UNITED STATES
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2929 Seventh
Berkeley,900
28, 2020
1. | To elect our three nominees for Class |
2. | To approve an amendment to the Company’s Sixth Amended and Restated Certificate of Incorporation, as amended, to increase the authorized number of shares of common stock from 139,000,000 to 278,000,000. |
3. | To approve an amendment and restatement of the Dynavax Technologies Corporation 2018 Equity Incentive Plan (the “2018 EIP”) to, among other things, increase the aggregate number of shares of common stock authorized for issuance under the |
To approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Proxy Statement accompanying this Notice. |
To ratify the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, |
To conduct any other business properly brought before the meeting or any adjournment(s) thereof. |
Statement.
The proxy statement and annual report to stockholders
www.proxyvote.com.
By Order of the Board of Directors | |
Steven N. Gersten | |
Secretary |
Berkeley,
DYNAVAX TECHNOLOGIES CORPORATION
2929 Seventh
Berkeley,900
28, 2020
receive a notice regarding the availability of proxy materials on the Internet?
We intend to mail this proxy statement and accompanyingusing a proxy card onthat you may request or about April 25, 2019,that we may elect to all stockholdersdeliver at a later time.
proxy materials.
Meeting.
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1. | To elect our three nominees for Class |
2. | To approve an amendment to the Company’s Sixth Amended and Restated Certificate of Incorporation, as amended, to increase the authorized number of shares of common stock from 139,000,000 to 278,000,000. |
3. | To approve an amendment and restatement of the Dynavax Technologies Corporation 2018 Equity Incentive Plan (the “2018 EIP”) to, among other things, increase the aggregate number of shares of common stock authorized for issuance under the |
4. | To approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Proxy Statement accompanying this |
5. | To ratify the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, |
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from Dynavax. Simply complete and mailfollow the proxy cardvoting instructions in such notice to ensure that your vote is counted. To vote in personlive at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other agent. Followfollow the instructions from your broker, bank or other agent included with these proxy materials, or contact your broker, bank or other agent to request a proxy form.
We provide internet proxy voting to allow you to vote your shares online, with procedures designed to ensureafter logging into the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.
the Record Date. Proposals 2 and 5.April 9, 2019.completing yourphone or by using a proxy card by telephone,that you may request or that we may elect to deliver at a later time, or through the internetInternet before or in person at the Annual Meeting, your shares will not be voted.“non-routine” “non-routine” matters. Under the rules and interpretations of the NYSE,“non-routine”New York Stock Exchange, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation), and certain corporate governance proposals, even if management-supported. Accordingly, your broker or nominee may not vote your shares on Proposals 1, 2,3 or 34 without your instructions, but may vote your shares on Proposal 4.1.Proposal 1: “For” election of our nominees for Class I directors.2.Proposal 2: “For” approval of the amendment and restatement of the 2018 EIP to, among other things, increase the aggregate number of shares of common stock authorized for issuance under the plan by 2,300,000;3.Proposal 3: “For” advisory approval of executive compensation; and4.Proposal 4: “For” ratification of the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2019.3
Notice?
annual meeting?
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Proposal 4, to ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for our fiscal year ending December 31, 2019,such advisory approval must receive “For” votes from the holders of a majority of shares present (either in person or by proxy) and entitled to vote on the matter at the meeting. If you return your proxy and select “Abstain” from voting, it will have the same effect as an “Against” vote. Brokernon-votes will have no effect.
Internet?
Householding of Proxy Materials
The Securities and Exchange Commission, or SEC, has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Annual Meeting materials with respect to two or more stockholders sharing the same address by delivering a single set of Annual Meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies. A number of brokers with account holders who are Dynavax stockholders will be “householding” our proxy materials. A single set of Annual Meeting materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to
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your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If you no longer wish to participate in “householding” and would prefer to receive a separate set of Annual Meeting materials, please notify your broker and we will promptly deliver to you a separate set of our Annual Meeting materials. direct your written request to Dynavax Technologies Corporation, Attention: Corporate Secretary, 2929 Seventh Street, Suite 100, Berkeley, California 94710, if mailed prior to June 1, 2019, or to 5959 Horton Street, Suite 700, Emeryville, California 94608, if mailed on or after June 1, 2019, or contact Dynavax’s Corporate Secretary at(510) 848-5100. Stockholders who currently receive multiple copies of the Annual Meeting materials at their addresses and would like to request “householding” of their communications should contact their brokers.
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Meeting, which does not include Mr. Spencer, who also attended although he was not a director at that time.
THE BOARD OF DIRECTORS RECOMMENDS
VOTE IN FAVOR OF EACH NAMED NOMINEE.
| Age |
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Francis R. Cano, Ph.D. | 75 | Director | ||||
| 46 | Director | ||||
| 73 | Director | ||||
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| 80 | Director | ||||
Peggy V. Phillips | 66 | Director | ||||
Natale Ricciardi | 71 | Director | ||||
Ryan Spencer | 42 | Director and Chief Executive Officer |
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CLASS I DIRECTORS NOMINEES
Dennis A. Carson, M.D.
Dr. Carson has been a member of our Board since December 1997. Dr. Carson is a noted researcher in the fields of autoimmune and immunodeficiency diseases and isco-discoverer with Dr. Eyal Raz of the immunostimulatory sequences (ISS) that form the basis of our technology. He has played key roles in the founding of Vical, Inc., a gene therapy company, IDEC Pharmaceuticals, a biopharmaceutical company, and Triangle Pharmaceuticals, a pharmaceutical company. Dr. Carson is former director of the Rebecca and John Moores Cancer Center at the University of California, San Diego and has been a professor in the Department of Medicine at the University of California, San Diego since 1990. The Board believes that Dr. Carson’s significant experience in research and development provides important insights for the strategy of the Company, particularly with regard to scientific opportunities for development by the Company, and qualifies Dr. Carson to be nominated as a director. He is a member of the National Academy of Sciences, the American Academy of Arts and Sciences, and the Institute of Medicine, as well as the American Association for Cancer Research, the American Society for Clinical Investigation, the American Society of Hematology and the Association of American Physicians. He received his M.D. from Columbia University and his B.A. from Haverford College. Dr. Carson completed his residency in internal medicine and a postdoctoral fellowship at the University of California, San Diego.
Eddie Gray – CEO and Director
Mr. Gray joined Dynavax as Chief Executive Officer and was appointed to our Board in May 2013. Most recently, Mr. Gray served as the President of Pharmaceuticals Europe and a member of the corporate executive team at GlaxoSmithKline plc (GSK) from 2008 until 2013 and as Senior Vice President and General Manager of Pharmaceuticals UK from 2001 through 2007. Prior to the formation of GSK, Mr. Gray was with SmithKline Beecham from 1988 through 2000 serving in various positions of increasing responsibility, including Vice President and Director of Anti-Infectives Marketing in the U.S., Vice President and Director of the Vaccines Business Unit in the U.S., and Vice President and General Manager of Pharmaceuticals in Canada. Our Board believes that Mr. Gray’s more than 30 years of pharmaceutical industry experience, including, most recently, as the President of Pharmaceuticals Europe at GSK, a leading pharmaceutical company, and other senior management roles at GSK and its predecessor, where he was responsible for the launch, commercialization and strategic development of vaccines and other products, enables him to provide commercial and strategic leadership to the Company and qualifies Mr. Gray to be nominated as a director. Mr. Gray received a Bachelor of Science degree in Chemistry and Management Studies from the University of London and an MBA from the Cranfield School of Management in the UK.
Laura Brege
Ms. Brege has been a member of our Board since February 2015. Since September 2015, she has served as managing director of Cervantes Life Science Partners, LLC, a consulting firm providing integrated business solutions to life sciences companies. She has over 20 years of executive management experience in the pharmaceutical, biotechnology and venture capital industries. From September 2012 to July 2015, Ms. Brege was President and Chief Executive Officer of Nodality Inc., a life sciences company focused on innovative personalized medicine. Prior to joining Nodality in 2012, Ms. Brege held several senior-level positions at Onyx Pharmaceuticals, Inc., a biopharmaceutical and biotherapeutics company, from 2006 until 2012, including positions as Executive Vice President and Chief Operating Officer. While at Onyx she led multiple functions, including commercialization, strategic planning, corporate development, and medical, scientific and government affairs. Prior to Onyx, Ms. Brege was a General Partner at Red Rock Capital Management, a venture capital firm specializing in early stage financing for technology companies. Previously Ms. Brege was Senior Vice President and Chief Financial Officer at COR Therapeutics, where she helped build the company from an early stage R&D company through commercial launch of a successful cardiovascular product. Earlier in her career, she served as Chief Financial Officer at Flextronics, Inc. and Treasurer of The Cooper Companies. She serves on the board of directors of the following public pharmaceutical companies: Acadia Pharmaceuticals, Inc., Pacira Pharmaceuticals, Inc., Portola Pharmaceuticals,
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Inc. and HLS Therapeutics, Inc., a pharmaceutical company. During the past five years, Ms. Brege also served on the boards of directors of Angiotech Pharmaceuticals, Inc., a biotechnology company, Delcath Systems, Inc., a pharmaceutical company, and Aratana Therapeutics Inc., a pharmaceutical company. Our Board believes that Ms. Brege’s background in finance and management of biotechnology companies and her participation as a member of the audit committees of other public companies provides important strategic insights for the Board in setting strategy and reviewing the operations of the Company, as well as qualifies Ms. Brege to be nominated as a director. Ms. Brege attended all Board and Audit Committee meetings of the Company and all meetings of the boards and committees on which she sits at other companies during the past year. Ms. Brege earned her undergraduate degrees from Ohio University (Honors Tutorial College) and her MBA degree from the University of Chicago.
CLASSCLASS II DIRECTORS CONTINUINGIN OFFICE UNTILTHE 2020 ANNUAL MEETING
DIRECTOR NOMINEES
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CLASS
ANNUAL MEETING
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The 2018 EIP contains a “fungible share counting” structure, whereby
The 2018 EIP provides that if a corporate transaction or change in control (each, a “Transaction”) occurs and the surviving or acquiring corporation (or its parent company) does not assume or continue outstanding awardsoptions under the 2018 EIP and/or any Prior Plan (i.e., the Dynavax Technologies Corporation 2011 Equity Incentive Plan (the “2011 EIP”) or the Dynavax Technologies Corporation 2017 Inducement Award Plan), or substitute similar stock awards for such outstanding awards, then with respect to any such awards that have not been assumed, continued or substituted and that are held by participants whose continuous service has not terminated prior to the Transaction, the vesting of such awards will be accelerated in full to a date prior to the Transaction (contingent upon the closing or completion of the Transaction). The Amended 2018 EIP retains such provision, but specifies that for purposes of such acceleration, with respect to performance stock awards, vesting will be deemed to be satisfied at the target level of performance.
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months following the date of grant of such award, except that shares up to 5% of the share reserve of the Amended 2018 EIP may be issued pursuant to awards that do not meet such vesting requirements.As of April | |||||
Total number of shares of common stock subject to outstanding stock options | |||||
Weighted-average exercise price of outstanding stock options | $ | ||||
Weighted-average remaining term of outstanding stock options | |||||
Total number of shares of common stock subject to outstanding full value awards | |||||
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Total number of shares of common stock outstanding | |||||
Per-share closing price of common stock as reported on | $ |
(1) | As of April |
As of December 31 | 2018 | 2017 | 2016 | |||||||||
Full Dilution(1) | 16.31 | % | 14.92 | % | 16.90 | % | ||||||
Gross Burn Rate (as discussed in greater detail below)(2) | 4.75 | % | 5.23 | % | 5.90 | % |
As of December 31 | 2019 | 2018 | 2017 | |||||||||
Full Dilution(1) | 15.39 | % | 16.31 | % | 14.92 | % | ||||||
Gross Burn Rate (as discussed in greater detail below)(2) | 7.73 | % | 4.75 | % | 5.23 | % |
(1) | Full Dilution is calculated as (shares available for grant + shares subject to outstanding equity incentive awards)/(weighted average common stock outstanding + shares available for grant + shares subject to outstanding equity incentive awards). |
(2) | Gross Burn Rate is calculated as (shares subject to options granted + shares subject to other equity incentive awards granted)/weighted average common stock outstanding. |
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Fiscal Year 2018 | Fiscal Year 2017 | Fiscal Year 2016 | ||||||||||
Total number of shares of common stock subject to stock options granted | 2,502,817 | 535,497 | 1,414,262 | |||||||||
Total number of shares of common stock subject to full value awards granted | 457,542 | 2,217,303 | 856,258 | |||||||||
Weighted-average number of shares of common stock outstanding | 62,361,828 | 52,613,215 | 38,505,856 | |||||||||
Burn Rate | 4.75 | % | 5.23 | % | 5.90 | % |
2017.
Fiscal Year 2019 | Fiscal Year 2018 | Fiscal Year 2017 | ||||||||||
Total number of shares of common stock subject to stock options granted | 3,745,751 | 2,502,817 | 535,497 | |||||||||
Total number of shares of common stock subject to full value awards granted | 1,822,257 | 457,542 | 2,217,303 | |||||||||
Weighted-average number of shares of common stock outstanding | 72,023,571 | 62,361,828 | 52,613,215 | |||||||||
Burn Rate | 7.73 | % | 4.75 | % | 5.23 | % |
statement.
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under the Amended 2018 EIP that are not issued because such stock award is settled in cash; and (iii) any shares issued pursuant to a stock award granted under the Amended 2018 EIP that are forfeited back to or repurchased by us because of a failure to vest.
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requirements.
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date of grant. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us or one of our affiliates, if a participant’s service relationship with us or any of our affiliates (referred to in this Proposal 23 as “continuous service”) terminates (other than for cause and other than upon the participant’s death or disability), the participant may exercise any vested stock options for up to three months following the participant’s termination of continuous service. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us or one of our affiliates, if a participant’s continuous service terminates due to the participant’s disability or death (or the participant dies within a specified period, if any, following termination of continuous service), the participant, or his or her beneficiary, as applicable, may exercise any vested stock options for up to 12 months following the participant’s termination due to the participant’s disability or for up to 18 months following the participant’s death. Except as explicitly provided otherwise in a participant’s stock option agreement or other written agreement with us or one of our affiliates, if a participant’s continuous service is terminated for cause (as defined in the Amended 2018 EIP), all stock options held by the participant will terminate upon the participant’s termination of continuous service and the participant will be prohibited from exercising any stock option from and after such termination date. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us or one of our affiliates, the term of a stock option may be extended if the exercise of the stock option following the participant’s termination of continuous service (other than for cause and other than upon the participant’s death or disability) would be prohibited by applicable securities laws or if the sale of any common stock received upon exercise of the stock option following the participant’s termination of continuous service (other than for cause) would violate our insider trading policy. In no event, however, may a stock option be exercised after its original expiration date.
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own stock possessing more than 10% of our total combined voting power or that of any affiliate unless the following conditions are satisfied:
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with the exercise procedures determined by the Plan Administrator, and any reacquisition or repurchase rights held by the Company with respect to such awards will lapse (contingent upon the closing or completion of the Transaction).
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included in the participant’s alternative minimum taxable income for the year in which the stock option is exercised. If, however, there is a disqualifying disposition of the share in the year in which the stock option is exercised, there will be no adjustment for alternative minimum tax purposes with respect to that share. In computing alternative minimum taxable income, the tax basis of a share acquired upon exercise of an ISO is increased by the amount of the adjustment taken into account with respect to that share for alternative minimum tax purposes in the year the stock option is exercised.
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| Number of Shares | |||
Ryan Spencer Chief Executive Officer and Director | (1) | |||
| (2) | |||
David F. Novack President and Chief Operating Officer | (1) | |||
| (1) | |||
Robert Janssen, M.D. Senior Vice President and Chief Medical Officer | (1) | |||
| (3) | |||
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All current executive officers as a group | (1) | |||
All current directors who are not executive officers as a group | (4) | |||
All employees, including all current officers who are not executive officers, as a group | (1) |
Awards granted under the Amended 2018 EIP to our executive officers and other employees are discretionary and are not subject to set benefits or amounts under the terms of the Amended 2018 EIP, and our Board and our Compensation Committee have not granted any awards under the Amended 2018 EIP subject to stockholder approval of this Proposal |
(2) |
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(3) | In October 2019, Dr. Coffman submitted notice of his retirement from the Company, effective December 1, 2019. Therefore, he is not eligible to receive any future awards under the Amended 2018 EIP. |
(4) | Awards granted under the Amended 2018 EIP to ournon-employee directors are discretionary and are not subject to set benefits or amounts under the terms of the Amended 2018 EIP. However, pursuant to our current compensation program fornon-employee directors, |
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6, 2020
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| As of April 6, 2020 Number of Shares | |||
Ryan Spencer Chief Executive Officer and Director | ||||
Eddie Gray
Former Chief Executive Officer and Director | ||||
David F. Novack President and Chief Operating Officer | ||||
Michael S. Ostrach Senior Vice President, Chief Financial Officer and Chief Business Officer | ||||
Robert Janssen, M.D. Senior Vice President and Chief Medical Officer | ||||
Robert L. Coffman, Ph.D. Former Senior Vice President and Chief Scientific Officer | ||||
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All current executive officers as a group | ||||
All current directors who are not executive officers as a group | ||||
Each | ||||
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Ryan Spencer | ||||
Each associate of any executive officers, current directors or director nominees | — | |||
Each other person who received or is to receive 5% of awards | — | |||
All employees, including all current officers who are not executive officers, as a group |
2.3. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Brokernon-votes are counted towards a quorum but are not counted for any purpose in determining whether this Proposal 23 has been approved.THE BOARD OF DIRECTORS RECOMMENDSVOTE IN FAVOR OF PROPOSAL 2.25
VOTE IN FAVOR OF PROPOSAL 33.
THE BOARD OF DIRECTORS RECOMMENDS
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VOTE IN FAVOR OF PROPOSAL 44.
THE BOARD OF DIRECTORS RECOMMENDS
5.
AUDIT FEES
VOTE IN FAVOR OF PROPOSAL 5.
