. The Company will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Restricted Stock Units and Performance Units.
A participant will not be subject to tax upon the grant of a restricted stock unit or performance unit awards. Rather, upon the delivery of shares or cash pursuant to a restricted stock unit or performance unit award, the participant will recognize ordinary compensation income equal to the fair market value of the number of shares (or the amount of cash) the participant actually receives with respect to the award. Such income will be subject to income tax withholdings, and the participant will be required to pay to the Company the amount of any required withholding taxes in respect to such income. The Company will be able to deduct the amount of taxable compensation recognized by the participant for U.S. federal income tax purposes, but the deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Dividend Equivalents.
A participant will not be subject to tax upon the grant of a dividend equivalent award, and the Company will not be entitled to a tax deduction at such time. Rather, upon the delivery of shares or cash pursuant to dividend equivalent award, the participant will recognize ordinary compensation income equal to the fair market value of the shares (or the amount of cash) the participant actually receives with respect to the award. Such income will be subject to income tax withholdings, and the participant may be required to pay to the Company the amount of any required withholding taxes in respect to such income (if such award is paid in shares). The Company will be able to deduct the amount of taxable compensation recognized by the participant for U.S. federal income tax purposes, but the deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Other Common Stock Awards. A participant will recognize ordinary compensation income equal to the difference between the fair market value of the shares on the date the shares of Common Stock subject to the award are transferred to the participant over the amount the participant paid for such shares, if any, and any subsequent appreciation in the value of the shares will be treated as a capital gain upon sale of the shares. The Company will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable compensation to the Participant for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
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Required Vote and Board Recommendation
Approval of
the amendment to the Equity Incentive Plan
Amendment Proposal requires that a majority of the votes cast at the Annual Meeting vote in favor of the
amendment to the Equity Incentive Plan
Amendment Proposal. If a shareholder does not submit a proxy card, provide proxy instructions by telephone or over the Internet or vote at the Annual Meeting, it will have no effect on the approval of the
amendment to the Equity Incentive Plan
Amendment Proposal. However, if a shareholder submits a proxy card or provides proxy instructions by telephone or over the Internet and affirmatively elects to abstain from voting, it will have the same effect as a vote “
AGAINST”
the amendment to the Equity Incentive Plan
Amendment Proposal.
THE BOARD RECOMMENDS A VOTE “FOR” THE AMENDMENT OF THE EQUITY INCENTIVE PLAN PROPOSAL.PLAN.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes share information, as of September 30,
2017,2021, for the
Company’sCompany's equity compensation plans and arrangements. In March 2008, the Company’s shareholders approved the 2008 Stock Incentive Plan and authorized
2 million2,000,000 shares (subject to adjustment in the event of stock splits and other similar events) for issuance under the plan, in July 2017, the Company’s shareholders approved the 2017 Equity Incentive Plan and authorized 4,700,000 shares (subject to adjustment in the event of stock splits and other similar events) for issuance under the plan, and in
July 2017March 2018, the
Company’sCompany's shareholders approved the
20172018 Equity Incentive Plan and
in March 2020 the Company shareholders approved an increase in the number of shares authorized
4.7 millionto be issued under the 2018 Equity Incentive Plan to 11,000,000 shares (subject to adjustment in the event of stock splits and other similar events)
for issuance under the plan. | | | | | | | | | | | | |
Equity Plan Category | | Number of Shares To Be Issued Upon Exercise Of Outstanding Options, SARs and RSUs | | | Weighted- Average Exercise Price Of Outstanding Options and SARs | | | Shares Remaining Available For Future Issuance Under Equity Compensation Plans | |
Equity compensation plans approved by shareholders | | | 3,028,955 | | | $ | 1.27 | | | | 1,778,545 | |
Equity compensation plans not approved by shareholders | | | — | | | | — | | | | — | |
| | | | | | | | | | | | |
Total | | | 3,028,955 | | | $ | 1.27 | | | | 1,778,545 | |
| | | | | | | | | | | | |
.
Equity compensation plans approved by shareholders | | | 10,650,680 | | | 2.83 | | | 2,890,787 |
PROPOSALS FOR
20192023 ANNUAL MEETING
Any shareholder who desires to submit a proposal for inclusion in the proxy materials for the
20192023 Annual Meeting of Shareholders in accordance with Rule
14a-8 must submit the proposal in writing c/o Secretary, Veru Inc.,
4400 Biscayne Boulevard,48 NW 25th Street, Suite
888,102, Miami, Florida
33137-3212.33127 before March 1, 2022 and c/o Secretary, Veru Inc., 2916 N. Miami Avenue, Suite 1000, Miami, Florida 33127, on or after March 1, 2022. This address for our new corporate headquarters and is effective as of March 1, 2022. We must receive a proposal by September
28, 201830, 2022 (120 days prior to the anniversary of the mailing date of this Proxy Statement) in order to consider it for inclusion in the proxy materials for the
20192023 Annual Meeting of Shareholders.
Shareholder proposals that are not intended to be included in the proxy materials for the 20182022 Annual Meeting of Shareholders, but that are to be presented by a shareholder from the floor are subject to advance notice provisions in ourby-laws. According to ourby-laws, in order to be properly brought before the meeting, a proposal not intended for inclusion in our proxy materials must be received at our principal offices no later than December 20, 2018,29, 2022, which is 90 calendar days prior to the anniversary of this year’syear's meeting date, and no earlier than November 20, 2018,29, 2022, which is 120 calendar days prior to the anniversary of this year’syear's meeting date, and the notice must set forth the following: (a) a representation that the person sending the notice is a shareholder of record on the record date for the meeting and will remain such through the meeting date, (b) the name and address of such shareholder, (c) the number of shares of our Common Stock which are beneficially owned by such shareholder and any other ownership interest of the shareholder in shares of our Common Stock, whether economic or otherwise, including derivatives and hedges, (d) a representation that such shareholder intends to appear in person or by proxy at such meeting to make the nomination or move the consideration of other business set forth in the notice, (e) if the proposal relates to any business to be brought before the meeting other than election of directors, a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting and any material interest of the shareholder in such business, and (f) if the proposal relates to the nomination of a candidate for election as director, the name, age, address (business and residence), principal occupation or employment of each nominee, the number of shares of our Common Stock beneficially owned by each nominee and any other ownership interest by such person in shares of our Common Stock, whether economic or otherwise, including derivatives and hedges and any other information relating to each nominee that would be required to be disclosed in a definitive proxy statement to shareholders prepared in connection with an election of directors pursuant to Section 14(a) of the Securities Exchange Act of 1934. If the notice does not comply with the requirements set forth in ourby-laws, the chairman of the meeting may refuse to acknowledge the matter. If the chairman of the meeting decides to present a proposal despite its untimeliness, the people named in the proxies solicited by the Board of Directors for the 20192023 Annual Meeting of Shareholders will have the right to exercise discretionary voting power with respect to such proposal.