This document shall also serve as a circular to holders of the ordinary shares of Zai Lab Limited for purposes of the Rules Governing the Listing of Securities on theThe Stock Exchange of Hong Kong Limited (“HK Listing Rules”).
Warning: The contents of this document have not been reviewed by any regulatory authority in Hong Kong. If you are in doubt about any of the contents of this document, you should obtain independent professional advice.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange” or “HKSE”) take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.
This document, for which the directors of Zai Lab Limited collectively and individually accept full responsibility, includes particulars given in compliance with the HK Listing
Rules.
Rules for the purpose of giving information with regard to Zai Lab Limited. The directors, having made all reasonable inquiries, confirm that to the best of their knowledge and belief the information contained in this document is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this document misleading.
Pudong, Shanghai, China 201210
314 Main Street
4th Floor, Suite 100
Cambridge, MA, 02142
(Nasdaq Trading Symbol: ZLAB; HKEx Stock Code: 9688)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
| | |
| NOTICE OF ANNUAL MEETING OF SHAREHOLDERS |
Notice is hereby given that the
20212023 Annual General Meeting of Shareholders
(the “Annual Meeting”) of Zai Lab Limited (the “Company” or “us”) will be held:
| | | | | | | | |
| Time and Date: | | 8:00 a.m. (Eastern Daylight(U.S. Eastern Time) on Thursday,Tuesday, June 24, 2021 /20, 2023 |
| | 8:00 p.m. (China Standard(Shanghai and Hong Kong Time) on Thursday,Tuesday, June 24, 202120, 2023 |
| |
| Physical Location: | | Building 1, 4/F, Denali Room, Jinchuang Plaza, 4560 Jinke Road, Bldg. 1, Fourth Floor, Pudong, Shanghai, China 201210.201210 |
| |
| Virtual Meeting Site: | | www.virtualshareholdermeeting.com/ZLAB2021.ZLAB2023 |
The purpose of the meeting is to consider and vote on the following matters:
| 1. | A special resolution to consider and approve amending and restating the Fourth Amended and Restated Articles of Association of Zai Lab Limited, or the Current Articles, to provide for the annual election of each of the Company’s directors.
|
| 2. | A special resolution to consider and approve amending and restating the Current Articles to reflect changes required or recommended by The Stock Exchange of Hong Kong Limited.
|
| 3. | A special resolution to consider and approve that, conditional upon the approval of special resolutions 1 and 2, the Current Articles be amended, restated and replaced in their entirety by the Fifth Amended and Restated Articles of Association in the form attached to the proxy statement as Exhibit A.
|
| 4. | An ordinary resolution to ratify the selection of Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu as the Company’s independent auditors for the fiscal year ending December 31, 2021.
|
| 5. | To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement.
|
1.An ordinary resolution to re-elect Samantha (Ying) Du to serve as a director until the 2024 annual general meeting of shareholders and until her successor is duly elected and qualified, subject to her earlier resignation or removal;
2.An ordinary resolution to re-elect Kai-Xian Chen to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
3.An ordinary resolution to re-elect John D. Diekman to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
4.An ordinary resolution to re-elect Richard Gaynor to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
5.An ordinary resolution to re-elect Nisa Leung to serve as a director until the 2024 annual general meeting of shareholders and until her successor is duly elected and qualified, subject to her earlier resignation or removal;
6.An ordinary resolution to re-elect William Lis to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
7.An ordinary resolution to re-elect Scott Morrison to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
8.An ordinary resolution to re-elect Leon O. Moulder Jr. to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
9.An ordinary resolution to elect Michel Vounatsos to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
10.An ordinary resolution to re-elect Peter Wirth to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
11.An ordinary resolution to approve the appointment of KPMG LLP and KPMG as the Company’s independent registered public accounting firms and auditors to audit our consolidated financial statements to be filed with the U.S. Securities and Exchange Commission (“SEC”) and the Hong Kong Stock Exchange for the year ending December 31, 2023, respectively;
12.An ordinary resolution to authorize the Board of Directors to fix auditor compensation for 2023;
13.An ordinary resolution to approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this Proxy Statement;
14.An ordinary resolution to approve a general mandate to the Board of Directors to allot and issue ordinary shares and/or ADSs of up to 20% of the total number of issued ordinary shares of the Company as of the date of passing of such ordinary resolution up to the 2024 annual general meeting of shareholders;
15.An ordinary resolution to approve a general mandate to the Board of Directors to allot and issue ordinary shares and/or ADSs of up to 10% of the total number of issued ordinary shares of the Company as of the date of passing of such ordinary resolution up to the 2024 annual general meeting of shareholders; and
16.To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.
The record date for the Annual Meeting is April
27, 2021.20, 2023 (ordinary share record date). Only shareholders of record as of
close of business (China Standard4:30 p.m. (Shanghai and Hong Kong Time) on April
27, 202120, 2023 are entitled to receive notice of, and to attend and to vote at the Annual Meeting or any adjournment thereof.
The latest date and time for lodging a share transfer in order to be registered as a shareholder on the record date is 4:30 p.m. (Shanghai and Hong Kong Time) on April 20, 2023.
Your vote is important to us. Whether or not you expect to attend the Annual Meeting, we urge you to vote your shares as soon as possible. The manner in which you hold your shares will dictate how you can vote:
Shareholders
of Ordinary Shares•If you are a shareholder of record of our ordinary shares registered on our Hong Kong register or Cayman Islands register as of the record date, you may vote your shares by submitting your proxy
through www.proxyvote.com no later than 11:59 p.m. on June 18, 2023 (U.S. Eastern Time) / 11:59 a.m. on June 19, 2023 (Shanghai and Hong Kong Time), or if you received printed proxy materials, you may submit your vote by completing, signing and dating each proxy card received and returning it in the prepaid envelope or
returning it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Sign your name exactly as it appears on the proxy card. Proxy cards submitted by mail must be received no later than 11:59 a.m. (U.S. Eastern Time) / 11:59 p.m. (Shanghai and Hong Kong Time) on June 19, 2023, to be voted at the Annual Meeting.
•If you are a beneficial owner of ordinary shares registered on the record date in the name of a brokerage firm, bank, or other financial institution, you should have received information containing voting instructions from that organization rather than from us. Simply follow the voting instructions so that your vote is counted. To vote at the Annual Meeting, you must obtain a legal proxy or broker’s proxy card from your broker, bank, or other agent. Follow the instructions from your broker or bank included with these proxy materials or contact your broker or bank to request a proxy form.
ADS Holders
•If you are a holder of record of our ADSs, each representing ten of our ordinary shares, as of 4:30 p.m. (U.S. Eastern Time) on April 20, 2023 who wishes to exercise your voting rights for the underlying ordinary shares, you must act through the depositary of the ADSs, Citibank, N.A. (“Citibank”), to vote the ordinary shares represented by your ADSs. Citibank will distribute information to ADS holders as of 4:30 p.m. (U.S. Eastern Time) on April 20, 2023 describing how voting instructions may be delivered to Citibank by ADS holders.
•If you are a beneficial owner of ADSs registered as of 4:30 p.m. (U.S. Eastern Time) on April 20, 2023 in the name of a brokerage firm, bank or other financial institution, you should have received information containing voting instructions from that organization rather than from Citibank. Simply follow the voting instructions so that your vote is counted.
By Order of the Board of Directors,
Samantha (Ying) Du
Director, Chairperson of the Board of Directors, and Chief Executive Officer
April 28, 2023
ZAI LAB LIMITED
PROXY STATEMENT FOR
2023 ANNUAL GENERAL MEETING OF SHAREHOLDERS
TABLE OF CONTENTS
| through www.proxyvote.com no later than 11:59 p.m. (Eastern Daylight Time) on June
| | | | | | | | | | |
| |
| | | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| PROPOSAL 13 | | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
| |
| | | |
ZAI LAB LIMITED
4560 Jinke Road
Bldg. 1, Fourth Floor
Pudong, Shanghai, China 201210
314 Main Street
4th Floor, Suite 100
Cambridge, MA, 02142
PROXY STATEMENT
FOR THE 2023 ANNUAL GENERAL MEETING OF SHAREHOLDERS
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON JUNE 20, 2023
This Proxy Statement and the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of Zai Lab Limited (the “Company” or “us”) are furnished in connection with the solicitation of proxies by the Board of Directors of the Company (the “Board of Directors” or “Board”) for use at the 2023 Annual General Meeting of Shareholders (the “Annual Meeting”), to be held at 8:00 a.m. (U.S. Eastern Time) on June 20, 2023 / 8:00 p.m. (Shanghai and Hong Kong Time) on June 20, 2023 at 4560 Jinke Road, Bldg. 1, Fourth Floor, Pudong, Shanghai, China 201210, and virtually at www.virtualshareholdermeeting.com/ZLAB2023 for the purpose of considering and, if thought fit, passing the resolutions specified in the Notice of the Annual Meeting. Our proxy materials, including this Proxy Statement and proxy card, are first being mailed to shareholders on or about April 28, 2023.
All references to “Zai Lab,” the “Company,” “we,” “us” or “our” in this Proxy Statement mean Zai Lab Limited.
| | |
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING |
Why am I receiving these materials?
You received these materials because the Board of Directors is soliciting your proxy to vote your shares at the Annual Meeting. As a shareholder of record of our ordinary shares as of 4:30 p.m. (Shanghai and Hong Kong Time) on April 20, 2023, you are invited to attend the Annual Meeting and are entitled to vote on the items of business described in this Proxy Statement. Holders of our ADSs will not be entitled to attend the Annual Meeting and cannot vote their ADSs directly. Holders of our ADSs as of the ADS record date (4:30 p.m. (U.S. Eastern Time) on April 20, 2023) may exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement by and among the Company, Citibank and the holders and beneficial owners of ADSs (the “deposit agreement”).
What does it mean if I receive more than one set of printed proxy materials?
If you hold your shares in more than one account, you may receive a separate set of printed proxy materials, including a separate proxy card or voting instruction form, for each account. To help ensure that all your shares are voted, please follow the instructions on each set of materials you receive to vote by Internet or by signing, dating, and returning a proxy card or voting instruction form for each account.
Why is the Annual Meeting a hybrid meeting?
This year we will continue to rely on the latest technology to host a “hybrid” Annual Meeting. We believe that the available technology provides expanded access, improved communication, and cost savings for our shareholders. Combined with allowing traditional in-person attendance, we believe this strikes a good balance between leveraging technology and maintaining the ability for our directors, employees, and shareholders to interact in person.
How do I attend the Annual Meeting?
If you are a shareholder of record of our ordinary shares, you may attend the Annual Meeting in person at 4560 Jinke Road, Bldg. 1, Fourth Floor, Pudong, Shanghai, China 201210, or virtually by visiting our Annual Meeting website at www.virtualshareholdermeeting.com/ZLAB2023. To participate in the Annual Meeting, you will need the 16-digit control number included on your proxy card or instructions that accompanied your proxy materials. Shareholders are encouraged to log in to this website and pre-register for the Annual Meeting before the start time of the meeting. Online check-in will begin 15 minutes prior to the start of the meeting, and you should allow ample time for the online check-in procedures. If you choose to attend the Annual Meeting virtually, there will be technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting website during the check-in or meeting time, please call the technical support number that will be posted on the Annual Meeting log-in page. Holders of ADSs will not be entitled to attend or vote at the Annual Meeting.
Who can vote at the Annual Meeting?
Only shareholders of record of our ordinary shares as of 4:30 p.m. (Shanghai and Hong Kong Time) on April 20, 2023 (Shanghai and Hong Kong Time) are entitled to vote at the Annual Meeting. As of 4:30 p.m. (Shanghai and Hong Kong Time) on April 20, 2023, we had 979,087,430 outstanding ordinary shares, all of which are entitled to vote with respect to all matters to be acted upon at the Annual Meeting, except those required to abstain from voting to approve the matter under consideration under the HK Listing Rules. Of these shares, approximately 743,576,320 were held in the name of Citibank, as depositary for the ADSs, each representing ten ordinary shares of our Company. Each shareholder of record of our ordinary shares is entitled to one vote for each ordinary share held by such shareholder. Holders of our ADSs cannot vote their ADSs directly. Instead, holders of our ADSs may exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement.
How do I submit questions at the Annual Meeting?
Although shareholders will have an opportunity to ask questions during the Annual Meeting, we encourage shareholders who wish to raise questions at the Annual Meeting to submit their questions in advance to the meeting. To submit questions in advance of the Annual Meeting, go to www.proxyvote.com before 8:00 a.m. (U.S. Eastern Time) / 8:00 p.m. (Shanghai and Hong Kong Time) on June 19, 2023 and enter the 16-digit control number included on your Notice.
What am I voting on?
There are 15 matters scheduled for a vote:
1.An ordinary resolution to re-elect Samantha (Ying) Du to serve as a director until the 2024 annual general meeting of shareholders and until her successor is duly elected and qualified, subject to her earlier resignation or removal;
2.An ordinary resolution to re-elect Kai-Xian Chen to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
3.An ordinary resolution to re-elect John D. Diekman to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
4.An ordinary resolution to re-elect Richard Gaynor to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
5.An ordinary resolution to re-elect Nisa Leung to serve as a director until the 2024 annual general meeting of shareholders and until her successor is duly elected and qualified, subject to her earlier resignation or removal;
6.An ordinary resolution to re-elect William Lis to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
7.An ordinary resolution to re-elect Scott Morrison to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
8.An ordinary resolution to re-elect Leon O. Moulder Jr. to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
9.An ordinary resolution to elect Michel Vounatsos to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
10.An ordinary resolution to re-elect Peter Wirth to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
11.An ordinary resolution to approve the appointment of KPMG LLP and KPMG, respectively, as the Company’s independent registered public accounting firms and auditors to audit our consolidated financial statements to be filed with the SEC and Hong Kong Stock Exchange for the year ending December 31, 2023, respectively;
12.An ordinary resolution to authorize the Board of Directors to fix auditor compensation for 2023;
13.An ordinary resolution to approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this Proxy Statement;
14.An ordinary resolution to approve a general mandate to the Board of Directors to allot and issue ordinary shares and/or ADSs of up to 20% of the total number of issued ordinary shares of the Company as of the date of passing of such ordinary resolution up to the 2024 annual general meeting of shareholders; and
15.An ordinary resolution to approve a general mandate to the Board of Directors to allot and issue ordinary shares and/or ADSs of up to 10% of the total number of issued ordinary shares of the Company as of the date of passing of such ordinary resolution up to the 2024 annual general meeting of shareholders.
What if another matter is properly brought before the meeting?
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment. If required by the HK Listing Rules, the Company will publish a supplementary circular or announcement in accordance with the HK Listing Rules.
How does the Board of Directors recommend that I vote?
The Board of Directors unanimously recommends that you vote:
1.FOR the ordinary resolution to re-elect Samantha (Ying) Du to serve as a director until the 2024 annual general meeting of shareholders and until her successor is duly elected and qualified, subject to her earlier resignation or removal;
2.FOR the ordinary resolution to re-elect Kai-Xian Chen to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
3.FOR the ordinary resolution to re-elect John D. Diekman to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
4.FOR the ordinary resolution to re-elect Richard Gaynor to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
5.FOR the ordinary resolution to re-elect Nisa Leung to serve as a director until the 2024 annual general meeting of shareholders and until her successor is duly elected and qualified, subject to her earlier resignation or removal;
6.FOR the ordinary resolution to re-elect William Lis to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
7.FOR the ordinary resolution to re-elect Scott Morrison to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
8.FOR the ordinary resolution to re-elect Leon O. Moulder Jr. to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
9.FOR the ordinary resolution to elect Michel Vounatsos to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
10.FOR the ordinary resolution to re-elect Peter Wirth to serve as a director until the 2024 annual general meeting of shareholders and until his successor is duly elected and qualified, subject to his earlier resignation or removal;
11.FOR the ordinary resolution to approve the appointment of KPMG LLP and KPMG as the Company’s independent registered public accounting firms and auditors to audit our consolidated financial statements to be filed with the SEC and Hong Kong Stock Exchange for the year ending December 31, 2023, respectively;
12.FOR the ordinary resolution to authorize the Board of Directors to fix auditor compensation for 2023;
13.FOR the ordinary resolution to approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this Proxy Statement;
14.FOR the ordinary resolution to approve a general mandate to the Board of Directors to allot and issue ordinary shares and/or ADSs of up to 20% of the total number of issued ordinary shares of the Company as of the date of passing of such ordinary resolution up to the 2024 annual general meeting of shareholders; and
15.FOR the ordinary resolution to approve a general mandate to the Board of Directors to allot and issue ordinary shares and/or ADSs of up to 10% of the total number of issued ordinary shares of the Company as of the date of passing of such ordinary resolution up to the 2024 annual general meeting of shareholders.
How do I vote?
Shareholders of Record of Ordinary Shares
If you are a shareholder of record of our ordinary shares registered on our Hong Kong register or Cayman Islands register as of the record date, you may vote at the Annual Meeting, in person or virtually, through the Internet in advance of the Annual Meeting, or by proxy using a proxy card. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to help ensure your vote is counted. You may still attend the meeting and vote even if you have already voted by proxy; such appointment of proxy will be revoked if you attend and vote at the Annual Meeting.
•To vote using a proxy card, simply complete, sign and date the proxy card that may be delivered and return it promptly in the prepaid envelope provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Proxy cards submitted by mail must be received no later than 11:59 a.m. (U.S. Eastern Time) / 11:59 p.m. (Shanghai and Hong Kong Time) on June 19, 2023, to be voted at the Annual Meeting.
•To vote through the Internet, go to www.proxyvote.com to complete an electronic voting instruction form. You will be asked to provide the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials.. Your Internet vote must be received by 11:59 p.m. on June 18, 2023 (U.S. Eastern Time) / 11:59 a.m. on June 19, 2023 (Shanghai and Hong Kong Time) to be counted.
•To vote while virtually attending the Annual Meeting, attend the meeting by visiting www.virtualshareholdermeeting.com/ZLAB2023. You will be asked to provide the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials.
•To vote in person at the Annual Meeting, attend the meeting by going to 4560 Jinke Road, Bldg. 1, Fourth Floor, Pudong, Shanghai, China 201210.
Beneficial Owners of Ordinary Shares
If you are a beneficial owner of ordinary shares registered on the record date in the name of a brokerage firm, bank or other financial institution, you should have received information containing voting instructions from that organization rather than from us. Simply follow the voting instructions to help ensure that your vote is counted. To vote at the Annual Meeting, you must obtain a legal proxy or broker’s proxy card from your broker, bank or other agent. Follow the instructions from your broker or bank included with these proxy materials or contact your broker or bank to request a proxy card.form.
ADS
HoldersIf you are a holder of record of our American Depositary Share(s), or ADS(s), each representing one of our ordinary shares, as of the close of business (Eastern Daylight Time) on April 27, 2021 who wishes to exercise your voting rights for the underlying ordinary shares, you must act through Citibank, N.A., the depositary of the ADSs.
If you are a beneficial owner of ADSs registered as of the close of business (Eastern Daylight Time) on April 27, 2021 in the name of a brokerage firm, bank or other financial institution, you should have received information containing voting instructions from that organization rather than from Citibank, N.A. Simply follow the voting instructions to ensure that your vote is counted.
By Order of the Board of Directors,
Samantha (Ying) Du
Director, Chairwoman of the Board of Directors and Chief Executive Officer
April 30, 2021
ZAI LAB LIMITED
PROXY STATEMENT FOR
2021 ANNUAL GENERAL MEETING OF SHAREHOLDERS
TABLE OF CONTENTS
-i-
ZAI LAB LIMITED
4560 Jinke Road
Bldg. 1, Fourth Floor
Pudong, Shanghai, China 201210
PROXY STATEMENT
FOR THE 2021 ANNUAL GENERAL MEETING OF SHAREHOLDERS
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON JUNE 24, 2021
This Proxy Statement and the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 of Zai Lab Limited, or the Company or us, are available for viewing, printing and downloading at www.proxyvote.com. To view these materials, please have your 16-digit control number included on your Notice of Internet Availability of Proxy Materials.
You may also obtain a printed copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and our annual report prepared according to the HK Listing Rules, or the HK Annual Report, including audited consolidated financial statements, free of charge by sending a written request to: Zai Lab Limited at Building 1, 4/F, Jinchuang Plaza, 4560 Jinke Road, Pudong, Shanghai, China 201210, Attention Corporate Secretary. Exhibits to our Annual Report on Form 10-K will be provided upon written request and payment of an appropriate processing fee. Copies of our Annual Report on Form 10-K and this Proxy Statement are also available online through the U.S. Securities and Exchange Commission, or the SEC, at www.sec.gov, The Stock Exchange of Hong Kong Limited, or the HKEx, at www.hkexnews.hk and on our website at https://www.zailaboratory.com/ under “Investors (Nasdaq)” and “Investors (HKEX).” Copies of our HK Annual Report are also available online through the HKEx at www.hkexnews.hk and on our website at https://www.zailaboratory.com/ under “Investors (HKEX).”
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials over the Internet. Accordingly, we have sent you a Notice of Internet Availability of Proxy Materials, or the Notice, because our Board of Directors is soliciting your proxy to vote at the Annual Meeting, including at any adjournments or postponements of the meeting. All shareholders will have the ability to access the proxy materials on the website referred to in the Notice or ask to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. We intend to mail the Notice on or about April 30, 2021 to all shareholders of record entitled to vote at the Annual Meeting.
We encourage you to take advantage of the availability of the proxy materials on the Internet in order to help lower the costs of delivery and reduce the Company’s environmental impact.
Will I receive any other proxy materials by mail?
We may send you a proxy card or a second notice on or after May 10, 2021. Holders of record of our American Depositary Share(s), or ADS(s), as of the close of business (Eastern Daylight Time) on April 27, 2021, or the ADS record date, will receive ADS voting instructions from Citibank, N.A., or Citibank, the depositary of the ADSs.
-1-
Record
Why am I receiving these materials?
You received these materials because our Board of Directors is soliciting your proxy to vote your shares at its 2021 Annual General Meeting of Shareholders, or the Annual Meeting. As a shareholder of record as of close of business (China Standard Time) on April 27, 2021, you are invited to attend the Annual Meeting and are entitled to vote on the items of business described in this proxy statement. Holders of our ADS(s) will not be entitled to attend the Annual Meeting and cannot vote their ADSs directly. Holders of our ADSs as of the ADS record date may exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement among the Company, Citibank and the holders and beneficial owners of ADSs, or the deposit agreement.
What does it mean if I receive more than one notice regarding the Internet availability of proxy materials or more than one set of printed proxy materials?
If you hold your shares in more than one account, you may receive a separate Notice of Internet Availability of Proxy Materials or a separate set of printed proxy materials, including a separate proxy card or voting instruction form, for each account. To ensure that all your shares are voted, please vote by Internet or by signing, dating and returning a proxy card or voting instruction form for each account.
Why is the Annual Meeting a hybrid meeting this year?
Due to the ongoing public health impact of the COVID-19 pandemic and to support the health and well-being of our directors, employees and shareholders, this year we are relying on the latest technology to host a “hybrid” Annual Meeting. We believe that embracing the latest technology provides expanded access, improved communication and cost savings for our shareholders. Combined with allowing traditional in-person attendance, we believe this strikes the right balance between leveraging technology and maintaining the ability for our directors, employees and shareholders to interact in person.
How do I attend the Annual Meeting?
You may attend the Annual Meeting if you are shareholder of record of our ordinary shares physically at Building 1, 4/F, Denali Room, Jinchuang Plaza, 4560 Jinke Road Shanghai, China 201210, or virtually by visiting our Annual Meeting website at www.virtualshareholdermeeting.com/ZLAB2021. To participate in the Annual Meeting, you will need the 16-digit control number included on your Notice, on your proxy card or on the instructions that accompanied your proxy materials. Shareholders are encouraged to log in to this website and pre-register for the Annual Meeting before the start time of the meeting. Online check-in will begin 15 minutes prior to the start of the meeting, and you should allow ample time for the online check-in procedures. If you choose to attend the Annual Meeting virtually, there will be technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting website during the check-in or meeting time, please call the technical support number that will be posted on the Annual Meeting log-in page. Holders of ADSs will not be entitled to attend or vote at the Annual Meeting.
Who can vote at the Annual Meeting?
Only shareholders of record of our ordinary shares as of close of business (China Standard Time) on April 27, 2021 are entitled to vote at the Annual Meeting. As of close of business (China Standard Time) on April 27, 2021, we had 94,684,743 outstanding ordinary shares, all of which are entitled to vote with respect to all matters to be acted upon at the Annual Meeting. Of these shares, approximately 65,326,281 of the 94,684,743 outstanding ordinary shares were held in the name of Citibank, as depositary for the ADSs, each representing one ordinary share of our Company. Each shareholder of record is entitled to one vote for each ordinary share held by such shareholder. Holders of our ADS(s) cannot vote their ADSs directly. Instead, holders of our ADSs may exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement.
-2-
How do I submit questions at the Annual Meeting?
Shareholders who wish to raise questions at the Annual Meeting must submit their questions prior to the meeting. To submit questions in advance of the Annual Meeting, go to www.proxyvote.com before 11:59 p.m. on June 15, 2021 and enter the 16-digit control number included on your Notice.
What am I voting on?
There are four matters scheduled for a vote:
| 1. | A special resolution to consider and approve amending and restating the Fourth Amended and Restated Articles of Association of Zai Lab Limited, or the Current Articles, to provide for the annual election of each of the Company’s directors.
|
| 2. | A special resolution to consider and approve amending and restating the Current Articles to reflect changes required or recommended by The Stock Exchange of Hong Kong Limited.
|
| 3. | A special resolution to consider and approve that, conditional upon the approval of special resolutions 1 and 2, the Current Articles be amended, restated and replaced in their entirety by the Fifth Amended and Restated Articles of Association in the form attached hereto as Exhibit A.
|
| 4. | An ordinary resolution to ratify the selection of Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu as the Company’s independent auditors for the fiscal year ending December 31, 2021.
|
What if another matter is properly brought before the meeting?
Our Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
How does the Board of Directors recommend that I vote?
Our Board of Directors unanimously recommends that you vote:
| 1. | FOR the special resolution to consider and approve amending and restating the Current Articles to provide for the annual election of each of the Company’s directors.
|
| 2. | FOR the special resolution to consider and approve amending and restating the Current Articles to reflect changes required or recommended by The Stock Exchange of Hong Kong Limited.
|
| 3. | FOR the special resolution to approve that, conditional upon the approval of special resolutions 1 and 2, the Current Articles be amended, restated and replaced in their entirety by the Fifth Amended and Restated Articles of Association in the form attached hereto as Exhibit A.
|
| 4. | FOR the ordinary resolution to ratify the selection of Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu as the Company’s independent auditors for the fiscal year ending December 31, 2021.
|
Why aren’t we voting for the election of directors at the Annual Meeting?
Cayman law does not require annual election of directors, and the Current Articles provide that each member of our Board of Directors holds office until the expiration of his or her term and until his or her successor shall have been elected and qualified. Our Board of Directors has considered the advantages and disadvantages of providing for annual election of directors and has concluded that annual election is in the Company’s best interests and the best interests of its shareholders. Accordingly, Proposal 1 at this Annual Meeting is a special resolution for the
-3-
Company’s shareholders to consider and approve amending and restating the Current Articles to provide for the annual election of each of the Company’s directors. If approved, Proposal 1 will permit the Company’s shareholders to vote on the election of all directors every year for one-year terms beginning with the next annual meeting to be held in 2022.
How do I vote?
Shareholders of Record
If you are a shareholder of record of our ordinary shares registered on our Hong Kong register or Cayman Islands register as of the record date, you may vote at the Annual Meeting, vote by proxy through the Internet or vote by proxy using a proxy card that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote even if you have already voted by proxy.