Fiscal Year Ended | ||||||||
2018 | 2017 | |||||||
Audit Fees(1) | $ | 1,442,681 | $ | 1,203,801 | ||||
Tax Fees(2) | 79,200 | 40,500 | ||||||
All Other Fees(3) | 1,995 | 1,995 | ||||||
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Total Fees | $ | 1,523,876 | $ | 1,246,296 | ||||
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2019 | 2018 | ||||||
Audit Fees (1) | $ | 1,475,391 | $ | 1,442,681 | |||
Tax Fees (2) | 46,550 | 79,200 | |||||
All Other Fees (3) | 1,995 | 1,995 | |||||
Total Fees | $ | 1,523,936 | $ | 1,523,876 |
(1) | Audit fees include fees for the audit of our consolidated financial statements and interim reviews of our quarterly financial statements, including compliance with the provisions of Section 404 of the Sarbanes-Oxley Act as well as fees related to registration statements, consents and other services related to SEC matters. In each of |
(2) | Tax fees include Section 382 study and other tax advisory services. |
(3) | All other fees represent subscription fees for an online accounting research tool and related database. |
PRE-APPROVAL POLICIES AND PROCEDURES
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Committeepre-approves specified services in the defined categories of audit services, audit-related services, tax services and all other services up to specified amounts.Pre-approval may be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an interim basis by the Audit Committee Chair, as needed and on acase-by-case basis before the independent registered public accounting firm is engaged to provide each service.
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EXECUTIVE OFFICERS
| Age |
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| Chief Executive Officer and Director | |||||
David F. Novack | 58 | President and Chief Operating Officer | ||||
Michael S. Ostrach | Senior Vice President, Chief Financial Officer and Chief Business Officer | |||||
Robert | ||||||
| Chief Medical Officer and Senior Vice President, Clinical Development, Medical and Regulatory Affairs | |||||
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(1) | Please see “Proposal 1 – Election of Directors” in this proxy statement for more information about Mr. |
Robert L. Coffman, Ph.D. – Senior Vice President and Chief Scientific Officer
Dr. Coffman was appointed Senior Vice President and Chief Scientific Officer of Dynavax in February 2014, and prior to that he was Vice President and Chief Scientific Officer of Dynavax since December 2000. Prior to joining Dynavax in 2000, Dr. Coffman was a founding member of the DNAX Research Institute in Palo Alto, California. Dr. Coffman has authored over 200 scientific publications, is a member of the National Academy of Sciences and the American Academy of Microbiology, and has received a number of prestigious awards for his work. With colleague Dr. Tim Mosmann, he defined the two principal subtypes of helper T cells, termed Th1 and Th2 cells, and demonstrated the central relationship between their differences in cytokine expression and function. Dr. Coffman defined basic mechanisms ofT-cell regulation in asthma and infectious and parasitic diseases, and demonstrated the central role of regulatory CD4+ T cells in preventing inflammatory bowel disease. At Dynavax, Dr. Coffman has pioneered the development of agonists and antagonists for Toll-Like Receptors (“TLRs”), key recognition receptors in innate immunity. Dr. Coffman received an A.B. in Microbiology from Indiana University and a Ph.D. in Immunology from the University of California, San Diego.
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U.S. and European licensing applications. Prior to joining Dynavax, Dr. Janssen was Vice President, Medical Affairs at Gilead from 2008 to 2010 where he was responsible for oversight of physician and health care provider education focused on HIV and hepatitis B therapies. Until 2008, Dr. Janssen spent 23 years at the U.S. Centers for Disease Control and Prevention (“CDC”), most recently as the Director of the Division of HIV/AIDS Prevention from 2000 to 2008. Under his leadership, the CDC first explored HIV treatment as a mode of HIV prevention and launched several of the earliest Phase 3 trials ofpre-exposure prophylaxis for HIV. Dr. Janssen received a Bachelor of Arts degree with Honors in Humanities from Stanford University and his M.D. degree from the University of Southern California. He is a neurologist with training in virology received at the University of Pennsylvania. Dr. Janssen has been the beneficiary of numerous honors and awards during his career. He has published over 130 scientific articles in a variety of journals and has served as a reviewer for leading scientific journals.
David F. Novack – Senior Vice President, Operations and Quality
Mr. Novack joined Dynavax in March 2013 as Senior Vice President, Operations and Quality. Mr. Novack was formerly with Novartis Vaccines & Diagnostics where he served since 2009 as the Global Head of Technical Operations and Supply Chain for Diagnostics and previously from 2007 to 2009 as the Global Head of Vaccine Manufacturing Strategy. Prior to Novartis, Mr. Novack was the Vice President, Business Development for Vaxin, Inc., a vaccine company, from 2004 to 2006. From 1993 until 2004, Mr. Novack worked at MedImmune, formerly Aviron, serving in several capacities including business development, manufacturing, contract operations and most recently as Senior Director, Supply Chain Operations. Previously, from 1989 to 1993, Mr. Novack was with American Cyanamid Company in various roles. Mr. Novack received a B.S. in Biology from State University of New York and an M.B.A. from Columbia University.
COMPENSATION DISCUSSION AND ANALYSIS
Eddie Gray,
Robert L. Coffman, Ph.D., Senior Vice President and Chief Scientific Officer;
David F. Novack,
We present this Compensation Discussion and Analysis in the following sections:
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Executive Summary
Heading into 2018, we had worked to diversify
Commercialization, dosage volume sold and manufacturing goals forHEPLISAV-B were weighted at 42.5%;
Objectives specific to advancing our oncology pipeline were weighted at 42.5%; and
Business plan goals that supported advancing our business and portfolio strategies were weighted at 15%.
Committed to achieving these corporate goals in 2018, our NEOs were focused on executing ourHEPLISAV-B business strategy by working to successfully commercialize it, deploy acontinuing work toward successful commercialization, bringing the field sales force developin-house, further developing a distribution network, obtain reimbursement coverage, develop and implement a healthcare compliance program to support compliant product-related business practices, and ensureensuring that we achieved sufficient manufacturing capability to successfully meet demand and that such manufacturing was done in accordance with applicable quality requirements. In addition, we recognized the importance of advancing our post-marketing safety study and initiating our study of the use of HEPLISAV-B in patients undergoing hemodialysis. Our NEOs were also focused on advancing a robust pipeline of immuno-oncology clinical stagevaccine development programs and discovering other cutting-edgewinding down our I/O program.
Propelled by our diversification strategy and the performance of our NEOs, we believe 2018it was a year of many positive developments for our company.Company that positioned us for future success. At the outset, the strategic reorganization around our vaccine business and the wind-down of our I/O program best positions the Company for the future. ForHEPLISAV-B, we not only commercializedcontinued the product and madecommercialization process with further significant strides by advancing it through the multiple-step decision-making process employed by institutional hepatitis B vaccine purchasers, butpurchasers. We also made substantial progress in our post-marketing safety study, including announcing positive interim results in December 2019. Importantly, we also gained regulatory approval of the PFS presentation of the vaccine—we believe this was an important accomplishment, as it increased our ability to achieve faster adoption of our product by physicians and other key decision-makers.HEPLISAV-B also received a recommendation from the Centers for Disease Control Advisory Committee on Immunization Practices (“ACIP”) and additional payer and policy review and approval.demonstrated continued compliance with quality requirements. Each of these developments served to lay a foundation for future sales growthcommercial success forHEPLISAV-B through advocacy and adoption efforts.
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We also successfully delivered certain key corporate goals related to advancing our immuno-oncology programs. In particular, we announced results associated withSD-101 and advanced DV281 into the clinical stage. We also achieved certain business plan goals that supported advancing our business and portfolio strategies.
European Union. In February,addition, we deployedexercised our option to draw down $75 million of non-dilutive capital under our existing term loan agreement with CRG Servicing LLC, a healthcare-focused investment firm. This provided necessary funding to continue our commercialization of HEPLISAV-B, bring our contract field sales force forHEPLISAV-B,in-house, and to meet other general business needs.
improved vaccines. In March 2020, we received FDA approvalannounced collaborations with the University of Queensland, Clover Biopharmaceuticals, and the PFS presentationCoalition for Epidemic Preparedness Innovations to develop a vaccine for COVID-19 leveraging CpG 1018. In addition, we have an on-going collaboration with Serum Institute ofHEPLISAV-B, enabling us India, Ltd., the world’s largest vaccine manufacturer, to meet the preferred means of physicians, institutionsdevelop vaccines containing CpG 1018, including an improved pertussis vaccine.
In April, we presented durability of response data in advanced melanoma patients from the ongoing Phase 1b/2 study investigatingSD-101 in combination with pembrolizumab. This data showed that 86% of initial responses were ongoing after a median of 18 months offollow-up in patients that were naïve toanti-PD-1/L1 monotherapy. We also, presented interim data forSD-101 in combination with pembrolizumab for patients with advanced squamous cell carcinoma of the head and neck, indicating, among other things, an overall response rate (“ORR”) of 33%, and thatSD-101 was well-tolerated with no dose-limiting toxicities. The data was presented at the 2018 American Association for Cancer Research Annual Meeting.
In April, we also announced the CDC’s publication of ACIP’s recommendationare exploring options for the use ofHEPLISAV-B for adults in the United States in the Morbidity and Mortality Weekly Report (“MMWR”). Publication in the MMWR is the final endorsement ofHEPLISAV-B that was required by many institutional policies for reimbursement.
In June, we announced the presentation of updated findings in patients with advanced melanoma in the ongoing Phase 1b/2 studyinvestigating SD-101 in combination with pembrolizumab. The data showed a 70% ORR in patients who received the£ 2 mg dose ofSD-101 and a6-month progression free survival rate of 76% in patients naïve toanti-PD-1 treatment in patients who received the£ 2 mg dose ofSD-101. The data was presented at the 2018 American Society of Clinical Oncology Annual Meeting.
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In August, we announced that 100% of Medicare-insured lives, 94% of commercially-insured lives, and 74% of lives under state Medicaid plans were now covered forHEPLISAV-B, ensuring a strong reimbursement environment as we continue to seek market share.
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In September, we announced publication of a preclinical study demonstrating that inhalation of a TLR9 agonist, such as DV281, can stimulate effective immunity against lung tumors and complement the actions ofPD-1 blockade to generate durable, systemic anti-tumor immunity.
In October, we announced that the combination ofSD-101 and pembrolizumab would be evaluated in a new randomized, investigational treatment arm for the ongoingI-SPY 2 Trial™ for neoadjuvant treatment of locally advanced breast cancer, expandingSD-101’s potential use in the field of neoadjuvant immunotherapy.
In October, we also presented interim data from our ongoing Phase 1b/2SYNERGY-001 study investigatingSD-101 in combination with pembrolizumab in patients with advanced melanoma naïve toanti-PD-1/L1 therapy. The interim data showed a 70% ORR in advanced melanoma patients naïve toanti-PD-1/L1 therapy who received the£ 2 mg dose ofSD-101 and a 48% ORR in the group receiving the 8 mg dose ofSD-101. The data was presented at the European Society for Medical Oncology 2018 Congress.
In November, we announced significant progress onHEPLISAV-B’s commercialization, including obtaining Pharmacy and Therapeutics (“P&T”) committee approval from six of the top 10 integrated delivery networks, and that 402sale or transfer of our largest targeted customers have received P&T committee approval, of whom 200 have progressed to purchaseI/O assets.
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☒ | Design executive compensation program to align pay with performance | ☒ | No excessive change in control or severance payments (no cash severance multiplier greater than | ||||
☒ | |||||||
| Prohibit hedging and discourage pledging by executive officers and directors (no pledging occurred in | ☒ | No | ||||
☒ | Grant equity awards with performance-based vesting of greater than one year | ☒ | No | ||||
☒ | Conduct an annual say-on-pay vote | No | |||||
☒ | Seek input from, listen to and respond to stockholders | ☒ No guaranteed bonuses |
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70%, 85%, 95%, and 95%75% in fiscal years 2016, 2017, 2018, and 2018,2019, respectively, of stockholders voting in favor of our pay practices.
Because of its importance, we continue to solicit
Additionally, we considered feedback from Institutional Shareholder Services and Glass Lewis. Based on the feedback, we made the following two changes: (1) we increased the percentage of our NEO’s performance-based equity compensation from 20% to 25%; and (2) we established performance goals that would be expected to take longer than a year to be completed, whereas in the past the NEO performance goals were expected to have a completion period of one year. These changes provide for an increased link between executive compensation and longer-term performance. This is in addition to time-based stock options the value of which is determined by long-term stock performance.
Philosophy and Objectives
A
Alignment of
Overall
Recognition of
Role of the Compensation Committee and Management
The Compensation Committee oversees and administers our executive compensation programs. The Compensation Committee acts pursuant to a charter adopted by our Board, which can be found at our website, www.dynavax.com. The Compensation Committee generally determines the compensation to be paid to the executive officers, including our NEOs. Either the Compensation Committee or the independent members of our Board, upon recommendation from the Compensation Committee, approve certain compensation of our CEO, and references in this Compensation Discussion and Analysis to our Board approving our CEO’s compensation refer to the independent members of our Board.
The Compensation Committee (and the board of directors, with respect to our CEO) approves our corporate goals and the individual goals of our NEOs after considering the Company’s recommendations on these matters. The Compensation Committee annually reviews the base salaries, cash incentives and equity compensation of our NEOs and periodically reviews other elements of our compensation. Compensation decisions are based primarily on the following:
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Role of Compensation Consultant
Arnosti has been the Compensation Committee’s independent compensation consultant since 2010, and the Compensation Committee meets regularly with Arnosti, both with and without management present, depending upon the topic being discussed.
In January 2018 and again in February 2019 the Compensation Committee reviewed whether the work of Arnosti as a compensation consultant raised any conflict of interest, taking into consideration the following factors:
The provision of other services to the Company;
The amount of fees paid to Arnosti by the Company;
Arnosti’s policies and procedures that are designed to prevent conflicts of interest;
Any business or personal relationship of Arnosti or the individual compensation advisors employed by Arnosti with an executive officer of the Company; and
Any Company stock owned by Arnosti or the individual compensation advisors employed by Arnosti.
Based on the Compensation Committee’s review of this information, it determined the work of Arnosti and the individual compensation advisors employed by Arnosti as compensation consultant to the Compensation Committee, did not create any conflict of interest. The Compensation Committee has the sole authority to direct, terminate or continue Arnosti’s services, although the Company pays the cost for Arnosti’s services.
In 2018, Arnosti provided advice to the Compensation Committee on several different aspects of its responsibilities related to our compensation programs and practices. Specifically, during 2018, Arnosti assisted the Compensation Committee as follows:
Reviewed and analyzed compensation levels of our NEOs in comparison to those of our peer companies;
Provided general information concerning executive compensation trends and developments;
Provided recommendations to the Compensation Committee on refining our peer group;
Provided an assessment of the annual meeting voting results;
Provided the Board with a review of competitive data from the peer group on Board compensation; and
Reviewed the Compensation Discussion and Analysis for inclusion in our proxy statement.
2018 Peer Group
35
Companies that had
Aduro Biotech, Inc.
• | Acadia Pharmaceuticals, Inc. • Acceleron Pharma Inc. • Acorda Therapeutics Inc. • Aduro Biotech, Inc. • Alder Biopharmaceuticals • Amicus Therapeutics, Inc. |
Array Biopharma, Inc.
BioCryst Pharmaceuticals, Inc.
ChemoCentryx, Inc.
Cytokinetics, Inc.
Clovis Oncology, Inc.
• | Arcus Biosciences, Inc. • Array Biopharma, Inc. • Biocryst Pharmaceuticals, Inc. • ChemoCentryx, Inc. • Clovis Oncology, Inc. • Depomed, Inc. |
Demira, Inc.
• | Eagle Pharmaceuticals, Inc. |
• | Epizyme, Inc. • Five Prime Therapeutics Inc. • Halozyne Therapeutics, Inc. • |
Epizyme, Inc.
Heron Therapeutics, Inc. |
• Immunogen, Inc. • Insmed Incorporated • Macrogenics, Inc. • Momenta Pharmaceuticals, Inc. • Novavax Inc. • Pacira Biosciences, Inc. • Portola Pharmaceuticals, Inc. • Puma Biotechnology, Inc. • Repligen Corp. | • |
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MacroGenics, Inc.
Nektar Therapeutics, Inc.
Novavax, Inc.
Puma Biotechnology, Inc.
Repligen Corp.
Rigel Pharmaceuticals, Inc.
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Supernus Pharmaceuticals, Inc. • TG Therapeutics, Inc. • The Medicines Company • Theravance Biopharma, Inc. |
TG Therapeutics, Inc.
Xenocor, Inc.
Ziopharm Oncology, Inc.
Elements of Executive Compensation
36
our key stockholders expressed support for the elements of our executive compensation program, including our continued use of stock options as one portion of long-term equity awards and continuing to grant a portion of long-term equity awards with performance-based vesting. As reflected in the chart below, we utilized performance-based vesting for a portion of our 20182019 long-term equity awards.