To vote using a proxy card, simply complete, sign and date the proxy card that may be delivered and return it promptly in the envelope provided. Proxy cards submitted by mail must be received no later than June 18, 2021, to be voted at the Annual Meeting.
| • | | To vote through the Internet, go to www.proxyvote.com to complete an electronic voting instruction form. You will be asked to provide the 16-digit control number included on your Notice. Your Internet vote must be received by 11:59 p.m. (Eastern Daylight Time) on June 21, 2021 to be counted.
|
| • | | To vote while virtually attending the Annual Meeting, attend the meeting by visiting www.virtualshareholdermeeting.com/ZLAB2021. You will be asked to provide the 16-digit control number included on your Notice.
|
To vote while physically attending the Annual Meeting, attend the meeting by going to Building 1, 4/F, Denali Room, Jinchuang Plaza, 4560 Jinke Road Shanghai, China 201210.
Beneficial Owners
If you are a beneficial owner of ordinary shares registered on the record date in the name of a brokerage firm, bank or other financial institution, you should have received information containing voting instructions from that organization rather than from us. Simply follow the voting instructions to ensure that your vote is counted. To vote at the Annual Meeting, you must obtain a legal proxy or broker’s proxy card from your broker, bank or other agent. Follow the instructions from your broker or bank included with these proxy materials or contact your broker or bank to request a proxy card.
Holders of Record of ADSs
Holders of record of our ADSs as of the ADS record date (4:30 p.m. (U.S. Eastern Time) on April 20, 2023) who wish to exercise their voting rights for the underlying ordinary shares must act through Citibank. The deposit agreement permits registered ADS holders of ADSs as of the ADS record date to instruct Citibank to exercise the voting rights for the ordinary shares represented by ADSs. Citibank has agreed that it will endeavor, insofar as practicable and permitted under applicable law and the provisions of the Deposit Agreement,deposit agreement, to vote the securities (in person or by proxy) represented by the holder’s ADSs in accordance with such voting instructions as follows:
In the event of voting by a show of hands,ADSs. Citibank will vote (or cause theits custodian to vote) all ordinary shares held on deposit at that time in accordance with the voting instructions received from a majority of holders who provide timely voting instructions.
In the event of voting by poll, Citibank will vote (or cause the Custodian to vote) the ordinary shares held on deposit in accordance with the voting instructions received from the holders.
-4-
In the event ofADS holders who provide timely voting by poll,instructions.
ADS holders of record of ADSs in respect of which nothat have not provided timely voting instructions have been received shall be deemed to have instructed Citibank to give a discretionary proxy to a person designated by us to vote the ordinary shares represented by such holders’ ADSs; provided that no such instructions shall be deemed given and no such discretionary proxy shall be given with
respect to any matter as to which we inform Citibank that we do not wish such proxy to be given; provided, further, that no such discretionary proxy shall be given (x) with respect to any matter as to which we inform Citibank that (i) there exists substantial opposition, or (ii) the rights of ADS holders or the shareholders of the Company will be materially adversely affected, and (y) inaffected.
Citibank will distribute information to ADS holders as of the
event that the vote isADS record date (4:30 p.m. (U.S. Eastern Time) on April 20, 2023) describing how voting instructions may be delivered to Citibank by
a show of hands.InstructionsADS holders.
To be considered timely, instructions from the ADS holders must be sent to Citibank so that the instructions are received by no later than 10:00 a.m.
(Eastern Daylight(U.S. Eastern Time) on June
11, 2021.12, 2023.
Beneficial Owners of ADSs
If you are a beneficial owner of ADSs registered on the ADS record date in the name of a brokerage firm, bank or other financial institution, you should have received information containing voting instructions from that organization rather than from Citibank. Simply follow the voting instructions to
help ensure that your vote is counted.
If a holder of ADSs cancels his, her or its ADSs in exchange for ordinary shares on or prior to the ADS record date, such holder of ADSs will not be able to instruct Citibank, as depositary of the ADSs, as to how to vote the ordinary shares represented by the canceled ADSs as described above. Holders of ADSs who wish to cancel their ADSs in exchange for ordinary shares for the purpose of voting the ordinary shares directly will need to make arrangements to deliver their ADSs to Citibank, as depositary of the ADSs, for cancellation with sufficient time to allow for the completion of the delivery and, if applicable, the
re-registration of the ordinary shares on our
Company’s register of members in Hong Kong
register prior to the
ordinary share record date, together with (a) delivery instructions for the corresponding ordinary shares (including, if applicable, the name and address of person(s) who will be the registered holder of such ordinary shares) and (b) payment of the ADS depositary fees associated with such ADS cancellation
($(US$0.05 per ADS to be cancelled) and any applicable taxes. If ADSs are held in a brokerage firm, bank or other financial institution, please contact the broker, bank or other financial institution to find out what actions need to be taken to instruct the broker, bank or other financial institution to present the ADSs for cancellation. Please be aware that there are no guarantees of timely delivery or
re-registration of ordinary shares prior to the record date due to the time differences between
U.S. Eastern
Daylight Time and
China StandardShanghai and Hong Kong Time,
andas well as the time required
to processfor processing the ADS cancellations, the delivery of our ordinary shares and, if applicable, the
re-registration of our ordinary shares on the
Company’s register of members in Hong
Kong register.Kong.
What are “broker
non-votes”?A “broker
non-vote” occurs when a
U.S. brokerage firm, bank, or other financial institution holding shares for a beneficial owner of ordinary shares does not vote the shares on a proposal because the
U.S. brokerage firm, bank, or other financial institution does not have discretionary voting power for a particular item and has not received instructions from the beneficial owner regarding
voting. Brokeragevoting of their shares. U.S. brokerage firms, banks, and other nominees who hold shares for the accounts of their clients have discretionary authority to vote shares if specific instructions are not given with respect to routine matters. Although the determination of whether a brokerage firm, bank, or other financial institution will have discretionary voting power for a particular item is typically determined only after proxy materials are filed with the SEC, we expect that the
special resolutionordinary resolutions to
consider and approve amending and restatingelect the
Current Articles to provide for the annual election of each of the Company’s directors (Proposal 1), the special resolution to consider and approve amending and restating the Current Articles to reflect changes required or recommended by The Stock Exchange of Hong Kong Limited (Proposal 2) and the special resolution to consider and approve that, conditional upon the approval of special Proposals 1 and 2, the Current Articles be amended, restated and replaceddirector nominees as set forth in
their entirety by the Fifth Amended and Restated Articles of Association in the-5-
form attached hereto as Exhibit A (Proposal 3)this Proxy Statement (Proposals 1-10) will be considered non-routine matters, and the ordinary resolution to ratify the selectionappointment of Deloitte Touche Tohmatsu Certified Public AccountantsKPMG LLP and Deloitte Touche TohmatsuKPMG, respectively, as the Company’s independent registered public accounting firms and auditors (Proposal 11), the ordinary resolution to authorize the Board of Directors to fix auditor compensation for 2023 (Proposal 12), the fiscal year ending December 31, 2021ordinary resolution to approve, on an advisory basis, the compensation of the Company’s named executive officers (Proposal 4)13), and the ordinary resolutions with respect to a general mandate (Proposals 14 and 15) will be routine matters. Discretionary proxies exercised by U.S. brokerage firms, banks, or other financial institutions with respect to our ADSs will be processed by Citibank in accordance with the provisions of the deposit agreement.
Brokerage firms, banks or other financial institutions holding shares for a
routine matter.beneficial owner of our ordinary shares listed for trading on the Hong Kong Stock Exchange and held in Central Clearing and Settlement System (“CCASS”) in Hong Kong do not have discretionary authority to vote shares if specific instructions are not given by the beneficial owner of the ordinary shares. Accordingly, if your shares
listed for trading on the Hong Kong Stock Exchange are held by a brokerage firm, bank or other financial institution on your behalf
in CCASS in Hong Kong and you do not instruct the brokerage firm, bank or other financial institution as to how to vote your shares, your brokerage firm, bank or other financial institution will
not be entitled to exercise discretion to vote your
shares only on Proposal 4, but your brokerage firm, bank or other financial institution may not exercise discretion to vote on the other proposals. Discretionary proxies with respect to our ordinary shares underlying our ADSs will be processed by Citibank in accordance with the provisions of the deposit agreement.shares.
Votes will be counted by the inspector of election appointed for the meeting. Consistent with the laws of the Cayman Islands, abstentions and broker
non-votes will be counted for the purpose of determining the presence or absence of a quorum. If you return a signed and dated proxy card or otherwise vote without marking voting selections,
your sharesthe proxy will
be voted, as applicable, “FOR” the special resolutionexercise discretion on whether to
considervote and,
approve amending and restating the Current Articles to provide for the annual election of each of the Company’s directors (Proposal 1), “FOR” the special resolution to consider and approve amending and restating the Current Articles to reflect changes required or recommended by The Stock Exchange of Hong Kong Limited (Proposal 2), “FOR” the special resolution to consider and approve that, conditional upon the approval of special Proposals 1 and 2, the Current Articles be amended, restated and replaced in their entirety by the Fifth Amended and Restated Articles of Association in the form attached hereto as Exhibit A (Proposal 3) and “FOR” the ratification of the selection of Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu as the Company’s independent registered public accounting firms for the fiscal year ending December 31, 2021 (Proposal 4).if so, how. Our shareholders have no rights under the Cayman
Islands Companies
LawAct or under our
articlesSixth Amended and Restated Memorandum and Articles of Association (“Current Articles”) to exercise dissenters’ or appraisal rights with respect to the proposals being voted on.
Can I revoke or change my vote after I submit my proxy?
If you are the record holder of
yourordinary shares, you may revoke your proxy in any one of the following ways:
•You may submit another properly completed proxy card with a later date.
•You may grant a subsequent proxy through the Internet.
•You may send a timely written notice that you are revoking your proxy to Zai Lab Limited, Building 1, 4/F, Jinchuang Plaza, 4560 Jinke Road, Pudong, Shanghai, China 201210,314 Main Street, Fourth Floor, Suite 100, Cambridge, MA 02142, Attention: Corporate Secretary.
•You may attend the Annual Meeting and vote electronically.electronically during the Annual Meeting. Simply attending the Annual Meeting will not, by itself, revoke your proxy.
Your most current proxy card or Internet proxy is the one that is counted.
If you are the holder of record of ADSs, directly or through a broker, bank, or other nominee, you must follow the instructions provided by Citibank or such broker, bank, or other nominee if you wish to change your vote. The last instructions you submit prior to the deadline indicated by Citibank or the broker, bank, or other nominee, as applicable, will be used to instruct Citibank how to vote your ADSs.
Will my shares be counted if I do not vote?
If
Your shares will not be voted at the Annual Meeting if you are the shareholder of record and you do not vote before the Annual Meeting by proxy card, or via the Internet, or during the Annual Meeting,
in person or virtually via the
Internet, your shares will not be voted at the Annual Meeting.Internet.
What if I return my proxy card but do not provide voting instructions?
Abstentions and broker
non-votes will be counted for the purpose of determining the presence or absence of a quorum, but will not be counted for the purpose of determining the number of votes cast on a given proposal. If you return a signed and dated proxy card or otherwise vote without marking voting selections,
your sharesthe proxy will
be voted in accordance with the recommendations of our Board of Directors set forth above.-6-
exercise discretion on whether to vote and, if so, how.
What is the quorum requirement?
Pursuant to the Current Articles, the quorum required for a general meeting of shareholders consists of one or more shareholders holding not less than an aggregate of one-thirdone-tenth of all voting share capital of the Company in issue who
are present in person, virtually or by proxy and entitled to vote.
As of close of business (China Standard Time) on April 27, 2021, there were 94,684,743 shares outstanding and entitled to vote. Thus, the holders of 31,561,581 shares must be present or represented by proxy at the Annual Meeting to have a quorum. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank, or other nominee) or if you vote electronically
or in person at the Annual Meeting. Abstentions and broker
non-votes will be counted
towardsfor the
quorum requirement.purpose of determining the presence or absence of a quorum. If there is no quorum, the holders of a majority of the shares present at the meeting or represented by proxy may adjourn the meeting to another date.
How many votes are needed to approve each proposal?
An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes cast by the shareholders entitled to vote who are present in person, virtually or by proxy at a general meeting, while a special resolution requires the affirmative vote of at least two-thirds of the votes cast by the shareholders entitled to vote who are present in person, virtually or by proxy at a general meeting. Proposals 1, 2 and 31-15 of this Proxy Statement are specialordinary resolutions. Proposal 4 of this Proxy Statement is an ordinary resolution. If you “Abstain” from voting, it will have no effect on the same effectoutcome of the vote on these proposals because abstentions do not count as an “Against” vote.a vote cast. Broker non-votes will have no effect on the results of this vote.the vote on these proposals.
Who is paying the expenses of solicitation?
We are making this solicitation and will pay the
entire cost of preparing and distributing the proxy materials and soliciting votes. If you choose to access the proxy materials over the Internet, you are responsible for any Internet access charges that you may incur. Our officers, directors, and employees may, without compensation other than their regular compensation, solicit proxies through further mailings, personal conversations, facsimile transmissions, emails or otherwise.
Proxies may be solicited by telephone, email, facsimile, personalWe will also pay proxy solicitation
or otherwise. Proxy solicitation expenses
that we will pay include those for preparation, mailing, returning, and tabulating the proxies.
When are shareholder proposals and director nominations due for next year’s annual meeting?
The Cayman
Islands Companies Act provides shareholders with only limited rights to requisition a general meeting and does not provide shareholders with a right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. The Current Articles allow our shareholders holding in aggregate not less than
one-thirdone-tenth of the share capital of the Company and entitled to vote at general meetings to requisition an extraordinary general meeting of our shareholders, in which case
ourthe Board of Directors may duly convene an extraordinary general meeting and submit the resolutions put forward to a vote at such meeting. As a Cayman Islands exempted company, we are not obligated by law to call
shareholders’ annual general meetings,
andhowever, under the Current Articles,
do not require shareholders’the Company shall hold an annual general
meetings.meeting every year.
Shareholders may present proper proposals for inclusion in our proxy statement and for consideration at our next annual general meeting of shareholders by submitting their proposals in writing to us in a timely manner. In order to be considered for inclusion in the proxy statement for the
20222024 annual general meeting of shareholders, shareholder proposals (including
a director
nomination)nominations) must be received at our principal executive offices no later than December
31, 2021,30, 2023, and must otherwise comply with the requirements of Rule
14a-8 of
the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act.
If we do not receive notice of the proposal or nomination at our principal executive offices prior to such date, such proposal or nomination will be considered untimely for purposes of Rule 14a-8. If a shareholder wishes to propose a person for election as a director of the Company (a “Candidate”) at our next annual general meeting, such shareholder must lodge a written notice at our principal place of business, with a copy forwarded to our registered office. The period for lodgment of such notice shall be a period commencing on the day after the dispatch of the notice of such meeting and ending on the earlier of (i) seven (7) days after the date of such notice or (ii) seven (7) days prior to the date of such meeting (or such other period, being not less than seven (7) days, commencing no earlier than the day of dispatch of the notice of such meeting and ending no later than seven (7) days prior to the date appointed for such meeting, as may be determined by the Board of Directors from time to time). Such written notice must include the background information on the Candidate required by Rule 13.51(2) of the HK Listing Rules. Any
other shareholder proposal for the
2024 annual general meeting of shareholders
in 2022 which is submitted outside the processes of
Exchange Act Rule
14a-8 (including a director
nomination)nomination under Rule 13.70 of the HK Listing Rules) shall be considered untimely unless received by the Company in writing no later than March
15, 2022.14, 2024. If the date of the annual general meeting is moved by more than 30 days from the date
-7-
contemplated at the time of the previous year’s proxy
statement, then notice must be received within a reasonable time before we begin to print and send proxy materials. If that happens, we will publicly announce the deadline for submitting a proposal in a press release or in a document filed with the SEC and announced in Hong Kong via the website of Hong Kong Exchange and Clearing Limited (www.hkexnews.hk). A copy of all notices of proposals by shareholders should be sent to Chief Legal Officer & Corporate Secretary, Zai Lab Limited, Building 1, 4/F Jinchuang Plaza, 4560 Jinke Road, Pudong, Shanghai, China 201210.314 Main Street, Fourth Floor, Suite 100, Cambridge, MA 02142. Additionally, any shareholder that intends to solicit proxies in support of a director nominee other than our Board’s nominees must also comply with Rule 14a-19 under the Exchange Act.
When will the Company announce the voting results?
Results of the Annual Meeting will be posted on the website of the Company (https://www.zailaboratory.com/) and on the website of HKExthe Hong Kong Stock Exchange (www.hkexnews.hk) during the pre-market session on the next business day following the conclusion of the Annual Meeting and on the website of the SEC (www.sec.gov) in a Current Report on Form 8-K filed by us within four business days of the conclusion of the Annual Meeting.All references to “Zai Lab,” the “Company,” “we,” “us” or “our” in this Proxy Statement mean Zai Lab Limited.
-8-
MATTERS REQUIRING SHAREHOLDER ACTION
-9-
PROPOSAL 1
AS A SPECIAL RESOLUTION, APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE CURRENT ARTICLES TO PROVIDE FOR ANNUAL
| | |
| MATTERS REQUIRING SHAREHOLDER ACTION |
PROPOSALS 1-10
Description of the
ProposalProposals
The Board of Directors
approved, adopted and declared advisable amending and restatingcurrently has ten members, all of whom are up for re-election or election at the Annual Meeting in accordance with the Current
Articles to provide for the annual election of directors.Purpose of Proposed Amendment
Articles. The Board of Directors approved, adopted and declared advisable the amendment and restatementrecommends shareholder approval of the Current Articles to providere-election or election, as applicable, for each of these nominees. If elected at the annual electionAnnual Meeting, each of directors. The Board of Directors regularly reviews the Company’s corporate governance practices. After careful consideration, the Board of Directors determined that itthese nominees would be in the Company’s best interests and the best interests of the Company’s shareholders to allow the shareholders to vote on the election of the entire Board of Directors each year. If this Proposal 1 is approved by the shareholders, the Current Articles will be amended and restated in their entirety to provide for the annual election of directors.
Cayman law does not require the annual election of directors and the Current Articles provide that each director holds officeserve until the expiration of his or her term2024 annual general meeting and until his or her successor shall havehas been duly elected and qualified. Aqualified or, if sooner, until the director’s death, resignation, or removal. For additional information on the Company’s corporate governance practices, including information on director elections and nominations, see Corporate Governance. For additional information on compensation for our non-employee directors, see Director mayCompensation. We will not enter into service contracts with our independent directors. For information on our employment agreement with our Chief Executive Officer, who also be removed from office by ordinary resolution or byserves Chairperson of the Board at any time beforeof Directors, see CD&A - Employment Agreements.
Director Biographical Information
Set forth below is biographical information as of April 1, 2023 for our directors, which has been confirmed by each of them for inclusion in this Proxy Statement. We have provided their current Board and Committee roles as well as a summary of the expirationexperiences, qualifications, attributes, and skills that led the Board to conclude that each director should serve as a director in light of his or her term. Theour business and structure. As discussed in Corporate Governance – Director Independence of Directors, the Board of Directors has considereddetermined that all of our director nominees, other than our Chief Executive Officer Dr. Du, are independent under the advantagesNasdaq listing rules and disadvantagesHK Listing Rules. So far as the Board of providing forDirectors is aware, there is no other information which is disclosable pursuant to HK Listing Rule 13.51(2)(h) to (v) or other matters that need to be brought to the annual electionattention of directorsthe shareholders of the Company.
Samantha (Ying) Du, Ph.D.
Founder, Chairperson of the Board of Directors, and has concluded that annual electionChief Executive Officer
| | | | | | | | | | | |
| Age | Director Since | Board Committees | Other Public Company Boards |
| 58 | 2014 | Research and Development | None |
Dr. Du is inan experienced executive and entrepreneur with significant global leadership experience who brings to the best interestsBoard a deep knowledge of the capital markets and the biotechnology, healthcare, and pharmaceutical industries as well as a considerable scientific background. In addition, as the Company’s Founder and Chief Executive Officer, Dr. Du provides valuable knowledge of the Company and its shareholders. Although Cayman law does not require the annual electionbusiness.
Key Experience and Qualifications
•Founder, Chief Executive Officer, and Chairperson of directors, the Board of Directors believes thatof Zai Lab (2014-Present)
•Healthcare Partner (2012-2014) and Venture Partner (2014-2017) at Sequoia Capital China, leading several major healthcare investments
•Co-Founder and Chief Executive Officer of Hutchison MediPharma and Co-Founder and Chief Scientific Officer of Hutchison China MediTech (2001-2011)
•Began her research career at Pfizer Inc. in the electionUnited States, where she led the global metabolic licensing program and was involved in the development of directorsmultiple early and late-stage products (1994-2001)
•Ph.D. in Biochemistry from the University of Cincinnati and a B.S. in Molecular Biology from Jilin University, China
John David Diekman, Ph.D.
Lead Independent Director
| | | | | | | | | | | |
| Age | Director Since | Board Committees | Other Public Company Boards |
| 80 | 2017 | Audit Compensation Nominating and Corporate Governance | None |
Dr. Diekman is a primary means for shareholdersan experienced executive who brings to influence corporate governance policiesthe Board extensive business, management, policy, and increasecapital markets experience as well as deep expertise in the life sciences and venture capital industries, including in the area of oncology.
Key Experience and Qualifications
•Founder and Managing Partner of 5AM Ventures (2002-Present)
•Chairman of the Board of Directors’Directors of IDEAYA Biosciences, Inc. (NASDAQ) (2015-June 2020)
•Chairman of The Scripps Research Institute and management’s accountabilityon the Advisory Board of the Schaeffer Center for Health Policy and Economics at the University of Southern California (2014-March 2021), Charter Trustee of Princeton University (2008-June 2019), and Trustee of The California Institute of Technology (2004-2008)
•Ph.D. in Chemistry from Stanford University and an A.B. in Organic Chemistry from Princeton University
Kai-Xian Chen, Ph.D.
Independent Director
| | | | | | | | | | | |
| Age | Director Since | Board Committees | Other Public Company Boards |
| 77 | 2018 | Research and Development | Innovent Biologics, Inc. (HKSE) InnoCare Pharma Limited (HKSE) Jiangsu Kanion Pharmaceutical Co., Ltd. (SSE) |
Professor Chen brings to shareholders. The annual electionthe Board an extensive and distinguished scientific and academic background and considerable service as a member of several prestigious Chinese institutional and research organizations and as a member of the board of directors will provide the Company’s shareholders with the opportunity to register their views on the performancefor various biopharmaceutical companies.
Key Experience and Qualifications
•Member of the entireChief Specialists Board and Deputy Chief Technical Officer of the major science and technology projects “innovative drugs and modernization of traditional Chinese medicine” and “Innovative Drug Research & Development,” where he participated in the organization and promotion of new drug research and development for China’s 10th -13th Five Year Plans (2001-Present)
•Member of the Board of Directors each year.If approved,of InnoCare Pharma Limited (March 2020-Present)
•Member of the Board of Directors of Jiangsu Kanion Pharmaceutical Co., Ltd. (December 2019-Present)
•Member of the Board of Directors of Innovent Biologics, Inc. (October 2018-Present)
•Professor at the Shanghai Institute of Materia Medica (“SIMM”) Chinese Academy of Sciences (1990-Present) and Shanghai University of Traditional Chinese Medicine (2004-Present)
•Elected member of the Chinese Academy of Sciences since 1999
•Member of the National Committee of the Chinese People’s Political Consultative Conference (2007-2017)
•President of the Shanghai Association for Science and Technology (2011-2018)
•President of Shanghai University of Traditional Chinese Medicine (2005-2014)
•Various roles at SIMM Chinese Academy of Sciences, in addition to serving as Professor, including Director (1996-2004) and Deputy Director (1993-1996)
•Principal Scientist for two National Basic Research Programs by the MOST (1998-2009)
•Postdoctoral research at Institut de Biologie Physico-Chimique in Paris, Ph.D. and Master of Science from the SIMM, Chinese Academy of Sciences, and B.S. in Radiochemistry from Fudan University
Richard Brian Gaynor, M.D.
Independent Director
| | | | | | | | | | | |
| Age | Director Since | Board Committees | Other Public Company Boards |
| 73 | 2021 | Research and Development, Chair | Infinity Pharmaceuticals, Inc. (NASDAQ) Alkermes plc (NASDAQ) |
Dr. Gaynor brings to the Board significant experience as a senior business executive in the biopharmaceutical industry, deep experience as an oncologist, and expertise in research and development.
Key Experience and Qualifications
•President and Chief of Research and Development at BioNTech US Inc. (formerly Neon Therapeutics, Inc.) (May 2020-Present), after serving in this Proposal 1 will permitrole at Neon Therapeutics from November 2016 to May 2020
•Member of the Company’s shareholders to voteBoard of Directors of Infinity Pharmaceuticals, Inc. (March 2020-Present)
•Member of the Board of Directors of Alkermes plc (September 2019-Present)
•Various senior clinical development and medical affairs roles at Eli Lilly and Company (2002-2016), including Senior Vice President of Clinical Development and Medical Affairs
•Professor at the UCLA School of Medicine (1982-1991) and service on the electionfaculty at the University of all directors every year for one-year terms beginning withTexas Southwestern Medical School (1991-2002), including as the next annual meeting. If the Company’s shareholders do not approve this Proposal 1, eachChief of Hematology-Oncology and Director of the Company’s directors will continueSimmons Cancer Center
•Author of nearly 150 publications and participant on numerous advisory boards and committees, including currently serving as a Director for the Damon Runyon Cancer Research Foundation and on several committees for the American Association of Cancer Research and other cancer organizations
•M.D. from the University of Texas Southwestern Medical School, where he served a residency in internal medicine; fellowship training in hematology-oncology at the UCLA School of Medicine
Nisa Bernice Wing-Yu Leung
Independent Director
| | | | | | | | | | | |
| Age | Director Since | Board Committees | Other Public Company Boards |
| 52 | 2014 | None | CanSino Biologics Inc. (HKSE, SSE) Hong Kong Exchanges and Clearing Limited (HKSE) |
Ms. Leung brings to remainthe Board significant venture capital experience in the healthcare industry, particularly in China, as well as extensive corporate governance experience through her service on the boards of companies listed on the Shanghai Stock Exchange and Hong Kong Stock Exchange.
Key Experience and Qualifications
•Managing Partner at Qiming Venture Partners, where she leads healthcare investments (2006-Present)
•Member of the Board of Directors of Hong Kong Exchanges and Clearing Limited (June 2021-Present)
•Member of the Board of Directors of CanSino Biologics Inc. (2015-Present)
•Member of the Board of Directors of New Horizon Health Limited (HKSE) (2017-October 2022)
•Member of the Board of Directors of Venus Medtech (Hangzhou) Inc. (HKSE) (2013-January 2023)
•Member of the Board of Directors of Gan & Lee (SSE) (2009-March 2021)
•Member of Stanford Graduate School of Business Advisory Council (August 2019-Present)
•MBA from Stanford Graduate School of Business, B.S. in Hotel Administration from Cornell University
William David Lis
Independent Director
| | | | | | | | | | | |
| Age | Director Since | Board Committees | Other Public Company Boards |
| 58 | 2018 | Commercial Nominating and Corporate Governance Research and Development | Jasper Therapeutics, Inc. (NASDAQ) |
Mr. Lis brings to the Board over 30 years of experience in the biopharmaceutical industry at the executive and board level, including considerable leadership and business, financial, and product development expertise.