Element | Purpose | Key Characteristics | ||||
Base Salary | ||||||
Provides a fixed level of compensation for performing the essential | Fixed compensation that is reviewed annually and adjusted if and when appropriate; reflects each NEO’s performance, experience, skills, level of responsibility and the breadth, scope and complexity of the position as well as the competitive marketplace for executive talent specific to our industry. | |||||
Annual Incentive Program | ||||||
Motivates executive officers to achieve corporate and individual business goals, which we believe increase stockholder value, while providing flexibility to respond to opportunities and changing market conditions. | Company. | |||||
Long-Term Equity Incentives (Stock Options) | ||||||
Motivates executive officers to achieve our business objectives by tying incentives to the appreciation of our common stock over the long term. | Stock options with an exercise price equal to the fair market value on the date of grant vesting over three years; the ultimate value realized, if any, depends on the appreciation of our common stock In |
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From time to time, we may also use special grants of stock options | ||||||
Long-Term Equity Incentives (RSUs) | ||||||
Motivates executive officers to achieve our corporate objectives by tying compensation to the performance of our common stock over the long term and/or the achievement of business and clinical development goals over the long term; motivates our executive officers to remain with the Company by mitigating swings in incentive values during periods when market volatility weighs on our stock price. | Restricted stock unit awards may vest based on continued service over a specified period of time and/or achievement of performance goals; the ultimate value realized varies with our common stock price. From time to time, we may also use special RSU awards | |||||
Other Compensation | ||||||
Our executive officers participate in the same benefits offered to all other employees, which promote employee health and welfare and assist in attracting and retaining our executive officers. | Indirect compensation element consisting of programs such as medical, vision, dental, life and accidental death, long-term care and disability insurance as well as a 401(k) plan with a Company matching contribution, and other plans and programs made available to all | |||||
Severance and Change in Control Benefits | ||||||
Serves our retention objectives by helping our named executive officers maintain continued focus and dedication to their responsibilities to maximize stockholder value, including in the event of a transaction that could result in a change in control of our Company. | Provides protection in the event of a termination of employment under specified circumstances, including following a change in control of our Company as described below under “Potential Payments Upon Change in Control or Involuntary Termination.” |
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Name | 2018 Base Salary | % Increase from Prior Year(1) | 2018 Target Bonus | |||||||||
Eddie Gray | $ | 621,000 | 3.5 | % | 60 | % | ||||||
Michael S. Ostrach | $ | 439,875 | 3.5 | % | 50 | % | ||||||
Robert L. Coffman, Ph.D. | $ | 483,134 | 3.5 | % | 50 | % | ||||||
Robert Janssen, M.D. | $ | 438,000 | 9.5 | % | 50 | % | ||||||
David F. Novack | $ | 401,700 | 4.0 | % | 50 | % |
Name | 2019 Base Salary | % Increase from Prior Year | 2019 Target Bonus | |||||||||
Ryan Spencer | $ | 515,000 | (1) | 80 | % | 50 | %(2) | |||||
Eddie Gray | $ | 640,000 | 3 | % | 60 | % | ||||||
David F. Novack | $ | 495,000 | (3) | 23 | % | 50 | %(4) | |||||
Michael S. Ostrach | $ | 450,872 | 3.5 | % | 50 | % | ||||||
Robert Janssen, M.D. | $ | 453,333 | 3.5 | % | 50 | % | ||||||
Robert L. Coffman, Ph.D. | $ | 495,212 | 2 | % | 50 | % |
(1) |
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(2) From January 1, 2019, to May 15, 2019, Mr. Spencer’s target bonus was 40%, and from May 16, 2019 to December 31, 2019 his target bonus was 50%. On January 1, 2020 Mr. Spencer’s target bonus increased to 60% to reflect his recent promotion to Chief Executive Officer. | |
(3) From January 1 until May 23, 2019, Mr. Novack, in the role of Senior Vice President, Operations, had an annual base salary of $413,750. On May 21, 2019, Mr. Novack received the interim appointment to the shared office of the President and he began receiving an additional monthly stipend of $6,500 for his interim role. On December 16, 2019, Mr. Novack was promoted to President and Chief Operating Officer and his base salary increased to $495,000, and the additional monthly stipend of $6,500 was discontinued. | |
(4) From January 1, 2019 to December 31, 2019, Mr. Novack’s target bonus was 50%. On January 1, 2020 Mr. Novack’s target bonus was increased to 55% to reflect his recent promotion to President and Chief Operating Officer. |
The
Achieve approval bygoals. In August of 2019, following the FDA ofPre-filled Syringe (“PFS”) and “potency assay” applications;
Sales of at least 200,000 doses ofHEPLISAV-B;
Release 720,000 doses ofHEPLISAV-B PFS;
CompleteSD-101 and DV281 development plans;
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Initiate expandedSD-101 clinical trial program; and
Achieve financing to ensure certaincash-on-hand goals.
In February 2019,Company’s strategic reorganization, the Compensation Committee (andrevised the performance goals applicable to the NEOs for whom performance grants were made in February so that they were aligned with and measure performance under the new Company focus. The goals were:
Name | Grant Date Fair Value of February 2018 Time-Based Stock Option Awards | Grant Date Fair Value of March 2018 Performance-Based Stock Option Awards | ||||||
Eddie Gray | $ | 3,032,400 | $ | 758,100 | ||||
Michael S. Ostrach | $ | 866,400 | $ | 216,600 | ||||
Robert L. Coffman, Ph.D. | $ | 866,400 | $ | 216,600 | ||||
Robert Janssen, M.D. | $ | 866,400 | $ | 216,600 | ||||
David F. Novack | $ | 866,400 | $ | 216,600 |
Additionally, in March 2018,2019.
Name | Grant Date Fair Value of February 2019 Time-Based Stock Option Awards | Grant Date Fair Value of February 2019 Performance-Based RSU Awards | ||||||
Ryan Spencer | $ | – | (1) | $ | – | |||
Eddie Gray | $ | 1,945,468 | $ | 732,900 | (2) | |||
David F. Novack | $ | 1,701,362 | $ | 272,220 | ||||
Michael S. Ostrach | $ | 611,433 | $ | 230,340 | ||||
Robert Janssen, M.D. | $ | 722,602 | $ | 272,220 | ||||
Robert L. Coffman, Ph.D. | $ | 611,433 | $ | 230,340 | (2) |
(1) Mr. Spencer was granted 50,000 time-based stock option awards in June 2019 upon his appointment as Co-President of the Company and was granted 400,000 time-based stock option awards in December 2019 upon his appointment as Chief Executive Officer. The grant date fair value of these options was $1,957,520. |
(2) These performance based RSUs were subsequently cancelled. |
performance-based RSU grant.
2018
Structure. Our CEO does notWith their appointments to the positions of Chief Executive Officer and President and Chief Operating Officer in December of 2019, neither Mr. Spencer nor Mr. Novack will have individual goals separate from the Company’s corporate objectives. Forobjectives in 2020. This aligns their incentive compensation with the completion of corporate goals that measure business performance and are intended to drive long term stockholder value. In early 2019, Mr. Gray’s incentive compensation was based solely on our other NEOs, theirachievement of corporate goals, while Mssrs. Spencer and Novack’s total cash incentive payout is typicallyfor 2019, along with our other NEOs, was based on a weighting of 50% corporate and 50% individual goals. Our CEOChief Executive Officer typically recommends individual goals for each NEO, which are aligned with our business strategy and linked with corporate goals, and our Compensation Committee approves these goals. The individual goals for the NEOs are in addition to the general responsibilities each officer has for managing his respective functional or operational area.
2018
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level of completion in making an overall determination of goal completion for each category. We have omitted details about the 2018 goals or achievement of goals in the table below only where we believe disclosing such details would result in competitive harm. After its consideration of the Company’s performance, as more specifically described in the following chart, the Compensation Committee rated our 20182019 corporate achievement at 90%86% of our 20182019 corporate goals.
Corporate Goal | Weighting | Corporate Achievement | Corporate Achievement Percentage | |||||||
HEPLISAV-B Advancement
• Obtain ACIP recommendation.
• Post-marketing study and “first patient in.”
• FDA approval of PFS and “potency assay” applications.
• Engage, train and deploy field sales organization.
• Minimum 90% reimbursement coverage of commercial lives 90 days post-ACIP recommendation.
• Minimum of 200,000 doses sold.
• 720,000 doses of PFS doses released.
• Executere-start plan for Dusseldorf manufacturing facility and release 2 hepatitis B surface antigen batches.
• Develop and implement healthcare compliance program to ensure compliantHEPLISAV-B operations. | 42.5% | The Compensation Committee determined that we achieved the goals in this category at an overall percentage of 85%. In determining this percentage, the Compensation Committee considered several factors, including:
• Obtaining the ACIP recommendation.
• Achieving the first patient enrolled in post-marketing study.
• Obtaining FDA approval of PFS and “potency assay”.
• Successful deployment of field sales organization.
• Achievement of reimbursement coverage of commercial lives goal.
• Positioning us for increasingHEPLISAV-B sales in 2019 and beyond by advancing through the lengthy institutional decision-making process in 2018.
• 100,000 doses ofHEPLISAV-B sold.
• Introduction of PFS to market and rapid customer uptake of this presentation.
• Successfully restarting the Dusseldorf manufacturing facility.
• Successful implementation of a healthcare compliance program associated with status as a commercial company. | 85% | |||||||
Oncology: Advance the Pipeline
• Advance oncology programs that are in clinical studies, including initiating enrollment in various studies forSD-101 and advance intra-tumoral vaccination studies for 2019 initiation.
• CompleteSD-101 and DV281 development plans. | 42.5% | The Compensation Committee determined that we achieved the goals in this category at an overall percentage of 95%. In determining this percentage, the Compensation Committee considered several factors, including:
• Advancement ofSD-101 in melanoma and squamous cell head and neck cancer and data presentation of results at key oncology meetings.
| 95% |
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Corporate Goal | Weight | Corporate Achievement | Corporate Achievement Percentage | |||
HEPLISAV-B • HEPLISAV-B net sales of $35M. • Complete recruitment and interim analysis of study HBV25 • Initiate HBV24. • File EU MAA and complete a successful MAA GCP inspection. • Complete successful FDA inspection of Dusseldorf. • Sufficient supply to achieve sales plan. • Evaluate opportunity and develop overall strategy for HEPLISAV-B ex-US. | 60% | The Compensation Committee determined that we achieved the goals in this category at an overall percentage of 80%. In determining this percentage, the Compensation Committee considered several factors, including: • HEPLISAV-B net sales of $34.6 million. • Successful completion of enrollment in HBV25 and publication of interim analysis. • Initiation of HBV24. • Filing of EU MAA and successful GCP inspection. • Successful FDA inspection in Dusseldorf. • Sufficient supply. • Ex-US strategy development. | 80% | |||
Vaccine Business • Create a vaccine business strategy including a Pertussis vaccine development plan. | 10% | The Compensation Committee determined that we achieved the goals in this category at an overall percentage of 90%. In determining this percentage, the Compensation Committee considered several factors, including: • Vaccine business strategy created, including Pertussis. | 90% |
Corporate Goal | Weighting | Corporate Achievement | Corporate Achievement Percentage | |||||||
• Select lead compound TLR 7/8 agonists and develop and explore production and collaboration strategies.
• Identify and execute oncology-specific meeting presentation/publication timetable. |
• The selection ofSD-101 and pembrolizumab in combination for advanced breast cancer in theon-goingI-SPY 2 trial.
• Initiation of DV281 Phase 1 study.
• Completion ofSD-101 and DV281 Development Plans. | |||||||||
Sustain the DVAX Business Plan
• At least one year of cash at year end 2018.
• Control net cash usage within budget.
• Establish and implement necessary financial reports and controls to deliver compliant commercial organization.
• Implement quality systems automation.
• Complete preparations for pharmacovigilance inspection.
• Develop and implement investor relations and corporate communications program, including regular investor engagement.
• Recruit key leadership positions.
• Develop strategic plan document and update Board of Directors on abi-annual basis.
| 15% | The Compensation Committee determined that we achieved the goals in this category at an overall percentage of 90%. In determining this percentage, the Compensation Committee considered several factors, including:
• Maintaining one year of cash at year end.
• Controlling net cash usage.
• Establishing and implementing financial reports and controls.
• Successful pharmacovigilance inspection.
• Hiring VPs of Quality and Investor Relations & Corporate Communications. | 90% | |||||||
Total | 100% | 90% |
The terms used, but not defined above, have the following definitions:
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Immuno-Oncology • Wind down all clinical I/O activity by October while ensuring completion of treatment regimens and minimize I/O spend by year end. | 10% | The Compensation Committee determined that we achieved the goal in this category at an overall percentage of 90%. In determining this percentage, the Compensation Committee considered several factors, including: • Wind down substantially completed, except with respect to a small number of subjects still receiving pembrolizumab, as per protocol. • Spend minimized. | 90% | |||
Financial • Develop Dynavax spending and financing plan to ensure sufficient capital to reach positive cash flow. | 20% | Spending and financing plan developed. The Compensation Committee determined that we achieved the goals in this category at an overall percentage of 100%. | 100% | |||
Total | 100% | 86% |
area, including through the period of significant change during and following the restructuring.
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of the goal grading in a manner that is reflective of performance against the individual goals. Thus, as is the case with respect to the 20182019 individual goals, there maywill be circumstances where the individual goal grading exceeds the corporate goal grading, and there maywill be instances where the corporate goal grading will surpass the individual goal grading. In early 2019,2020, based on the recommendation of our CEO,Mr. Spencer, as well as the observations by Compensation Committee members of these officers and its own assessment of each NEO’s effectiveness, the Compensation Committee determined the level of achievement of each NEO’s individual performance goals as follows:
Name | Individual Goals | Individual Achievement | Individual Achievement Percentage | |||||
Ryan Spencer | ||||||||
1. Achieve 2019 Revenue Goal for HEPLISAV-B in the U.S. market, including securing contracts with retail pharmacies, developing a probability segmentation framework to support field engagement strategies, and developing and implementing a broadly available rebate programs to facilitate timely adoption. 2. Advance the long-term value for HEPLISAV-B, including evaluating opportunities outside of the U.S., developing overall strategy, including executing pilot programs for diabetes vaccination within retail pharmacies, and setting policy objectives to support revenue growth. 3. Execute financing transactions of at least $50M; develop financial plan to support path to profitability; increase ownership from-long fundamental based investors by positioning Dynavax as a transparent, knowledgeable, and capable organization through direct and open communications; and develop a succession plan for finance leadership which can be fully implemented by March of 2020. | Mr. Spencer partially achieved his 2019 Revenue Goal for HEPLISAV-B, met his goal for advancing long term value for HEPLISAV-B, and slightly exceeded his goal related to financial and investor relations. |
David F. Novack | ||||||||
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2. Support the
3. Ensure continuity of clinical supply and | Mr. Novack exceeded his
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Michael S. Ostrach | 1. Execute an equity financing strategy, including budget control, managing the at-the-market financing facility and otherwise achieving a specified amount of
2. Obtain U.S. patent protection on DV230 and | Mr. Ostrach met all of his personal goals in 2019 and obtained additional patents beyond those in his goals. | 100% | |||||
Robert Janssen, M.D. | 1. Advance HEPLISAV-B Clinical Studies and Regulatory Filings. 2. Advance our HEPLISAV-B medical affairs plan by initiate one or more ISRs, label enabling ACTG ISR—FPI, initiate one or more web-based CME program, publishing the HHS letter highlighting need for hepatitis B prevention associated with the opioid crisis, and submitting manuscripts on HBV-18 and HBV-19. 3. Advance our vaccine pipeline, including creating a vaccine business strategy, and a pertussis development plan. 4. Wind down all clinical I/O activity and minimize all I/O spend. | Dr. Janssen met all of his 2019 personal goals. | 100% | |||||
Robert L. Coffman Ph.D. | 1. Complete pre-clinical studies of DV230-Ficoll and advance TLR 7 and 8 agonists to initiate IND-enabling studies. 2. Evaluate in preclinical models new double or triple combinations reflecting scientific and business development priorities. 3. Evaluate feasibility of antibody targeting of TLR 7/8 agonists to tumors. 4. Support development of partnering opportunities for cancer and vaccine programs. | N/A (Dr. Coffman retired in 2019.) | N/A |
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Mr. Spencer) reviewed and approved the cash incentive payouts noted below. As noted above, for the NEOs other than the CEO,Mssrs. Spencer and Novack, the cash incentive payouts are based 50% on achievement of corporate goals and 50% on achievement of individual goals. There were no changes to the NEOs’ target annual cash incentive percentages between 20172018 and 2018.
2018 Target Annual Cash Incentive | 2018 Actual Annual Cash Incentive Paid | |||||||||||||||||||||||||||
Name | Achievement of Corporate Goals | Achievement of Individual Goals | ||||||||||||||||||||||||||
% of Base Salary | $ | % of Target Annual Cash Incentive | $* | % of Target Annual Cash Incentive | $* | Total* | ||||||||||||||||||||||
Eddie Gray | 60 | % | $ | 372,600 | 90 | % | $ | 335,340 | N/A | N/A | $ | 335,340 | ||||||||||||||||
Michael S. Ostrach | 50 | % | $ | 219,938 | 45 | % | $ | 98,972 | 54 | % | $ | 117,667 | $ | 216,639 | ||||||||||||||
Robert L. Coffman, Ph.D. | 50 | % | $ | 241,567 | 45 | % | $ | 108,705 | 54 | % | $ | 130,446 | $ | 239,151 | ||||||||||||||
Robert Janssen, M.D. | 50 | % | $ | 219,000 | 45 | % | $ | 98,550 | 54 | % | $ | 118,260 | $ | 216,810 | ||||||||||||||
David F. Novack | 50 | % | $ | 200,850 | 45 | % | $ | 90,383 | 60 | % | $ | 120,510 | $ | 210,893 |
Name | 2019 Target Annual Cash Incentive | 2019 Actual Annual Cash Incentive Paid | Total(1) | ||||
Achievement of Corporate Goals | Achievement of Individual Goals | ||||||
% of Base Salary | $(1) | % of Target Annual Cash Incentive | $(1) | % of Target Annual Cash Incentive | $(1) | ||
Ryan Spencer (January 1, 2019 – May 15, 2019) | 40% | $44,402 | 86% | $19,093 | 90% | $19,981 | $39,074 |
Ryan Spencer (May 16, 2019 – December 31, 2019) | 50% | $128,750(2) | 86% | $55,363 | 90% | $57,938 | $113,301 |
Ryan Spencer total |
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David F. Novack | 50% | $232,876(2) | 86% | $100,136 | 111% | $129,246 | $229,382 |
Michael S. Ostrach | 50% | $225,436 | 86% | $96,937 | 100% | $112,718 | $209,655 |
Robert Janssen, M.D. | 50% | $226,665 | 86% | $97,466 | 100% | $113,333 | $210,799 |
Eddie Gray(3) | 60% | $384,000 | N/A | N/A | N/A | N/A | N/A |
Robert L. Coffman, Ph.D.(4) | 50% | $207,606 | N/A | N/A | N/A | N/A | N/A |
Amounts are rounded to |
(2) | Includes the monthly stipend of $6,500 for the interim appointment to the shared office of the President for 8 months. |
(3) | Mr. Gray retired from the Company, effective August 1, 2019, and was therefore not eligible to receive an annual cash incentive payout for 2019. |
(4) | Dr. Coffman retired from the Company, effective December 1, 2019, and was therefore not eligible to receive an annual cash incentive payout for 2019. |
Equity Compensation Policies
Our Compensation Committee approves equity awards for
The exercise price of stock options is not less than the closing price of our common stock on the Nasdaq Capital Market on the grant date of the stock option. We have no practice of timing grants of stock options or restricted stock awards to coordinate with the release of materialnon-public information,Management Continuity and we have not timed the release of materialnon-public information for purposes of affecting the value of the compensation awarded to our NEOs or any other employee.
We encourage our NEOs to hold a significant equity interest in our Company, but we have not set specific stock ownership guidelines.
We have a policySeverance Agreement (“MCSA”) that prohibits our executive officers, directors and other members of management from engaging in short sales, transactions in put or call options, hedging transactions or other inherently speculative transactions with respect to our stock.
Tax Effects of Executive Compensation
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), compensation paid to any publicly held corporation’s “covered employees” that exceeds $1 million per taxable year for any covered employee is generallynon-deductible.
Prior to the enactment of the Tax Cuts and Jobs Act, Section 162(m) of the Code (“Section 162(m)”) provided a performance-based compensation exception, pursuant to which the deduction limit under Section 162(m) did not apply to any compensation that qualified as “performance-based compensation” under Section 162(m). Pursuant to the Tax Cuts and Jobs Act, the performance-based compensation exception under Section 162(m) was repealed with respect to taxable years beginning after December 31, 2017, except that certain transition relief is provided for compensation paid pursuant to a written binding contract which was in effect on November 2, 2017 and which is not modified in any material respect on or after such date.
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Compensation paid to each of the Company’s “covered employees” in excess of $1 million per taxable year generally will not be deductible unless it qualifies for the performance-based compensation exception under Section 162(m) pursuant to the transition relief described above. Because of certain ambiguities and uncertainties as to the application and interpretation of Section 162(m), as well as other factors beyond the control of the Compensation Committee, no assurance can be given that any compensation paid by the Company will be eligible for such transition relief and be deductible by the Company in the future. Although the Compensation Committee will continue to consider tax implications as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for the Company’s named executive officers in a manner consistent with the goals of the Company’s executive compensation program and the best interests of the Company and its stockholders, which may include providing for compensation that is not deductible by the Company due to the deduction limit under Section 162(m). The Compensation Committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with the Company’s business needs.
The Compensation Committee also considers the impact of Section 409A of the Code, and in general, our executive plans and programs are designed to comply with the requirements of that section so as to avoid possible adverse tax consequences that may result fromnon-compliance.
Accounting Considerations
The accounting impact of our compensation programs is one of many factors that the Compensation Committee considers in determining the structure and size of our executive compensation programs. In general, the Company accounts for equity compensation paid to our employees under the Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation, or ASC 718, which requires us to estimate and record an expense over the service period of the equity award, and our cash compensation is recorded as an expenseentered into at the time of Mr. Gray’s appointment as Chief Executive Officer in 2013. Mr. Gray’s severance is reflected in the obligation is accrued.
Summary Compensation Recovery Policy
Amounts paid and awards granted under our 2011 and 2018 Plans will be subject to recoupment in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and any applicable regulations under the Act, any clawback policy the Company adopts or as is required by applicable law. Table below.
Summary Compensation Risk Analysis
During fiscal 2018, our Compensation Committee reviewed our compensation policies as generally applicable to our employees in order to determine whether any such programs were likely to present a material risk to the Company. As part of its assessment, the Compensation Committee considered, among other things, the allocation of compensation among base salary and short- and long-term compensation, our approach to establishing Company-wide and individual financial, operational and other performance targets, and the nature of our key performance metrics. As a result of this review and analysis, the Compensation Committee’s determined that our policies and programs do not encourage excessive or inappropriate risk taking, and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on the Company.
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Report of the Compensation Committee of the Board of Directors on Executive Compensation
In early 2019, the Compensation Committee discussed with management the Compensation Discussion and Analysis, contained in this proxy statement. Based on this review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into our Annual Report on Form10-K for the fiscal year ended December 31, 2018.
The material in this report is not “soliciting material,” is furnished to, but not deemed “filed” with, the SEC and is not deemed to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, other than the Company’s Annual Report on Form10-K, where it shall be deemed to be “furnished,” whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Ms. Peggy V. Phillips, Chairperson
Dr. Francis R. Cano, Ph.D.
Dr. Daniel Kisner, M.D.
SUMMARY COMPENSATION TABLE
Name and Principal Position | Year | Salary | Stock Awards(1) | Option Awards(2) | Non-Equity Incentive Compensation(3) | All Other Compensation(4) | Total | |||||||||||||||||||||
Eddie Gray | 2018 | $ | 621,000 | $ | — | $ | 3,790,500 | $ | 335,340 | $ | 2,000 | $ | 4,748,840 | |||||||||||||||
CEO and Director | 2017 | $ | 600,000 | $ | 2,094,113 | $ | — | $ | 450,000 | $ | 2,000 | $ | 3,146,113 | |||||||||||||||
2016 | $ | 600,000 | $ | — | $ | 2,345,840 | $ | — | $ | 2,000 | $ | 2,947,840 | ||||||||||||||||
Michael S. Ostrach | 2018 | $ | 439,875 | $ | — | $ | 2,904,000 | $ | 216,639 | $ | 2,000 | $ | 3,562,514 | |||||||||||||||
Senior Vice President, Chief Financial Officer, Chief Business Officer | 2017 | $ | 425,000 | $ | 1,126,060 | $ | — | $ | 265,625 | $ | 2,000 | $ | 1,818,685 | |||||||||||||||
2016 | $ | 425,000 | $ | — | $ | 703,752 | $ | — | $ | 2,000 | $ | 1,130,752 | ||||||||||||||||
Robert L. Coffman, Ph.D. | 2018 | $ | 483,134 | $ | — | $ | 2,904,000 | $ | 239,151 | $ | 2,000 | $ | 3,628,285 | |||||||||||||||
Senior Vice President and Chief Scientific Officer | 2017 | $ | 466,796 | $ | 1,223,041 | $ | — | $ | 297,582 | $ | 2,000 | $ | 1,989,419 | |||||||||||||||
2016 | $ | 466,796 | $ | — | $ | 703,752 | $ | — | $ | 2,000 | $ | 1,172,548 | ||||||||||||||||
Robert Janssen, M.D. | 2018 | $ | 438,000 | $ | — | $ | 1,083,000 | $ | 216,810 | $ | 2,000 | $ | 1,739,810 | |||||||||||||||
Chief Medical Officer and Senior Vice President, Clinical Development, Medical and Regulatory Affairs | 2017 | $ | 400,000 | $ | 1,068,056 | $ | — | $ | 260,000 | $ | 2,000 | $ | 1,730,056 | |||||||||||||||
| 2016 | | $ | 400,000 | | $ | — | | $ | 670,240 | | $ | — | | $ | 2,000 | | $ | 1,072,240 | | ||||||||
David F. Novack | 2018 | $ | 401,700 | $ | — | $ | 1,083,000 | $ | 210,893 | $ | 2,000 | $ | 1,697,593 | |||||||||||||||
Senior Vice President, Operations and Quality | 2017 | $ | 386,250 | $ | 1,036,148 | $ | — | $ | 241,406 | $ | 2,000 | $ | 1,665,804 | |||||||||||||||
2016 | $ | 386,250 | $ | — | $ | 536,192 | $ | — | $ | 2,000 | $ | 924,442 |
Name and Principal Position | Year | Salary | Stock Awards (1) | Option Awards (2) | Non-Equity Incentive Compensation (3) | All Other Compensation (4) | Total | |||||||||||||||||||
Ryan Spencer | 2019 | $ | 391,212 | (5) | $ | 654,375 | $ | 1,957,520 | $ | 152,375 | $ | 2,000 | $ | 3,157,482 | ||||||||||||
Chief Executive Officer and Director | ||||||||||||||||||||||||||
Eddie Gray(6) | 2019 | $ | 375,795 | $ | 732,900 | (7) | $ | 4,391,449 | $ | — | $ | 3,727,518 | $ | 9,227,662 | ||||||||||||
Former Chief Executive Officer and Director | 2018 | $ | 621,000 | $ | — | $ | 3,790,500 | $ | 335,340 | $ | 2,000 | $ | 4,748,840 | |||||||||||||
David F. Novack | 2019 | $ | 465,886 | (8) | $ | 272,220 | $ | 1,701,362 | $ | 229,382 | $ | 2,000 | $ | 2,670,850 | ||||||||||||
President and Chief Operating Officer | 2018 | $ | 401,700 | $ | — | $ | 1,083,000 | $ | 210,892 | $ | 2,000 | $ | 1,697,592 | |||||||||||||
Michael S. Ostrach | 2019 | $ | 450,872 | $ | 230,340 | $ | 611,433 | $ | 209,665 | $ | 2,000 | $ | 1,504,310 | |||||||||||||
Senior Vice President, Chief Financial Officer, Chief Business Officer | 2018 | $ | 439,875 | $ | — | $ | 2,904,000 | $ | 216,639 | $ | 2,000 | $ | 3,562,514 | |||||||||||||
Robert Janssen, M.D. | 2019 | $ | 453,330 | $ | 272,220 | $ | 722,602 | $ | 210,798 | $ | 2,000 | $ | 1,660,950 | |||||||||||||
Senior Vice President and Chief Medical Officer | 2018 | $ | 438,000 | $ | — | $ | 1,083,000 | $ | 216,810 | $ | 2,000 | $ | 1,739,810 | |||||||||||||
Robert L. Coffman, Ph.D. | 2019 | $ | 455,849 | $ | 230,340 | (7) | $ | 621,407 | $ | — | $ | 522,791 | $ | 1,830,387 | ||||||||||||
Former Senior Vice President and Chief Scientific Officer | 2018 | $ | 483,134 | $ | — | $ | 2,904,000 | $ | 239,151 | $ | 2,000 | $ | 3,628,285 |
(1) |
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(2) | Represents the aggregate grant date fair value of option awards granted in the fiscal year in accordance with ASC |
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stock options. For |
(3) | Represents the annual incentive bonuses earned pursuant to our annual incentive bonus plan for services rendered in the fiscal year. For further discussion see the section entitled “Compensation |
(4) | Represents $2,000 401(k) matching contribution for each NEO made by the Company in the fiscal |
GRANTS OF PLAN BASED AWARDS
The following table shows certain information regarding grants of plan-based awards to NEOs during the fiscal year ended December 31, 2018.
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards Target(1) ($) | Estimated Future Payouts Under Equity Incentive Plan Awards Target(2) (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of RSU and Option Awards(3) ($) | ||||||||||||||||||
Eddie Gray | — | $ | 372,600 | — | — | — | — | |||||||||||||||||
2/1/2018 | — | 280,000 | $ | 16.45 | $ | 3,032,400 | ||||||||||||||||||
2/1/2018 | 70,000 | — | $ | 16.45 | $ | 758,100 | ||||||||||||||||||
Michael S. Ostrach | — | $ | 219,938 | — | — | — | — | |||||||||||||||||
2/1/2018 | — | 80,000 | $ | 16.45 | $ | 866,400 | ||||||||||||||||||
2/1/2018 | 20,000 | — | $ | 16.45 | $ | 216,600 | ||||||||||||||||||
3/21/2018 | — | 150,000 | $ | 18.40 | $ | 1,821,000 | ||||||||||||||||||
Robert L. Coffman, Ph.D. | — | $ | 241,567 | — | — | — | — | |||||||||||||||||
2/1/2018 | — | 80,000 | $ | 16.45 | $ | 866,400 | ||||||||||||||||||
2/1/2018 | 20,000 | — | $ | 16.45 | $ | 216,600 | ||||||||||||||||||
3/21/2018 | — | 150,000 | $ | 18.40 | $ | 1,821,000 | ||||||||||||||||||
Robert Janssen, M.D. | — | $ | 219,000 | — | — | — | — | |||||||||||||||||
2/1/2018 | — | 80,000 | $ | 16.45 | $ | 866,400 | ||||||||||||||||||
2/1/2018 | 20,000 | — | $ | 16.45 | $ | 216,600 | ||||||||||||||||||
David F. Novack | — | $ | 200,850 | — | — | — | — | |||||||||||||||||
2/1/2018 | — | 80,000 | $ | 16.45 | $ | 866,400 | ||||||||||||||||||
2/1/2018 | 20,000 | — | $ | 16.45 | $ | 216,600 |
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(5) | From January 1 until May 15, 2019 Mr. Spencer, in the |
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(6) | In May 2019, Mr. Gray submitted notice of his retirement from the Company, including the Board, effective August 1, 2019. |
(7) | These performance based RSUs were subsequently cancelled. |
(8) | From January 1 until May 23, 2019, Mr. Novack, in |
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NARRATIVE DISCLOSURE
SUMMARY COMPENSATION TABLE
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Vesting Commencement Date | Option Expiration Date | Number of Shares or Units that Have Not Vested (#) | Market Value of Stock that Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Other Rights that Have Not Vested ($) | ||||||||||||||||||||||||||||||||||
Eddie Gray | 150,000 | — | — | $ | 22.10 | 5/1/2013 | 4/30/2023 | |||||||||||||||||||||||||||||||||||||
75,001 | — | — | $ | 17.40 | 1/31/2014 | 1/30/2024 | ||||||||||||||||||||||||||||||||||||||
150,000 | — | — | $ | 17.10 | 2/4/2014 | 2/3/2024 | ||||||||||||||||||||||||||||||||||||||
(2) | 215,624 | 9,376 | — | $ | 16.00 | 2/9/2015 | 2/8/2025 | |||||||||||||||||||||||||||||||||||||
(3) | 264,444 | 15,556 | — | $ | 21.99 | 2/4/2016 | 2/3/2023 | |||||||||||||||||||||||||||||||||||||
(4) | — | — | — | — | — | — | 75,000 | $ | 686,250 | |||||||||||||||||||||||||||||||||||
(5) | — | — | — | — | — | — | 74,000 | $ | 677,100 | |||||||||||||||||||||||||||||||||||
(6) | — | — | — | — | — | — | 75,000 | $ | 686,250 | |||||||||||||||||||||||||||||||||||
(3) | — | 280,000 | — | 16.45 | 2/1/2018 | 1/31/2025 | ||||||||||||||||||||||||||||||||||||||
(7) | — | — | 70,000 | 16.45 | — | 1/31/2025 | ||||||||||||||||||||||||||||||||||||||
Michael S. Ostrach | 3,750 | — | — | $ | 5.40 | 3/10/2009 | 3/9/2019 | |||||||||||||||||||||||||||||||||||||
2,673 | — | — | $ | 15.80 | 2/19/2010 | 2/18/2020 | ||||||||||||||||||||||||||||||||||||||
25,000 | — | — | $ | 31.40 | 1/6/2011 | 1/5/2021 | ||||||||||||||||||||||||||||||||||||||
18,000 | — | — | $ | 34.80 | 1/31/2012 | 1/30/2022 | ||||||||||||||||||||||||||||||||||||||
20,000 | — | — | $ | 30.80 | 2/5/2013 | 2/4/2023 | ||||||||||||||||||||||||||||||||||||||
27,000 | — | — | $ | 17.10 | 2/4/2014 | 2/3/2024 | ||||||||||||||||||||||||||||||||||||||
(2) | 64,208 | 2,792 | — | $ | 16.00 | 2/9/2015 | 2/8/2025 | |||||||||||||||||||||||||||||||||||||
(2) | 24,166 | 4,834 | — | $ | 28.45 | 8/27/2015 | 8/26/2025 | |||||||||||||||||||||||||||||||||||||
(3) | 79,333 | 4,667 | — | $ | 21.99 | 2/4/2016 | 2/3/2023 | |||||||||||||||||||||||||||||||||||||
(4) | — | — | — | — | — | — | 49,804 | $ | 455,707 | |||||||||||||||||||||||||||||||||||
(5) | — | — | — | — | — | — | 17,000 | $ | 155,550 | |||||||||||||||||||||||||||||||||||
(6) | — | — | — | — | — | — | 49,804 | $ | 455,707 | |||||||||||||||||||||||||||||||||||
(3) | — | 80,000 | — | 16.45 | 2/1/2018 | 1/31/2025 | ||||||||||||||||||||||||||||||||||||||
(7) | — | — | 20,000 | 16.45 | — | 1/31/2025 | ||||||||||||||||||||||||||||||||||||||
(8) | — | 150,000 | — | 18.4 | 3/21/2018 | 3/20/2025 |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Vesting Commencement Date | Option Expiration Date | Number of Shares or Units that Have Not Vested (#) | Market Value of Stock that Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Other Rights that Have Not Vested ($) | ||||||||||||||||||||||||||||||