Key Experience and Qualifications
•Various board and executive positions at Jasper Therapeutics, Inc., including Chairperson of the Board of Directors (March 2022-Present) and Chief Executive Officer and Executive Chairman of the Board (November 2019-March 2022)
•Member of the Board of Directors of Eidos Therapeutics, Inc. (NASDAQ) (December 2018-its acquisition by Bridge Bio Pharma, Inc. in January 2021)
•Various executive and board positions at Portola Pharmaceuticals, Inc. (later acquired by Alexion Pharmaceuticals, Inc. in 2020), including Chief Executive Officer and Member of the Board of Directors (December 2009-August 2018), Chief Operating Officer (2009), and Chief Business Officer (2008-2009)
•Various executive positions at Scios, Inc. (a Johnson & Johnson company) (2003-2008), including Senior Vice President of New Product Development and Business Development
•Various roles of increasing responsibility at Millennium Pharmaceuticals, Inc. (previously COR Therapeutics, Inc.) in sales, marketing, medical affairs, and business development (1998-2003)
•Member of the Biotechnology Innovation Organization (“BIO”) Emerging Companies Section (“ECS”) (2015-2016)
•B.S. from the University of Maryland
Scott William Morrison
Independent Director
| | | | | | | | | | | |
| Age | Director Since | Board Committees | Other Public Company Boards |
| 65 | 2021 | Audit, Chair and Audit Committee Financial Expert | Corvus Pharmaceuticals, Inc. (NASDAQ) IDEAYA Biosciences Inc. (NASDAQ) Tarsus Pharmaceuticals, Inc. (NASDAQ) Vera Therapeutics, Inc. (NASDAQ) |
Mr. Morrison brings to the Board financial expertise obtained from his extensive business, accounting, and financial background obtained from his over 35 years of experience serving public and private companies in the life sciences industry until his retirement in 2015 as well as his significant board and audit committee experience.
Key Experience and Qualifications
•Partner with Ernst & Young LLP (1996-2015), serving as U.S. Life Sciences Leader from 2002 to 2015
•Member of the Board of Directors, Chairperson of the Audit Committee, and Member of the Compensation Committee of Corvus Pharmaceuticals, Inc. (2015-Present)
•Member of the Board of Directors, Chair of the Audit Committee, Chair of the Transaction and Financing Committee, and Member of the Compensation Committee and Commercial Committee of Global Blood Therapeutics, Inc. (2016-its acquisition by Pfizer Inc. in October 2022)
•Member of the Board of Directors, Chair of the Audit Committee, and Member of the Nominating and Corporate Governance Committee of IDEAYA Biosciences Inc. (July 2018-Present)
•Member of the Board of Directors and Chair of the Audit Committee of Vera Therapeutics, Inc. (April 2020-Present)
•Member of the Board of Directors, Chair of the Audit Committee, and Member of the Commercial Committee of Tarsus Pharmaceuticals, Inc. (October 2022-Present)
•Member of the Board of Directors and Chairman of the Audit Committee of Audentes Therapeutics, Inc. (NASDAQ) (2016-its sale to Astellas in January 2020)
•Has served as a director on several life sciences industry boards, including BIO ECS (2002-2006), the Bay Area Biosciences Board (now California Life Sciences) (1989-2012), the Biotechnology Institute (1998-2012), and the Life Sciences Foundation (2014-its merger with the Chemical Heritage Foundation in 2015)
•Awarded the CLS Pantheon 2016 Life Sciences Leadership Award
•B.S. in Business Administration from the Haas School at University of California, Berkeley and Certified Public Accountant (inactive)
Leon Oliver Moulder, Jr.
Independent Director
| | | | | | | | | | | |
| Age | Director Since | Board Committees | Other Public Company Boards |
| 65 | 2020 | Nominating and Corporate Governance, Chair Commercial Compensation | Trevena, Inc. (NASDAQ) |
Mr. Moulder brings to the Board significant operational and senior management experience in the biopharmaceutical industry as well as extensive experience as a director on public and private boards in the industry.
Key Experience and Qualifications
•Founder and Managing Member of Tellus BioVentures, LLC, a life sciences investment fund (March 2019-Present)
•Member of the Board of Directors of Trevena, Inc. (2011-Present), serving as Chairman since 2013
•Member of the Board of Directors of the Helsinn Group (January 2020-Present)
•Co-Founder, Chief Executive Officer, and Member of the Board Directors of Tesaro, Inc. (NASDAQ) (May 2010-its acquisition by GSK plc in January 2019)
•President, Chief Executive Officer, and Vice Chairman of the Board of Directors of Abraxis BioScience, Inc. (NASDAQ) (2009- 2010)
•Vice Chairman of the Board of Directors of Eisai Corporation of North America, a research-based pharmaceutical company and wholly owned subsidiary of Eisai Co., Ltd. (2008-2009)
•President, Chief Executive Officer, and Member of the Board of Directors of MGI PHARMA, Inc. (2003-its acquisition by Eisai Corporation of North America in 2008), after serving as President and Chief Operating Officer (2002-2003) and Executive Vice President (1999-2002)
•Temple University Trustee (January 2013-Present), Council Member for the University of Chicago Booth School of Business and the Polsky Center for Entrepreneurship and Innovation (June 2016-Present), and Board Member of the Fox Chase Cancer Center (March 2013-Present)
•MBA from The University of Chicago Booth School of Business and B.S. in Pharmacy from Temple University
Michel Pericles Vounatsos
Independent Director
| | | | | | | | | | | |
| Age | Director Since | Board Committees | Other Public Company Boards |
| 61 | 2023 | Commercial, Chair Research and Development | PerkinElmer, Inc. (NYSE) |
The Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, appointed Mr. Vounatsos to the Board, effective January 7, 2023. Mr. Vounatsos was recommended to the Nominating and Corporate Governance Committee by our Chairperson and Chief Executive Officer and our Chief Legal Officer in light of his experience, our corporate priorities, and the needs of the Board of Directors. We entered into an agreement with Mr. Vounatsos, noting that his appointment as a director would continue until the expiration of his or her termAnnual Meeting and until his or her successor shall have been elected and qualified, or until removed from officehe would receive compensation in accordance with our non-employee director compensation policy.
Mr. Vounatsos brings to the Current Articles. Even if Proposal 1 is not approvedBoard extensive global leadership and even thoughmanagement experience in the Current Articles provide that directors hold office until their successors have been electedbiopharmaceutical industry, including more than 25 years of service at leading companies. His expertise includes significant commercial experience in China and qualified or untilworldwide in the earlierareas of their resignation or removal,primary care and neuroscience.
Key Experience and Qualifications
•Chief Executive Officer and Member of the Company currently plansBoard of Directors of Biogen Inc. (NASDAQ) (January 2017-November 2022), after serving as Executive Vice President and Chief Commercial Officer (2016)
•Member of the Board of Directors and Audit Committee of PerkinElmer, Inc. (March 2020-Present) and Chair of the Nominating and Corporate Governance Committee (October 2022-Present)
•Various roles of increasing responsibility at Merck & Co. (1996-2016), including President, Primary Care & Merck Customer Centricity (2014-2016), President, Merck Customer Centricity (2012-2014), President of MSD China (2008-2012), and other leadership positions across Europe (1996-2008)
•Member of the Advisory Board of Tsinghua University School of Pharmaceutical Sciences in Beijing, China (December 2020-Present) and Chairman of the Supervisory Board of Liryc, the Electrophysiology and Heart Modeling Institute at the University of Bordeaux (May 2019-Present)
•MBA from HEC School of Management in Paris, France and Certificate of Clinical and Therapeutic Synthesis in Medicine from Université Victor Segalen, Bourdeaux II, France
Peter Karl Wirth
Independent Director
| | | | | | | | | | | |
| Age | Director Since | Board Committees | Other Public Company Boards |
| 72 | 2017 | Compensation, Chair Audit | Syros Pharmaceuticals, Inc. (NASDAQ) |
Mr. Wirth brings to hold an electionthe Board expertise in corporate governance and significant experience in corporate strategy, product development, business development, and the legal issues relating to the operation of its directorsa global biopharmaceutical company.
Key Experience and Qualifications
•Venture Partner at its next annual meeting.Quan Capital Management, LLC, a global venture capital firm (August 2018-Present)
•Chairman of the Board of Directors at Syros Pharmaceuticals, Inc. (2017-Present)
•Chairman of the Board of Directors of FORMA Therapeutics Holdings, Inc. (NASDAQ) (2012-its acquisition by Novo Nordisk A/S in October 2022)
•Co-Founder, President, and Member of the Board of Directors of Lysosomal Therapeutics, Inc. (2011-2014)
•Various senior executive roles at Genzyme Corporation (1996-its acquisition by Sanofi-Aventis SA in 2011), most recently as Executive Vice President, Legal and Corporate Development, Chief Risk Officer, and Corporate Secretary
•Partner at Palmer & Dodge LLP, where he was head of the firm’s biotechnology practice group and served as outside general counsel for Genzyme and a number of other biotechnology companies (1975-1996)
•J.D. from Harvard Law School and B.A. in Political Science from the University of Wisconsin at Madison
Vote Required
This proposal requires the affirmative vote of two-thirds
Each director nominated for election will be elected if a simple majority of the votes cast by the shareholders entitled to vote who are present in person, virtually, or by proxy
atvote in favor of such director. Broker non-votes and abstentions with respect to one or more directors will not be treated as votes cast for this purpose and, therefore, will not affect the
Annual Meeting. Abstentions and broker non-votes will have no effect on this vote.outcome of the election.
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS
ATHAT SHAREHOLDERS VOTE “FOR” THE
AMENDMENT AND RESTATEMENTELECTION OF EACH OF THE
CURRENT ARTICLES TO PROVIDE FOR THE ANNUAL ELECTION OF DIRECTORS.-9-
DIRECTOR NOMINEES LISTED ABOVE.
PROPOSAL
2AS A SPECIAL RESOLUTION, 11
APPROVAL
OF THE AMENDMENT AND RESTATEMENT OF THE CURRENT ARTICLES TO REFLECT CHANGES REQUIRED OR RECOMMENDED BY THE STOCK EXCHANGE OF HONG KONG LIMITEDDescription of the Proposal
The Board of Directors approved, adopted and declared advisable amending and restating the Current Articles to reflect changes required or recommended by the HKEx as further set forth below.
Purpose of Proposed Amendment
The Board of Directors approved, adopted and declared advisable the amendment and restatement of the Current Articles to reflect changes required or recommended by the HKEx, as follows:
1. | HK Listing Rules: The Current Articles contemplate the listing of the Company’s ordinary shares or ADSs on the Nasdaq Stock Market.
|
If this Proposal 2 is approved, the Current Articles will be amended and restated to reflect the Company’s secondary listing of its shares on the HKEx. The defined term “Designated Stock Exchange” will be amended and restated to mean “the Global Market of The Nasdaq Stock Market, The New York Stock Exchange, the HKEx or any other internationally recognized stock exchange where the Company’s securities are traded.” The Current Articles will also be amended and restated to include references to the Rules Governing the Listing of Securities on the HKEx, or the HK Listing Rules.
2. | Transfer of Shares: Article 13 of the Current Articles provide that shares of the Company are transferable subject to the approval of the Board of Directors or the written consent of a Director authorized by the Board of Directors in writing to approve share transfers.
|
If this Proposal 2 is approved, Article 13 of the Current Articles will be amended and restated to exclude shares that are listed on a Designated Stock Exchange (as defined therein) and to provide that transfers of shares that are listed on the HKEx may be effected by any method of transferring or dealing in securities permitted by HK Listing Rules.
Because shares listed on a Designated Stock Exchange are subject to the listing rules of such Designated Stock Exchange, this amendment and restatement will harmonize the Company’s share transfer rules with the listing rules of the relevant Designated Stock Exchange, namely, in this case, the HKEx.
3. | Company Purchase of Own Shares: Article 17 of the Current Articles provide that, subject to the provisions of the relevant laws and regulations and the Current Articles, the Company may purchase its own shares (including any redeemable shares) provided that the Company’s shareholders shall have approved the manner of purchase by ordinary resolution or the manner of purchase is in accordance with Articles 19 and 20 of the Current Articles.
|
If this Proposal 2 is approved, Article 17 of the Current Articles will be amended and restated to provide that, subject to the provisions of the relevant laws and regulations and the Current Articles, the Company may purchase its own shares (including any redeemable shares) provided that the manner of purchase may also be approved by the Board of Directors, in lieu of approval by ordinary resolution. This proposed amendment is made in compliance with HK Listing Rule 10.06, which provides that the Board of Directors can repurchase shares of an HKEx issuer after a general approval is given by the shareholders of the Company at an annual general meeting to repurchase the Company’s shares (not exceeding 10% of the total number of issued share capital of the Company as of the date of approval).
4. | Variation or Abrogation of Rights: Article 22 of the Current Articles provide that, if at any time the share capital of the Company is divided into different classes or series of shares, the rights attaching to any class or series (unless otherwise provided by the terms of issue of the shares of that class or series) may, subject
|
-10-
| to the Current Articles, be varied or abrogated with the consent in writing of the holders of a majority of the issued shares of that class or series or with the sanction of a Special Resolution passed at a general meeting of the holders of the shares of that class or series. |
If this Proposal 2 is approved, this approval threshold will be amended and restated from “a majority” to “two-thirds.” This proposed amendment is made in compliance with HK Listing Rule 19C.07(1), which provides that a super-majority vote of an HKEx issuer’s members in a general meeting is required to approve changes to the rights attached to any class of shares of the issuer.
5. | Annual General Meeting: Article 55 of the Current Articles provide that the Company may hold an annual meeting and that such annual general meeting shall be held at such time and place as the Board of Directors shall determine.
|
If this Proposal 2 is approved, Article 55 of the Current Articles will be amended and restated to provide that the Company shall hold an annual general meeting every year and that not more than 15 months should elapse between the date of one annual general meeting of the Company and the next. This proposed amendment is made in compliance with HK Listing Rule 19C.07(4), which provides that an HKEx issuer must hold a general meeting each year and that generally not more than 15 months should elapse between the date of one annual general meeting and the next.
6. | Minimum Shareholder Threshold for Extraordinary General Meetings: Article 56 of the Current Articles provide holders of one-third of the Company’s share capital may requisition a general meeting and Article 59 of the Current Articles provide that quorum shall require holders of not less than an aggregate of one-third of all voting share capital of the Company in issue present in person or by proxy and entitled to vote.
|
If this Proposal 2 is approved, this threshold will be lowered to one-tenth such that holders of one-tenth of the Company’s share capital may requisition a general meeting and holders of one-tenth of the Company’s share capital shall meet quorum. This proposed amendment is made in compliance with HK Listing Rule 19C.07(7), which provides that the minimum stake required for shareholders to be able to convene an extraordinary general meeting and add resolutions to a meeting agenda must not be higher than 10% of the voting rights of the share capital of an HKEx issuer.
7. | Notice of General Meetings: Section 58 of the Current Articles require seven calendar days’ notice for any general meeting. If this Proposal 2 is approved, the required notice period will be increased to 14 calendar days. This proposed amendment is made in compliance with undertakings given by the Company to the HKEx in connection with the Company’s secondary listing on the HKEx in 2020.
|
8. | Polls at General Meetings: Article 65 of the Current Articles provide that a resolution put to the vote at a general meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by one or more shareholders present in person or by proxy entitled to vote and who together hold not less than 10 percent of the paid-up voting share capital of the Company.
|
If this Proposal 2 is approved, this provision will be amended to permit any shareholder present in person or by proxy entitled to vote to demand a poll regardless of such shareholder’s percent holdings in the Company.
9. | Abstention from Voting per HK Listing Rules: If this Proposal 2 is approved, the Current Articles will be amended to provide that where any shareholder is, under the HK Listing Rules, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction, shall not be counted.
|
Vote Required
This proposal requires the affirmative vote of two-thirds of the votes cast by the shareholders entitled to vote who are present in person, virtually or by proxy at the Annual Meeting. Abstentions and broker non-votes will have no effect on this vote.
-11-
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AMENDMENT AND RESTATEMENT OF THE CURRENT ARTICLES TO REFLECT CHANGES REQUIRED OR RECOMMENDED BY THE HKEx AS SET FORTH ABOVE.
-12-
PROPOSAL 3
AS A SPECIAL RESOLUTION, ADOPTION OF THE FIFTH AMENDED AND RESTATED ARTICLES OF ASSOCIATION
Description of the Proposal
The Board of Directors approved, adopted and declared advisable amending and restating the Current Articles in their entirety, and replacing them with the Fifth Amended and Restated Articles of Association in the form attached hereto as Exhibit A, conditioned upon the approval by the shareholders of Proposal 1 and Proposal 2. If both Proposal 1 and Proposal 2 are approved by the Company’s shareholders, then Proposal 3 will be proposed to the shareholders for their approval.
Purpose of Proposed Amendment
The Board of Directors approved, adopted and declared advisable, conditioned upon the approval by the shareholders of Proposal 1 and Proposal 2, the adoption of the Fifth Amended and Restated Articles of Association in the form attached as Exhibit A to implement the amendments in Proposal 1 and Proposal 2.
Vote Required
This proposal requires the affirmative vote of two-thirds of the votes cast by the shareholders entitled to vote who are present in person, virtually or by proxy at the Annual Meeting. Abstentions and broker non-votes will have no effect on this vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” AMENDING AND RESTATING THE CURRENT ARTICLES IN THEIR ENTIRETY, AND REPLACING THEM WITH THE FIFTH AMENDED AND RESTATED ARTICLES OF ASSOCIATION IN THE FORM ATTACHED HERETO AS EXHIBIT A.
-13-
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS AND AUDITORS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023
Description of the Proposal
The Audit Committee of the Board of Directors, or our Audit Committee, is directly responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firmfirms and auditors retained to audit our consolidated financial statements. Ourstatements, subject to shareholder approval in accordance with the HK Listing Rules. The Audit Committee has selected Deloitte Touche Tohmatsu Certified Public Accountantsappointed KPMG LLP, an independent registered public accounting firm in China,the United States, and Deloitte Touche Tohmatsu, an independentKPMG, a public interest entity auditor registered public accounting firmin accordance with the Accounting and Financial Reporting Council Ordinance in Hong Kong, as our independent registered public accounting firms and auditors for the fiscal year ending December 31, 2021. Deloitte Touche Tohmatsu Certified Public Accountants2023. KPMG LLP has been the Company’s independent registered public accounting firm and auditor since 2022.
Upon the recommendation of the Audit Committee, the Board of Directors recommends shareholder approval of the appointment of KPMG LLP and Deloitte Touche Tohmatsu have servedKPMG as our independent registered public accounting firms since 2017 and 2020, respectively. Our Audit Committee believes at this timeauditors for the fiscal year ending December 31, 2023. The Board of Directors continues to believe that the continued retentionappointment of Deloitte Touche Tohmatsu Certified Public AccountantsKPMG LLP and Deloitte Touche TohmatsuKPMG to serve as our independent registered public accounting firms and auditors is in the best interest of the Company and its shareholders.Upon recommendation of the Audit Committee, the Board of Directors has appointed Deloitte Touche Tohmatsu Certified Public Accountants KPMG LLP an independent registered public accounting firm in China, and Deloitte Touche Tohmatsu, an independent registered public accounting firm in Hong Kong, as the Company’s independent registered public accounting firmswill be responsible for auditing our consolidated financial statements for the fiscal year ending December 31, 2021. Deloitte Touche Tohmatsu Certified Public Accountants LLP is responsible for auditing our annual consolidated financial statements2023 filed with the SEC and the effectiveness of our internal control over financial reporting as of December 31, 2023 in accordance with the Exchange Act, and Deloitte Touche Tohmatsu isKPMG will be responsible for auditing our annualconsolidated financial statements for the year ending December 31, 2023 filed within the HKExAnnual Report prepared in accordance with the HK Listing Rules. Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu are the member firms of Deloitte Touche Tohmatsu Limited.
Although shareholder approval of our Audit Committee and Board of Directors’ selection of Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu is not required, our Board of Directors believes that it is a matter of good corporate practice to solicit shareholder ratification of this selection. The Board of Directors recommends that shareholders vote for approval and ratification of this appointment.
If this proposal is not approved at the Annual Meeting, the Board of Directors will reconsider its
appointment. Even if the selection is ratified, our Audit Committee has the ability to change the engagementappointment of
Deloitte Touche Tohmatsu Certified Public AccountantsKPMG LLP and
Deloitte Touche Tohmatsu if it considers that a change is in the Company’s best interest.Deloitte Touche Tohmatsu Certified Public Accountants LLP has audited our financial statements filed with the SEC for the fiscal years ended December 31, 2020, 2019 and 2018 and internal control over financial reporting for the fiscal years ended December 31, 2020 and 2019. Deloitte Touche Tohmatsu was engaged in 2020 to audit our annual financial statements filed with the HKExKPMG. If approved in accordance with Hong Kong Stock Exchange requirements and the HK Listing Rules, following our secondary listing on HKEx. KPMG LLP and KPMG will serve as the Company’s independent auditors until the next annual general meeting, unless removed or subsequently changed by shareholders at a general meeting.
We expect
representativesa representative from each of
Deloitte Touche Tohmatsu Certified Public AccountantsKPMG LLP and
Deloitte Touche TohmatsuKPMG to be available at the Annual Meeting
in person or virtually and available to respond to appropriate questions. They will have the opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions.-14-
so.
Auditors’ Fees
The following table summarizes the fees of Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu, our registered independent public accounting firms, billed to the Company for each of the last two fiscal years (in thousands of U.S. Dollars).
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2020 | | | 2019 | |
| Fee Category | | Deloitte Touche
Tohmatsu
Certified Public
Accountants LLP | | | Deloitte
Touche
Tohmatsu | | | Total | | | Deloitte Touche
Tohmatsu
Certified Public
Accountants LLP | | | Deloitte
Touche
Tohmatsu | | | Total | |
Audit Fees(1) | | $ | 1,056 | | | $ | 420 | | | $ | 1,476 | | | $ | 1,026 | | | | — | | | $ | 1,026 | |
Audit-related Fees(2) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Tax Fees(3) | | $ | 1 | | | | — | | | $ | 1 | | | $ | 36 | | | | — | | | $ | 36 | |
All Other Fees(4) | | $ | 100 | | | | — | | | $ | 100 | | | | — | | | | — | | | | — | |
Total Fees | | $ | 1,157 | | | $ | 420 | | | $ | 1,577 | | | $ | 1,062 | | | | — | | | $ | 1,062 | |
(1) | Audit fees consist of fees for the audit of our consolidated financial statements, reviews of our interim financial statements and the audit of the effectiveness of our internal control over financial reporting. Audit fees also include related services that are normally provided in connection with registration statements and securities offerings on Nasdaq in 2020 and 2019 and our Hong Kong listing in 2020, and other statutory and regulatory filings.
|
(2) | Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.” No such fees were billed during either fiscal year 2020 or 2019.
|
(3) | Tax fees consist of fees incurred for tax advisory services.
|
(4) | All other fees consist of fees incurred for Hong Kong listing-related internal control compliance check service fees and other products and services other than the services described above.
|
Pre-approval Policies
The Board of Directors has adopted policies and procedures for the pre-approval of audit and non-audit services by the Audit Committee for the purpose of maintaining the independence of our independent auditors. The Audit Committee pre-approves all auditing services, internal control-related services and permitted non-audit services to be performed for the Company by its independent auditor. Consistent with any applicable SEC rules on auditor independence, the Audit Committee annually may establish ceilings on the level of fees and costs of generally pre-approved and sufficiently defined services that may be performed without seeking additional approval from the Committee. The Committee may delegate pre-approval authority to one or more of its members. The member (or members) to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Committee at its next regularly scheduled meeting.
The Audit Committee has considered the non-audit services provided by Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu as described above and believes that they are compatible with maintaining the firms’ independence as our external auditors. In accordance with Regulation S-X, Rule 2-01, paragraph (c)(7)(i), no fees for services in 2020, 2019 and 2018 were approved pursuant to any waivers of the pre-approval requirement.
Vote Required
and Board of Directors’ RecommendationApproval of Proposal
411 requires the favorable vote of a simple majority of the votes cast by the shareholders entitled to vote who are present in person, virtually, or by proxy at the Annual Meeting. Broker
non-votes and abstentions with respect to
Proposal 4this proposal will not be treated as votes cast for this purpose and, therefore, will not
-15-
affect the outcome of the vote. We expect that there will be no broker non-votes on this proposal due to the discretionary authority granted to brokerage firms, banks, and other financial institutions.
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS
ATHAT SHAREHOLDERS VOTE “FOR” THE
RATIFICATIONAPPROVAL OF THE APPOINTMENT OF
DELOITTE TOUCHE TOHMATSU CERTIFIED PUBLIC ACCOUNTANTSKPMG LLP AND
DELOITTE TOUCHE TOHMATSUKPMG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
AND AUDITORS TO AUDIT OUR CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING DECEMBER 31,
2021.-16-
2023 TO BE FILED WITH THE SEC AND HONG KONG STOCK EXCHANGE, RESPECTIVELY.
PROPOSAL 12
APPROVAL OF BOARD AUTHORITY TO FIX AUDITOR COMPENSATION FOR 2023
Description of the Proposal
The Board of Directors recommends shareholder approval of Board authority to fix auditor compensation for 2023 in accordance with the HK Listing Rules. The Board of Directors notes, in this regard, that the annual amount of auditor compensation cannot fully be determined at the beginning of the year. This is because an auditor’s compensation for any given year may vary, such as due to the scope and extent of the audit work undertaken during that year. As a result, the Board of Directors requests shareholder approval to delegate the authority to the Board of Directors to fix auditor compensation for the year ending December 31, 2023.
If approved in accordance with the HK Listing Rules, the Board of Directors may delegate such responsibility to the Audit Committee. Auditor compensation will be approved in accordance with the policies and procedures described in Pre-Approval Policies below.
Vote Required
Approval of Proposal 12 requires the favorable vote of a simple majority of the votes cast by the shareholders entitled to vote who are present in person, virtually, or by proxy at the Annual Meeting. Broker non-votes and abstentions with respect to this proposal will not be treated as votes cast for this purpose and, therefore, will not affect the outcome of either vote. We expect that there will be no broker non-votes on this proposal due to the discretionary authority granted to brokerage firms, banks, and other financial institutions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE APPROVAL OF BOARD AUTHORITY TO FIX AUDITOR COMPENSATION FOR 2023.
PROPOSAL 13
NON-BINDING, ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
Description of the Proposal
Consistent with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), we are providing our shareholders with an opportunity to indicate whether they support our named executive officer compensation as described in detail in Compensation Discussion and Analysis (“CD&A”) and Executive Compensation Tables. This non-binding advisory vote, commonly referred to as “say-on-pay,” is not intended to address any specific item of compensation, but instead relates to the CD&A, the tabular disclosures regarding named executive officer compensation, and the narrative disclosure accompanying the tabular disclosures. These disclosures allow you to view the trends in our executive compensation program and the application of our compensation philosophies for the years presented.
As discussed in detail in the CD&A, our executive compensation guiding principles and structure are designed to attract and retain strong leaders who perform at high levels and succeed in a demanding business environment.
Specifically, our executive compensation program in 2022 was:
•Mission Focused and Business Driven. Our executive compensation program focused on whether each named executive officer achieved his or her performance goals which support the annual and long-term objectives of our business which include the discovery, development, and commercialization of meaningful and innovative products to address unmet medical needs. Our objective is to provide an executive compensation program that contributes to building and sustaining a foundation for long-term success.
•Market Competitive. While we do not benchmark our compensation, or its components, to a specific market percentile of compensation, we consider the executive compensation programs of a peer group of biotechnology and pharmaceutical companies that we believe are representative of the companies we primarily compete with for talent in the geographies where we do business. Broader market data, as further described below, is also considered to provide additional context for our executive compensation decisions. Peer group and market practices are among the many factors we take into account in developing an executive compensation program that we believe is effective in enabling us to recruit, retain, and motivate our leadership team to achieve our business objectives and enhance shareholder value.
•Performance Focused. We believe strongly in pay-for-performance and endeavor to provide our named executive officers with higher levels of compensation when our business goals and their personal performance objectives are met or exceeded and would correspondingly reduce compensation when performance does not meet our expectations and goals. Each performance factor is weighted separately in determining whether target bonuses have been achieved.