Ryan Spencer | 1,500 | — | — | $ | 14.80 | 2/25/2010 | 2/24/2020 | |||||||||||||||||||||||||||||||||
4,500 | — | — | $ | 31.40 | 1/6/2011 | 1/5/2021 | ||||||||||||||||||||||||||||||||||
4,500 | — | — | $ | 36.80 | 2/1/2012 | 1/31/2022 | ||||||||||||||||||||||||||||||||||
2,000 | — | — | $ | 42.60 | 10/22/2012 | 10/21/2022 | ||||||||||||||||||||||||||||||||||
5,250 | — | — | $ | 30.60 | 2/6/2013 | 2/5/2023 | ||||||||||||||||||||||||||||||||||
3,500 | — | — | $ | 16.70 | 2/6/2014 | 2/5/2024 | ||||||||||||||||||||||||||||||||||
9,500 | — | — | $ | 16.00 | 2/9/2015 | 2/8/2025 | ||||||||||||||||||||||||||||||||||
2,000 | — | — | $ | 30.49 | 9/10/2015 | 9/9/2025 | ||||||||||||||||||||||||||||||||||
(6) | — | — | — | — | — | — | 1,562 | $ | 8,935 | |||||||||||||||||||||||||||||||
(3) | — | — | — | — | — | — | 6,375 | $ | 36,465 | |||||||||||||||||||||||||||||||
(2) | 34,222 | 21,778 | — | $ | 16.45 | 2/1/2018 | 1/31/2025 | |||||||||||||||||||||||||||||||||
(2) | — | 50,000 | — | $ | 3.81 | 6/14/2019 | 6/13/2026 | |||||||||||||||||||||||||||||||||
(2) | — | 400,000 | — | $ | 6.80 | 12/16/2019 | 12/15/2026 | |||||||||||||||||||||||||||||||||
(7) | — | — | — | — | — | — | 62,500 | $ | 357,500 | |||||||||||||||||||||||||||||||
Eddie Gray | 150,000 | — | — | $ | 22.10 | 5/1/2013 | 8/1/2022 | |||||||||||||||||||||||||||||||||
75,001 | — | — | $ | 17.40 | 1/31/2014 | 8/1/2022 | ||||||||||||||||||||||||||||||||||
150,000 | — | — | $ | 17.10 | 2/4/2014 | 8/1/2022 | ||||||||||||||||||||||||||||||||||
225,000 | — | — | $ | 16.00 | 2/9/2015 | 8/1/2022 | ||||||||||||||||||||||||||||||||||
280,000 | — | — | $ | 21.99 | 2/4/2016 | 8/1/2022 | ||||||||||||||||||||||||||||||||||
280,000 | — | — | $ | 16.45 | 2/1/2018 | 8/1/2022 | ||||||||||||||||||||||||||||||||||
63,000 | — | — | $ | 16.45 | — | 8/1/2022 | ||||||||||||||||||||||||||||||||||
280,000 | — | — | $ | 10.47 | 2/22/2019 | 8/1/2022 | ||||||||||||||||||||||||||||||||||
David F. Novack | 30,000 | — | — | $ | 21.40 | 3/25/2013 | 3/24/2023 | |||||||||||||||||||||||||||||||||
22,000 | — | — | $ | 17.10 | 2/4/2014 | 2/3/2024 | ||||||||||||||||||||||||||||||||||
75,000 | — | — | $ | 16.00 | 2/9/2015 | 2/8/2025 | ||||||||||||||||||||||||||||||||||
64,000 | — | — | $ | 21.99 | 2/4/2016 | 2/3/2023 | ||||||||||||||||||||||||||||||||||
(3) | — | — | — | — | — | — | 8,500 | $ | 48,620 | |||||||||||||||||||||||||||||||
(2) | 48,889 | 31,111 | — | $ | 16.45 | 2/1/2018 | 1/31/2025 | |||||||||||||||||||||||||||||||||
18,000 | — | — | $ | 16.45 | — | 1/31/2025 | ||||||||||||||||||||||||||||||||||
(2) | — | 104,000 | — | $ | 10.47 | 2/22/2019 | 2/21/2026 | |||||||||||||||||||||||||||||||||
(2) | — | 25,000 | — | $ | 3.81 | 6/14/2019 | 6/13/2026 | |||||||||||||||||||||||||||||||||
(2) | — | 200,000 | — | $ | 6.80 | 12/16/2019 | 12/15/2026 | |||||||||||||||||||||||||||||||||
(5) | — | — | — | — | — | — | 26,000 | $ | 148,720 | |||||||||||||||||||||||||||||||
Michael S. Ostrach | 2,673 | — | — | $ | 15.80 | 2/19/2010 | 2/18/2020 | |||||||||||||||||||||||||||||||||
25,000 | — | — | $ | 31.40 | 1/6/2011 | 1/5/2021 | ||||||||||||||||||||||||||||||||||
18,000 | — | — | $ | 34.80 | 1/31/2012 | 1/30/2022 | ||||||||||||||||||||||||||||||||||
20,000 | — | — | $ | 30.80 | 2/5/2013 | 2/4/2023 | ||||||||||||||||||||||||||||||||||
27,000 | — | — | $ | 17.10 | 2/4/2014 | 2/3/2024 | ||||||||||||||||||||||||||||||||||
67,000 | — | — | $ | 16.00 | 2/9/2015 | 2/8/2025 | ||||||||||||||||||||||||||||||||||
29,000 | — | — | $ | 28.45 | 8/27/2015 | 8/26/2025 | ||||||||||||||||||||||||||||||||||
84,000 | — | — | $ | 21.99 | 2/4/2016 | 2/3/2023 | ||||||||||||||||||||||||||||||||||
(3) | — | — | — | — | — | — | 8,500 | $ | 48,620 | |||||||||||||||||||||||||||||||
(2) | 42,457 | 37,543 | — | $ | 16.45 | 2/1/2018 | 1/31/2025 | |||||||||||||||||||||||||||||||||
18,000 | — | — | $ | 16.45 | — | 1/31/2025 | ||||||||||||||||||||||||||||||||||
(4) | — | 150,000 | — | $ | 18.40 | 3/21/2018 | 3/20/2025 | |||||||||||||||||||||||||||||||||
(2) | — | 88,000 | — | $ | 10.47 | 2/22/2019 | 2/21/2026 | |||||||||||||||||||||||||||||||||
(5) | — | — | — | — | — | — | 22,000 | $ | 125,840 | |||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Vesting Commencement Date | Option Expiration Date | Number of Shares or Units that Have Not Vested (#) | Market Value of Stock that Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Other Rights that Have Not Vested ($) | ||||||||||||||||||||||||||||||||||
Robert L. Coffman, Ph.D. | 10,000 | — | — | $ | 15.80 | 2/19/2010 | 2/18/2020 | |||||||||||||||||||||||||||||||||||||
30,000 | — | — | $ | 31.40 | 1/6/2011 | 1/5/2021 | ||||||||||||||||||||||||||||||||||||||
18,000 | — | — | $ | 34.80 | 1/31/2012 | 1/30/2022 | ||||||||||||||||||||||||||||||||||||||
18,000 | — | — | $ | 30.80 | 2/5/2013 | 2/4/2023 | ||||||||||||||||||||||||||||||||||||||
(2) | 71,874 | 3,126 | — | $ | 16.00 | 2/9/2015 | 2/8/2025 | |||||||||||||||||||||||||||||||||||||
(2) | 13,751 | 2,750 | — | $ | 28.45 | 8/27/2015 | 8/26/2025 | |||||||||||||||||||||||||||||||||||||
(3) | 79,333 | 4,667 | — | $ | 21.99 | 2/4/2016 | 2/3/2023 | |||||||||||||||||||||||||||||||||||||
(4) | — | — | — | — | — | — | 54,702 | $ | 500,523 | |||||||||||||||||||||||||||||||||||
(5) | — | — | — | — | — | — | 17,000 | $ | 155,550 | |||||||||||||||||||||||||||||||||||
(6) | — | — | — | — | — | — | 54,702 | $ | 500,523 | |||||||||||||||||||||||||||||||||||
(3) | — | 80,000 | — | 16.45 | 2/1/2018 | 1/31/2025 | ||||||||||||||||||||||||||||||||||||||
(7) | — | — | 20,000 | 16.45 | — | 1/31/2025 | ||||||||||||||||||||||||||||||||||||||
(8) | — | 150,000 | — | 18.4 | 3/21/2018 | 3/20/2025 | ||||||||||||||||||||||||||||||||||||||
Robert Janssen, M.D. | 6,000 | — | — | $ | 13.60 | 4/7/2010 | 4/6/2020 | |||||||||||||||||||||||||||||||||||||
2,250 | — | — | $ | 31.40 | 1/6/2011 | 1/5/2021 | ||||||||||||||||||||||||||||||||||||||
2,500 | — | — | $ | 36.80 | 2/1/2012 | 1/31/2022 | ||||||||||||||||||||||||||||||||||||||
15,000 | — | — | $ | 41.40 | 10/31/2012 | 10/30/2022 | ||||||||||||||||||||||||||||||||||||||
(2) | 18,000 | — | — | $ | 17.10 | 2/4/2014 | 2/3/2024 | |||||||||||||||||||||||||||||||||||||
(2) | 53,666 | 2,334 | — | $ | 16.00 | 2/9/2015 | 2/8/2025 | |||||||||||||||||||||||||||||||||||||
(3) | 75,555 | 4,445 | — | $ | 21.99 | 2/4/2016 | 2/3/2023 | |||||||||||||||||||||||||||||||||||||
(4) | — | — | — | — | — | — | 46,875 | $ | 428,906 | |||||||||||||||||||||||||||||||||||
(5) | — | — | — | — | — | — | 17,000 | $ | 155,550 | |||||||||||||||||||||||||||||||||||
(6) | — | — | — | — | — | — | 46,875 | $ | 428,906 | |||||||||||||||||||||||||||||||||||
(3) | — | 80,000 | — | 16.45 | 2/1/2018 | 1/31/2025 | ||||||||||||||||||||||||||||||||||||||
(7) | — | — | 20,000 | 16.45 | — | 1/31/2025 | ||||||||||||||||||||||||||||||||||||||
David F. Novack | 30,000 | — | — | $ | 21.40 | 3/25/2013 | 3/24/2023 | |||||||||||||||||||||||||||||||||||||
(2) | 22,000 | — | — | $ | 17.10 | 2/4/2014 | 2/3/2024 | |||||||||||||||||||||||||||||||||||||
(2) | 71,874 | 3,126 | — | $ | 16.00 | 2/9/2015 | 2/8/2025 | |||||||||||||||||||||||||||||||||||||
(3) | 60,444 | 3,556 | — | $ | 21.99 | 2/4/2016 | 2/3/2023 | |||||||||||||||||||||||||||||||||||||
(4) | — | — | — | — | — | — | 45,263 | $ | 414,156 | |||||||||||||||||||||||||||||||||||
(5) | — | — | — | — | — | — | 17,000 | $ | 155,550 | |||||||||||||||||||||||||||||||||||
(6) | — | — | — | — | — | — | 45,263 | $ | 414,156 | |||||||||||||||||||||||||||||||||||
(3) | — | 80,000 | — | 16.45 | 2/1/2018 | 1/31/2025 | ||||||||||||||||||||||||||||||||||||||
(7) | — | — | 20,000 | 16.45 | — | 1/31/2025 |
Robert Janssen, M.D. | 6,000 | — | — | $ | 13.60 | 4/7/2010 | 4/6/2020 | |||||||||||||||||||||||||||||
2,250 | — | — | $ | 31.40 | 1/6/2011 | 1/5/2021 | ||||||||||||||||||||||||||||||
2,500 | — | — | $ | 36.80 | 2/1/2012 | 1/31/2022 | ||||||||||||||||||||||||||||||
15,000 | — | — | $ | 41.40 | 10/31/2012 | 10/30/2022 | ||||||||||||||||||||||||||||||
18,000 | — | — | $ | 17.10 | 2/4/2014 | 2/3/2024 | ||||||||||||||||||||||||||||||
56,000 | — | — | $ | 16.00 | 2/9/2015 | 2/8/2025 | ||||||||||||||||||||||||||||||
80,000 | — | — | $ | 21.99 | 2/4/2016 | 2/3/2023 | ||||||||||||||||||||||||||||||
(3) | — | — | — | — | — | — | 8,500 | $ | 48,620 | |||||||||||||||||||||||||||
(2) | 48,889 | 31,111 | — | $ | 16.45 | 2/1/2018 | 1/31/2025 | |||||||||||||||||||||||||||||
18,000 | — | — | $ | 16.45 | — | 1/31/2025 | ||||||||||||||||||||||||||||||
(2) | 104,000 | $ | 17.45 | 2/22/2019 | 2/21/2026 | |||||||||||||||||||||||||||||||
(5) | — | — | — | — | — | — | 26,000 | $ | 148,720 | |||||||||||||||||||||||||||
Robert L. Coffman, Ph.D. | 10,000 | — | — | $ | 15.80 | 2/19/2010 | 2/18/2020 | |||||||||||||||||||||||||||||
30,000 | — | — | $ | 31.40 | 1/6/2011 | 12/2/2020 | ||||||||||||||||||||||||||||||
18,000 | — | — | $ | 34.80 | 1/31/2012 | 12/2/2020 | ||||||||||||||||||||||||||||||
18,000 | — | — | $ | 30.80 | 2/5/2013 | 12/2/2020 | ||||||||||||||||||||||||||||||
75,000 | — | — | $ | 16.00 | 2/9/2015 | 12/2/2020 | ||||||||||||||||||||||||||||||
16,501 | — | — | $ | 28.45 | 8/27/2015 | 12/2/2020 | ||||||||||||||||||||||||||||||
84,000 | — | — | $ | 21.99 | 2/4/2016 | 12/2/2020 | ||||||||||||||||||||||||||||||
42,457 | — | — | $ | 16.45 | 2/1/2018 | 12/2/2020 | ||||||||||||||||||||||||||||||
18,000 | — | — | $ | 16.45 | — | 12/2/2020 | ||||||||||||||||||||||||||||||
(1) | Represents the aggregate fair value of RSUs in accordance with ASC 718, based on the last closing price per share as of December 31, |
(2) | Options vest |
|
RSU |
|
|
|
Options vest 50% on March 21, 2020 and the remainder will vest on March 21, 2021. |
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OPTION EXERCISES AND STOCK VESTED
The following table provides information on stock awards that vested, including the number of shares acquired upon vesting and the value realized, determined as described below, for the named executive officers in the fiscal year ended December 31, 2018.
Option Awards | Stock Awards | |||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||||||||
Eddie Gray | — | — | 214,750 | 3,626,363 | ||||||||||||||||
Michael S. Ostrach | — | — | 114,485 | 1,914,582 | ||||||||||||||||
Robert L. Coffman, Ph.D. | — | — | 124,281 | 2,077,196 | ||||||||||||||||
Robert Janssen, M.D. | — | — | 108,625 | 1,817,306 | ||||||||||||||||
David F. Novack | — | — | 105,403 | 1,763,821 |
|
(6) | RSU vests over four years with one-quarter vesting on |
(7) | This RSU was granted on February 22, 2019 prior to Mr. Spencer becoming an NEO. The RSU vests over three years with one-third vesting on each annual anniversary date. |
PENSION BENEFITS
NON-QUALIFIED DEFERRED COMPENSATION
POTENTIAL PAYMENTS UPON CHANGE
INVOLUNTARY TERMINATION
The Management Agreement with Mr. Gray provides that, as of immediately prior to the effective date of a Change in Control (as described below), all of Mr. Gray’s then-outstanding equity awards (including stock options and RSUs) under the 2011 Plan or the 2018 Plan shall automatically accelerate and fully vest, subject to Mr. Gray’s execution and delivery of a release. Upon a Change in Control, Mr. Gray would have 598,932 aggregate equity awards subject to accelerated vesting, with a value of $2,049,600, assuming the event occurred on December 31, 2018. This amount represents the value of stock and accelerated stock option and award vesting if the event took place on December 31, 2018. The value for RSUs is calculated in accordance with ASC 718, based on the closing price per share on December 31, 2018. The value for stock option awards is calculated based on the “spread” between the closing price per share on December 31, 2018 of $9.15 and the exercise price of the vested awards, to the extent such vested awards were “in the money.”
The other
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(200%(175% of such target for Mr. GraySpencer, 150% for Mr. Novack, and 100%120% of such target for our other NEOs) for the year of termination;
The table below outlines the potential payments and benefits payable to each NEO in the event such executive’s termination in connection with a Change in Control of the Company, assuming such event had occurred on December 31, 2018.
Name | Severance Payment | Continuation of Benefits | Value of Accelerated Stock Awards(1) | Total | ||||||||||||
Eddie Gray | $ | 1,987,200 | $ | 59,253 | $ | 2,049,600 | $ | 4,096,053 | ||||||||
Michael S. Ostrach | $ | 659,813 | $ | 35,047 | $ | 1,066,963 | $ | 1,761,823 | ||||||||
Robert L. Coffman, Ph.D. | $ | 724,701 | $ | 29,726 | $ | 1,156,597 | $ | 1,911,024 | ||||||||
Robert Janssen, M.D. | $ | 657,000 | $ | 29,726 | $ | 1,013,363 | $ | 1,700,089 | ||||||||
David F. Novack | $ | 602,550 | $ | 35,047 | $ | 983,863 | $ | 1,621,460 |
|
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accelerated vesting of all equity awards that are held by Mr. Gray on the effective date of termination
for Mr. Gray,Novack, the extension of exercisability of all vested stock options to purchase the Company’s common stock for a period of 3 years18 months, and 15 months, respectively (and 12 months for all other NEOs) following termination of employment (but in any event not beyond each option’s expiration date).
Under the terms of the Management Agreements:
Mr. Gray will receive 24 months of base salary, 200% of his target annual cash incentive, the COBRA Payment, accelerated vesting of his then-outstanding employee stock options and restricted stock awards, and up to 3 years to exercise the vested options; and
Our other NEOs will receive 6 months of base salary and the COBRA Payment.
The table below outlines the potential payments and benefits payable to each NEO in the event of such NEO’s involuntary termination had occurred on December 31, 2018.
Name | Severance Payment | Continuation of Benefits | Value of Accelerated Stock Awards(1) | Total | ||||||||||||
Eddie Gray | $ | 1,987.200 | $ | 59,253 | $ | 2,049,600 | $ | 4,096,053 | ||||||||
Michael S. Ostrach | $ | 219,938 | $ | 17,524 | $ | — | $ | 237,461 | ||||||||
Robert L. Coffman, Ph.D. | $ | 241,567 | $ | 14,863 | $ | — | $ | 256,430 | ||||||||
Robert Janssen, M.D. | $ | 219,000 | $ | 14,863 | $ | — | $ | 233,863 | ||||||||
David F. Novack | $ | 200,850 | $ | 17,524 | $ | — | $ | 218,374 |
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For purposes of the Management Agreements, “cause” generally means (1) gross negligence or willful misconduct in the performance of duties to the Company, where such gross negligence or willful misconduct has resulted or is likely to result in substantial and material damage to the Company or its subsidiaries; (2) repeated unexplained or unjustified absence from the Company; (3) a material and willful violation of any federal or state law; (4) commission of any act of fraud with respect to the Company; or (5) conviction of a felony or a crime involving moral turpitude causing material harm to the standing and reputation of the Company, in each case as determined in good faith by the Board.