•Aligned with Shareholders. We believe every employee contributes to our success and, as such, every employee has a vested interest in our success. For members of our executive team, including our named executive officers, who set and lead our future strategic direction, a significant portion of their total pay opportunities are equity-based to promote alignment between the interests of our executive officers and our shareholders.
•Flexible. We are committed to providing flexible benefits designed to allow our diverse global workforce to have rewarding opportunities that meet their varied needs so that they are inspired to perform their very best on behalf of patients and shareholders.
The Compensation Committee actively reviews and assesses our executive compensation program in light of the highly competitive employment environment; the challenge of recruiting, motivating, and retaining executives in an industry that generally has longer business cycles than other commercial industries; significant risks associated with success in our industry; and evolving compensation governance and best practices. In evaluating these considerations, the Compensation Committee strives to act in the long-term best interests of the Company and our shareholders and believes that our executive compensation program is strongly aligned with the long-term interests of our shareholders. In determining whether to approve this proposal, the Compensation Committee believes that shareholders should consider the following with respect to 2022 compensation determinations and governance:
•Independent Compensation Committee. To promote strong oversight of executive compensation programs and decisions, the Compensation Committee consists solely of independent directors. The Compensation Committee is responsible, among other things, for approving executive compensation for executive officers other than the CEO and for recommending the compensation of the CEO to the Board of Directors for approval.
•No personal benefits. Our executive officers are eligible for the same benefits as non-executive, salaried employees, and do not receive any personal benefits.
•No tax gross-ups on compensation. None of our executive officers receive tax related gross-ups on any element of compensation.
•No benefits during retirement. We do not offer any pension plans or health benefits to our executive officers during retirement.
We actively monitor our executive compensation practices in light of the industry in which we operate and the marketplace for talent in which we compete. We are focused on providing competitive compensation to our executive officers that incentivizes high levels of performance while providing the Company with tools to attract and retain the best talent.
Vote Required
Advisory approval of Proposal 13 requires the favorable vote of a simple majority of the votes cast by the shareholders entitled to vote who are present in person, virtually, or by proxy at the Annual Meeting. Broker non-votes and abstentions with respect to Proposal 13 will not be treated as votes cast for this purpose and, therefore, will not affect the outcome of the vote. The say-on-pay vote is advisory and therefore not binding on the Board of Directors, the Compensation Committee, or the Company. However, the Board of Directors and the Compensation Committee value the opinion of our shareholders, and to the extent there is a significant vote against the compensation of our named executive officers as disclosed in this Proxy Statement, we will consider our shareholders’ concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
PROPOSALS 14-15
GENERAL MANDATE TO ISSUE SHARES
Description of Proposal 14
In order to give the Company the flexibility to allot and issue ordinary shares and/or ADSs if and when appropriate and in accordance with Rule 13.36 of the HK Listing Rules, the Board of Directors recommends shareholder approval of a general mandate to the Board of Directors to allot and issue ordinary shares and/or ADSs (the “General Mandate”) of up to 20% of the total number of issued ordinary shares of the Company as at the date of passing of such ordinary resolution (equal to a total of 195,817,486 ordinary shares as of April 22, 2023 on the basis that no further ordinary shares are issued or repurchased before the Annual Meeting) (the “total number of issued ordinary shares”). If approved in accordance with Hong Kong Stock Exchange requirements and HK Listing Rules, the General Mandate shall remain in force until the next annual general meeting, unless revised or revoked by shareholders at a general meeting.
The Board of Directors has determined that a General Mandate of up to 20% of the total number of issued ordinary shares is most appropriate for the Company and recommends that you vote for a General Mandate of up to 20%. A General Mandate of up to 20% is customary for companies listed on the Hong Kong Stock Exchange. In addition, a General Mandate of up to 20% is important to our continued efforts to pursue our corporate strategic goals and would provide the Company with flexibility to issue shares as it thinks appropriate. The Board of Directors may consider using the shares available for issuance under a General Mandate for various corporate purposes, including but not limited to, financing, strategic transactions such as licensing and collaboration arrangements, joint ventures, business combinations, or other business development arrangements, and other general corporate transactions.
Vote Required
Approval of Proposal 14 requires the favorable vote of a simple majority of the votes cast by the shareholders entitled to vote who are present in person, virtually, or by proxy at the Annual Meeting. Broker non-votes and abstentions with respect to Proposal 14 will not be treated as votes cast for this purpose and, therefore, will not affect the outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF A GENERAL MANDATE TO ISSUE UP TO 20% OF THE TOTAL NUMBER OF ISSUED ORDINARY SHARES OF THE COMPANY.
If Proposal 14 is approved, the Board of Directors will be granted a General Mandate of up to 20% of the total number of issued ordinary shares of the Company. If Proposal 14 is not approved, then Proposal 15 will become applicable. For the avoidance of doubt, Proposal 15 will become applicable, if any only if Proposal 14 is not approved and Proposal 15 is approved.
Description of Proposal 15
In the alternative, the Board of Director recommends shareholder approval of a General Mandate of up to 10% of the total number of issued ordinary shares. Such an alternative General Mandate would similarly be approved in accordance with Hong Kong Stock Exchange requirements and HK Listing Rules and would remain in force until the next annual general meeting, unless revised or revoked by shareholders in a general meeting.
Although the Board of Directors believes a General Mandate of up to 20% of the total number of issued ordinary shares is most appropriate for the Company, as noted in the description of Proposal 14 above, the Board recommends that you vote for a General Mandate of up to 10% as an alternative to provide the Company with such level of flexibility to issue shares as it deems appropriate.
Vote Required
Approval of Proposals 14-15 require the favorable vote of a simple majority of the votes cast by the shareholders entitled to vote who are present in person, virtually, or by proxy at the Annual Meeting. Broker non-votes and abstentions with respect to these proposals will not be treated as votes cast for this purpose and, therefore, will not affect the outcome of the vote.
IN THE CASE WHERE PROPOSAL 14 IS NOT APPROVED BY THE SHAREHOLDERS, AS AN ALTERNATIVE TO A GENERAL MANDATE OF UP TO 20% RECOMMENDED IN PROPOSAL 14, THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF A GENERAL MANDATE TO ISSUE UP TO 10% OF THE TOTAL NUMBER OF ISSUED ORDINARY SHARES OF THE COMPANY.
If Proposals 14 and 15 are both voted “FOR” by a majority of shareholders, Proposal 15 will not be applicable and only Proposal 14 will be approved, and the Board of Directors will be granted a General Mandate of up to 20% of the total number of issued ordinary shares of the Company. If Proposal 14 is not approved, but Proposal 15 is approved, the Board of Directors will be granted a General Mandate of up to 10% of the total number of issued ordinary shares of the Company.
TRANSACTION OF OTHER BUSINESS
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting as of the date of this Proxy Statement. If any other matters are properly brought before the Annual Meeting, the person(s) named in the accompanying proxy intend to vote on such matters in accordance with their best judgment.
-17-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
| | |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Security Ownership of Certain Beneficial Owners and Management
The
table below
table sets forth certain information known to us regarding beneficial ownership of our share capital as of April
1, 202117, 2023 by:
•each person, or group of affiliated persons, known by us to be the beneficial owner of more than 5% of any class of our voting securities;
•each of our named executive officers;
•each of our directors; and
•all of our executive officers and directors as a group.
Beneficial ownership
as set forth below is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities, except as otherwise provided.
The beneficial ownership rules of the SEC differ from those of the SFO and the HK Listing Rules. Except as noted by footnote, and subject to community property laws where applicable, we believe based on the information provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all securities shown as beneficially owned by them.
The
applicable percentagebeneficial ownership
percentages in the table below
isare based on
89,192,343979,087,430 ordinary shares,
equivalent to 97,908,743 ADSs, outstanding as of April
1, 2021.17, 2023. Any options to purchase ordinary shares that are exercisable and
restricted share units, or RSUs that will vest within 60 days of April
1, 202117, 2023 are deemed to be beneficially owned by the persons holding these options
and RSUs for the purpose of computing the percentage ownership of such persons, but are not treated as outstanding for the purpose of computing any other person’s ownership percentage.
| | | | | | | | |
Name of Beneficial Owner(1) | | No. of Ordinary
Shares | | | Percent(2) | |
Named Executive Officers and Directors: | | | | | | | | |
Samantha (Ying) Du(3) | | | 6,079,490 | | | | 6.6 | % |
Tao Fu(4) | | | 495,000 | | | | | * |
Alan Bart Sandler | | | — | | | | — | |
F. Ty Edmondson | | | — | | | | — | |
Billy Cho(5) | | | 276,000 | | | | | * |
Peter Wirth | | | 338,852 | | | | | * |
John Diekman | | | 56,352 | | | | | * |
Nisa Leung | | | — | | | | | * |
Kai-Xian Chen | | | 24,662 | | | | | * |
William Lis | | | 22,927 | | | | | * |
Leon O. Moulder, Jr. | | | 13,852 | | | | | * |
All Executive Officers and Directors as a Group | | | 7,199,635 | | | | 7.8 | % |
Beneficial Owners of 5% or More of our Ordinary Shares: | | | | | | | | |
Capital World Investors(6) | | | 10,313,492 | | | | 11.6 | % |
QM 11 Limited(7) | | | 9,072,932 | | | | 10.2 | % |
FMR LLC(8) | | | 8,117,324 | | | | 9.2 | % |
(1) | The business address of all directors and officers is 4560 Jinke Road, Bldg. 1, 4F, Pudong, Shanghai, China 201210.
|
(2) | Beneficial ownership representing less than 1% is denoted with an asterisk (*).
|
(3) | Includes 3,277,952 ordinary shares issuable upon exercise of vested options and options exercisable within 60 days of April 1, 2021 and 1,792,885 ordinary shares held by certain holders of ordinary shares, including the Company’s management and their affiliates. Although Dr. Du does not have any pecuniary interest in these 1,792,885 ordinary shares, these shareholders have granted Dr. Du the right to vote their shares and, therefore, she may be deemed to be the beneficial owner of the ordinary shares held by these shareholders.
|
-18-
| | | | | | | | | | | |
| Name of Beneficial Owner (1) | No. of ADSs (2) | | Percent (3) |
| Directors and Named Executive Officers: | | | |
| Samantha (Ying) Du (4) | 4,180,125 | | | 4.14 | % |
| Kai-Xian Chen | 28,372 | | | * |
| John Diekman | 48,782 | | | * |
| Richard Gaynor | 8,912 | | | * |
| Nisa Leung | — | | | * |
| William Lis | 23,330 | | | * |
| Scott Morrison | 7,345 | | | * |
| Leon O. Moulder, Jr. | 21,615 | | | * |
| Michel Vounatsos | — | | | * |
| Peter Wirth | 342,763 | | | * |
| Rafael Amado | — | | | * |
| Billy Cho (5) | 461,389 | | | * |
| Harald Reinhart (6) | 170,446 | | | * |
| Joshua Smiley | — | | | * |
| Alan Bart Sandler | 4,618 | | | * |
| All Directors and Executive Officers as a Group | 5,297,697 | | | 5.23% |
| | | |
| | | | | | | | | | | |
| Beneficial Owners of 5% or More of our Ordinary Shares (10): | | | |
| Fidelity Management & Research Company LLC (7) | 9,191,719.5 | | 9.39% |
| Invesco Advisers (8) | 8,231,036 | | 8.41 | % |
| QM11 Limited (9) | 7,922,932 | | 8.09% |
(1)The business address of all directors and officers is 314 Main Street, Fourth Floor, Suite 100, Cambridge, MA 02142.
(2)One ADS of the Company represents ten ordinary shares.
(3)Beneficial ownership representing less than 1% is denoted with an asterisk (*).
(4)Includes 2,946,925 ADSs issuable upon exercise of vested options, options exercisable and RSUs eligible to vest within 60 days of April 17, 2023. Also includes 230,499 ADSs held by certain holders of ordinary shares, including the Company’s management and their affiliates, for which Dr. Du does not have any pecuniary interest but for which she may be deemed beneficial owner as these holders have granted Dr. Du the right to vote their shares.
(5)Includes 407,642 ADSs issuable upon exercise of vested options, options exercisable and RSUs eligible to vest within 60 days of April 17, 2023.
(6)Comprises 148,199 ADSs issuable upon exercise of vested options, options exercisable and RSUs eligible to vest within 60 days of April 17, 2023.
(7)Based on information provided in a Schedule 13G/A filed by FMR LLC on February 9, 2023. Abigail P. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. The address for FMR LLC is 245 Summer Street, Boston, Massachusetts 02110.
(8)Based on information provided in a Schedule 13G/A filed by Invesco Ltd. on February 13, 2023. Invesco Ltd., in its capacity as a parent holding company to its investment advisers, may be deemed to beneficially own 8,231,036 ADSs which are held of record by clients of Invesco Ltd. The address for Invesco Ltd. is 1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309.
(9)Based on information provided in a Schedule 13G/A filed by Qiming Corporate GP IV, Ltd. on February 14, 2023. Qiming Corporate GP IV, Ltd. is the general partner of Qiming Managing Directors Fund IV, L.P. and Qiming GP IV, L.P. Qiming Managing Directors Fund IV, L.P. holds approximately 3.06% of the equity interest of QM11 Limited. Qiming GP IV, L.P. is the general partner of Qiming Venture Partners IV, L.P., which holds approximately 96.94% of the equity interest of QM11 Limited. Qiming Managing Directors Fund IV, L.P. holds approximately 3.06% of the equity interest of QM11 Limited. Qiming GP IV, L.P. is the general partner of Qiming Venture Partners IV, L.P., which owns approximately 96.94% of the equity interest of QM11 Limited. Qiming Venture Partners IV, L.P. holds approximately 96.94% of the equity interest of QM11 Limited. The address for QM 11 Limited is Units 4205-06, 42nd Floor, Gloucester Tower, the Landmark, 15 Queen’s Road Central, Hong Kong.
(10)The beneficial ownership percentages are calculated based upon an aggregate of 979,087,430 ordinary shares, equivalent to 97,908,743 ADSs, outstanding as of April 17, 2023.
The beneficial ownership rules of the SEC differ from those of the Hong Kong Securities and Futures Ordinance (“SFO”) and the HK Listing Rules. As of April 17, 2023, the interests of our directors in our ordinary shares within the meaning of Part XV of the SFO were as follows: Dr. Du 54,257,490; Professor Chen 310,160; Dr. Diekman 487,820; Dr. Gaynor 89,120; Mr. Lis 233,300; Mr. Morrison 73,450; Mr. Moulder 216,150; Mr. Vounatsos 183,320; and Mr. Wirth 3,427,630. We note that we report ownership interest in accordance with Hong Kong requirements in ordinary shares and that one of our ADSs represent 10 ordinary shares.
Equity Compensation Plan Information
The following table contains information about securities authorized for issuance under our equity compensation plans as of December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | |
| Plan Category | | Number of Securities to Be Issued upon Exercise of Outstanding Options, Warrants, and Rights | | Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights | | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | |
| Equity compensation plans approved by security holders (1) | | 124,615,310 | | $ | 3.05 | | (2) | 89,954,053 | (3) |
| Equity compensation plans not approved by security holders (4) | | — | | $ | — | | | — | |
| Total | | 124,615,310 | | $ | 3.05 | | | 89,954,053 | |
(1)Equity compensation plans approved by security holders include the 2015 Plan, 2017 Plan, and 2022 Plan.
(2)The weighted-average exercise price is calculated based solely on the exercise price of outstanding options and does not take into account outstanding restricted stock units, which have no exercise price.
(3)Represents the number of shares reversed and available for future issuance under the 2022 Plan.
(4)The Company does not have any equity compensation plans not approved by security holders.
(4) | Includes 180,000 ordinary shares issuable upon exercise of vested options and options exercisable within 60 days of April 1, 2021 and 107,500 shares held by Mr. Fu’s spouse.
| |
| CORPORATE GOVERNANCE |
(5) | Includes 216,000 ordinary shares issuable upon exercise of vested options and options exercisable within 60 days of April 1, 2021.
|
(6) | Based on information provided in a Schedule 13G/A filed on February 16, 2021. Capital World Investors (“CWI”) is a division of Capital Research and Management Company (“CRMC”), as well as its investment management subsidiaries and affiliates Capital Bank and Trust Company, Capital International, Inc., Capital International Limited, Capital International Sarl and Capital International K.K. (together with CRMC, the “investment management entities”). CWI’s divisions of each of the investment management entities collectively provide investment management services under the name “Capital World Investors.” The address for Capital World Investors is 333 South Hope Street, 55th Fl, Los Angeles, CA 90071.
|
(7) | Based on information provided in a Schedule 13G/A filed on February 14, 2020. The address for QM 11 Limited is Units 4206-06 Gloucester Tower, The Landmark, Central, Hong Kong.
|
(8) | Based on information provided in a Schedule 13G/A filed on February 8, 2021. Abigail P. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company (“FMR Co”), a wholly-owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. FMR Co. LLC carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. The address for FMR LLC is 245 Summer Street, Boston, Massachusetts 02110.
|
-19-
GOVERNANCE OF THE COMPANY
Composition of the Board of Directors
The following table sets forth the name, age, and position of each of our directors as of April 1,
2021: | | | | | | | | |
Name | | Age | | Position(s) | | Director Since | |
Samantha (Ying) Du | | 56 | | Founder, Chief Executive Officer, Chairwoman of the Board of Directors | | | 2014 | |
Tao Fu | | 49 | | President and Chief Operating Officer and Director | | | 2017 | |
Kaixian Chen | | 75 | | Director | | | 2018 | |
John D. Diekman | | 78 | | Director | | | 2017 | |
Nisa Leung | | 50 | | Director | | | 2014 | |
William Lis | | 56 | | Director | | | 2018 | |
Leon O. Moulder Jr. | | 63 | | Director | | | 2020 | |
Peter Wirth | | 70 | | Director | | | 2017 | |
Biographical2023:
| | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Position(s) | | Director Since |
| Samantha (Ying) Du | | 58 | | Founder, Chief Executive Officer, and Chairperson of the Board of Directors | | 2014 |
| John D. Diekman | | 80 | | Lead Independent Director | | 2017 |
| Kai-Xian Chen | | 77 | | Director | | 2018 |
| Richard Gaynor | | 73 | | Director | | 2021 |
| Nisa Leung | | 52 | | Director | | 2014 |
| William Lis | | 58 | | Director | | 2018 |
| Leon O. Moulder Jr. | | 65 | | Director | | 2020 |
| Scott Morrison | | 65 | | Director | | 2021 |
| Michel Vounatsos | | 61 | | Director | | 2023 |
| Peter Wirth | | 72 | | Director | | 2017 |
For additional biographical information for
our directors,
as of April 1, 2021 are set forth below:Samantha (Ying) Du, Ph.D.
Experience
Dr. Dufounded Zai Lab in 2014 and has been our CEO and Chairwoman of the Boardsee Matters Requiring Shareholder Action – Proposals 1-10 – Election of Directors since its inception. Prior to founding Zai Lab, Dr. Du spent two years at Sequoia Capital China where she led four healthcare investments and served on the boards. From 2001 to 2011, Dr. Du co-founded Hutchison MediPharma and Hutchison China MediTech and served as their Chief Executive Officer and Chief Scientific Officer, respectively, since their inception. Dr. Du began her research career with Pfizer in the United States from 1994 to 2001. She received her Ph.D. in biochemistry from the University of Cincinnati in 1994 and her bachelor’s degree in molecular biology from Jilin University, China in 1987.
Skills and Qualifications
Our Board believes that Dr. Du’s significant knowledge and experience with respect to the biotechnology, healthcare and pharmaceutical industries and her comprehensive global leadership background resulting from extensive service as an executive in the pharmaceutical industry position her to make valuable contributions to the Board.
Tao Fu
Experience
Mr. Fu has been our– Director since 2017 and has served as our Company’s President and Chief Operating Officer since September 2018. Prior to joining our Company, he was Executive Vice President, Chief Commercial and Business Officer of Portola Pharmaceuticals, Inc. from June 2015 to September 2018. Prior to joining Portola in June 2015, Mr. Fu was Vice President, business development, head of M&A and alliance management at BMS. Between 2003 and 2014, Mr. Fu worked at Johnson & Johnson in a number of roles, most recently as Vice President, business development. Prior to joining Johnson & Johnson, Mr. Fu held managerial positions with Scios Inc., a biotechnology company in California; McKinsey & Company, a global management consulting firm; and Becton Dickinson, a leading medical device company. Mr. Fu received a master of science in cell biology from the University of Rochester, and a master of business administration in finance and marketing from Vanderbilt University. Mr. Fu did his undergraduate studies in biology at Tsinghua University from 1989 to 1992 and earned a Chartered Financial Analyst (CFA) designation.
-20-
Biographical Information.
Skills and Qualifications
Our Board believes that Mr. Fu’s significant experience of over 20 years overseeing the operations and global business development of healthcare and biotechnology companies and experience with mergers and acquisitions position him to make valuable contributions to the Board.
Kai-Xian Chen, Ph.D.
Experience
Professor Chen has been our independent Director since August 2018. Professor Chen has been serving as the independent non-executive Director of InnoCare Pharma Limited since March 2020. He has also been serving as the independent Director of Jiangsu Kanion Pharmaceutical Co., Ltd. since December 2019 and the independent non-executive Director of Innovent Biologics, Inc. since October 2018. From 2007 to 2017, he served as a member of the National Committee of the Chinese People’s Political Consultative Conference. From 2005 to 2014, Professor Chen served as President of Shanghai University of Traditional Chinese Medicine. From 2011 to 2018, Professor Chen served as President of the Shanghai Association for Science and Technology. Prior to that, from 1993 to 2004, Professor Chen served as Deputy Director and later, Director of Shanghai Institute of Materia Medica, or SIMM, Chinese Academy of Sciences. Professor Chen has also served as Principal Scientist for two National Basic Research Programs by the MOST. Since 2001, Professor Chen has served successively as the member of the Chief Specialists Board and the Deputy Chief Technical Officer of the major science and technology projects “innovative drugs and modernization of traditional Chinese medicine” and “Innovative Drug Research & Development,” where he participated in the organization and promotion of new drug research and development for China’s 10th -13th Five Year Plans. In 1999, Professor Chen was elected as a member of the Chinese Academy of Sciences. Prior to that, from 1985 to 1988, he conducted postdoctoral research at Institut de Biologie Physico-Chimique in Paris. Professor Chen started his academic career at SIMM as an Associate Professor, where he later reached the level of Full Professor. Professor Chen received his Master and Ph.D. degree at the Chinese Academy of Science in 1982 and 1985 respectively, and his Bachelor of Science from Fudan University in 1967.
Skills and Qualifications
Our Board believes that Professor Chen’s service as a member of several prestigious Chinese institutional and research organizations, in addition to his service as an independent director for biopharmaceutical companies, position him to make valuable contributions to the Board.
John D. Diekman, Ph.D.
Experience
Dr. Diekman has been our independent Director since 2017 and currently serves as the Chairman of our Audit Committee. Dr. Diekman is founding partner of 5AM Ventures, where he has served since 2002. He is director of Cleave Therapeutics, Inc., a cancer therapeutic company; and Wildcat Discovery Technologies, Inc., a technology company that discovers materials for energy storage applications; charter trustee of Princeton University; chairman of the board of directors of The Scripps Research Institute; and a member of the advisory board of the Schaeffer Center for Health Policy and Economics at the University of Southern California. During the last five years, Dr. Diekman served as the Chairman and Director of IDEAYA Biosciences from 2015 to June 2020. Dr. Diekman holds an A.B. in Organic Chemistry from Princeton University in 1965 and a Ph.D. in Chemistry from Stanford University in 1969.
Skills and Qualifications
Our Board believes that Dr. Diekman’s expertise, perspective and experience as a founder and director at oncology-focused companies and his expertise in life sciences and venture capital industries, position him to make valuable contributions to the Board.
-21-
Nisa Leung
Experience
Nisa Leung has been our Director since 2014 and independent director since July 2020. Ms. Leung is a Managing Partner at Qiming Venture Partners, where she leads its healthcare investments. In addition to serving on our Board of Directors, Ms. Leung is also a member of the board of directors of CanSino Biologics Inc., a vaccine developer; dMed, a Shanghai-based CRO consulting startup; and Venus Medtech, a developer of interventional artificial cardiac valve systems. Ms. Leung received a Master of Business Administration from the Stanford Graduate School of Business in June 2001 and a B.S. in Hotel Administration from Cornell University in 1992.
Skills and Qualifications
Our Board believes that Ms. Leung’s venture capital and consulting experience in the healthcare industry, position her to make valuable contributions to the Board.
William Lis
Experience
Mr. Lis has been our independent Director since October 2018. He has 28 years of biopharmaceutical experience. He is the Executive Chairman, and interim CEO of Jasper Therapeutics, Inc. where he led the company’s 2019 Series A financing. Previously, Mr. Lis served as Chief Executive Officer and a Director of Portola Pharmaceuticals, Inc. from 2009 until 2018 after serving as Chief Operating Officer. Under his leadership, Portola successfully grew from a discovery-stage company to a fully integrated research and development and commercial organization, and independently discovered and developed Andexxa® and Bevyxxa® through commercial launch, and advanced cerdulatinib into clinical development. He led corporate partnerships and private and public financings including an initial public offering in 2013. The company grew into a multi-billion valuation company during his tenure. Portola was acquired by Alexion Pharmaceuticals in 2020. Mr. Lis held executive positions at Scios, Inc. (a Johnson & Johnson company) where he last served as Sr. Vice President of Business Development and New Product Development, having led efforts for the in-licensing, development and pre-commercial launch for Xarelto®; He also held positions of increasing responsibility at Millennium Pharmaceuticals, Inc. (previously COR Therapeutics, Inc.) and Rhone Poulenc Rorer in sales, marketing, medical affairs and business development. He was involved in the U.S. commercial launch of several products, including Integrilin®, Lovenox®, Rilutek® and Taxotere®. Mr. Lis served as a member of the Bio Board of Directors for Emerging Companies and as an independent Director of Eidos Therapeutics, Inc. prior to its acquisition by Bridge Bio in 2021. Mr. Lis holds a B.S. from the University of Maryland.
Skills and Qualifications
Our Board believes that Mr. Lis’s extensive leadership and financial experience in the biopharmaceutical industry position him to make valuable contributions to the Board.
Leon O. Moulder, Jr.
Experience
Mr. Moulder has been our independent Director since January 2020 and currently serves as the Chairman of the Nominating and Corporate Governance Committee. Mr. Moulder is the Managing Member of Tellus BioVentures, LLC, an early-stage life sciences investment fund. He most recently served as Chief Executive Officer and Director of Tesaro, Inc. since cofounding the company in 2010. Acquired by GSK in January 2019, Tesaro was a fully-integrated Boston based oncology-focused biopharmaceutical company with operations in North America and Europe. He previously served as President and Chief Executive Officer of Abraxis BioScience, Inc., prior to the company’s eventual acquisition by Celgene Corporation in 2010. Prior to that, from
-22-
2008, Mr. Moulder served as Vice Chairman of Eisai Corporation of North America following Eisai’s acquisition of MGI PHARMA, where he served as President and Chief Executive Officer beginning in 2003 and previously as Executive Vice President since 1999. This followed him serving as a member of the founding management team of a venture-stage biotech company in 1997. Mr. Moulder began his career as a clinical pharmacist followed by a seventeen-year career at predecessor companies of Sanofi, beginning with Marion Laboratories in 1981. Mr. Moulder is a Temple University Trustee, Chairman of the Trustee Committee for Research, Chairman of the Temple University Japan (TESS) Board and serves on the board of the Fox Chase Cancer Center. He is a Council Member for both the University of Chicago Booth School of Business and the Polsky Center for Entrepreneurship and Innovation. Mr. Moulder serves on the board of the Helsinn Group, is Chairman of the Board of Directors of Trevena, Inc. and previously served on the Boards of Cubist Pharmaceuticals and the Biotechnology Innovation Organization (BIO). Mr. Moulder received a Pharmacy degree from Temple University in 1980 and an MBA from The University of Chicago Booth School of Business in 1997.
Skills and Qualifications
Our Board believes that Mr. Moulder’s significant operational and senior management experience in the biopharmaceutical industry, as well as his extensive experience as a director on public and private boards in the industry, position him to make valuable contributions to the Board.
Peter Wirth
Experience
Mr. Wirthhas been our Director since 2017, and independent Director since May 2020 and currently serves as the Chairman of the Compensation Committee. He is a venture partner at Quan Capital Management, LLC, a global venture capital firm; chairman of the board of directors of FORMA Therapeutics, a Nasdaq-listed clinical stage biopharmaceutical company developing novel therapeutics for patients with rare hematological diseases and cancer; and chairman of the board of directors at Syros Pharmaceuticals, a Nasdaq-listed clinical stage biopharmaceutical company developing novel therapeutics for patients with leukemia and select solid tumors. From 2011 to 2014, Mr. Wirth served as Founder, President and Director of Lysosomal Therapeutics, Inc., a biopharmaceutical company focused on small molecule research and development in the field of neurodegeneration. From 1996 to 2011, Mr. Wirth served as a senior executive at Genzyme, which is now part of Sanofi, and most recently as its Executive Vice President of legal and corporate development, Chief Risk Officer and corporate secretary. Mr. Wirth received a B.A. in Political Science from the University of Wisconsin at Madison in 1972 and a JD from Harvard Law School in 1975.
Skills and Qualifications
Our Board believes that Mr. Wirth’s expertise in corporate governance and his experience in corporate strategy, product development, business development and legal issues confronting the biotechnology industry, position him to make valuable contributions to the Board.
Election of Directors
The Board of Directors currently consists of
eightten members. The Current Articles provide that unless otherwise determined by the Company in a general meeting, the
authorized number of directors shall be not less than one or more than ten. We are not subject to any contractual obligations regarding the election of our directors. Our Nominating and Corporate Governance Committee and Board of Directors may consider a broad range of factors relating to the qualifications and background of nominees, as further set forth below under “Director Nominations.”
The laws of the Cayman
law doesIslands do not require an annual election of directors, and the Current Articles provide that
directors hold office until their successors have beeneach Director shall be elected
and qualifiedannually for terms expiring at the next annual general meeting of the Company, at which he or she may be eligible for re-election or until the earlier of their resignation or removal.
-23-
The Current Articles provide that (1) the shareholders requisitioning a general meeting of shareholders may put forward resolutions to appoint or remove directors (with or without cause), and (2) at that meeting so convened, the affirmative vote of a simple majorityshareholders of the issued shares as of the applicable record date may by ordinary resolution approve the removal of directors. Shareholders holding in aggregate not less than one-thirdone-tenth of the voting rights of issued shares and entitled to vote at general meetings to requisition an extraordinary general meeting of our shareholders in accordance with the Current Articles. Additionally, the Current Articles provide that any vacancy on the Board of Directors, including a vacancy resulting from an enlargement of the Board of Directors, may be filled by ordinary resolution or by vote of a simple majority of our directors then in office.
Director Nominations
The Board of Directors is responsible for nominating and recommending director candidates to the Company’s shareholders for election at the annual general meeting or for appointing directors to the Board to fill a vacancy or as an addition to the existing Board between annual general meetings. The Board of Directors has determineddelegated to the Nominating and Corporate Governance Committee the responsibility to identify, evaluate, and recommend director candidates to the Board of Directors for their consideration, as deemed appropriate. From time to time, the Nominating and Corporate Governance Committee utilizes third-party search firms to identify director candidates.
The Board of Directors has adopted Corporate Governance Guidelines that include, among other things, the criteria that the Board of Directors may consider in evaluating the suitability of director candidates. The Board of Directors has delegated to the Nominating and Corporate Governance Committee the responsibility for reviewing, on an annual electionbasis, the qualification criteria for the Board of Directors as a whole and its individual members and recommending any changes to the Board of Directors for approval. In identifying director candidates, the Board of Directors and the Nominating and Corporate Governance Committee may consider any factors that they deem appropriate in the context of the needs of the Board of Directors and the overall diversity and composition of the Board of Directors. Such factors may include, but are not limited to, the candidate’s qualifications, skills, expertise, experience, integrity, independence (including any actual or perceived conflicts of interest), and time availability in light of other commitments. Diversity may be considered across multiple dimensions, including diversity in experiences, perspective, and skills as well as diversity with respect to other background characteristics such as gender, age, culture, ethnicity, and nationality. Overall, the Board of Directors and Nominating and Corporate Governance Committee will be guided to select and recommend director candidates that they determine are best suited to meet the needs of the Board of Directors and further the interests of our shareholders through their established record of professional accomplishment, ability to contribute positively to the collaborative culture among board members, knowledge of our business, understanding of the competitive landscape, and professional and personal experiences and relevant expertise.
Director Nominations by Shareholders
Any shareholder wishing to recommend a director candidate for consideration by the Nominating and Corporate Governance Committee should provide the following information within the time frame set forth for shareholder proposals and in accordance with our Articles of Association to Zai Lab Limited, 314 Main Street, Fourth Floor, Suite 100, Cambridge, MA 02142, Attention: Chief Legal Officer & Corporate Secretary: (a) the name and address of record of the shareholder; (b) a representation that the shareholder is a record holder of our securities or, if the shareholder is not a record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) of the Exchange Act; (c) the candidate’s name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation or employment for the past five years; (d) a description of the qualifications and background of the candidate that addresses the criteria for board membership approved by the Board of Directors; (e) a description of all arrangements or understandings between the shareholder and the candidate; (f) the consent of the candidate (1) to be named in the proxy statement for our next general meeting and (2) to serve as a director, if elected at that meeting; and (g) and any other information regarding the candidate that is required to be included in a proxy statement filed pursuant to SEC rules and HK Listing Rules. The Nominating and Corporate Governance Committee may seek further information from or about the shareholder making the recommendation, the candidate, or any such other beneficial owner, including information about all business and other relationships between the candidate and the shareholder and between the candidate and any such other beneficial owner.
Board Diversity
In accordance with Nasdaq Rule 5606, the below chart provides information on each of our director’s voluntary, self-identified characteristics.
| | | | | | | | | | | | | | |
| Board Diversity Matrix (as of April 1, 2023) |
| Board Size: | | | | |
| Total Number of Directors | | 10 | | |
| | Female | | Male |
| Gender Identity | | | | |
| Directors | | 2 | | 8 |
| Demographic Background | | | | |
| Asian | | 2 | | 1 |
| White | | 0 | | 6 |
| Did not disclose demographic background | | 0 | | 1 |
Our Corporate Governance Practices
We seek to implement and follow corporate governance practices in line with best practices in our industry. The Board of Directors has adopted Corporate Governance Guidelines, which are available on our website at https://ir.zailaboratory.com/corporate-governance/highlights. The Board of Directors periodically reviews and updates these Guidelines, as deemed appropriate, such as in consideration of evolving legal and regulatory requirements and corporate governance best practices.
Our corporate governance practices include the following:
•Each of our directors is independent, except for the Chairperson who also serves as our CEO;
•Since July 2022, the Board of Directors has had a lead independent director to, among other things, lead meetings of the Board when the Chairperson is not present, serve as liaison between the Chairperson and independent directors, and preside over executive sessions of our independent directors;
•Our directors are elected annually;
•The Audit, Nominating and Corporate Governance, Compensation, and Commercial Committees are comprised solely of independent directors;
•Each of the Board Committees operates pursuant to a written charter that has been approved by the Board of Directors and is available on our website;
•Independent directors meet regularly without management;
•The Company provides new directors with a director orientation program to help familiarize them with our business, policies, and procedures and makes available to directors continuing education programs;
•The Board and Committees are provided access to senior management as well as independent advisors as necessary to perform their duties and, for Committees, in accordance with their respective charters;
•The Board of Directors and Board Committees conduct an annual self-evaluation; and
•The Board periodically reviews the Company’s best interests and in the best interests of its shareholders and accordingly, has proposed at the Annual Meeting to amend the Current Articles to provide for an annual election of directors (see Proposal 1). If approved, this Proposal 1 will permit the Company’s shareholders to vote on the election of all directors every year for one-year terms beginning with the next annual meeting.succession planning.
Independence of Directors
The Board of Directors has determined that all members of the Board of Directors, except Samantha (Ying) Du,
and Tao Fu, are independent, as determined in accordance with
the Nasdaq
listing rules;requirements and
that all members of the Board of Directors, except Samantha (Ying) Du and Tao Fu, are independent, as determined in accordance with the HK Listing Rules. In making this independence determination, the Board of Directors considered the relationships that each such director has with us and all other facts and circumstances that the Board of Directors deemed relevant in determining their independence, including the beneficial ownership of our share capital by each director. In considering the independence of the directors listed above, the Board of Directors considered the association of our directors with the holders of more than 5% of our share capital. We expect that the composition and functioning of the Board of Directors and each of our committees will continue to comply with
all applicable
requirements of the Nasdaq Stock Market, theSEC rules and regulations,
of the SEC and the HK Listing
Rules.Rules, and Nasdaq and Hong Kong Stock Exchange requirements. There are no family relationships among any of our directors or executive
officers.Director Nominations
officers or senior management.
Board Meetings
The Board of Directors will considerheld five meetings in 2022. The independent directors ordinarily hold executive sessions at regularly scheduled meetings of the Board of Directors. Each of our other directors then in office attended at least 75% of the aggregate of all meetings of the Board of Directors and approve from timeall meetings of the committees of the Board of Directors on which such director then served. Directors and director nominees are encouraged to timeattend the criteria that it deems necessaryannual general meeting of shareholders, barring significant commitments or advisable for director candidates. special circumstances. Seven of nine directors then in office attended the 2022 annual meeting.
Committees of the Board
The Board of Directors has full authority to modify such criteria as it deems necessary or advisable. The Board of Directors has delegated tofive standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, the responsibilityResearch and Development Committee, and the Commercial Committee. The Company’s CEO and Chairperson participates as a member of the Research and Development Committee. Otherwise, all of the standing committees are comprised solely of independent directors. These committees perform important functions on behalf of the Board of Directors and meet regularly. All of our committees operate in accordance with written charters, which were approved by the Board of Directors and are available on our website at https://ir.zailaboratory.com/corporate-governance/highlights.
The membership of each committee as of April 1, 2023, a brief description of their primary responsibilities, and the number of meetings held in 2022 are included below.
Audit Committee
Scott Morrison, John Diekman, and Peter Wirth currently serve on the Audit Committee, which is chaired by Scott Morrison. The Board of Directors has determined that each member of the Audit Committee is “independent” for developingAudit Committee purposes as that term is defined in SEC and Nasdaq rules and the HK Listing Rules. The Board of Directors has evaluated the background of Scott Morrison and, upon so doing, designated him as an “audit committee financial expert,” as defined in SEC rules. The Board of Directors has also determined that Mr. Morrison has the relevant accounting qualification as required under the HK Listing Rules. The Audit Committee’s responsibilities include:
•Overseeing the integrity of our consolidated financial statements;
•Overseeing our compliance with legal and regulatory requirements;
•Overseeing the qualifications, independence, and performance of our independent auditor;
•Overseeing the performance of the Company’s internal audit function, including reviewing the internal audit department’s responsibilities, budget, staffing, and any recommended changes in the planned scope of the internal audit with the independent auditor and management;
•Deciding whether to appoint, retain, or terminate our independent auditors and approving all audit, permitted non-audit, tax, and other services, if any, and the fees for and terms of such services, to be provided by our independent auditor;
•Reviewing and discussing with management and the independent auditor our annual and quarterly and interim financial statements and related disclosures as well as significant financial reporting judgments and critical accounting policies and practices used by us;
•Overseeing our controls and procedures, including: (i) reviewing the adequacy of our internal control over financial reporting; (ii) establishing policies and procedures for the receipt and retention of financial and accounting-related complaints and concerns; (iii) establishing and implementing policies and procedures for the review and approval or disapproval of proposed related party transactions and reviewing all related party transactions for potential conflict of interest situations and approving all such transactions, if deemed appropriate;
•Overseeing our enterprise risk management and related guidelines and policies;
•Overseeing the integrity of our information technology systems, processes, and data and reviewing and discussing with management and the internal auditor the adequacy of security for our IT systems, processes, and data;
•Recommending, based upon the Audit Committee’s review and discussions with management and the independent auditor, whether our annual audited financial statements should be included in our Annual Report on Form 10-K filed with the SEC and our annual report and annual results announcement filed with the Hong Kong Stock Exchange;
•Preparing the Audit Committee report and other disclosures required by SEC rules to be included in our annual proxy statement; and
•Reviewing our earnings releases and unaudited financial statements to be included in our quarterly and interim filings with the SEC and Hong Kong Stock Exchange, as applicable.
The Audit Committee held nine meetings in 2022. The Audit Committee’s written charter satisfies the applicable standards of the SEC and Nasdaq as well as the HK Listing Rules.
Compensation Committee
Peter Wirth, John Diekman, and Leon O. Moulder, Jr. currently serve on the Compensation Committee, which is chaired by Peter Wirth. The Board of Directors has determined that each member of the Compensation Committee is “independent” as that term is defined in the Nasdaq requirements and HK Listing Rules. The Compensation Committee’s responsibilities include:
•Reviewing the corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluating the performance of our Chief Executive Officer in light of such corporate goals and objectives and recommending to the Board of Directors for its considerationapproval of our Chief Executive Officer’s compensation based on that evaluation;
•Reviewing and approval criteriaapproving the compensation of our other executive officers;
•Approving our long-term compensation strategy for director candidates. The Company has adopted guidelinesemployees and procedures for director candidates. Thedirectors and determining the types of shares and other compensation plans to be used by us and our affiliates;
•Overseeing the administration of our equity incentive plans;
•Reviewing and making recommendations to the Board of Directors may, however, rescind its delegationwith respect to director compensation;
•Overseeing the management of risks relating to our executive compensation and assumeoverall compensation and benefits strategies, plans, arrangements, practices, and policies;
•Evaluating and assessing legal counsel, compensation consultants, and other advisors in accordance with the responsibilities it previously delegatedapplicable requirements in the Nasdaq listing rules;
•Retaining and approving the compensation of any outside advisors to the Compensation Committee;
•Preparing the compensation committee report required by SEC rules to be included in our annual proxy statement or Annual Report on Form 10-K; and
•Reviewing and discussing with management the compensation discussion and analysis to be included in our annual proxy statement or Annual Report on Form 10-K.
The Compensation Committee held five meetings in 2022.
Nominating and Corporate Governance
Committee.The Board of Directors has delegated toCommittee
Leon O. Moulder, Jr., John Diekman, and William Lis currently serve on the Nominating and Corporate Governance Committee,
the responsibility to identify candidates for nomination to the Board of Directors (including candidates to fill vacancies) and assessing their qualifications in light of the principles in our Corporate Governance Guidelines and the Committee’s charter. The Nominating and Corporate Governance Committee will recommend director candidates for the Board of Directors’ consideration and review the candidates’ qualifications with the Board of Directors.which is chaired by Leon O. Moulder, Jr. The Board of Directors
retains the authority to nominate a candidate for election by the shareholders as a director and to fill vacancies. From time to time,has determined that each member of the Nominating and Corporate Governance Committee
utilizes third-party search firms to identify director candidates. In identifying director candidates,is “independent” as that term is defined in the
NominatingNasdaq and
Corporate Governance Committee may consider all facts and circumstances it deems appropriate, including, among other things, the skills of the candidate, his or her depth and breadth of business experience and other background characteristics, his or her independence and the needs of the Board of Directors.Our Nominating and Corporate Governance Committee has not adopted a formal policy with respect to a fixed set of specific minimum qualifications for its candidates for membership on the Board of Directors. Our
-24-
Nominating and Corporate Governance Committee and Board of Directors may therefore consider a broad range of factors relating to the qualifications and background of nominees. OurHK listing rules. The Nominating and Corporate Governance Committee’s responsibilities include:
•Identifying and recommending candidates for membership of the Board of Directors’ priority in selecting board members is the identification of persons who will further the interests of our shareholders through his or her established record of professional accomplishment, the ability to contribute positivelyDirectors and committees to the collaborative culture among board members, knowledgeBoard of our business, understanding of the competitive landscape, and professional and personal experiences and relevant expertise.Director Nominations by Shareholders
Any shareholder wishing to recommend a director candidate for consideration by the Nominating and Corporate Governance Committee should provide the following information within the time frame set forth for shareholder proposals andDirectors in accordance with our Articles of Association to Zai Lab Limited, Building 1, 4/F, Jinchuang Plaza, 4560 Jinke Road, Pudong, Shanghai, China 201210, attention to Chief Legal Officer & Corporate Secretary: (a) the name and address of record of the shareholder; (b) a representation that the shareholder is a record holder of our securities or, if the shareholder is not a record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) of the Exchange Act; (c) the candidate’s name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation or employment for the past five years; (d) a description of the qualifications and background of the candidate that addresses the criteria for board membership approved by the Board of Directors; (e) a description of all arrangements or understandings between the shareholder and the candidate; (f) the consent of the candidate (i) to be named in the proxy statement for our next general meeting and (ii) to serve as a director, if elected at that meeting; and (g) and any other information regarding the candidate that is required to be included in a proxy statement filed pursuant to SEC rules and HK Listing Rules. The Nominating and Corporate Governance Committee may seek further information from or about the shareholder making the recommendation, the candidate, or any such other beneficial owner, including information about all business and other relationships between the candidate and the shareholder and between the candidate and any such other beneficial owner.
Shareholder Communications
The Board of Directors provides to every shareholder the ability to communicate with the Board of Directors, as a whole, and with individual directors on the Board of Directors through an established process for shareholder communication. For a shareholder communication directed to the Board of Directors as a whole, shareholders may send such communication to the attention of our Corporate Secretary via regular mail or expedited delivery service to: Zai Lab Limited, Building 1, 4/F, Jinchuang Plaza, 4560 Jinke Road Pudong, Shanghai, China 201210, attention Board of Directors c/o Corporate Secretary.
For a shareholder communication directed to an individual director in his or her capacity as a member of the Board of Directors, shareholders may send such communication to the attention of the individual director via Regular Mail or Expedited Delivery Service to: Zai Lab Limited, Building 1, 4/F, Jinchuang Plaza, 4560 Jinke Road Pudong, Shanghai, China 201210, Attention: [Name of Individual Director].
Communications will be distributed
•Recommending to the Board of Directors or to any individual director or directors asthe appropriate depending oncommittee thereto processes for annual evaluation of the facts and circumstances outlined in the communications. Items that are unrelated to the duties and responsibilitiesperformance of the Board of Directors, may be excluded,the Chairperson of the Board of Directors, the Chief Executive Officer, and appropriate committees of the Board of Directors;
•Reviewing our practices and policies with respect to the Board of Directors and the functions, duties, and composition of the committees thereto;
•Developing and recommending to the Board of Directors a set of corporate governance principles and reviewing the principles on an annual basis, or more frequently if appropriate;
•Overseeing the maintenance and presentation of the Board of Directors or management’s plans for succession to our senior management positions; and
•Overseeing the Company’s environmental, social, and governance (“ESG”) strategy, commitments, goals, and activities.
The Nominating and Corporate Governance Committee held four meetings in 2022.
Research and Development Committee
Richard Gaynor, Kai-Xian Chen, Samantha Du, William Lis, and Michel Vounatsos currently serve on the Research and Development Committee, which is chaired by Richard Gaynor. The Research and Development Committee’s responsibilities include:
•Reviewing and discussing with management our strategic research and development objectives, goals, and priorities, identifying opportunities for further research and development projects, and assessing, informing, and recommending to the Board of Directors such as junk mailstrategies and mass mailings, resumesopportunities that it deems suitable for the Company;
•Overseeing, assessing, and, other formswhere applicable, approving any ongoing Company research and development programs; and
•Providing feedback and advice to the Board of job inquiries, surveysDirectors regarding our ongoing research and solicitations or advertisements.development programs and activities.
The Research and Development Committee held eight meetings in 2022.
Commercial Committee
Michel Vounatsos, William Lis, and Leon O. Moulder, Jr. currently serve on the Commercial Committee, which is chaired by Michel Vounatsos. The Commercial Committee’s responsibilities include:
•Overseeing our commercialization strategy including reviewing and discussing with management our product commercialization plans and efforts and competitiveness of our commercial programs;
•Overseeing commercial risk management, including reviewing and discussing with management our risk assessment and risk management policies and procedures relating to commercial programs;
•Reviewing the organization, implementation, and effectiveness of our compliance programs with respect to commercial programs and activities and the adequacy of the resources for those programs; and
•Providing feedback and advice to the Board of Directors regarding commercial performance goals, the capabilities and performance of our commercial personnel.
The Commercial Committee was established in January 2023 and thus no meetings were held in 2022.
Board Leadership Structure and Role in Risk Oversight
Our Founder and Chief Executive Officer, Samantha (Ying) Du, is the ChairwomanChairperson of ourthe Board of Directors. The Board of Directors believes that Dr. Du is the director best suited to identify strategic opportunities for the Company and theareas of focus offor the Board of Directors due to her extensive understanding of our business as aour founder-25-
and our Chief Executive Officer.Officer and her deep knowledge of our industry. The Board of Directors also believes that the combined role of ChairwomanChairperson and Chief Executive Officer can promote thepromotes effective execution of strategic initiatives and facilitatefacilitates the flow of information between management and the Board of Directors.
In July 2022, the Board of Directors decided to further enhance our corporate governance by establishing a lead independent director and appointed John Diekman to serve in this important position. While the roles of Chairperson of the Board and Chief
Executive officer are combined, our lead independent director will, among other things, lead meetings of the Board when the Chairperson is not present, serve as liaison between the Chairperson and independent directors, have the authority to call meetings of the independent directors, and, if requested by a significant portion of our shareholders, be available for consultation and direct communication.
The Board of Directors oversees the management of risks inherent in the operation of our business and the implementation of our business strategies. The Board of Directors performs this oversight role by using several different levels of review. In connection with its reviews of our operations and corporate functions, the Board of Directors addresses the primary risks associated with those operations and corporate functions. In addition, the Board of Directors reviews the risks associated with our business strategies periodically throughout the year.
Each of
our board committeesthe Board Committees also oversees
therisk management
of our risk that falls within
the committee’sits areas of responsibility. In performing this function, each committee has full access to management, as well as the ability to engage advisors.
Our Chief Financial Officer reports toFor example, the
Audit Committee and is responsible for identifying, evaluating and implementing risk management controls and methodologies to address any identified risks. In connection with its risk management role, our Audit Committee meets privately with representatives from our independent registered public accounting firms and our Chief Financial Officer. The Audit Committee oversees the operation of our
enterprise risk management program, including the identification of the primary risks associated with our business and periodic updates to such risks, and reports to the Board of Directors regarding these activities.
Board Meetings
The Audit Committee also oversees risks related to our financial reporting, compliance with applicable laws and regulations, and our IT systems, processes, and data. In connection with its risk management role, the Audit Committee meets privately with representatives from our independent registered public accounting firms and receives regular reporting from management, including our Chief Financial Officer and Chief Compliance Officer. Our Chief Financial Officer is responsible for identifying, evaluating, and implementing risk management controls and methodologies to address financial reporting risks, and our Chief Compliance Officer is responsible for enterprise risk management program more broadly. The Compensation Committee considers risks related to our compensation policies and practices, and the Commercial Committee oversees risks related to our commercial programs.
Shareholder Communications
The Board of Directors held six meetings and acted by unanimous written consent six times during 2020. The independent directors ordinarily hold executive sessions at regularly scheduled meetings ofprovides every shareholder the ability to communicate with the Board of Directors. Other than Professor Chen, eachDirectors, as a whole, and with individual directors on the Board of Directors through an established process for shareholder communication. For a shareholder communication directed to the Board of Directors as a whole, shareholders may send such communication to the attention of our other directors thenCorporate Secretary via regular mail or expedited delivery service to: Zai Lab Limited, 314 Main Street, Fourth Floor, Suite 100, Cambridge, MA 02142, Attention: Board of Directors c/o Corporate Secretary.
For a shareholder communication directed to an individual director in office attended at least 75% of the aggregate of all meetingshis or her capacity as a member of the Board of Directors, and all meetingsshareholders may send such communication to the attention of the committeesindividual director via Regular Mail or Expedited Delivery Service to: Zai Lab Limited, 314 Main Street, Fourth Floor, Suite 100, Cambridge, MA 02142, Attention: [Name of Individual Director].
Communications will be distributed to the Board of Directors, or to any individual director or directors as deemed appropriate, depending on the facts and circumstances outlined in the communications. Items that are unrelated to the duties and responsibilities of the Board of Directors may be excluded, such as junk mail and mass mailings, resumes, and other forms of job inquiries, surveys, and solicitations or advertisements.
Environmental, Social, and Governance Practices
We remain committed to strong ESG practices and being a company that you can trust. Since hiring our Chief Sustainability Officer and releasing our first ESG report in 2021, we have continued to focus on which such director then served. Directorsdeveloping our ESG program.
ESG Oversight and
director nominees are encouraged to attend the annual general meeting of shareholders, barring significant commitments or special circumstances.Committees of the Board
During 2020, the Board of Directors had three standing committees: the Audit Committee, the Compensation Committee and theGovernance
The Nominating and Corporate Governance
Committee.Audit Committee
John Diekman, William Lis provides guidance and Peter Wirth currently serveoversight to management with respect to ESG matters. Our executive leadership team, led by our CEO and Founder, monitors the development and
execution of our overall corporate business strategy, including our ESG strategy and activities, and our Chief Sustainability Officer maintains responsibility for the day-to-day management of the enterprise ESG program.
Materiality Assessment
In 2022, with guidance from Business Social Responsibility (BSR), we conducted our first ESG materiality assessment to help us identify, understand, organize, and prioritize the ESG themes, opportunities, and risks that are most important to our business. The results of this analysis informed the development of our ESG strategy, which we refer to as Trust for Life because, as a company that works in the delicate space of human health, we understand the importance of being a company you can trust.
Trust for Life ESG Strategy
Our Trust for Life ESG strategy supports our core business of discovering, developing, and commercializing therapies that improve the lives of patients in China and worldwide. Through our ESG strategy, we continue to focus on the Audit Committee,quality of our products and manufacturing processes, minimizing our environmental footprint, supporting our employees and communities, and promoting honest and ethical business practices. In our effort to deliver value to our patients, workforce, healthcare professionals, communities, and shareholders, we have made three Trust for Life commitments – Improve Human Health, Create Better Outcomes, and Act Right Now – which is chaired by John Diekman. The Board of Directors has determined that each member of the Audit Committee is “independent” for Audit Committee purposes as that term is definedwe seek to build upon in the rulescoming years, including our goal of reaching one million patients by 2030.
ESG Reporting
In developing our ESG program and evaluating and reporting our progress with respect to our ESG commitments and goals, we have aligned with industry appropriate sustainability reporting standards from the SECGlobal Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB). We have also considered other sources, including the United Nations Sustainable Development Goals (SDGs), the Task Force on Climate-Related Financial Disclosures (TCFD) framework, HK Listing Rules, and feedback from industry-leading raters and rankers, including CDP (formally the Carbon Disclosure Project), the 2022 S&P Corporate Sustainability Assessment (CSA), and the Nasdaq Stock Market. The Board of Directors has evaluated the background of William LisDow Jones Sustainability Index (DJSI).