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30 daysdays’ to cure (if curable), and any resignation for good reason must occur within 180 days after the occurrence of the event giving rise to such resignation right.
PAY RATIO DISCLOSURE
Under SEC rules, we are required to calculate
To determine our total populationseverance benefits (which amounts are consistent with Dr. Coffman’s MCSA): (a) a lump sum cash severance payment of employees, we included all full-time, part-time,$495,212, which is equal to 12 months of Dr. Coffman’s 2019 monthly base salary, less applicable withholdings; (b) a cash payment equal to the amount of COBRA premiums for continued health insurance for 12 months; and temporary employees(c) an extended period of time to exercise any outstanding vested stock options held by Dr. Coffman as of the date of his retirement, which extended exercisability period ended upon the earlier of (i) the date on which the original term of such stock options would otherwise expire or (ii) December 31, 2018.
To identify our median employee from our employee population, we calculated the aggregate amount of each employee’s 2018 base salary (using a reasonable estimate of the hours worked and overtime actually paid during 2018 for hourly employees and actual salary paid for our remaining employees), the target value of annual cash incentive awards, and the value of equity awards granted in 2018 using the same methodology we use for estimating the value of the equity awards granted to our named executive officers and reported in our Summary Compensation Table.
In making this determination, we annualized the compensation elements listed above of employees who were employed by us for less than the entire calendar year.
Compensation paid in foreign currencies was converted to U.S. dollars based on exchange rates in effect on December 31, 2018.
Using this approach, we determined our median employee. Once the median employee was identified, we then calculated the annual total compensation of this employee for 2018 in accordance with the requirements of the Summary Compensation Table.
For 2018, the median of the annual total compensation of our employees (other than our CEO) was $162,137 and the annual total compensation of our CEO, as reported in the Summary Compensation Table included in this Proxy Statement, was $4,748,840. Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 29 to 1.
The CEO Pay Ratio above represents our reasonable estimate calculated in a manner consistent with SEC rules and applicable guidance. SEC rules and guidance provide significant flexibility in how companies identify the median employee, and each company may use a different methodology and make different assumptions particular to that company. As a result, and as explained by the SEC when it adopted these rules, in considering the pay ratio disclosure, stockholders should keep in mind that the rule was not designed to facilitate comparisons of pay ratios among different companies, even companies within the same industry, but rather to allow stockholders to better understand and assess each particular company’s compensation practices and pay ratio disclosures.
Neither the Compensation Committee nor our management used our CEO Pay Ratio measure in making compensation decisions.
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NON-EMPLOYEE DIRECTOR COMPENSATION PHILOSOPHY
Changes to Director equity compensation are described in the “Equity Awards” section below.
CASH COMPENSATION ARRANGEMENTS
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EQUITY AWARDS
Our
receivesreceived a subsequent equity award or (“Subsequent Grant,Grant”), consisting of anon-qualified stock option to purchase 15,000 shares of Dynavax common stock. However, the non-employee director’s first Subsequent Grant was reduced to –
o | 75% of the Subsequent Grant, or 11,250 shares, if the service period from the non-employee director’s initial election date to the annual meeting was between 7 and 10 months; |
o | 50% of the Subsequent Grant, or 7,500 shares, if the service period from the non-employee director’s initial election date to the annual meeting was between 4 and 7 months; and |
o | 25% of the Subsequent Grant, or 3,750 shares, if the service period from the non-employee director’s initial election date to the annual meeting was between 1 and 4 months. |
Effective as of the 2016 Annual Meeting, each
o | 75% of the Subsequent Grant, or 18,750 shares, if the service period from the non-employee director’s initial election date to the annual meeting is between 7 and 10 months; |
o | 50% of the Subsequent Grant, or 12,500 shares, if the service period from the non-employee director’s initial election date to the annual meeting is between 4 and 7 months; and |
o | 25% of the Subsequent Grant, or 6,250 shares, if the service period from the non-employee director’s initial election date to the annual meeting is between 1 and 4 months. |
DIRECTOR COMPENSATION TABLE
directors in its discretion.
Name | Fees Earned or Paid in Cash(1) | Option Awards(2)(3) | Total | |||||||||
Arnold L. Oronsky, Ph.D. | $ | 75,000 | $ | 156,767 | $ | 231,767 | ||||||
Laura Brege | $ | 60,000 | $ | 156,767 | $ | 216,767 | ||||||
Francis R. Cano, Ph.D. | $ | 52,000 | $ | 156,767 | $ | 208,767 | ||||||
Dennis A. Carson, M.D. | $ | 40,000 | $ | 156,767 | $ | 196,767 | ||||||
Daniel L. Kisner, M.D. | $ | 57,000 | $ | 156,767 | $ | 213,767 | ||||||
Peggy V. Phillips | $ | 65,000 | $ | 156,767 | $ | 221,767 | ||||||
Stanley A. Plotkin, M.D. | $ | 20,000 | — | $ | 20,000 | |||||||
Natale Ricciardi | $ | 45,000 | $ | 156,767 | $ | 201,767 |
Name | Fees Earned or Paid in Cash(1) | Option Awards(2)(3) | Total | |||||||||
Andrew A. F. Hack, M.D., Ph.D. | $ | 22,500 | $ | 33,465 | $ | 55,965 | ||||||
Arnold L. Oronsky, Ph.D. | $ | 75,000 | $ | 49,640 | $ | 124,640 | ||||||
Daniel L. Kisner, M.D. | $ | 57,000 | $ | 49,640 | $ | 106,640 | ||||||
Dennis A. Carson, M.D. | $ | 40,000 | $ | 49,640 | $ | 89,640 | ||||||
Francis R. Cano, Ph.D. | $ | 52,000 | $ | 49,640 | $ | 101,640 | ||||||
Laura Brege | $ | 60,000 | $ | 49,640 | $ | 109,640 | ||||||
Natale Ricciardi | $ | 45,000 | $ | 49,640 | $ | 94,640 | ||||||
Peggy V. Phillips | $ | 65,000 | $ | 49,640 | $ | 114,640 |
(1) | Consists of fees earned or paid in |
(2) | Represents the aggregate grant date fair value of stock options granted in the fiscal year in accordance with ASC 718. See note 15 of our “Notes to Consolidated Financial Statements” in our annual report on Form10-K filed with the SEC on |
(3) | As of December 31, |
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EQUITY COMPENSATION PLANS
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) | |||||||||
Equity compensation plans approved by security holders: | ||||||||||||
2004 Stock Incentive Plan | 39,223 | $ | 13.71 | — | ||||||||
2011 Equity Incentive Plan | 4,740,931 | $ | 18.76 | — | ||||||||
2014 Employee Stock Purchase Plan | — | $ | — | 573,034 | (1) | |||||||
2018 Equity Incentive Plan | 474,000 | $ | 13.78 | 4,810,112 | ||||||||
Equity compensation plans not approved by security holders: | ||||||||||||
2010 Employment Inducement Award Plan(2) | 11,450 | $ | 16.55 | — | ||||||||
2017 Inducement Award Plan(3) | 484,800 | $ | 17.46 | — | ||||||||
|
|
|
| |||||||||
Total | 5,750,404 | $ | 18.20 | 5,383,146 | ||||||||
|
|
|
|
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) | |||||||||
Equity compensation plans approved by security holders: | ||||||||||||
2004 Stock Incentive Plan | 24,448 | $ | 16.22 | — | ||||||||
2011 Equity Incentive Plan | 4,233,272 | $ | 18.99 | — | ||||||||
2014 Employee Stock Purchase Plan(1) | — | $ | — | 450,917 | ||||||||
2018 Equity Incentive Plan | 3,433,237 | $ | 7.18 | 3,308,216 | ||||||||
Equity compensation plans not approved by security holders: | ||||||||||||
2010 Employment Inducement Award Plan(2) | 11,450 | $ | 16.55 | — | ||||||||
2017 Inducement Award Plan(3) | 303,192 | $ | 17.67 | — | ||||||||
Total: | 8,005,599 | $ | 13.86 | 3,759,133 |
(1) | As of December 31, |
(2) | In order to induce qualified individuals to join our Company, our Board adopted the 2010 Employment Inducement Award Plan, or the 2010 Inducement Plan, effective January 8, 2010, which provided for the issuance of up to 150,000 shares of Company common stock to new employees of the Company. Stockholder approval of the 2010 Inducement Plan was not required under Nasdaq Marketplace Rule 5635(c)(4). Upon the effectiveness of the Amended 2011 Plan, no additional awards were granted under either the 2004 Stock Incentive Plan or the 2010 Inducement Plan. All shares currently subject to awards outstanding under the 2004 Stock Incentive Plan or 2010 Inducement Plan, which awards expire or are forfeited, will be included in the reserve for the Amended 2011 Plan to the extent such shares would otherwise return to such plans. Awards granted under the 2010 Inducement Plan have a term of 10 years. Exercisability, option price and other terms are determined by the plan administrator, but the option price cannot be less than 100% of fair market value of those shares on the date of grant. Stock options granted under the 2010 Inducement Plan generally vest over a period of four years, with the exception of performance based awards which will vest upon achievement of certain performance conditions. |
(3) | In order to induce qualified individuals to join our Company, on November 28, 2017, our Board adopted the 2017 Inducement Award Plan, or the 2017 Inducement Plan, which provided for the issuance of up to 1,200,000 shares of Company common stock to new employees of the Company. Stockholder approval of the 2017 Inducement Plan was not required under Nasdaq Marketplace Rule 5635(c)(4). Upon the effectiveness of the 2018 Equity Incentive Plan, no additional awards were granted under the 2017 Inducement Plan. All shares currently subject to awards outstanding under the 2017 Inducement Plan, which awards expire or are forfeited, are included in the reserve for the 2018 Equity Incentive Plan to the extent such shares would otherwise return to such plan. Awards granted under the 2017 Inducement Plan have a term of 10 years. Exercisability, option price and other terms are determined by the plan administrator, but the option price cannot be less than 100% of fair market value of those shares on the date of grant. Stock options granted under the 2017 Inducement Plan generally vest over a period of four years, with the exception of performance based awards which will vest upon achievement of certain performance conditions. |
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CORPORATE GOVERNANCE GUIDELINES
STOCKHOLDER OUTREACHAND ENGAGEMENT
94608.
MAJORITY VOTE POLICY
program.
INDEPENDENCE OF THE BOARD OF DIRECTORS
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In determining the independence of Dr. Carson, the Board took into account his role as the university-nominated representative on the evaluation committee to oversee aspects of the agreement between the Regents of the University of California and Dynavax and determined that this relationship would not interfere with Dr. Carson’s exercise of independent judgment in carrying out his responsibilities as a director.
BOARD LEADERSHIP STRUCTURE
Prior to his resignation from the Board in August 2019, our then-Chief Executive Officer, Eddie Gray, was not an independent director.
BOARD’S ROLE IN RISK OVERSIGHT
MEETINGS OF THE BOARD OF DIRECTORS
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COMMITTEES OF THE BOARD OF DIRECTORS
Name | Audit | Compensation | Nominating | |||||||||
Arnold L. Oronsky, Ph.D. | X | |||||||||||
Francis R. Cano, Ph.D. | X | X | ||||||||||
Laura Brege | X | * | ||||||||||
Daniel L. Kisner, M.D. | X | X | * | |||||||||
Peggy V. Phillips | X | X | * | |||||||||
Natale Ricciardi | X | |||||||||||
Total Members | 3 | 3 | 3 | |||||||||
Total Meetings | 4 | 4 | 2 |
Name | Audit | Compensation | Nominating | |||||||||
Andrew A. F. Hack, M.D., Ph.D. (1) | X | |||||||||||
Arnold L. Oronsky, Ph.D. | X | |||||||||||
Daniel L. Kisner, M.D. | X | X | * | |||||||||
Francis R. Cano, Ph.D. | X | X | ||||||||||
Laura Brege(1) | X | * | ||||||||||
Natale Ricciardi | X | |||||||||||
Peggy V. Phillips | X | X | * | |||||||||
Total Members | 4 | 3 | 3 | |||||||||
Total Meetings | 4 | 11 | 5 |
* | Committee Chairperson |
(1) | Ms. Brege served as the chairperson of our Audit Committee for the duration of 2019, and upon her resignation from the Board in February 2020, Dr. Hack became Chairperson of the Audit Committee. Dr. Hack joined the Audit Committee in October 2019. |
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reviewed and provided guidance with respect to the external audit and the Company’s relationship with Ernst & Young by (1) reviewing Ernst & Young’s proposed audit scope, approach, compensation and independence; (2) obtaining written statements and disclosures from Ernst & Young regarding relationships and services with the Company which may impact independence as required by Ethics and Independence Rule 3526, “Communications with Audit Committees Concerning Independence”; (3) discussing with Ernst & Young the financial statements and audit findings, including any significant adjustments, management judgments and accounting estimates, significant new accounting policies and whether there were disagreements with management; and (4) obtaining assurance from Ernst & Young that the requirements of Section 10A of the Exchange Act have been met; and
• | reviewed and provided guidance with respect to the external audit and the Company’s relationship with Ernst & Young by (1) reviewing Ernst & Young’s proposed audit scope, approach, compensation and independence; (2) obtaining written statements and disclosures from Ernst & Young regarding relationships and services with the Company which may impact independence as required by applicable requirements of the PCAOB regarding the accounting firm’s independence;(3) discussing with Ernst & Young the financial statements and audit findings, including any significant adjustments, management judgments and accounting estimates, significant new accounting policies and whether there were disagreements with management; and (4) obtaining assurance from Ernst & Young that the requirements of Section 10A of the Exchange Act have been met; and |
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firm for 2019.2020. In making this recommendation, we considered whether Ernst & Young’s provision of services other than audit services is compatible with maintaining independence of our independent registered public accounting firm. Although we have the sole authority to appoint the independent registered public accounting firm, we continued the long-standing practice of recommending that the Board ask the stockholders at their Annual Meeting to ratify the appointment of Ernst & Young as the Company’s independent registered public accounting firm.
Ms. Laura Brege, Chairperson
.
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Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 2018, Ms. Phillips and Drs. Cano and Kisner, each served as a member of the Compensation Committee. None of the members of our Compensation Committee at any time has been one of our officers or employees or an officer or employee of one of our subsidiaries at any time during the fiscal year ended December 31, 2018. None of our executive officers currently serve, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers on our Board or Compensation Committee.
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STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
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There
provide Bain Life Sciences with customary indemnification in in connection with the registration and sale of Bain Life Sciences’ securities pursuant to the registration rights agreement.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
CODE OF BUSINESS CONDUCT AND ETHICS
compliance, other than one report on Form 4 that was filed late by David Johnson, our Vice President and Chief Accounting Officer, covering one transaction which was required to report the receipt of an equity award.