Additional information on our ESG program, strategy, activities, and upon so doing, designated him as an “audit committee financial expert,” as definedprogress in SEC rules. The Audit Committee’s responsibilities include:appointing, approving the compensation of, assessing the qualification, independence and performance of, and terminating or changing our independent auditor;
approving auditing and permitted non-audit services, and the terms of such services, to be provided by our independent auditor;
reviewing the internal audit department’s responsibilities, budget, staffing and any recommended changes in the planned scope of the internal audit with the independent auditor and management;
reviewing and discussing with management and the independent auditor our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us;
-26-
reviewing the adequacy of our internal control over financial reporting;
establishing policies and procedures for the receipt and retention of financial and accounting-related complaints and concerns;
recommending, based upon the Audit Committee’s review and discussions with management and the independent auditor, whether our audited financial statements shall be2022, is included in our Annual2022 Trust for Life ESG Report, on Form 10-K and our annual results announcement filed with the SEC and HKEx;
monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;
preparing the Audit Committee report and other disclosures required by the SEC rules to be included in our annual proxy statement;
reviewing all related party transactions for potential conflict of interest situations and approving all such transactions; and
reviewing our earnings releases and unaudited financial statements to be included in our quarterly and interim filings with the SEC and HKEx.
The Audit Committee held four meetings during 2020. The Audit Committee operates under a written charter that satisfies the applicable standards of the SEC, the Nasdaq Stock Market and the HKEx. A copy of the Audit Committee charter is available on our website at https://www.zailaboratory.com/ under “Investors (Nasdaq).”
Compensation Committee
Peter Wirth, Nisa Leung and Leon O. Moulder, Jr. currently serve on the Compensation Committee, which is chaired by Peter Wirth. The Board of Directors has determined that each member of the Compensation Committee is “independent” as that term is defined in the Nasdaq listing rules and the HKEx. The Compensation Committee’s responsibilities include:
reviewing the corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluating the performance of our Chief Executive Officer in light of such corporate goals and objectives and recommending to the Board for approval our Chief Executive Officer’s compensation based on that evaluation;
reviewing and approving the compensation of our other executive officers;
approving our long-term compensation strategy for employees and directors and determining the types of shares and other compensation plans to be used by us and our affiliates;
overseeing the administration of our equity incentive plans;
evaluating and assessing legal counsel, compensation consultants and other advisors in accordance with the applicable requirements in the Nasdaq listing rules;
retaining and approving the compensation of any outside advisors to the Compensation Committee;
reviewing and approving the grant of equity-based awards;
reviewing and making recommendations to the Board with respect to director compensation;
preparing the compensation committee report required by SEC rules to be included in our annual proxy statement or Annual Report on Form 10-K; and
reviewing and discussing with management the compensation discussion and analysis to be included in our annual proxy statement or Annual Report on Form 10-K.
The Compensation Committee held eight meetings and acted by unanimous written consent once during 2020. The Compensation Committee operates under a written charter adopted by the Board of Directors, which is available on our website at https://www.zailaboratory.com/ under “Investors (Nasdaq)sustainability.”
-27-
NominatingCode of Conduct and Corporate Governance Committee
Leon O. Moulder, Jr., John DiekmanEthics
We have adopted a written Code of Business Conduct and William Lis currently serve onEthics (the “Code”) that applies to our directors, officers, and employees. The Code defines the NominatingCompany’s culture and Corporate Governance Committee, which is chairedbeliefs and how it expects its employees to conduct business worldwide, treat people with respect, protect information and property, and comply with applicable laws and regulations, among other things. Everyone at the Company, including our senior executives and financial officers, receive annual training and are required to sign an annual acknowledgment that they have read the Code and agree to abide by Leon O. Moulder, Jr. The Board of Directors has determined that each memberit and will report suspected deviations. A copy of the Nominating and Corporate Governance CommitteeCode is “independent” as that term is defined in the Nasdaq listing rules and the HKEx. The Nominating and Corporate Governance Committee’s responsibilities include:identifying and recommending candidates for membership of the Board and committees to the Board in accordance with criteria approved by the Board;
recommending to the Board or to the appropriate committee thereto processes for annual evaluation of the performance of the Board, the Chairwoman of the Board, the Chief Executive Officer and appropriate committees of the Board;
reviewing our practices and policies with respect to the Board and the functions, duties and composition of the committees thereto;
developing and recommending to the Board a set of corporate governance principles and reviewing the principles on an annual basis, or more frequently if appropriate; and
overseeing the maintenance and presentation of the Board or management’s plans for succession to our senior management positions.
The Nominating and Corporate Governance Committee held two meetings and acted by unanimous written consent once during 2020. The Nominating and Corporate Governance Committee operates pursuant to a written charter adopted by the Board of Directors, which is availableposted on our website at
https://www.zailaboratory.com/ under “Investors (Nasdaq)ir.zailaboratory.com/corporate-governance/highlights.”Environmental, Social and Governance Practices
The business and affairs of the Company are managed under the direction of our Board of Directors. The Board believes that good corporate governance is a critical factor in achieving business success and in fulfilling the Board’s responsibilities to our shareholders. The Board believes that its practices align management and shareholder interests.
We have initiated an Environmental, Social and Governance program. We are committed to operating in a sustainable manner and being a responsible corporate citizen for the benefit of our employees, persons who participate in our clinical trials, patients of our products, our partners, our investors, the environment and the communities in which If we live and work. We view sustainability as a key part of our strategy to maximize long-term shareholder value, as we believe that operating responsibly is consistent with our goal of becoming a leading global biopharmaceutical company discovering, developing and commercializing products to extend and improve the lives of patients worldwide. We intend to issue a report on this program during 2021 and to enhance the program in coming years. We have focused our efforts in the following areas:
Social
Drug safety. We have implemented policies and procedures to ensure that our marketed products and product candidates under development are safe. We import the components of Tumor Treating Fields and most of the compounds we use in clinical trials in China from our partners and establish through inspection that these components and products were received in good order and are genuine. For those products and product candidates that we manufacture either directly or with the assistance of outside vendors, we follow rigorous procedures for inspecting components and finished products before release for potential commercial or clinical use.
-28-
Safety of patients in clinical trials. We follow Good Clinical Practice in all of the clinical trials we conduct. This includes establishing standard operating procedures for safety review in clinical trials, reaching pharmacovigilance agreements with each partner, creating safety and medical management plans for each product candidate, establishing independent data monitoring committees, submitting clinical trial applications andmake any necessarysubstantive amendments to, regulators within statutory requirements, training clinical staff and investigators, obtaining institutional review board approval before initiating clinical trials, obtaining informed consentor grant any waivers from, clinical trial participants, and reporting serious adverse events and adverse events to regulatory authorities as required by law and to partners as governed by pharmacovigilance agreements. We have not receivedthe Code for any warning letters from regulators and have had no product recalls.
Ethical marketing. We have a Chief Compliance Officer and a Global Compliance Committee to support global operations and overall company program administration. We also have a regional Compliance Officer and Compliance Committee for operations in Greater China. We have established clear requirements and processes regarding managementofficer, we will disclose the nature of the behavior ofsuch amendment or waiver on our marketing employees, including avoidance of off-label promotional behavior and the review and approval of marketing materials. Additionally, while we are not a member of the R&D-based Pharmaceutical Association Committee (RDPAC), we follow this organization’s principles concerning the promotion of products.
Employee recruitment, development, and retention. We aim to attract and retain a high-quality work force through a competitive package of remuneration and benefits, training, promotion, and a satisfying and diversified work experience built on developing and commercializing innovative medicines in service to patients in need. We have low employee turnover and have built a company culture around the core corporate values of Entrepreneurship, Innovation, Patient First, Collaboration, Dedication and Integrity. We reinforce our culture through the actions of an internal culture committee, company-wide activities, and awards.
Gender diversity, equity, and inclusion. We are committed to providing equal opportunities in recruitment, internal transfer and promotion to candidates and employees regardless of their sex, nationality, marital status, disability and religious belief in compliance with the laws of the countries where we have operations. As of April 1, 2021, 57% of our employees and 59% of our R&D employees are female. Two of our directors are women, one of whom is our Founder, Chairwoman, and CEO.
Access to/affordability of medicines. We aim to achieve universal or near-universal access to our products in China mainly by obtaining their inclusion in China’s National Reimbursed Drug List (NRDL). Prior to inclusion of our products on the NRDL, we offer our products through Patient Assistance Programs. We also offer products not eligible for the NRDL, such as the medical device Optune/Tumor Treating Fields, through a Patient Assistance Program. We also seek to obtain coverage of our products under commercial insurance plans and supplemental insurance offered by certain provinces and municipalities in China.
Environmental
Energy, water, and waste efficiency. We have established and follow procedures to comply with environmental laws, regulations, standards, and other requirements in all countries where we have operations. Our management team actively manages environmental risks and opportunities in the manufacturing activities at our manufacturing plant in Suzhou, China, our principal area of environmental risk, including by implementing procedures governing an overall environmental management system. We have procedures for assessing risk and measuring outcomes in the areas of greenhouse gas emissions, climate change, waste management, water use, packaging, and environmental health and safety. For our offices in Cambridge, Massachusetts, we have leased office space in a building that is currently anticipated to receive a LEED Gold certification.
-29-
website.
Governance
Business ethics.
(i) | Code of Business Conduct and Ethics. We have adopted a written Code of Business Conduct and Ethics that applies to our directors, officers and employees. A current copy of the code is posted on our website at https://www.zailaboratory.com/ under “Investors (Nasdaq).” If we make any substantive amendments to, or grant any waivers from, the code of conduct for any officer, we will disclose the nature of such amendment or waiver on our website.
| |
| EXECUTIVE OFFICERS |
(ii) | Ethics & Compliance Department and Policies. We have established a global Ethics & Compliance Department under the leadership of our Chief Compliance Officer, reporting to our Chief Legal Officer, as well as our Audit Committee. Our Ethics & Compliance Department promulgates global policies to guide the conduct of the Company and our employees consistent with the terms of our Code of Business Conduct and Ethics. The global policies are supplemented by regional and local written standards to guide transactional engagement and provide detailed processes and requirements for all aspects of the Company’s business.
|
EXECUTIVE OFFICERS
The following table sets forth the name, age, and position of each of our executive officers as of April 1,
2021:2023: | | | | | | | | | | | | | | |
Name | | Age | | Position(s) |
Samantha (Ying) Du | | 5658 | | Founder, Chief Executive Officer, ChairwomanChairperson of the Board of Directors |
Billy Cho | | 4345 | | Chief Financial Officer |
Rafael G. Amado | | 59 | | President, Head of Global Oncology Research and Development |
| F. Ty Edmondson | | 5557 | | Chief Legal Officer |
Tao Fu
Harald Reinhart | | 4971 | | President and Chief Operating Officer and Director |
Alan Bart Sandler
| | 64 | | President, Head of Global Development, OncologyNeuroscience, Autoimmune and Infectious Diseases |
| Joshua Smiley | | 53 | | President, Chief Operating Officer |
Biographical information for our executive officers as of April 1,
20212023 is set forth below:
The biographical information of Samantha (Ying) Du, Ph.D. and Tao Fu are isset forth above under “Corporate Governance — Composition of Our BoardMatters Requiring Shareholder Action – Proposals 1-10 – Election of Directors.”
Billy Cho, M.B.A., M.A. joined our Company as our Chief Financial Officer in March 2018. Prior to joining our Company, Mr. Cho served as Managing Director and Head of Asia Healthcare Investment Banking at Citigroup. Based in Hong Kong since 2011, Mr. Cho was responsible for healthcare client coverage at Citigroup across the Asia Pacific region and led many biopharma transactions in China, including Zai Lab’s U.S. initial public offering. Prior to this, he was based in New York in healthcare M&A investment banking and also spent time in corporate development for a pharmaceutical services company. Mr. Cho started his career at Ernst & Young LLP performing financial audits of U.S.-based healthcare companies. Mr. Cho earned his M.B.A.an MBA. from the Wharton School of the University of Pennsylvania, in May 2011,an M.S. in Accounting from the University of Virginia, in 2001, and a B.S. in Business Administration from the University of Southern California’s Marshall School of BusinessBusiness.
Rafael G. Amado joined our Company as President, Head of Global Oncology Research and Development in 2000.December 2022. Dr. Amado joined Zai Lab from Allogene Therapeutics, Inc., where he had served as Executive Vice President, Head of Research and Development and Chief Medical Officer since September 2019. Prior to Allogene, he served as President of Research and Development and Chief Medical Officer of Adaptimmune, LLC from August 2018 to July 2019 and as Chief Medical Officer from March 2015 to July 2018. In these roles, he was responsible for directing discovery and clinical development strategy as well as execution activities for several gene-engineered cell therapies, chairing the R&D leadership team and providing medical guidance for pipeline prioritization. Prior to Adaptimmune, Dr. Amado held various roles of increasing responsibility at GlaxoSmithKline from 2008 to 2015, most recently as Senior Vice President and Global Head of Oncology Research and Development, and at Amgen Inc. from 2003 to 2008, where he was last Executive Director of Clinical Research and Global Development in Therapeutic Oncology. In these roles, he has been instrumental in the development of multiple medicines across therapeutic modalities. Prior to joining Amgen, he held academic roles at the University of California, Los Angeles (UCLA) in the Department of Medicine, Division of Hematology / Oncology. Dr. Amado received an M.D. from the University of Seville School of Medicine in Seville, Spain and completed his internship and residency in Internal Medicine at the Michael Reese Hospital and Medical Center and a fellowship in Hematology / Oncology at UCLA.
F. Ty Edmondson joined our Company as Chief Legal Officer in August 2020. Mr. Edmondson hasjoined our company from Biogen Inc. where he served in various legal and compliance roles during his tenure at Biogen Inc., a leading global biotech company where he has been from Junebeginning in 2014, through August 2020, including Senior Vice President, Chief Corporation Counsel, and Assistant Secretary. During his time at Biogen, he also served as theSecretary from November 2019 to August 2020 and in several roles of increasing responsibility, including Chief Compliance Officer, Chief Commercial Counsel, and Chief International Counsel, of the company. and Chief US Counsel from August 2014 to November 2019.
Prior to Biogen, Mr. Edmondson served as Vice President, Associate General Counsel, and Corporate Secretary for Sepracor Inc.
, as well as in various senior legal and compliance positions in Japan and China after Sepracor’s from 2005 until its acquisition by Sumitomo Dainippon Pharma Co., Ltd.
in 2010. He then served with Sumitomo in various senior legal and compliance roles in Japan, China, and the United States until August 2014. Before Sumitomo, Mr. Edmondson served in various
legal roles with life sciences companies with a focus on international and U.S. FDA work, including Eisai, Inc.
, from 2004 to 2005, Boston Scientific
from 1999 to 2004, and Bristol-Myers
Squibb.-30-
Squibb from 1997 to 1999. Before his work in the life sciences industry, he was an associate with the admiralty law firm, Royston Rayzor in Houston, Texas.Texas from 1993 to 1997. Mr. Edmondson received a BA degreeB.A. in History from Washington & Lee University in June 1988 and received a J.D. from the Widener University School of LawLaw.
Harald Reinhart, M.D. joined our Company in May 1993.Alan Bart Sandler, M.D. has been our2017 and currently serves as President, Head of Global Development, Oncology since December 2020. Dr. Sandler brings nearly 30 yearsNeuroscience, Autoimmune and Infectious Diseases. He is Adjunct Clinical Professor of oncology and drug development experience across industry and academia.infectious diseases at Yale School of Medicine. Prior to joining Zai Lab,the Company, Dr. Reinhart worked at Shionogi US from 2011 to 2013 as the US Head of Clinical Development and Medical Affairs, directing a broad portfolio of drug candidates in anti-infectives, diabetes, allergy, GI, and pain medications. He guided several compounds through regulatory meetings and obtained approval for ospemifene. Between 2003 and 2010, he held increasingly senior roles at Novartis where he oversaw successful filings of SNDAs and NDAs for Coartem, Famvir, Sebivo, and Cubicin and managed global clinical development groups for infectious disease, immunity, transplantation, and renal disease. At NIBR (Novartis Institutes for Biomedical Research), he supervised the transitioning of research projects into clinical development. From 1991 until 2003, he worked as the International Clinical Project Manager in charge of ciprofloxacin and acarbose at Bayer Corp. with several successful SNDAs and approvals. Dr. Reinhart holds a medical degree from the University of Würzburg in Germany where he trained in anesthesiology. He completed his medical specialty training in the United States with board-certifications in internal medicine and infectious diseases. He has been a Yale faculty member since 1992.
Joshua Smileywas appointed in March 2022 as our Chief Operating Officer, effective in August 2022 following the completion of his leave with his prior employer, and was promoted to President, Chief Operating Officer in April 2023. Mr. Smiley is responsible for our corporate strategy and for overseeing our commercial, manufacturing, business development, finance, human resources, information technology, and corporate affairs functions. Mr. Smiley brings to the Company over 26 years of experience working in the biopharmaceutical industry, including experience leading finance, corporate strategy, business development, venture capital, and global business services operations. Prior to joining the Company, Mr. Smiley worked for Eli Lilly and Company (Lilly) from 1995 to March 2022. While at Lilly, he held various global leadership roles with responsibility over finance, corporate strategy, business development, and capital markets activities, including Senior Vice President and Global Head of Product Development Oncology at Genentech, a member of the Roche Group. During his tenure at Genentech/Roche, he led the teams responsible for the global development and regulatory approval of several innovative medicines, most recently Tecentriq®.Chief Financial Officer from January 2018 to February 2021. Prior to joining Genentech/Roche, Dr. Sandler served as ProfessorLilly, he worked in investment banking and Chiefconsulting. Mr. Smiley earned a B.A. in History from Harvard University.
| | |
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS |
RTAIN RELATIONSHIPSReview and Approval of Hematology/Oncology at Oregon HealthTransactions with Related Parties
The Audit Committee has adopted a written policy and
Science University. Previously, he served onprocedures for review and approval or ratification of transactions involving the
faculties of the medical schools of Indiana UniversityCompany and
Vanderbilt University. Dr. Sandler holds a Doctor of Medicine degree from Rush Medical College. He completed his training in internal medicine and a fellowship in medical oncology at Yale-New Haven Medical Center. He has published over 300 peer-reviewed publications, articles, abstracts and book chapters.-31-
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
Other than compensation arrangements, we describe below any transactions and series of similar transactions, since January 1, 2020 to which we were a party or will be a party, in which:
the amounts involved exceeded or will exceed $120,000; and
any of our directors,related parties, including executive officers, or holdersdirectors, beneficial owners of more than 5%ten percent of our share capital, or any member of thevoting securities, and immediate family members or certain related entities of such persons. The policy covers any related party transaction that meets the foregoing persons, had or will haveminimum threshold for disclosure in this proxy statement under relevant SEC rules, which generally include transactions involving amounts exceeding $120,000 in which a related party has a direct or indirect material interest.
Pursuant to the related party transaction policy and procedures, management determines whether a transaction requires review by the Audit Committee, in which case the transaction, along with all material information, will be provided to the Audit Committee for review, approval, ratification, or termination. The Audit Committee will review the material terms and relevant factors to determine whether the transaction would be on an arms’ length basis and in the ordinary course of business. Subject to certain exceptions, related party transactions must be pre-approved by the Audit Committee, Board of Directors, or shareholders, as described below:
•Audit Committee: The Audit Committee will determine whether to approve the transaction if: (1) the Audit Committee has determined that the transaction is on an arms’ length basis and in the ordinary course of business and (2) the amount, individually or in the aggregate, does not exceed the lesser of (i) 1% of annual consolidated operating expenses per the last audited annual financial statements and (ii) $1,000,000.
If prior Audit Committee approval is not feasible, the Audit Committee will consider the transaction and determine whether to ratify the transaction at its next regularly scheduled meeting. In the event that a related party transaction was not previously approved or ratified under this policy, the Chair of the Audit Committee will be notified promptly. The Audit Committee or, if it is not practicable for the entire Audit Committee to consider the matter, the Chair of the Audit Committee, will consider whether the related party transaction should be ratified or rescinded or other action be taken.
•Board of Directors: The Board of Directors will determine whether to approve the transactions if: (1) the transactions would not be in the ordinary course of business or on an arms’ length basis or (2) the amount, individually or in the aggregate, would exceed the lesser of (i) 1% of annual consolidated operating expenses per the last audited annual financial statements and (ii) $1,000,000.
•Shareholders: If the Board of Directors determines that a related party transaction should be brought before the Company’s shareholders, then approval of such related party transaction shall be presented to the shareholders for approval through a resolution at a general meeting of shareholders or pursuant to any other method consistent with applicable law.
•No director will participate in any communication, discussion, or decision with respect to a transaction for which he or she is a related party, other than to provide all material information concerning the related party transaction to the Company and Audit Committee. Similarly, shareholders will abstain from voting on any resolution presented to shareholders with respect to a transaction for which they are a related party.
•Certain types of transactions with related parties do not require approval under this policy, such as the employment or compensation of executive officers or directors and transactions where the related party’s interest arises solely from ownership in our securities and all shareholders receive proportional benefits.
In determining whether to approve a related party transaction, the Audit Committee, Board of Directors, or shareholders, as applicable, should consider the material facts and relevant factors, including the following:
•the related party’s interest in the transaction;
•whether the terms and conditions are fair and on an arm’s length basis and are in the ordinary course;
•whether there are appropriate business reasons for entering into the transaction;
•whether the transaction is on terms no less favorable than those that could have been reached with an unrelated party;
•the potential for the transaction to affect the independence of an independent director or lead to reputational risk or an actual or apparent conflict of interest for our executive officers or directors; and
•any other information regarding the transaction or the related party that would be material to investors in light of the circumstances of the particular transaction.
The related party transaction should only be approved if it is determined to be consistent with the interests of the Company and its shareholders. If a related party transaction is ongoing, the Audit Committee may establish guidelines for management to follow in its ongoing dealings with the related party and may periodically review and assess such ongoing transaction to determine whether it remains fair and reasonable to the Company.
Transactions with Related Persons
The following transactions require disclosure in this proxy statement pursuant to Regulation S-K Item 404(a). We believe that
all of the transactions described below were made on terms no less favorable to us than could have been obtained from unaffiliated third parties.
Compensation arrangements for our directors and named executive officers are described in the sections of this Proxy Statement titled “Director Compensation” and “Executive Compensation.”Share Purchase Agreement
On March 17, 2021, we entered into a Stock Purchase Agreement with our director John Diekman to purchase from Dr. Diekman 3,515 of our ordinary shares at a purchase price per share equal to $142.25, the closing price of the our ADSs on Nasdaq as of March 16, 2021. We anticipate that the closing of this transaction will take place in April 2021. Dr. Diekman intends to use the proceeds of the sale towards taxes incurred or anticipated to be incurred by him in connection with the vesting of certain restricted shares granted by the Company to Dr. Diekman in connection with his services as a director of the Company.
MEDx Research Agreement
MEDx (Suzhou) Translational Medicine Co., Ltd.
, or MEDx, (MEDx) provides product research and development services to
us.the Company. We paid MEDx
$359,000 for services rendered
$678,000in 2022 and nil for
the year ended December 31, 2020, and from January 1 to April 1,
2021, $146,000.2023. Mr. Zhang, the Founder, Chief Executive Officer, and
member of the Board
memberof Directors of MEDx is an immediate family member of Dr. Samantha (Ying) Du, our Founder,
ChairChief Executive Officer, and
CEO.Employment Agreements
For more information regarding employment agreementsChairperson of the Board of Directors. The related party arrangement with MEDx was approved by the Audit Committee in accordance with our named executive officers, see “Executive Compensation — Employment Agreements.”
related party transaction policy.
Indemnification
AgreementsCayman law does not limit the extent to which a company’s articles of association may provide indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as providing indemnification against civil fraud or the consequences of committing a crime. Our
articlesCurrent Articles provide that each director and officer shall be indemnified and secured harmless out of the assets and funds of our Company against all actions, proceedings, costs, charges, expenses, losses, damages, or liabilities incurred or sustained by him or her in connection with the execution or discharge of his or her duties, powers, authorities, or discretions as a director or officer of our Company, including without prejudice to the generality of the foregoing, any costs, expenses, losses, or liabilities incurred by him or her in defending (whether successfully or otherwise) any civil proceedings concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere.
In addition, we
We have entered into indemnification agreements to indemnify our directors and executive officers that will provide such persons with additional indemnification beyond that provided in our
articles.Current Articles. These agreements, among other things, indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or executive officer.
-32-
Registration Rights
Pursuant to a shareholders agreement, as amended and restated, certain holders of our registrable shares are entitled to rights with respect to the registration of these shares under the Securities Act of 1933, as amended, the Securities Act, including demand registration rights, short-form registration rights and piggyback registration rights. All fees, costs and expenses of underwritten registrations will be borne by us and all selling expenses, including underwriting discounts and selling commissions, will be borne by the holders of the shares being registered. The shareholders agreement contains customary cross-indemnification provisions, under which we are obligated to indemnify such holders of registrable securities in the event of material misstatements or omissions in the registration statement or any violation of applicable securities laws by us (except for such misstatement, omission or violation that are attributable to such holders), and such holders are obligated to indemnify us for material misstatements or omissions in the registration statement or any violation of applicable securities laws by us that are attributable to them. The registration rights granted under the shareholders agreement will terminate upon the earlier of (i) the date of completion of a deemed liquidation event, (ii) the fifth anniversary of the completion of our initial public offering (September 22, 2022) and (iii) the date such holder may sell all its registrable shares under Rule 144 of the Securities Act in any ninety-day period.
-33-
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
| | |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION |
None of the members of the Compensation Committee has at any time during
20202022 been an officer or employee of the Company. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on the Board of Directors or the Compensation Committee.
AUDIT COMMITTEE REPORT
The information contained in this report shall not be deemed to be (1) “soliciting material,” (2) “filed” with the SEC, (3) subject to Regulations 14A or 14C
| | |
| DELINQUENT SECTION 16(A) REPORTS |
Section 16(a) of the Exchange Act
or (4) subject to the liabilities of Section 18 of the Exchange Act. This report shall not be deemed incorporated by reference into anyrequires our officers and directors and persons who beneficially own more than 10% of our
other filings underordinary shares (collectively, “Reporting Persons”) to file reports of beneficial ownership and changes in beneficial ownership with the
Exchange ActSEC. Reporting Persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of such reports received or
written representations from certain Reporting Persons during the
Securities Act, exceptfiscal year ended December 31, 2022, we believe that all Reporting Persons complied with all Section 16(a) reporting requirements, with the exception of: one Form 5 for John D. Diekman filed on February 14, 2022 to
the extentreport three transactions that
we specifically incorporate it by reference into such filing.occurred on March 4, 2021, June 16, 2021, and August 17, 2021; one Form 5 for William Lis filed on February 14, 2022 to report a transaction that occurred on January 5, 2021; one Form 4 for Kai-Xian Chen filed on February 15, 2022 to report a transaction that occurred on January 3, 2022; one Form 4/A for F. Ty Edmondson filed on August 22, 2022 to report a transaction that occurred on April 1, 2022; one Form 4 for Harald Reinhart filed on November 17, 2022 to report a transaction that occurred on April 1, 2022; one Form 5 for Samantha (Ying) Du filed on December 9, 2022 to report a transaction that occurred on December 31, 2021; and one Form 4 for Samantha (Ying) Du filed on December 9, 2022 to report three transactions that occurred on January 5, 2022 and three transactions that occurred on January 28, 2022, April 1, 2022, and June 21, 2022.
The Audit Committee operates under a written charter approved by the Board of Directors, which provides that its responsibilities include the oversight of the qualityintegrity of our consolidated financial reports and other financial information and itsstatements, compliance with legal and regulatory requirements; the appointment, compensation,requirements, independent auditor qualifications and oversightindependence, performance of our independent registered public accounting firms, Deloitte Touche Tohmatsu Certified Public Accountants LLPauditors and Deloitte Touche Tohmatsu, including reviewing their independence; reviewingthe internal audit function, our compliance programs, and approvingour risk management and internal control over financial reporting. The Audit Committee is also responsible for the planned scopeappointment of our annual audit; reviewingindependent auditor and for pre-approving any audit and non-audit services that mayto be performedprovided by Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu; the oversightindependent auditors.