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Name and Address of Beneficial Holder | Number of Shares(2) | Percent of Shares Beneficially Owned(3) | ||||||
5% Stockholders: | ||||||||
BlackRock, Inc.(4) | 4,128,600 | 6.51 | % | |||||
55 East 52nd Street | ||||||||
New York, New York 10055 | ||||||||
HealthCor Management, L.P.(5) | 4,613,280 | 7.28 | % | |||||
55 Hudson Yards, 28th Floor | ||||||||
New York, New York 10001 | ||||||||
Franklin Resources, Inc.(6) | 3,199,278 | 5.05 | % | |||||
One Franklin Parkway | ||||||||
San Mateo, California 94403-1906 | ||||||||
Senvest Management, L.L.C.(7) | 3,173,112 | 5.01 | % | |||||
540 Madison Avenue, 32nd Floor | ||||||||
New York, New York 10022 | ||||||||
Federated Investors, Inc.(8) | 3,661,600 | 5.78 | % | |||||
Federated Investors Tower | ||||||||
Pittsburgh, Pennsylvania 15222-3779 | ||||||||
NEOs and Directors (1) | ||||||||
Eddie Gray(9) | 1,329,823 | 2.06 | % | |||||
Michael S. Ostrach(10) | 451,527 | * | ||||||
Robert L. Coffman, Ph.D.(11) | 437,769 | * | ||||||
Robert Janssen, M.D.(12) | 379,614 | * | ||||||
David F. Novack(13) | 318,366 | * | ||||||
Arnold L. Oronsky, Ph.D.(14) | 81,456 | * | ||||||
Laura Brege(15) | 27,675 | * | ||||||
Francis R. Cano, Ph.D.(16) | 40,050 | * | ||||||
Dennis A. Carson, M.D.(17) | 40,562 | * | ||||||
Daniel L. Kisner, M.D.(18) | 44,950 | * | ||||||
Peggy V. Phillips(19) | 57,752 | * | ||||||
Natale Ricciardi(20) | 27,750 | * | ||||||
All executive officers and directors as a group (12 persons)(21) | 3,237,294 | 4.90 | % |
Name and Address of Beneficial Holder | Number of Shares (2) | Percent of Shares Beneficially Owned (3) | ||||||
5% Stockholders | ||||||||
Federated Hermes, Inc. (4) | 9,821,800 | 11.55 | % | |||||
Federated Investors, Inc. (5) | 9,326,450 | 10.97 | % | |||||
Bain Capital Life Sciences Fund, L.P. (6) | 7,525,000 | 8.85 | % | |||||
BlackRock, Inc. (7) | 6,181,895 | 7.27 | % | |||||
NEOs and Directors(1) | ||||||||
Ryan Spencer (8) | 109,506 | * | ||||||
Eddie Gray (9) | 1,783,046 | 2.06 | % | |||||
David F. Novack (10) | 500,357 | * | ||||||
Michael S. Ostrach (11) | 634,452 | * | ||||||
Robert Janssen, M.D. (12) | 565,665 | * | ||||||
Robert L. Coffman, Ph.D. (13) | 271,501 | * | ||||||
Arnold L. Oronsky, Ph.D. (14) | 95,456 | * | ||||||
Laura Brege (15) | 42,675 | * | ||||||
Francis R. Cano, Ph.D. (16) | 69,717 | * | ||||||
Andrew A. F. Hack, M.D., Ph.D. (17) | 7,525,000 | 8.85 | % | |||||
Daniel L. Kisner, M.D. (18) | 59,950 | * | ||||||
Peggy V. Phillips (19) | 88,418 | * | ||||||
Natale Ricciardi (20) | 42,750 | * | ||||||
All executive officers and directors as a group (13 persons) (21) | 11,788,493 | 13.33 | % |
* | Less than one percent. |
(1) | The address of each of the NEOs and directors is |
(2) | To our knowledge, except as set forth in the footnotes to this table, and subject to applicable community property laws, each person named in this table has sole voting and investment power with respect to the shares set forth opposite such person’s name. |
(3) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to the securities. Shares of our common stock subject to options currently exercisable or that will become exercisable within 60 days after January 31, |
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(4) | This information is based solely on |
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This information is based solely on Schedule 13G/A filed by Federated Investors, Inc. on |
(6) | This information is based solely on Schedule 13D/A filed by Bain Capital Life Sciences Fund, L.P. on March 12, 2020, with the SEC. Bain Capital Life Sciences Fund L.P. holds 6,826,266 shares of common stock, 3,756 shares of Series B preferred stock and warrants to purchase 2,645,566 shares of common stock. BCIP Life Sciences Associates, LP holds 698,734 shares of common stock, 384 shares of Series B preferred stock and warrants to purchase 270,684 shares of common stock. As a result of the Beneficial Ownership Blocker, beneficial ownership is capped at 9.99% of the outstanding common stock of the issuer. The address of the principal business and office of Bain Capital Life Sciences Fund, L.P. is, 200 Clarendon Street, Boston, MA 02116. The Schedule 13G provides information only as of March 12, 2020. |
(7) | This information is based solely on Schedule 13G/A filed by BlackRock, Inc. on February 5, 2020 with the SEC. BlackRock, Inc. beneficially owns and has sole dispositive power over 6,181,895 shares of common stock, of which 5,996,422 shares are held with sole voting power. The address of the principal business and office of BlackRock, Inc. is, 55 East 52nd Street, New York, NY 10055. The Schedule 13G provides information only as of December 31, |
Consists of |
Consists of |
(10) | Consists of 118,484 shares of common stock owned directly by Mr. Novack, restricted stock awards to be converted into 79,763 shares of common stock within 60 days of January 31, 2020 and options to purchase 302,110 shares of common stock exercisable within 60 days of January 31, 2020. |
(11) | Consists of 131,604 shares of common stock owned directly by Mr. Ostrach, restricted stock awards to be converted into 58,304 shares of common stock within 60 days of January 31, |
Consists of |
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(13) | Consists of |
(14) | Consists of 37,506 shares of common stock owned directly by Dr. Oronsky and options to purchase |
(15) | Consists of options to purchase |
(16) | Consists of 16,667 shares of common stock owned directly by Dr. Cano and options to purchase |
(17) |
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(18) | Consists of 1,500 shares of common stock owned directly by Dr. Kisner and options to purchase |
(19) | Consists of |
(20) | Consists of options to purchase |
(21) | Total number of shares includes |
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206,254 shares of common stock within 60 days of January 31, |
Note: Dynavax management cautions that the stock price performance shown in the graph below should not be considered indicative of potential future stock price performance.
This Section is not “soliciting material,” is not deemed “filed” with the SEC and is notProxy Materials, please notify your broker or Dynavax. Direct your written request to be incorporated by reference in any filing of Dynavax Technologies Corporation, underAttention: Corporate Secretary, 2100 Powell Street, Suite 900, Emeryville, California 94608, or contact Dynavax’s Corporate Secretary at (510) 848-5100. Stockholders who currently receive multiple copies of the Securities Act, or the Exchange Act, whether made before or after the date hereofAnnual Meeting materials at their addresses and irrespectivewould like to request “householding” of any general incorporation language in any such filing.
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By Order of the Board of Directors | |
Steven N. Gersten Secretary | |
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April , 2020 |
April 22, 2019
, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “ ”), hereby certifies that: , 2018 , 2019 , 2020 , 2020]2018,2019, is available without charge upon written request to: Dynavax Technologies Corporation, Attention: Corporate Secretary, 2929 Seventh2100 Powell Street, Suite 100, Berkeley,900, Emeryville, California 94710.94608.70Appendix ADYNAVAX TECHNOLOGIES CORPORATIONDYNAVAX TECHNOLOGIES CORPORATIONCorporationDYNAVAX TECHNOLOGIES CORPORATION Ryan Spencer, Chief Executive Officer EQUITY INCENTIVE PLANADOPTEDBYTHE BOARDOF DIRECTORS: APRILEIPAPPROVEDBYTHE STOCKHOLDERS: MAY 31, 2018April 9AMENDEDAND RESTATEDBYTHE BOARDOF DIRECTORS: APRIL 9,May 30, 2019APPROVEDBYTHE STOCKHOLDERS: [MAY 30, 2019]May 281.GENERAL.(the(the “2011 Plan”). Following the Effective Date, no additional awards may be granted under the 2011 Plan or the Dynavax Technologies Corporation 2017 Inducement Award Plan (the “2017 Inducement Plan”) (each of the 2011 Plan and 2017 Inducement Plan, a “Prior Plan”). Any unallocated shares remaining available for grant under the 2011 Plan as of 12:01 a.m. Pacific Time on the Effective Date (the “2011 Plan’sPlan’s Available Reserve”) will cease to be available under the 2011 Plan at such time and will be added to the Share Reserve (as defined in Section 3(a)(i)) and be then immediately available for grant and issuance pursuant to Awards granted under this Plan. From and after 12:01 a.m. Pacific Time on the Effective Date, except as provided in Sections 9(c), 9(d) and 9(e), all outstanding stock awards granted under either of the Prior Plans (each, a “Prior Plan Award”) will remain subject to the terms of the applicable Prior Plan;provided, however, that the following shares of Common Stock subject to any outstanding Prior Plan Award (collectively, the “Prior Plans’Plans’ Returning Shares”) will immediately be added to the Share Reserve (as defined in Section 3(a)(i)) as and when such shares become Prior Plans’ Returning Shares and will become available for grant and issuance pursuant to Awards granted under this Plan: (i) any shares subject to such stock award that are not issued because such stock award or any portion thereof expires or otherwise terminates without all of the shares covered by such stock award having been issued; (ii) any shares subject to such stock award that are not issued because such stock award or any portion thereof is settled in cash; and (iii) any shares issued pursuant to such stock award that are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required for the vesting of such shares.shares. All Awards granted on or after 12:01 a.m. Pacific Time on the Effective Date will be subject to the terms of this Plan.Administration. 2.ADMINISTRATION.(a)Administration by Board. The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee or Committees, as provided in Section 2(c).(b)Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:(i) To determine (A) who will be granted Awards, (B) when and how each Award will be granted, (C) what type of Award will be granted, (D) the provisions of each Award (which need not be identical), includingA-1
when a Participant will be permitted to exercise or otherwise receive cash or Common Stock under the Award, (E) the number of shares of Common Stock subject to, or the cash value of, an Award, and (F) the Fair Market Value applicable to an Award.
(iii) To settle all controversies regarding the Plan and Awards granted under it.
(v) To suspend or terminate the Plan at any time. Except as otherwise provided in the Plan (including Section 2(b)(viii)) or an Award Agreement, suspension or termination of the Plan will not materially impair a Participant’s rights under an outstanding Award without his or her written consent.
(vi) To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to make the Plan or Awards granted under the Plan compliant with the requirements for Incentive Stock Options or exempt from or compliant with the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any, of applicable law. However, if required by applicable law or listing requirements, and except as provided in Section 9(a) relating to Capitalization Adjustments, the Company will seek stockholder approval of any amendment of the Plan that (A) materially increases the number of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, or (E) materially expands the types of Awards available for issuance under the Plan. Except as otherwise provided in the Plan (including Section 2(b)(viii)) or an Award Agreement, no amendment of the Plan will materially impair a Participant’s rights under an outstanding Award without his or her written consent.
(vii) To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of (A) Section 422 of the Code regarding incentive stock options or (B) Rule 16b-3.
(viii) To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more outstanding Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion;provided, however, that except as otherwise provided in the Plan (including this Section 2(b)(viii)) or an Award Agreement, no amendment of an outstanding Award will materially impair a Participant’s rights under such Award without his or her written consent.
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(x) To adopt such procedures andsub-plans as are necessary or appropriate to permit participation in the Plan by Employees or Directors who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Award Agreement that are required for compliance with the laws of the relevant foreign jurisdiction).
(i)General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee, as applicable). Any delegation of administrative powers will be reflected in resolutions, not inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable). The Committee may, at any time, abolish the subcommittee and/or revest in the Committee any powers delegated to the subcommittee. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.
(e)Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.
(f)Cancellation andRe-Grant of Awards. Neither the Board nor any Committee will have the authority to (i) reduce the exercise or strike price of any outstanding Option or SAR or (ii) cancel any outstanding Option or SAR that has an exercise or strike price (per share) greater than the then-current Fair Market Value of the Common Stock in exchange for cash or other Awards under the Plan, unless the stockholders of the Company have approved such an action within 12 months prior to such an event.
(g)Minimum Vesting Requirements. No Award may vest (or, if applicable, be exercisable) until at least 12 months following the date of grant of the Award;provided, however, that shares of Common Stock up to 5% of the Share Reserve (as defined in Section 3(a)(i)) may be issued pursuant to Awards that do not meet such vesting (and, if applicable, exercisability) requirements.
(h)Dividends and Dividend Equivalents. Dividends or dividend equivalents may be paid or credited, as applicable, with respect to any shares of Common Stock subject to an Award, as determined by the Board and
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contained in the applicable Award Agreement;provided, however, that (i) no dividends or dividend equivalents may be paid with respect to any such shares before the date such shares have vested under the terms of such Award Agreement, (ii) any dividends or dividend equivalents that are credited with respect to any such shares will be subject to all of the terms and conditions applicable to such shares under the terms of such Award Agreement (including, but not limited to, any vesting conditions), and (iii) any dividends or dividend equivalents that are credited with respect to any such shares will be forfeited to the Company on the date, if any, such shares are forfeited to or repurchased by the Company due to a failure to meet any vesting conditions under the terms of such Award Agreement.
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Shares Subject to the Plan.
(ii) Subject to Section 3(b), the number of shares of Common Stock available for issuance under the Plan will be reduced by: (A) one share for each share of Common Stock issued pursuant to an Appreciation Award granted under the Plan; (B) 1.28 shares for each share of Common Stock issued pursuant to a Full Value Award granted under the Plan prior to May 30, 2019; and (C) 1.40 shares for each share of Common Stock issued pursuant to a Full Value Award granted under the Plan on or after May 30, 2019.
(iii) Subject to Section 3(b), the number of shares of Common Stock available for issuance under the Plan will be increased by: (A) one share for each Prior Plans’ Returning Share or 2018 Plan Returning Share (as(as defined in Section 3(b)(i)) subject to an Appreciation Award; (B) 1.28 shares for each Prior Plans’ Returning Share or 2018 Plan Returning Share subject to a Full Value Award that returns to the Plan prior to May 30, 2019; and (C) 1.40 shares for each Prior Plans’ Returning Share or 2018 Plan Returning Share subject to a Full Value Award that returns to the Plan on or after May 30, 2019.
(iv) For clarity, the Share Reserve in this Section 3(a) is a limitation on the number of shares of Common Stock that may be issued pursuant to the Plan. Accordingly, this Section 3(a) does not limit the granting of Awards except as provided in Section 7(a). Shares may be issued in connection with a merger or acquisition as permitted by NASDAQNasdaq Listing Rule 5635(c) or, if applicable, NYSE Listed Company Manual Section 303A.08, AMEX Company Guide Section 711 or other applicable rule, and such issuance will not reduce the number of shares available for issuance under the Plan.
(ii)Shares Not Available for Subsequent Issuance.The following shares of Common Stock will not become available again for issuance under the Plan: (A) any shares that are reacquired or withheld (or not issued) by
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the Company to satisfy the exercise, strike or purchase price of an Award or a Prior Plan Award (including(including any shares subject to such award that are not delivered because such award is exercised through a reduction of shares subject to such award (i.e., “net exercised”)); (B) any shares that are reacquired or withheld (or not issued) by the Company to satisfy a tax withholding obligationobligation in connection with an Award or a Prior Plan Award;Award; (C) any shares repurchased by the Company on the open market with the proceeds of the exercise, strike or purchase price of an Award or a Prior Plan Award; and (D) in the event that a Stock Appreciation Right granted under the Plan or a stock appreciation right granted under either of the Prior Plans is settled in shares of Common Stock, the gross number of shares of Common Stock subject to such award.
(c)Incentive Stock Option Limit.Subject to the Share Reserve and Section 9(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options will be 10,000,00017,600,000 shares.
(d)Non-Employee Director Compensation Limit. The aggregate value of all cash and equity-based compensation granted or paid, as applicable, by the Company to any individual for service as aNon-Employee Director with respect to any fiscal year of the Company will not exceed (i) a total of $200,000 with respect to any such cash compensation and (ii) $800,000 in total value with respect to any such equity-based compensation (including Awards and any other equity-based awards), calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes.
(e)Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.
Eligibility. (a) |
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(a)Eligibility for Specific Awards. Incentive Stock Options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code). Awards other than Incentive Stock Options may be granted to Employees and Directors;provided, however, that Awards may not be granted to Employees and Directors who are providing Continuous Service only to any “parent” of the Company, as such term is defined in Rule 405, unless (i) the stock underlying such Awards is treated as “service recipient stock” under Section 409A of the Code (for example, because the Awards are granted pursuant to a corporate transaction such as a spin off transaction) or (ii) the Company, in consultation with its legal counsel, has determined that such Awards are otherwise exempt from or alternatively comply with Section 409A of the Code.
(b)Ten Percent Stockholders. A Ten Percent Stockholder will not be granted an Incentive Stock Option unless the exercise price (per share) of such Option is at least 110% of the Fair Market Value of the Common Stock on the date of grant of such Option and the Option is not exercisable after the expiration of five years from the date of grant.
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Provisions Relating to Options and Stock Appreciation Rights.
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(a)Term. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the expiration of seven years from the date of its grant or such shorter period specified in the Award Agreement.
(b)Exercise or Strike Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the exercise or strike price (per share) of each Option or SAR will be not less than 100% of the Fair Market Value of the Common Stock on the date the Award is granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price (per share) less than 100% of the Fair Market Value of the Common Stock on the date the Award is granted if such Award is granted pursuant to an assumption of, or substitution for, another option or stock appreciation right pursuant to a Transaction and in a manner consistent with the provisions of Section 409A of the Code and, if applicable, Section 424(a) of the Code. Each SAR will be denominated in shares of Common Stock equivalents.
(i) By cash (including electronic funds transfers), check, bank draft or money order payable to the Company;
(ii) Pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the Common Stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;
(iii) By delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;
(iv) If an Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price;provided, however, that the Company will accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued. Shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations; or
(v) In any other form of legal consideration that may be acceptable to the Board and specified in the applicable Award Agreement.
(d)Exercise and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Award Agreement evidencing such SAR. The appreciation distribution payable on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the aggregate strike price of the number of Common Stock equivalents with respect to which the Participant is exercising the SAR on such date. The appreciation distribution may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Award Agreement evidencing such SAR.
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(e)Transferability of Options and SARs. The Board may, in its sole discretion, impose such limitations on the transferability of Options and SARs as the Board will determine. In the absence of such a determination by the Board to the contrary, the restrictions set forth in this Section 5(e) on the transferability of Options and SARs will apply. Notwithstanding the foregoing or anything in the Plan or an Award Agreement to the contrary, no Option or SAR may be transferred to any financial institution without prior stockholder approval.
(i)Restrictions on Transfer. An Option or SAR will not be transferable, except by will or by the laws of descent and distribution (and pursuant to Sections 5(e)(ii) and 5(e)(iii) below), and will be exercisable during the lifetime of the Participant only by the Participant. Subject to the foregoing paragraph, the Board may, in its sole discretion, permit transfer of the Option or SAR in a manner that is not prohibited by applicable tax and securities laws. Except as explicitly provided in the Plan, neither an Option nor a SAR may be transferred for consideration.
(ii)Domestic Relations Orders. Subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury RegulationsSection 1.421-1(b)(2). If an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.
(iii)Beneficiary Designation. Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering written notice to the Company, in a form approved by the Company (or the designated broker), designate a third party who, upon the death of the Participant, will thereafter be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, upon the death of the Participant, the executor or administrator of the Participant’s estate will be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent with the provisions of applicable laws.
(g)Termination of Continuous Service. Except as otherwise provided in the applicable Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates (other than for Cause and other than upon the Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date that is three months following such termination of Continuous Service (or such longer or shorter period specified in the Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after such termination of Continuous Service, the Participant does not exercise his or her Option or SAR (as applicable) within the applicable time period, the Option or SAR (as applicable) will terminate.
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terminationpost-termination exercise period after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would not be in violation of such registration requirements or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Award Agreement. In addition, except as otherwise provided in the applicable Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if the sale of any Common Stock received upon exercise of an Option or SAR following the termination of a Participant’s Continuous Service (other than for Cause) would violate the Company’s insider trading policy, then the Option or SAR will terminate on the earlier of (i) the expiration of a total period of time (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the sale of the Common Stock received upon exercise of the Option or SAR would not be in violation of the Company’s insider trading policy or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Award Agreement.
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Option or SAR will be exempt from his or her regular rate of pay. To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income derived by anon-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Award will be exempt from the employee’s regular rate of pay, the provisions of this Section 5(l) will apply to all Awards and are hereby incorporated by reference into such Award Agreements.