With respect to financial reporting, the Audit Committee’s role is one of
our internal audit function; reviewing with management and our independent registered public accounting firmoversight. Management has the
adequacy of internalprimary responsibility for the financial
controls; and reviewing our critical accounting policies and estimatesstatements and the
application of accounting principles generally accepted infinancial reporting process, including the
United States.Deloitte Touche Tohmatsu Certified Public Accountantsrelated internal controls and procedures. Our independent auditor, KPMG LLP, is responsible for auditing our annual consolidated financial statements for the year ended December 31, 2022 filed with the SEC, andthe effectiveness of our internal control over financial reporting as of December 31, 2022 in accordance with the Exchange Act, and Deloitte Touche Tohmatsu is responsible for auditing our annualconsolidated financial statements filed withfor the HKExyear ended December 31, 2022 submitted to the Hong Kong Stock Exchange in accordance with the HK Listing Rules. Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu are members of the global Deloitte Touche Tohmatsu Limited firm.
The Audit Committee oversees our financial reporting process on behalf of the Board of Directors. Management is responsible for our internal controls, financial reporting process, and compliance with laws and regulations and ethical business standards. Deloitte Touche Tohmatsu Certified Public Accountants LLP is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). The Audit Committee’s main responsibility is to monitor and oversee this process.
The Audit Committee reviewed and discussed with management and our independent auditor the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.2022. The Audit Committee also discussed with Deloitte Touche Tohmatsu Certified Public Accountants LLPthe independent auditor the matters required to be discussed with the Audit Committee by Public Company Accounting Oversight Board, or the PCAOB Auditing Standard No. 1301, Communications with Audit Committees, and SEC Regulation S-X Rule 207, Communications with Audit Committees. SEC.
The Audit Committee has received
and considered the written disclosures and the letter from the independent
registered public accounting firmauditor required by applicable requirements of the PCAOB regarding
the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent
registered public accounting firmauditor its
independence.independence from the Company and our management. The Audit Committee consideredhas determined that KPMG LLP has not provided any fees paid to Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu for the provision of non-audit related services and does not believe that these fees
-34-
compromise Deloitte Touche Tohmatsu Certified Public Accountants LLP’s or Deloitte Touche Tohmatsu’s independence in performingKPMG LLP is independent with respect to the audit.
Company.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that such audited financial statements be included in our Annual Report on Form
10-K for the year ended December 31,
2020,2022, which was filed with the SEC on March 1,
2021.2023.The Audit Committee
Scott Morrison, Chair
John Diekman
Peter Wirth
|
AUDIT COMMITTEE |
John Diekman, Chair |
|
William LisADDITIONAL AUDIT MATTERS |
Prior Year Auditors
Deloitte Touche Tohmatsu Certified Public Accountants LLP, an independent registered public accounting firm in China, and Deloitte Touche Tohmatsu, an independent registered public accounting firm in Hong Kong (together, “Deloitte”), were appointed as our independent registered public accounting firms and auditors for the fiscal year ended December 31, 2021. Additionally, Deloitte Touche LLP, a U.S. firm, provided tax advisory services for our U.S. tax filings in 2021 and 2022. Deloitte Touche Tohmatsu Certified Public Accountants LLP audited our financial statements filed with the SEC and our internal controls over financial reporting for the fiscal years ended December 31, 2021 and 2020. Deloitte Touche Tohmatsu audited our annual financial statements for the fiscal years ended December 31, 2021 and 2020 filed with the Hong Kong Stock Exchange in accordance with the Hong Kong Listing Rules, following our secondary listing on Hong Kong Stock Exchange.
In April 2022, the Audit Committee notified Deloitte that Deloitte would be dismissed from auditing our annual consolidated financial statements, effective after Deloitte’s completion of its services as the Company’s independent registered public accounting firms for the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and the Company’s receipt of the requisite approvals from the Hong Kong Stock Exchange and the Financial Reporting Council of Hong Kong for the appointment of KPMG LLP. Deloitte’s dismissal as our independent registered public accounting firm became effective on May 25, 2022. Deloitte’s reports on the Company’s consolidated financial statements for the fiscal years ended December 31, 2021 and 2020 do not contain any adverse opinion or disclaimer of opinion, nor are qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2020 and 2021 and the subsequent interim period through the effective date of Deloitte’s dismissal as our independent registered public accounting firm, the Company had (i) no disagreements with Deloitte in any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Deloitte, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its reports for such years and interim period and (ii) no reportable events within the meaning of Item 304(a)(1)(v) of Regulation S-K. Additionally, there are no matters in respect of the change of the Company’s auditor that need to be brought to the attention of the shareholders of the Company. We do not expect representatives of Deloitte Touche Tohmatsu Certified Public Accountants LLP or Deloitte Touche Tohmatsu to be available at the Annual Meeting in person or virtually and available to respond to appropriate questions.
In accordance with Item 304(a)(3) of Regulation S-K, the Company has provided Deloitte a copy of the disclosures contained herein prior to its filing with the SEC and requested that Deloitte furnish the Company with a letter addressed to the SEC stating whether Deloitte agrees with the above statements. A copy of that letter, dated May 2, 2022, is filed as Exhibit 16.1 to the Amendment to Company’s Current Report on Form 8-K filed with the SEC on May 2, 2022.
Auditor Fees
The following table presents the fees billed to the Company by KPMG LLP and its affiliates for 2022 (in thousands). KPMG LLP has been our independent registered public accounting firm and auditor since 2022.
| | | | | |
Peter WirthFee Category | 2022 |
| Audit Fees (1) | $ | 4,716 | |
| Audit-Related Fees (2) | $ | — | |
| Tax Fees (2) | $ | — | |
| All Other Fees (2) | $ | — | |
| Total Fees | $ | 4,716 | |
-35-
(1)Audit fees consist of fees for the audit of our consolidated financial statements, reviews of our interim financial statements, and the audit of the effectiveness of our internal control over financial reporting. Audit fees also include services that are normally provided in connection with statutory and regulatory filings.
(2)KPMG LLP and its affiliates did not provide any audit-related, tax advisory, or other services in 2022.
Pre-Approval Policies
The Board of Directors has adopted policies and procedures for the pre-approval of audit and non-audit services by the Audit Committee for the purpose of maintaining the independence of our independent auditors. The Audit Committee pre-approves all auditing services, internal control-related services, and permitted non-audit services to be performed for the Company by its independent auditor. Consistent with any applicable SEC rules on auditor independence, the Audit Committee annually may establish ceilings on the level of fees and costs of generally pre-approved and sufficiently defined services that may be performed without seeking additional approval from the Audit Committee. The Audit Committee may delegate pre-approval authority to one or more of its members. The member (or members) to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next regularly scheduled meeting. No fees for services to KPMG LLP in 2022 were approved pursuant to any waivers of the pre-approval requirement.
EXECUTIVE COMPENSATION
-43-
Compensation Discussion and Analysis
| | |
| COMPENSATION DISCUSSION AND ANALYSIS |
This Compensation Discussion and Analysis
(CD&A)(“CD&A”) describes our compensation strategy, philosophy, and practices with respect to our executive compensation program for
2020.2022. It also provides information regarding the compensation decisions made with respect to our named executive officers for
20202022 and gives context for the information included in the tables that follow this discussion. For
2020,2022, our named executive officers were:
•Samantha (Ying) Du, our Founder, Chairwoman, and Chief Executive Officer;
Officer, and Chairperson of the Board of Directors;•Billy Cho, our Chief Financial Officer;
Tao Fu, our•Rafael G. Amado, President, Head of Global Oncology Research and Development;
•Harald Reinhart, President, Head of Global Development, Neuroscience, Autoimmune, and Infectious Diseases;
•Joshua Smiley, President, Chief Operating Officer; and
F. Ty Edmondson, our Chief Legal Officer and Corporate Secretary; and
•Alan Bart Sandler, ourformer President, Head of Global Development, Oncology.
The
Compensation Committee of our Board of Directors, or our Compensation Committee, either on its own, or, as appropriate, together with the Board of Directors, reviews and approves the Company’s compensation structure, including all forms of compensation relating to our directors and executive officers, including our named executive officers.
2020
2022 Business Highlights
2020 was
2022 marked another year of
exceptionally strong
growth and execution
for Zai Lab. Despite challenges from the COVID-19 pandemic in China, our commercial operations continued to drive momentum, and
growthour four commercial products that are marketed in Greater China – ZEJULA, Optune, QINLOCK, and NUZYRA – each had substantial sales growth. Our total revenue for
us. Last year, we successfully launched three commercial products: in January, we began selling ZEJULA in China; in June, we began selling Optune in China; and in August, we began selling Optune Lua in Hong Kong. Based on these successful product launches, our revenues for the full year of 2020 were $49.02022 was $215.0 million, compared to
$13.0$144.3 million in
2019.2021, representing 49% growth. We advanced key clinical stage projectsalso continued to focus on improved access and met allaffordability. As a result of our majorefforts, QINLOCK and NUZYRA were added to China’s National Reimbursement Drug List (NRDL) in January 2023, joining ZEJULA which was first added in December 2020, developmental milestones. We added four clinical programs across our three areasand we increased the number of medical concentrationsupplemental insurance plan listings for Optune from 33 to 87 during 2022.
Our product pipeline continues to demonstrate potential best-in-class and/or first-in-class profiles globally. Since January 2022, we have had numerous positive late-stage data readouts, including adagrasib in non-small cell lung cancer, KarXT in schizophrenia, and emerging growth areas — oncology, autoimmune disorders,efgartigimod in primary immune thrombocytopenia and infectious disease.generalized myasthenia gravis. We also as described below, executedcontributed to several significant licensing collaborationssuccessful registrational studies, including the Tumor Treating Fields LUNAR study and the repotrectinib TRIDENT-1 study.
We expanded our portfolio of potential first-in-class and/or best-in-class assets through our strategic collaboration with leading biopharmaceutical companies.Seagen Inc. for TIVDAK®, which further deepened our women’s cancer franchise. We also made advances with our pipeline of assets with global rights, including ZL-1102, our internally developed anti-IL-17A Humabody
® for chronic plaque psoriasis, and ZL-1218 (CCR8). For example, we expect to initiate a Phase I study for ZL-1218 in the first half of 2023. Our portfolio now includes 21 innovative22 product candidates, including 17 in clinical development, that may potentially address an aggregate total of more than 40 disease indications. Eleven of these product candidates are in-licensed from third parties and are13 in late-stage clinical development. Five of theseWith this robust product pipeline, we expect to launch eight additional products have been approved byin the next 2-3 years.
To sustain our growth, we expanded our talented global team both in the United States
Food and
Drug Administration (FDA),China. For example, Josh Smiley joined us as Chief Operating Officer in August, Dr. Peter Huang as Chief Scientific Officer in November, and
Dr. Rafael Amado as President, Head of Global Oncology Research & Development in December. Our expanded global leadership team will help us drive innovation in China and beyond. To further strengthen governance and oversight, we engaged KPMG LLP, a U.S. auditor, to be our independent registered public accounting firm and auditor in May, and our Board of Directors established a lead independent director role, appointing Dr. John Diekman to serve in this important position, in July. We also launched our ESG strategy, which we refer to as our Trust for Life strategy, which is focused on three
commitments – to improve human health, create better outcomes, and act right now – each of which is intended to further strengthen our foundation for continued growth and strong execution. Further, to improve access to our business for investors in Greater China, we completed our conversion to primary listing on the Hong Kong Stock Exchange and our ordinary shares have been
approved byincluded in the
National Medical Products Administration (NMPA) as of April 2021.OurShanghai and Shenzhen Stock Connect Programs.
We continued to align our executive compensation programs
for 2020 were alignedin 2022 with shareholder interests
asby linking a significant portion of executive compensation
was closely linked to
eachboth corporate and individual
executive’s performance achievements. The Compensation Committee also considered how each executive’s performance assisted us in achieving our 2020 goals.-36-
performance.
As summarized below,in the “2022 Corporate Goals” table, we achieved or exceeded our clinical development and regulatory goals and we showed strong commitment to overcome challenges presented by the vast majority of our corporateCOVID-19 pandemic, which more than offset some shortfalls in certain research, business development, and commercial goals during 2020, and, accordingly, certain payouts2022. Payouts to our named executive officers for 20202022 reflected such achievements.
| | |
2020 Company Goals
| | Achievements
|
Clinical Development/Regulatory | | ZEJULA |
• Initiate key clinical trials
| | • The NMPA granted priority review status to our supplemental New Drug Application
|
| |
• Execute key regulatory milestones, including new approvals and NDA filings
• Complete enrollment for key trials
| | • ZEJULA was approved by the NMPA, one year ahead of schedule, as maintenance treatment for adults with advanced epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in complete or partial response to first-line platinum-based chemotherapy
|
| |
| | TTFields |
| | • Approval obtained for sale of Optune in China
|
| |
| | • Approval obtained for sale of Optune Lua in Hong Kong
|
| |
| | • Enrolled first patient in a Phase II clinical trial evaluating TTFields in combination with chemotherapy as a first-line treatment for gastric adenocarcinoma, a type of gastric cancer
|
| |
| | QINLOCK |
| | • The NMPA granted priority review to our NDA
|
| |
| | • First patient dosed with QINLOCK in Greater China (China, Hong Kong, Macau, and Taiwan) for second-line GIST
|
| |
| | MARGENZA |
| | • Dosed the first patient in Greater China in the global MAHOGANY study
|
| |
| | Retifanlimab |
| | • First patients dosed in Greater China in the global, potentially registrational studies for patients with previously treated microsatellite-instability-high endometrial cancer and first-line metastatic non-small-cell lung cancer
|
| |
| | NUZYRA |
| |
| | • The NMPA granted priority review status for NUZYRA
|
| |
| | Durlobactam |
| | • First patient in China was enrolled into the global Phase III ATTACK trial
|
| |
Research | | |
| |
• Complete an IND-enabling study
| | • Filed one Investigational New Drug (IND) application and successfully progressed two programs into global Phase I trials
|
| |
• Select new clinical product candidates
| | • Selected one new clinical product candidate
|
| |
Business Development | | |
| |
• Establish strategic relationships, including additional in-licensed transactions
| | • Completed licensing collaborations with leading biopharmaceutical companies including but not limited to Regeneron, Turning Point and Cullinan Oncology
|
-37-
performance.
| | |
2020 Company Goals
| | Achievements
|
Commercial Launch | | |
• Achieve new commercial product launches in China
| | • Successfully launched two products in China (ZEJULA and Optune) and one product in Hong Kong (Optune Lua)
• Achieved product revenue goals
|
| |
• Achieve product revenue goals
| | • ZEJULA included in the updated National Reimbursement Drug List as maintenance therapy for patients with advanced and recurrent ovarian cancer
|
| |
Financing, Strategy, HR, IT, and Legal and Compliance | | |
| |
• End year with sufficient cash and access to additional cash resources
| | • Completed $300 million follow-on offering on the Nasdaq Global Market and an $880 million secondary offering on The Stock Exchange of Hong Kong Limited
|
| |
• Operate within the approved Company budget
| | • Enhanced IR/PR programs and deepened engagement with key existing and new investors
|
| |
• Secure new investors
| | • Operated within the Company-approved budget
|
| |
• Achieve other corporate, financial, strategic, HR, IT, and legal and compliance objectives
| | • Met all reporting and auditing requirements
|
| • Met key hiring needs
|
| • Established and implemented key legal and compliance procedures
|
| |
| | • Strengthened digital support systems for commercial, clinical, and corporate functions
|
COVID-19
Although, like many companies, we have been affected by the COVID-19 pandemic, we believe we only experienced minimal disruption to the clinical development of our products and the commercialization of ZEJULA and Optune. For example, due to business interruptions to hospitals and treatment centers in China arising in connection with the outbreak of COVID-19, some patients experienced difficulties in accessing hospital care and, as a result, our commercialization team had fewer opportunities to reach patients who could benefit from ZEJULA or Optune. In addition, we also experienced delays in the enrollment of patients in our clinical trials due to the outbreak of COVID-19. However, despite the challenges of COVID-19, our new drug application (“NDA”) submissions and acceptances and our clinical trial application (“CTA”) approvals have not been materially delayed.
COVID-19 has presented a global challenge and has required concerted global efforts to overcome. As an innovative biopharmaceutical company, we are committed to contributing to the global response. Since January 2020, we have made several donations of funds and urgently needed medical supplies to support the community and front-line relief efforts. Our support is ongoing.
In January 2020, we donated RMB 1 million (approximately $150,000) to the Hubei Charity Federation for coronavirus relief efforts in Hubei Province.
In February 2020, we donated medical supplies worth RMB 1.5 million (approximately $225,000) to 38 hospitals in 22 cities in China through the China Charity Federation, Beijing Bethune Public Welfare Foundation, and China Cancer Research Foundation.
In March 2020, we donated masks and other medical supplies to partners and doctors in the United States and Japan.
In April 2020, we collaborated with our partner Novocure to donate medical supplies, including external defibrillators, to Hadassah Medical Center, a hospital in Israel.
-38-
About Our 20202022 Executive Compensation Program
We believe our
Our executive compensation program is
effectively designed
and has instilled in the Company a to support our pay-for-performance culture,
that is aligned with the interests of our shareholders. From our listing on Nasdaq in 2017 through the end of 2020, we were classified as a foreign private issuer under applicable SEC and Nasdaq rules and maintained an executive compensation program with incentive metrics that we believe were broadly aligned with similar companies. As of June 30, 2020, more than half of our investors were U.S.-based. As a result, on January 1, 2021, we became a domestic issuer under SEC and Nasdaq rules. Our compensation programs are aligned with our pay-for-performance culture,reflect the competitive market for skilled executives in both China and the
U.S., and are tailored toUnited States, meet the unique characteristics of our
Company.Compensation PracticesCompany, and Policies
The following features of our 2020 compensation program were designed to alignhave strong alignment with the interests of our namedshareholders.
Our shareholders will have an opportunity to cast a non-binding advisory vote to approve our executive officers with thosecompensation program at the Annual Meeting. The Compensation Committee will review and consider the results of the shareholder advisory vote from the Annual Meeting when making future compensation decisions.
Compensation Practices and Policies
In developing our
shareholders:compensation programs, the Compensation Committee seeks to achieve the following outcomes: •Offer market-competitive benefits for executives;
Calibrateour executive compensation based primarily on the success of each executive’s achievement of his or her performance goals;
officers;•Evaluate how each executive assisted the Company in achieving its corporate goals;
•Calibrate executive compensation based on the success of corporate objectives as well as each executive’s achievement of his or her individual performance goals;
•Maintain an updated industry-specific peer group for benchmarking pay;that we will consider when evaluating our executive compensation programs and decisions;
•Consult with an independent compensation advisor on peer group analysis, other market data, and benchmarking;recommendations with respect to our compensation programs and
decisions; and•Consider peer group compensation when determining target pay for our executive officers to the extent such a comparison accounts forreflects the competitive market dynamics unique to us and is consistent with our corporate goals and objectives.
Roles and Responsibilities
Role of Compensation Committee. The Compensation Committee reviews, on an annual basis, our executive compensation program in light of our business goals and objectives and the business highlightsresults and corporate performance goals we achieved for the year in order to establish the compensation for our named executive officers. The Compensation Committee may, in its discretion, adopt or recommend to the Board of Directors the adoption of, new or amended elements of our executive compensation program, to the extent our business goals and objectives have changed. The Compensation Committee shall have the authority to delegate to subcommittees of the Committee any of the responsibilities of the full Committee and to officers of the Company such responsibilities of the full Committee as may be permitted by applicable laws, rules, or regulations and in accordance with the listing rules and standards set forth by the Nasdaq and the Hong Kong Stock Exchange. The Compensation Committee currently consists of three independent directors, Peter Wirth (Chair), Nisa Leung,John Diekman, and Leon O. Moulder, Jr. In making executive compensation decisions, the Compensation Committee reviews a variety of factors and compensation-related data, including information obtained from our peer group companies, and
other market data such as compensation surveys comprising companies with a similar size, complexity, and industry focus as us. The
Compensation Committee also considers our Company’s performance and whether we achieved or exceeded our annual corporate performance goals as well as the individual performance of each named executive
officer, includingofficer. Based on this corporate and individual performance assessment, the
appropriateCompensation Committee will then determine or recommend the amount of total compensation that
it deems appropriate for each executive officer as well as how such compensation should be
paid, or inallocated between cash and non-cash compensation and among the
casedifferent forms of
equity-based compensation, granted to each executive based on its assessment of these factors and data.non-cash compensation. In addition,
ourthe Compensation Committee reviews our annual bonus plan and our equity incentive plan, assesses the business achievements relevant to granting awards under these plans,
and makes recommendations to
ourthe Board
of Directors with respect to the Company’s overall compensation policies and
practices as well as the specific compensation to be awarded to our CEO, and seeks to ensure that the total compensation paid to our named executive officers is fair, competitive, and aligned with shareholder interests.Ourpractices.
The Compensation Committee retains the right to hire outside advisors as needed to assist it in reviewing and making modifications to our executive compensation program. The Compensation Committee works closely with our independent compensation consultants, as well as with management, to examine the effectiveness of the
-39-
Company’s executive compensation program throughout the year.program. The duties and responsibilities of ourthe Compensation Committee are documented in ourthe Compensation Committee’s written charter, which was adopted by ourthe Board whichof Directors and can be found on our website, www.zailaboratory.com, under the “Corporate Governance” subsection of the “Investor Relations (Nasdaq)” section of the website.“Investors” section. The Compensation Committee also serves, along with the Board of Directors, as the administrator of our equity incentive plans.
Role of the Independent Compensation Consultant. OurThe Compensation Committee believes that independent advice is important in developing and overseeing our executive compensation program. From our initial public offering in 2017 through September 2020, theThe Compensation Committee has engaged the services of Radford as its independent compensation consultant, and Radford provided consulting services with respect to our 2020 compensation determinations. Beginning in October 2020, the Compensation Committee engaged the services of Pearl Meyer to provide consulting services in relation to executive and director compensation decisions for 2021.decisions. Pearl Meyer does not provide any otherreports directly to the Compensation Committee and only provides services to us other thanon such other matters as needed and as directed solely by ourthe Compensation Committee. Reporting directly to our Compensation Committee, Pearl Meyer providesThese services include providing guidance on trends in CEO, executive, and non-employee director compensation,compensation; the development of the specific components of our executive compensation programprogram; and the composition of our compensation peer group. For
our 2020 CEO compensation, Radford2022, Pearl Meyer prepared a report that compared each element of
our CEO’s compensation
(base– including base salary, target annual bonus, and target long-term incentive
value)value – for our CEO and other named executive officers to that of CEOs
and executive officers with similar positions at companies in our
compensation peer group.
UsingBased on the relative positioning of our executive officer compensation compared to market, and using this and other compensation and performance information described above,
ourthe Compensation Committee
approved (or, in the case of the CEO, recommended
to the Board of Directors for approval) the elements and target levels of
our CEO’s compensation forexecutive compensation. The Board
approval and the Boardof Directors subsequently approved such
recommendation.Ourrecommendation regarding CEO compensation.
The Compensation Committee has assessed the independence of
both Radford and Pearl Meyer in accordance with applicable SEC and Nasdaq rules and confirmed that
neither firm’sPearl Meyer’s work
raiseddoes not raise any conflicts of interest and that Pearl Meyer remains independent under applicable rules.
Role of our CEO.Each year, our CEO provides an assessment of the prior year’s company performance relative to its corporate goals as well as the individual performance of each named executive officer, other than herself, as well as an assessment of the company’s performance relative to its corporate goals, and recommends to ourthe Compensation Committee the compensation to be paid or awarded to each named executive officer, other than herself. OurThe Compensation Committee however, makes the final determinations regarding the compensation of our named executive officers, (otherother than our CEO).CEO. Our CEO’s recommendations are based on numerous factors, including: •Company, team, and individual performance;
•internal pay comparisons;
•potential for future contributions;
•leadership competencies;
•external market competitiveness; and
•any other factors deemed relevant.
Our
The Compensation Committee
reviews andalso considers our CEO’s compensation recommendations and assessment of the Company’s performance
both when assessing the CEO’s
own performance and recommendingperformance. The Compensation Committee makes a recommendation to the Board of Directors for the compensation
ofto be paid or awarded to our CEO,
for approval byand the Board of Directors makes the final determination regarding our
Board.CEO’s compensation. Our CEO does not participate in any deliberations regarding her own compensation.
Role of our Shareholders: Advisory Vote on Executive Compensation. While the Company was a foreign private issuer, we were not required under applicable U.S. securities rules to have our shareholders consider and approve a non-binding advisory vote on the compensation of our named executive officers. We intend to hold our first such vote at our annual meeting of shareholders in 2022, and the Compensation Committee will review and consider the results of the shareholder advisory vote from the annual meeting to be held in 2022 when making future compensation decisions.
-40-
Principal Objectives of Our 20202022 Compensation Program
Our executive compensation program is designed to drive the creation of long-term shareholder value by awarding compensation that
is competitive with companies in our peer group in order towill attract,
retain, and
retain extraordinarymotivate strong leaders who
can perform at high levels,
help us deliver on our corporate mission and objectives, and succeed in a demanding
international business environment. Specifically, our executive compensation program in
20202022 was:
| • | | Mission Focused and Business Driven. Our executive compensation program focused on whether each named executive officer achieved his or her performance goals which support the annual and long-term objectives of our business which include the delivery of meaningful and innovative products to address unmet medical needs. Our objective is to provide an executive compensation program that contributes to building and sustaining a foundation for long-term success.
|
| • | | Competitively Advantageous. While we consider the executive compensation programs of a peer group of biotechnology and pharmaceutical companies that we believe are representative of the companies we primarily compete with for talent in all the geographies where we do business, we do not benchmark our compensation, or its components, to a specific market percentile of compensation within such peer group. Broader market data, as further described below, is also considered in order to provide additional context for our executive compensation decisions. Peer group and market practices are among the many factors we take into account in developing an executive compensation program that we believe is effective in enabling us to recruit, retain and motivate our leadership team to achieve our business objectives and enhance shareholder value.
|
| • | | Performance Focused.
•Mission Focused and Business Driven. Our executive compensation program focused on whether each named executive officer achieved his or her individual performance goals which support the annual and long-term objectives of our business, including the discovery, development, and commercialization of innovative products to address unmet medical needs in our key therapeutic areas. Our objective is to provide an executive compensation program that contributes to building and sustaining a foundation for long-term success. •Market Competitive. While we do not benchmark our compensation, or its components, to a specific market percentile of compensation within our peer group, we consider the executive compensation programs of our peer group in making executive compensation determinations. Broader market data, as further described below, is also considered in order to provide additional context for our executive compensation decisions. Peer group and market practices are among the many factors we take into account in developing an executive compensation program that we believe will enable us to recruit, retain, and motivate our leadership team to achieve our business objectives and enhance shareholder value. •Performance Focused. We believe strongly in pay-for-performance and endeavor to provide our named executive officers with higher levels of compensation when our business goals and their personal performance objectives are met or exceeded and would correspondingly reduce compensation when performance does not meet our expectations and goals. |
| • | | Aligned with Shareholders. We believe every employee contributes to our success and, as such, every employee has a vested interest in our success. For members of our executive team, including our named executive officers, who set and lead our future strategic direction, we ensure that a significant portion of their total pay opportunities are equity-based to maintain alignment between the interests of our executive officers and our shareholders.
|
| • | | Flexible. We are committed to providing flexible benefits designed to allow our diverse global workforce to have rewarding opportunities that meet their varied needs so that they are inspired to perform their very best on behalf of patients and shareholders each day.
|
Key Performance Factors in Determining Executive Compensation
Our 2020 compensation goals are described above. The Compensation Committee considered (i) whether we achieved our annual corporate goals, (ii) whether each individual executive met or exceeded hisand with lower levels of compensation when such corporate or individual performance goals, (iii)does not meet our CEO’s reviewexpectations and evaluation of our executive officers’goals. Each performance (other than herself), and (iv) the Compensation Committee’s assessment of our CEO’s performance, all of which are critical components in determining the compensation for our executive officers. Each factor wasis weighted separately in determining whether the target bonus hadbonuses have been achieved.