Provisions of Awards Other than Options and SARs. (a) |
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(a)Restricted Stock Awards. Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate. To the extent consistent with the Company’s bylaws, at the Board’s election, shares of Common Stock underlying a Restricted Stock Award may be (i) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse, or (ii) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. The terms and conditions of separate Restricted Stock Award Agreements need not be identical;provided, however, that each Restricted Stock Award Agreement will conform to (through incorporation of the provisions hereof by reference in the applicable Award Agreement or otherwise) the substance of each of the following provisions:
(i)Consideration. A Restricted Stock Award may be awarded in consideration for (A) cash (including electronic funds transfers), check, bank draft or money order payable to the Company, (B) past services to the Company or an Affiliate or (C) any other form of legal consideration (including future services) that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii)Vesting.Subject to Section 2(g), shares of Common Stock awarded under a Restricted Stock Award Agreement may be subject to forfeiture to or repurchase by the Company in accordance with a vesting schedule to be determined by the Board.
(iii)Termination of Continuous Service. If a Participant’s Continuous Service terminates, the Company may receive through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the Participant that have not vested as of the date of such termination under the terms of the Participant’s Restricted Stock Award Agreement.
(iv)Transferability. Rights to acquire shares of Common Stock under a Restricted Stock Award Agreement will be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted Stock Award Agreement. Notwithstanding the foregoing or anything in the Plan or a Restricted Stock Award Agreement to the contrary, no Restricted Stock Award may be transferred to any financial institution without prior stockholder approval.
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(ii)Board Discretion. With respect to any Performance Stock Award, the Board retains the discretion to (A) reduce or eliminate the compensation or economic benefit due upon the attainment of any Performance Goals on the basis of any considerations as the Board, in its sole discretion, may determine and (B) define the manner of calculating the Performance Criteria it selects to use for a Performance Period.
Covenants of the Company. (a) |
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(a)Availability of Shares. The Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy then-outstanding Awards.
(b)Securities Law Compliance. The Company will seek to obtain from each regulatory commission or agency having jurisdiction over the Plan the authority required to grant Awards and to issue and sell shares of Common Stock upon exercise of the Awards;provided, however, that this undertaking will not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Awards unless and until such authority is obtained. A Participant will not be eligible for the grant of an Award or the subsequent issuance of cash or Common Stock pursuant to the Award if such grant or issuance would be in violation of any applicable securities law.
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(c)No Obligation to Notify or Minimize Taxes.The Company will have no duty or obligation to any Participant to advise such holder as to the time or manner of exercising an Award. Furthermore, the Company will have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award.
Miscellaneous. (a) |
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(a)Use of Proceeds from Sales of Common Stock.Proceeds from the sale of shares of Common Stock issued pursuant to Awards will constitute general funds of the Company.
(b)Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant documents as a result of a clerical error in the papering of the Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents.
(d)No Employment or Other Service Rights.Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or will affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, or (ii) the service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.
(e)Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company or any Affiliate is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after the date of grant of any Award to the Participant, the Board has the right in its sole discretion to (i) make a corresponding reduction in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (ii) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced or extended.
(f)Incentive Stock Option Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).
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(g)Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Award and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Award has been registered under a then currently effective registration statement under the Securities Act or (B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.
(h)Withholding Obligations.Unless prohibited by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy any federal, state, local or foreign tax withholding obligation relating to an Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Award; (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Award Agreement.
(j)Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee or otherwise providing services to the Company or an Affiliate. The Board is authorized to make deferrals of Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.
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day following the date of such Participant’s “separation from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment may be made in a manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in a lump sum on the day after suchsix-month period elapses, with the balance paid thereafter on the original schedule.
(l)Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including, but not limited to, a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of Cause. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company or an Affiliate.
Adjustments upon Changes in Common Stock; Other Corporate Events. (a) |
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(a)Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a); (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c); and (iii) the class(es) and number of securities and price per share of stock subject to outstanding Awards. The Board will make such adjustments and its determination will be final, binding and conclusive.
(b)Dissolution or Liquidation. Except as otherwise provided in the applicable Award Agreement or other written agreement between a Participant and the Company or an Affiliate, in the event of a dissolution or liquidation of the Company, all outstanding Awards (other than Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to a forfeiture condition or the Company’s right of repurchase may be reacquired or repurchased by the Company notwithstanding the fact that the holder of such Award is providing Continuous Service.
(c)Transactions. In the event of a Transaction, the provisions of this Section 9(c) will apply to each outstanding Award and Prior Plan Award, in each case unless otherwise provided in the instrument evidencing the Award or Prior Plan Award (as applicable), in any other written agreement between the Company or any Affiliate and the Participant, or in any director compensation policy of the Company.
(i)Awards May Be Assumed. In the event of a Transaction, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all outstanding Awards and/or Prior Plan Awards or may substitute similar stock awards for any or all outstanding Awards and/or Prior Plan Awards (including, but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to any outstanding Awards and/or Prior Plan Awards may be assigned by the Company to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company). For clarity, in the event of a Transaction, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may choose to assume or continue only a portion of an outstanding Award or Prior Plan Award, to substitute a similar stock award for only a portion of an outstanding Award or Prior Plan Award, or to assume or continue, or substitute similar stock awards for, the outstanding Awards and/or Prior Plan Awards held by some, but not all, Participants. The terms of any such assumption, continuation or substitution will be set by the Board.
(ii)Awards Held by Current Participants. In the event of a Transaction in which the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) does not assume
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or continue outstanding Awards and/or Prior Plan Awards, or substitute similar stock awards for outstanding Awards and/or Prior Plan Awards, then with respect to any such Awards and/or Prior Plan Awards that have not been assumed, continued or substituted and that are held by Participants whose Continuous Service has not terminated prior to the effective time of the Transaction (referred to as the “Current Participants”), the vesting (and exercisability, if applicable) of such Awards and Prior Plan Awards will be accelerated in full (and with respect to Performance Stock Awards, vesting will be deemed to be satisfied at the target level of performance) to a date prior to the effective time of the Transaction (contingent upon the closing or completion of the Transaction) as the Board will determine (or, if the Board does not determine such a date, to the date that is five days prior to the effective time of the Transaction), and such Awards and Prior Plan Awards will terminate if not exercised (if applicable) prior to the effective time of the Transaction in accordance with the exercise procedures determined by the Board, and any reacquisition or repurchase rights held by the Company with respect to such Awards and Prior Plan Awards will lapse (contingent upon the closing or completion of the Transaction).
(iv)Payment for Awards in Lieu of Exercise. Notwithstanding the foregoing, in the event any outstanding Award or Prior Plan Award held by a Participant will terminate if not exercised prior to the effective time of a Transaction, the Board may provide that the Participant may not exercise such Award or Prior Plan Award but instead will receive a payment, in such form as may be determined by the Board, equal in value to the excess, if any, of (A) the value of the property the Participant would have received upon the exercise of such Award or Prior Plan Award immediately prior to the effective time of the Transaction, over (B) any exercise price payable by the Participant in connection with such exercise. For clarity, such payment may be zero if the value of such property is equal to or less than the exercise price. Payments under this provision may be delayed to the same extent that payment of consideration to the holders of the Common Stock in connection with the Transaction is delayed as a result of escrows, earn outs, holdbacks or any other contingencies.
(d)Change in Control. Unless provided otherwise in the Award Agreement for an Award or award agreement for a Prior Plan Award (as(as applicable), in any other written agreement or plan between the Company or any Affiliate and the Participant, or in any director compensation policy of the Company, an Award or Prior Plan Award will not be subject to additional acceleration of vesting and exercisability upon or after a Change in Control.
(e)Prior Plan Awards.For clarity, with respect to any Prior Plan Award, the terms set forth in Sections 9(c) and 9(d) will supersede any terms set forth in the applicable Prior Plan regarding the treatment of such Prior Plan Award in the event of a Corporate Transaction (as defined in the applicable Prior Plan) or Change in Control (as defined in the applicable Prior Plan).
(f)Parachute Payments.Except as otherwise provided in the applicable Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if any payment or benefit the Participant would receive pursuant to a Change in Control from the Company or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment will be equal to the Reduced Amount. The “Reduced Amount” will be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes,
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income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Participant’s receipt, on anafter-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction will occur in the following order: (A) reduction of cash payments; (B) cancellation of accelerated vesting of equity awards other than stock options; (C) cancellation of accelerated vesting of stock options; and (D) reduction of other benefits paid to the Participant. Within any such category of payments and benefits (that is, (A), (B), (C) or (D)), a reduction will occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and then with respect to amounts that are. In the event that acceleration of compensation from a Participant’s equity awards is to be reduced, such acceleration of vesting will be canceled, subject to the immediately preceding sentence, in the reverse order of the date of grant. The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control will perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company will appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company will bear all expenses with respect to the determinations by such accounting firm required to be made hereunder. The accounting firm engaged to make the determinations hereunder will provide its calculations, together with detailed supporting documentation, to the Participant and the Company within 15 calendar days after the date on which the Participant’s right to a Payment is triggered (if requested at that time by the Participant or the Company) or such other time as reasonably requested by the Participant or the Company. Any good faith determinations of the accounting firm made hereunder will be final, binding and conclusive upon the Participant and the Company.
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(b)No Impairment of Rights. Suspension or termination of the Plan will not materially impair rights and obligations under any Award granted while the Plan is in effect except with the written consent of the affected Participant or as otherwise permitted in the Plan (including Section 2(b)(viii)) or an Award Agreement.
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12. |
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“(b) “Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405. The Board will have the authority to determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition.
“(c) “Appreciation Award” means (i) a stock option or stock appreciation right granted under any of the Prior Plans or (ii) an Option or Stock Appreciation Right, in each case with respect to which the exercise or strike price is
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at least 100% of the Fair Market Value of the Common Stock subject to the stock option or stock appreciation right, or Option or Stock Appreciation Right, as applicable, on the date of grant.
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“(f) “Board” means the Board of Directors of the Company.
“(g) “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Award after the Adoption Date without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards No. 123 (revised). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
“(h) “Cause”will have the meaning ascribed to such term in any written agreement between a Participant and the Company or an Affiliate defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of one or more of the following: (i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Company or Affiliate documents or records; (ii) the Participant’s material failure to abide by the code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct) of the Company or an Affiliate; (iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of the Company or an Affiliate (including, without limitation, the Participant’s improper use or disclosure of confidential or proprietary information of the Company or an Affiliate); (iv) any intentional act by the Participant which has a material detrimental effect on the reputation or business of the Company or an Affiliate; (v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from the Company or an Affiliate, and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by the Participant of any employment or service agreement between the Participant and the Company or an Affiliate, which breach is not cured pursuant to the terms of such agreement; or (vii) the Participant’s conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participant’s ability to perform his or her duties. The determination that a termination of a Participant’s Continuous Service is either for Cause or without Cause will be made by the Company, in its sole discretion. Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Awards held by the Participant will have no effect upon any determination of the rights or obligations of the Company or the Participant for any other purpose.
(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities, or
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(C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed to occur;
(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction;
(iv) over a period of 12 months or less, individuals who, on the Adoption Date, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board;provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board.
“(j) “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.
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“(l) “Common Stock” means the common stock of the Company.
“(m) “Company” means Dynavax Technologies Corporation, a Delaware corporation.corporation.
“(o) “Corporate Transaction” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:
(i) the consummation of a saleorsale or other disposition of all or substantially all, as determined by the Board, in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;
(ii) the consummation of a sale or other disposition of at least 90% of the outstanding securities of the Company;
(iii) the consummation of a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
(iv) the consummation of a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.
“(p) “Director” means a member of the Board.
“(q) “Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be
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expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months, as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.
(s)“Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.
“(v) “Exchange Act Person”means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company, or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent 50% of the combined voting power of the Company’s then outstanding securities.
(i) Unless otherwise provided by the Board, if the Common Stock is listed on any established stock exchange or traded on any established market, then the Fair Market Value of a share of Common Stock will be the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in a source the Board deems reliable.
(ii) Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value of a share of Common Stock will be the closing sales price for such stock on the last preceding date for which such quotation exists.
(iii) In the absence of such markets for the Common Stock, the Fair Market Value of a share of Common Stock will be determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code.
“(x) “Full Value Award” means (i) a stock award granted under any of the Prior Plans or (ii) an Award, in each case that is not an Appreciation Award.
“(y) “Incentive Stock Option” means an option granted pursuant to Section 5 that is intended to be, and that qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.
(z) “Non-Employee Director Director”means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an
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Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of RegulationS-K promulgated pursuant to the Securities Act (“RegulationS-K”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of RegulationS-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of RegulationS-K, or (ii) is otherwise considered a“non-employee “non-employee director” for purposes of Rule 16b-3.
“(aa) “Nonstatutory Stock Option” means an option granted pursuant to Section 5 that does not qualify as an Incentive Stock Option.
“(bb) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act.
“(cc) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.
“(dd) “Option Agreement” means a written agreement between the Company and a holder of an Option evidencing the terms and conditions of an Option grant. Each Option Agreement will be subject to the terms and conditions of the Plan.
“(ee) “Other Stock Award” means an award based in whole or in part by reference to the Common Stock which is granted pursuant to the terms and conditions of Section 6(d).
(ff)“Other Stock Award Agreement”means a written agreement between the Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement will be subject to the terms and conditions of the Plan.
“(ii) “Performance Criteria” means the one or more criteria that the Board will select for purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that will be used to establish such Performance Goals may be based on any one of, or combination of, the following, as determined by the Board: (i) earnings (including earnings per share and net earnings); (ii) earnings before interest, taxes and depreciation; (iii) earnings before interest, taxes, depreciation and amortization (EBITDA); (iv) total stockholder return; (v) return on equity or average stockholder’s equity; (vi) return on assets, investment, or capital employed; (vii) stock price or stock price performance; (viii) margin (including gross margin); (ix) net income (before or after taxes); (x) operating income; (xi) operating income after taxes;(xii) pre-tax profit; (xiii) operating cash flow; (xiv) sales or revenue targets; (xv) increases in revenue or product revenue; (xvi) expenses and cost reduction goals; (xvii) improvement in or attainment of working capital levels; (xviii) economic value added (or an equivalent metric); (xix) market share; (xx) cash flow; (xxi) cash flow per share; (xxii) share price performance; (xxiii) debt reduction; (xxiv) implementation or completion of projects or processes; (xxv) customer satisfaction; (xxvi) stockholders’ equity; (xxvii) capital expenditures; (xxviii) debt levels; (xxix) operating profit or net operating profit; (xxx) workforce diversity; (xxxi) growth of net income or operating income; (xxxii) billings; (xxxiii) submission to, or approval by, a regulatory body (including but not limited to the U.S. Food and Drug
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Administration) of an applicable filing for a product candidate or other product development milestones; (xxxiv) acquisitions, divestitures, joint ventures, strategic alliances, licenses or collaborations; (xxxv) spin-offs,split-ups, reorganizations, recapitalizations, restructurings, financings (debt or equity) or refinancings; (xxxvi) manufacturing or process development, clinical trial, regulatory, intellectual property, compliance or research objectives; and (xxxvii) any other measures of performance selected by the Board. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the applicable Award Agreement.
“(jj) “Performance Goals” means, for a Performance Period, the one or more goals established by the Board for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. The Board is authorized to make appropriate adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as follows: (i) to exclude restructuring and/or other nonrecurring charges; (ii) to exclude exchange rate effects, as applicable, fornon-U.S. dollar denominated Performance Goals; (iii) to exclude the effects of changes to generally accepted accounting principles; (iv) to exclude the effects of any statutory adjustments to corporate tax rates; (v) to exclude the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (vi) to exclude the dilutive effects of acquisitions or joint ventures; (vii) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period following such divestiture; (viii) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation,spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (ix) to exclude the effects of stock based compensation and/or the award of an annual cash incentive under the Company’s Annual Incentive Program; (x) to exclude the effect of any other unusual,non-recurring gain or loss or other extraordinary item; and (xi) to make other appropriate adjustments selected by the Board.
“(kk) “Performance Period” means the period of time selected by the Board over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Stock Award. Performance Periods may be of varying and overlapping duration, at the sole discretion of the Board.
“(ll) “Performance Stock Award” means an Award granted under the terms and conditions of Section 6(c).
“(mm) “Plan” means this Dynavax Technologies Corporation 2018 Equity Incentive Plan.
(nn)“Restricted Stock Award” means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(a).
“(rr) “Rule16b-3” means Rule16b-3 promulgated under the Exchange Act or any successor to Rule16b-3, as in effect from time to time.
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“(ss) “Rule 405” means Rule 405 promulgated under the Securities Act.
“(tt) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“(uu) “Stock Appreciation Right” or “SAR”means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 5.
“(vv) “Stock Appreciation Right Agreement” or “SAR Agreement” means a written agreement between the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement will be subject to the terms and conditions of the Plan.
“(ww) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%.
“(xx) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Affiliate.
“(yy) “Transaction” means a Corporate Transaction or a Change in Control.
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DYNAVAX TECHNOLOGIES CORPORATION ATTN: STEVEN N. GERSTEN 2929 SEVENTH STREET, SUITE 100 BERKELEY, CA 94710 VOTE BY INTERNET - www.proxyvote.com Use the Internet
Important Notice Regarding the Availability of Proxy Material for the Annual Meeting: The Combined10-K with Proxy Statement is available at www.proxyvote.com. E73796-P20804 DYNAVAX TECHNOLOGIES CORPORATION THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DYNAVAX TECHNOLOGIES CORPORATION FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS May 30, 2019 The undersigned stockholder of DYNAVAX TECHNOLOGIES CORPORATION, a Delaware corporation (the “Company”), hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated April 22, 2019, and the Company’s Annual Report on Form10-K for the year ended December 31, 2018, and hereby appoints Eddie Gray and Michael Ostrach, or either of them, proxies, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the 2019 Annual Meeting of Stockholders of the Company to be held on May 30, 2019 at 9:00 a.m., Pacific Time, at the Company’s offices at 2929 Seventh Street, Suite 100, Berkeley, California, and at any postponement or adjournment thereof, and to vote all shares of common stock of the Company which the undersigned would be entitled to vote if then and there personally present, on the matters set on the reverse side. THE PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED IN FAVOR OF THE COMPANY’S PROPOSALS AS LISTED ON THE REVERSE SIDE, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. Address Changes/Comments: (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side