•Aligned with Shareholders. We believe every employee contributes to our success and, as such, we have endeavored to create a compensation program that provides every employee with a vested interest in our success. For members of our executive team, including our named executive officers, who set and lead our future strategic direction, a significant portion of their total pay opportunities are equity-based to promote alignment between the interests of our executive officers and our shareholders.
•Flexible. We are committed to providing flexible benefits designed to allow our diverse global workforce to have rewarding opportunities that meet their varied needs so that they are inspired to maximize their performance on behalf of patients and shareholders.
External Market Competitiveness and
Compensation Peer Group
We consider market practices and trends when
designing our executive compensation programs and determining executive compensation
levels and making compensation program design decisions.levels. We do not target a specific market percentile or simply replicate
the market practice. Instead, we review external market practices as a reference point to assist us in designing an executive compensation program that is tailored to the unique characteristics of our Company and is intended to attract, retain, and inspire
extraordinary talent.talented leaders, and we consider competitive ranges for each position when we make executive compensation decisions. To understand the external market competitiveness of the compensation for our named executive officers,
our CEO and ourthe Compensation Committee
review a report-41-
reviews reports analyzing publicly-availablepublicly available information and surveys prepared by the independent compensation consultant which, for 2020 compensation decisions, was Radford.Pearl Meyer. These reports compare the compensation of each named executive officer to data available for comparable positions at companies in our peer group and, in certain circumstances, the broader market, by compensation element. The determination ofTo determine our 20202022 peer group, was based on a search forwe identified comparable companies that approximate (i) our scope of business, including revenues and market capitalization, (ii) our global geographical reach, (iii) our research-based business with multiple marketed products, and (iv) a comparable pool of talent for which we compete. The 2020In 2021, the Compensation Committee, with support from our independent compensation consultant, conducted an analysis to determine the appropriate peer group to establish 2022 target compensation in the context of the Company’s business strategy and operating parameters. The purpose of the peer group analysis was to enable the Company to use the appropriate comparator group and third-party data sources for our annual assessment of executive compensation. Following this analysis, the Compensation Committee determined that our peer group should be updated to reflect the Company’s evolution over the prior year and better approximate the current size and scope of our business. The peer group used to establish 2022 target compensation consisted of the biotechnology and pharmaceutical companies listed below:
following 15 comparator companies:
| | | | | |
Agios Pharmaceuticals | | Global Blood Therapeutics |
Aimmune Therapeutics | | Heron Therapeutics |
Alder Biopharmaceuticals | | Hua Medicine |
Amicus Therapeutics | | Hutchison China MediTech |
Arena Pharmaceuticals | | Immunomedics |
Atara Biotherapeutics | Acceleron Pharma Inc. | Innovent Biologics, Inc. |
BeiGeneAlnylam Pharmaceuticals, Inc. | | InsmedJazz Pharmaceuticals plc |
Blueprint Medicinesargenx SE | | Intra-Cellular TherapiesMirati Therapeutics, Inc. |
Clovis OncologyBeiGene, Ltd. | | MacroGenicsNeurocrine Biosciences, Inc. |
CStone PharmaceuticalsBioMarin Pharmaceutical Inc. | | Portola PharmaceuticalsSeagen Inc. |
Deciphera PharmaceuticalsExelixis, Inc. | | TG TherapeuticsShanghai Junshi Biosciences Co., Ltd. |
FibroGenHorizon Therapeutics plc | Ultragenyx Pharmaceutical Inc. |
| Incyte Corporation | Xencor |
For each of the companies in our peer group,
when available, we analyze
otheravailable data
publicly filed during the prior year to identify
the executives at such companies whose positions are comparable
to those held by our executive officers. We then compile and analyze the data for each comparable position. Our competitive analysis includes the structure and design of the executive compensation programs as well as the targeted value of the compensation under these programs. For our executive officers, we may supplement the data from our peer group with published compensation surveys.
Elements of Compensation
In 2020, we met or exceeded the vast majority of performance goals that we set at the beginning of the year for our annual incentive compensation plan. Annual bonus amounts for our named executive officers were significantly influenced by our CEO’s assessment of whether each executive met or exceeded his individual performance objectives for the year. As a result of our strong performance during 2020 and our executives’ achievement of their individual performance goals, the bonus payouts, as a percentage of target, for our 2020 annual bonus plan were above target payout amounts, as described in further detail below. In addition, as a result of our strong share price performance during 2020, the equity-based awards that we granted to our named executive officers, as described in further detail below, show corresponding increases in value.
-42-
Principal Elements of
PayCompensation
Our
executive compensation objectives are achieved through the following principal elements of pay:
| | | | | | | | | | | | | | |
Pay Element | | How It’s Paid | | Purpose |
| Annual Base Salary | | Cash (Fixed) | | Provide a competitive base salary rate relative to similar positions in the market to enable the Company to attract and retain critical executive talent. |
| | | | |
| Annual Incentives (Bonus) | | Cash (Variable) | | Reward executives for delivering on annual strategic goals and individual contributions that drive our business strategy and contribute to long-term value creation. |
| | | | |
| Long-Term Equity Incentives | | Equity (Variable) | | Provide incentives for executives to execute on longer-term goals that drive the creation of shareholder value and support the Company’s retention strategy. |
Annual Base Salary
We pay our named executive officers an annual base salary as the fixed component of their compensation. Our
The Compensation Committee seeks to maintain
the annual base salaries
that we pay to our new and existing named executive officers at competitive
levels, but aslevels. This fixed component of executive compensation constitutes a relatively small percentage of
the executive’s total compensation. The majority of total compensation
for named executive officers is
reserved for other elements that are not fixedvariable and
are dependentdepends on the achievement of both
our corporate
and individual performance goals and
each executive’s achievement of his or herstock price performance,
goals, thus
ensuringpromoting alignment between
executive compensation and the interests of our
named executive officers and shareholders.
For 2020, our2022, the Board of Directors, in consideration of the recommendation by the Compensation Committee, reviewed the base salaries of chief executive officers in our peer group relative to Dr. Du’s compensation and considered Dr. Du’s compensation, capabilities, performance, and future expected contributions. Based on this analysis, the Board of Directors approved an increase to Dr. Du’s base salary was set at $697,221, which positionedto reflect her abovecontinued positive contributions in 2021 and to better align this element of her compensation with the market median when compared to the chief executive officers of our peer group, which is consistent with our Company’s and Dr. Du’s high level of performance in 2020. Ourmarket. The Compensation Committee undertook a similar, individualized review of each executive’sother named executive officer’s capabilities, performance, roles and base salary,responsibilities, and future expected contributions, as well as considering their base salaries compared to peer group compensation data, when approving the base salaries for our other named executive officers. Based on this analysis, the Compensation Committee approved increases to base salary for Mr. Cho and Drs. Reinhart and Sandler, in light of their continued positive contributions in 2021 and to better align this element of their compensation with the market, with a larger increase for Dr. Reinhart in light of his promotion to President, Head of Global Development, Neuroscience, Autoimmune and Infectious Diseases in December 2021.
Below is a summarytable of the annual base salaries for our named executive officers in 2022 and 2021 and the percentage changes in annual base salary, from 2019 to 2020where applicable.
| | | | | | | | | | | | | | | | | | | | |
| Name | | 2022 Base Salary (1) | | 2021 Annual Base (effective as of April 1, 2021) | | Percentage Increase |
| Samantha (Ying) Du | | $ | 840,000 | | | $ | 800,000 | | | 5.00% |
| Billy Cho | | $ | 499,200 | | | $ | 480,000 | | | 4.00% |
| Rafael Amado | | $ | 620,000 | | | N/A | | N/A |
| Harald Reinhart | | $ | 567,000 | | | $ | 480,000 | | | 18.13% |
| Joshua Smiley | | $ | 600,000 | | | N/A | | N/A |
| Alan Sandler | | $ | 567,000 | | | $ | 540,000 | | | 5.00% |
(1)The annual base salary for our named executive officers, other thanDrs. Du and Sandler and Mr. Edmondson andCho was effective as of April 1, 2022. The annual base salary for Dr. Sandler who commenced employment with us in 2020. The base salaries for Mr. Edmondson and Dr. SandlerReinhart was effective as of January 1, 2022, in connection with their hires were established after a review of the peer group data and taking into account their experience,his promotion in December 2021. The annual base salaries at their prior employers, and role in the Company. | | | | | | | | | | | | |
Name | | 2019 Base Salary
(effective as of April 1, 2019) | | | Merit Increase | | | 2020 Annual Base
(effective as of April 1, 2020) | |
Samantha (Ying) Du | | $ | 664,020 | | | | 5.00 | % | | $ | 697,221 | |
Tao Fu | | $ | 450,000 | | | | 2.00 | % | | $ | 459,000 | |
Billy Cho | | $ | 412,000 | | | | 3.00 | % | | $ | 424,360 | |
F.Ty Edmondson | | | N/A | | | | N/A | | | $ | 510,000 | |
Alan Sandler | | | N/A | | | | N/A | | | $ | 540,000 | |
As a result of the executive compensation assessment performed by Radford in late 2019, we increased the salariessalary for Dr. Du and Messrs. Fu and Cho by 5%, 2% and 3%, respectively. Mr. Edmondson joined the Company on August 15, 2020 and was awarded a base salary of $510,000,Amado and Mr. Sandler joinedSmiley was effective upon the commencement of their employment with the Company on December 30, 2022 and August 1, 20202022, respectively.
Cash Sign-On Awards for New Named Executive Officers
We may provide cash sign-on awards to new named executive officers, such as to attract and
motivate strong leaders and in recognition of forfeited compensation at their prior employer. Mr. Smiley received a total cash sign-on award of $400,000, which was
awardedpayable in two installments: $250,000 was paid in August 2022 and $150,000 will be paid in August 2023, subject to his relocation to the Boston area. Dr. Amado received a
base salarytotal cash sign-on award of
$540,000. As part$600,000, which was paid in two equal installments of
$300,000 in January 2023 and March 2023. If we terminate Dr.
Sandler’s compensation-43-
agreementAmado’s employment for cause within one year of the effective date of his employment, he will be required to joinrepay the full amount of this sign-on award, and if Dr. Amado resigns from the Company he received a one-time, cash sign-on paymentwithin one year of $800,000, with $500,000 payable within the first montheffective date of his dateemployment, he will be required to repay a pro-rated portion of hire and $300,000 payablethe sign-on bonus award based on the one-year anniversarynumber of his datefull and partial months remaining in such one-year period. For more information on what constitutes termination for cause, see CD&A – Potential Payments Upon Termination or Change of hire. This payment was provided to make up for annual cash incentive and equity compensation being forfeited by Dr. Sandler from his then current employer.
Control.
Annual Incentive Awards (Bonus)
Our annual bonus program is designed to motivate and reward our named executive officers and reward each for achievement of performance that supports short- and long-term value creation for the Company. Target annual bonus opportunities are based on a percentage of the named executive officer’s base salary, and actual awards are determined based on the Compensation Committee’s assessment of corporate and individual performance.
The annual incentive award for our CEO is weighted 75% for corporate performance and 25% for individual performance, and the target bonus percentage of annual base salary is 90%, an increase from 80% in 2021 to bring her target closer to that of other CEOs in our peer group. The annual incentive awards for our other named executive officers are weighted 60% for corporate performance and 40% for individual performance. The target bonus percentages range from 45% to 50% of annual base salary, which were unchanged from 2021 other than the target for Dr. Reinhart which increased from 40% to 50% in connection with his promotion and to bring his target closer to comparable executives in our company and peer group.
The Compensation Committee reviewed our Company’s performance with respect to our 2022 corporate goals and concluded that the Company had achieved and, in some cases, exceeded its 2022 corporate goals. Based on this level of achievement, the Compensation Committee then determined that the company multiplier for purposes of the corporate performance element of annual incentive awards for our named executive officers was 105%. The table below outlines the Company’s progress and achievement with respect to its 2022 corporate goals.
| | | | | | | | | | | | | | | | | | | | |
| 2022 Corporate Goals | | Achievements | | Weight (Target) | | Weight (Actual) |
| Clinical Development/Regulatory | | | | 37.5% | | 40.0% |
•Initiate key clinical trials | | ZEJULA | | | | |
•Execute key regulatory milestones, including new approvals and NDA filings • Complete enrollment for key trials | | •Full NDA approval submission for 1L ovarian cancer maintenance treatment | | | | |
| •Positive interim analysis of overall survival from Phase III NORA study presented | | | | |
| | | | | |
| | | | | |
| TTFields | | | | |
| | •Positive topline data readout of Phase III global LUNAR trial in non-small cell lung cancer (NSCLC) | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | •Positive topline data readout of Phase II EF-31 pilot trial in gastric cancer •Enrollment of China portion of PANOVA-3 Phase III pivotal trial for pancreatic cancer trial completed •Enrollment of China portion of pivotal METIS study for NSCLC completed | | | | |
| | KRAZATI •Enrollment of China portion of the colorectal cancer (CRC) and NSCLC monotherapy and combination therapy studies initiated
| | | | |
| | Bemarituzumab | | | | |
| | •Prepare to join global Phase III FORTITUDE-101 and -102 studies in gastric/gastroesophageal junction cancer in 2023
| | | | |
| | Repotrectinib | | | | |
| | •The CDE (Center for Drug Evaluation) of the NMPA granted 3 Breakthrough Therapy Designations for ROS-1+ TKI-naïve and TKI-pretreated NSCLC • Enrollment of China portion of Phase I/II TRIDENT-1 study completed • Positive topline data readout of global Phase I/II TRIDENT-1 study | | | | |
| | BLU-945 | | | | |
| | • Clinical Trial Application (CTA) for monotherapy and combination therapy submitted and approved | | | | |
| | | | | | |
| | Sulbactam-Durlobactam | | | | |
| | •New Drug Application (NDA) for approval for treatment of infections caused by Acinetobacter baumannii, including multidrug-resistant and CRAB strains submitted to NMPA | | | | |
| | | | | | |
| | VYVGART | | | | |
| | •China NDA submission for generalized myasthenia gravis accepted by NMPA •Proof of Concept (POC) studies initiated for lupus nephiritis and membranous nephropathy | | | | |
| | | | | | |
| | KarXT | | | | |
| | •Reached an agreement with NMPA on the development plan of a bridging study in schizophrenia | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Research | | | | 7.5% | | 5.0% |
•Complete an IND (Investigation New Drug Application)-enabling study | | •One IND filed | | | | |
| | | | | | |
•Select new clinical product candidates | | •Some new product candidates selected
| | | | |
| | | | | | |
| Business Development | | | | 15.0% | | 12.5% |
| | | | | | |
•Establish strategic relationships, including additional in-licensed transactions | | •Licensing collaboration completed with Seagen Inc. for TIVDAK in China | | | | |
| Commercial | | | | 20.0% | | 17.5% |
•Achieve total and product revenue goals •Increase access to commercial products and achieve new commercial product launches in China | | •Although the Company had substantial year-over-year revenue growth of 49%, original target revenue goals were not achieved due, in part, to COVID challenges • QINLOCK and NUZYRA included in the updated National Reimbursement Drug List in January 2023 based on successful negotiation in 2022 • Increased commercial insurance coverage for Optune in China | | | | |
| | | | | | |
| Corporate Functions | | | | 20.0% | | 22.5% |
| | | | | | |
•End year with sufficient cash and strong access to capital | | •Year-end balance of $1,008.5 million in cash and cash equivalents | | | | |
| | | | | | |
•Operate within the approved Company budget | | •Operating expenses were substantially below budget | | | | |
| | | | | | |
•Secure new investors | | •Transitioned to primary listing on the Hong Kong Stock Exchange and ordinary shares included in Shanghai and Shenzhen Stock Connect Programs | | | | |
| | | | | | |
•Achieve other corporate, financial, strategic, HR, IT, and legal and compliance objectives | | •Engaged KPMG LLP, a U.S. auditor, to be independent registered public accounting firm and auditor and complied with reporting and auditing requirements for Nasdaq and Hong Kong listed companies | | | | |
| | | | | | |
| | •Efficiently supported corporate needs, including key hires, and managed risks | | | | |
| | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Additional Achievements | | | | 0% | | 7.5%
|
| | •Successfully managed challenging operating environment due to COVID in China
| | | | |
| | QINLOCK •Full approval for QINLOCK for fourth-line treatment of gastrointestinal stromal tumor (GIST) in China
| | | | |
| | Odronextamab | | | | |
| | •Enrollment in China portion of DLBLC cohort for 3L+ diffuse large B-cell lymphoma (DLBCL) / follicular lymphoma (FL) Phase II study completed
| | | | |
| | VYVGART •Phase III ADVANCE study of efgartigimod for treatment of primary immune thrombocytopenia (ITP) met its primary endpoints | | | | |
Upon review of
our 2020 corporate goals and our Company andthe individual performance of each
individual executive’s performance,named executive officer, the
Board and Compensation Committee agreed that
our 2020 corporateindividual performance goals had been met and, in some cases, exceeded for the
20202022 performance year.
Individual performance ratings were determined by the Board of Directors for our CEO, in consideration of the recommendation from the Compensation Committee, and by the Compensation Committee for the other named executive officers, in consideration of the recommendation from our CEO.
Bonuses were then determined based on the corporate and individual performance ratings. Actual award payouts ranged between approximately 110% and 123% of target bonuses.
The table below shows the 20202022 target annual bonus for each named executive officer and the actual bonuses earned by each named executive officer. Individual executive
| | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Target Percentage | | Target Amount | | Actual Amount | |
| Samantha (Ying) Du | | 90% | | $ | 756,000 | | | $ | 831,600 | | |
| Billy Cho | | 45% | | $ | 224,640 | | | $ | 253,843 | | |
| Rafael Amado | | 50% | | $ | 310,000 | | | (1) | |
| Harald Reinhart | | 50% | | $ | 283,500 | | | $ | 348,705 | | |
| Joshua Smiley | | 50% | | $ | 300,000 | | | $ | 142,101 | | (2) |
| Alan Sandler | | 50% | | $ | 283,500 | | | (3) | |
(1)Dr. Amado joined the Company on December 30, 2022 and CEO bonuses were determined bywill be eligible for an annual bonus beginning with the individual2023 performance rating recommendedyear.
(2)Mr. Smiley joined the Company effective August 1, 2022, and his annual bonus was pro-rated for his period of service.
(3)Dr. Sandler resigned from the Company, effective October 28, 2022. In accordance with the terms of his severance agreement and general release, a portion of the severance payment he received related to a pro-rated 2022 target annual bonus. For more information regarding the Board by our CEO for allseverance agreement and general release, see CD&A – Employment Agreements.
Equity Incentive Compensation
Equity compensation directly aligns the interests of the named executive officers
other than our CEO, and determined by the Compensation Committee for our CEO. The Compensation Committee also considered our financial results and the achievementwith those of our
strategic corporate goals for 2020. The CEO’s actual bonus was determined by our Board after considering our financialshareholders. We granted equity incentive compensation (“EIC”) awards during 2022 using a mix of time-based share options and
strategic milestone performances, and after a review of the CEO’s performance by the Compensation Committee. | | | | | | | | | | | | |
Name | | Target Percentage | | | Target Amount | | | Actual Amount | |
Samantha (Ying) Du | | | 70 | % | | $ | 488,054.70 | | | $ | 683,060.00 | |
Billy Cho | | | 40 | % | | $ | 169,744.00 | | | $ | 203,692.80 | |
Tao Fu | | | 45 | % | | $ | 206,550.00 | | | $ | 185,895.00 | |
F. Ty Edmondson | | | 40 | % | | $ | 204,000.00 | | | $ | 244,800.00 | |
Alan Sandler (1) | | | 50 | % | | | N/A | | | $ | N/A | |
(1) | Dr. Sandler is not eligible
| | | | | | | | | | | | | |
| Equity Vehicle | What It Does | | Design Details |
| Time-Based Share Options | Rewards for stock appreciation | | Exercise price per Share: See table below Vesting: 20% per year on the anniversary of the date of the grant, subject to receive a 2020 bonus payment as a result of his commencement ofcontinued employment with the Company in December 2020.on the vesting date Exercise term: 10 years |
| | |
| Restricted Share Units (RSUs) | Supports leadership retention objectives | | Vesting: 20% per year on the anniversary of the date of the grant, unless otherwise noted below, subject to continued employment with the Company on the vesting date |
| | |
Equity Incentive Compensation
Prior to 2021, we did not have an established
In determining the total amount and mix of annual equity
grant program. We relied on initial new-hiregrants
that vest over a period of five years as the equity component of our executive compensation packages. The equity incentive awards granted during 2020 to our named executive officers,
are set forth in
April 2022, the
table below: | | | | | | | | | | | | | | | | | | | | |
Name | | Number of
Shares Subject
to Option
Award | | | Grant Date Fair
Value ($) | | | Exercise Price
per Share | | | Number of
Shares Subject
to RSU Award | | | Grant Date Fair
Value ($) | |
Samantha (Ying) Du | | | 250,000 | | | $ | 7,160,000 | | | $ | 44.94 | | | | — | | | $ | — | |
Billy Cho | | | 30,000 | | | $ | 859,200 | | | $ | 44.94 | | | | — | | | $ | — | |
Tao Fu | | | — | | | $ | — | | | $ | — | | | | — | | | $ | — | |
F. Ty Edmondson | | | 37,750 | | | $ | 1,970,173 | | | $ | 82.50 | | | | 24,250 | | | $ | 2,000,625 | |
Alan Bart Sandler | | | 47,000 | | | $ | 3,250,990 | | | $ | 108.93 | | | | 30,000 | | | $ | 3,267,900 | |
In determining the annual equity incentive compensation (“EIC”) target grant value for each executive officer, our Compensation Committee (or the Board of Directors with respect to the CEO) considered corporate and individual performance, the EIC awards granted to comparable executive officers of our peer group companies and, in certain circumstances, broader market data, and also reviewedas well as the total target direct compensationretentive value of our named executive officers against that of named executive officers of our peer group companies and broader market data.outstanding equity. In general, EIC awards constitute the largest component of our executive compensation program in order to better align the interests of our executives with those of our shareholders.
-44-
In 2021, we established anaddition to the annual equity incentive grant program. Dueawards in April 2022, the Compensation Committee (or the Board of Directors with respect to the establishment of this program, the EIC awards granted toCEO) approved a retention award for our named executive officers during 2020, or years prior, are not indicativein June 2022. This award was given in light of strong commitment and performance in the face of challenging market conditions and geopolitical uncertainty we have faced as a cross-border company, which conditions and uncertainty have adversely impacted share price and employee retention. In recognition of the grantsdedication and contributions of our executive officers as they navigated challenges from the ongoing effects of the COVID-19 pandemic, including government actions and quarantine measures taken in response, particularly in mainland China where our operations are primarily located, the Compensation Committee and Board of Directors determined that we expectit was in the best interests of the Company and its shareholders to make during 2021 or in subsequent years. Beginning in 2021, ourthese retention awards. The Compensation Committee will determine(and the annual EIC target grant valueBoard of Directors for each named executive officer by evaluating an executive’s individual performance, potential future contributions, and market competitiveness usingthe CEO) considered peer group and other market data when determining the other data described abovesize of the awards, as well as other factorsthat the retentive value of the awards would be more appropriately achieved if the awards vest ratably over a four-year period (rather than a five-year vesting period that has applied to previous RSU grants), subject to the named executive officer’s continued employment with the Company on the vesting date.
The Compensation Committee also approved sign-on equity awards for Mr. Smiley and Dr. Amado, which were granted upon the commencement of their employment with the Company in August 2022 and December 2022, respectively. We may provide sign-on equity awards, like these, to new named executive officers for a variety of reasons, including to help attract and motivate strong leaders, in recognition of forfeited compensation, and to help align their interests with those of our shareholders. The Compensation Committee determined that having 21,000 of the RSUs awarded to be appropriate by our Compensation Committee. All annual EICDr. Amado vest in full on the first anniversary of the date of grant, subject to the named executive officer’s continued employment with the Company on the vesting date was necessary to attract Dr. Amado to the Company and compensate him for forfeiture of equity awards at his previous employer.
The equity incentive awards granted during 2022 to our named executive officers are designedset forth in the table below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Number of Shares Subject to Option Award (1) | | Grant Date Fair Value ($) | | Exercise Price per Share | | Number of Shares Subject to RSU Award (1) | | Grant Date Fair Value ($) |
| Samantha (Ying) Du | | 282,000 | | $ | 8,015,244 | | | $ | 45.47 | | | 289,200 | | $ | 10,529,796 | |
| Billy Cho | | 50,114 | | $ | 1,424,383 | | | $ | 45.47 | | | 61,238 | | $ | 2,208,554 | |
| Rafael Amado | | 183,700 | | $ | 3,631,121 | | | $ | 30.70 | | | 126,000 | | $ | 3,868,200 | |
| Harald Reinhart | | 87,699 | | $ | 2,492,656 | | | $ | 45.47 | | | 89,692 | | $ | 3,265,075 | |
| Joshua Smiley | | 139,000 | | $ | 4,009,898 | | | $ | 45.78 | | | 79,500 | | $ | 3,639,510 | |
| Alan Bart Sandler | | 87,699 | | $ | 2,492,656 | | | $ | 45.47 | | | 89,692 | | $ | 3,265,075 | |
(1)The stock options are exercisable for ADSs, and each RSU represents a contingent right to reward long-term Company performance.EIC grantsreceive one ADS. As a result, the number of shares in these columns are made followingrepresented in terms of ADSs. Each ADS represents ten ordinary shares.
For more information on how the completion of our internal performance reviews of our executive officers as well as our external market review ofRSU awards were allocated between the annual equity practices of our peer groupincentive awards in April 2022, the retention awards in June 2022, and the broader market. We have generally made our annual EIC grantssign-on awards for Mr. Smiley in mid-to-late MarchAugust 2022 and Dr. Amado in December 2022, see Executive Compensation Tables – Grants of each year following our annual earnings release.We grant EIC awards as a combination of both time-based share options and restricted share unit (RSU) awards. The RSU grants to-date have had a five-year vesting schedule.
We have awarded annual equity grants to Dr. Du and Mr. Cho as well as new-hire grants to Dr. Sandler and Mr. Edmondson.
Plan-Based Awards.
We have entered into employment agreements with each of our named executive officers that govern the terms and conditions of their service relationship with us, including the
terms and conditions related to their compensation and
benefits to which they are entitled.benefits. Dr. Du is employed by Zai Lab Limited, pursuant to an amended and restated employment agreement that became effective
on December 1, 2018. Dr. Du also is a party to an employment agreement with Zai Lab (Shanghai) Co., Ltd. In addition, Dr. Du has entered into an agreement with our U.S. subsidiary, Zai Lab (US) LLC, pursuant to which a portion of her base salary is paid by Zai Lab (US) LLC based on the level of services that she provides to this entity.
The term of Dr. Du’s employment is without a fixed period and subject to a specified notice period only. Mr. Cho is employed by Zai Lab (Hong Kong) Limited pursuant to an amended and restated employment agreement dated March 22,
2019,2019. Mr. Smiley and
Dr. Fu is employed by Zai Lab (US) LLC pursuant to an amendedDrs. Amado and
restated employment agreement that became effective on January 25, 2019.In 2020, we entered into employment agreements with Mr. Edmondson and Dr. Sandler,Reinhart are each of whom is employed by Zai Lab (US) LLC pursuant to agreements that became effective on August 15, 20201, 2022, December 30, 2022, and December 1, 2020,2018, respectively. In addition to setting forth the general terms and conditions of their employment with us, including base salary and target bonus levels, the agreements with Mr. Edmondson and Dr. Sandler also specify the amount of the initial equity grants awarded to these executives, as detailed above, and establish a target grant date fair value of $1.5 million with respect to subsequent annual equity grants. These future equity awards are to be made in the form of share options and RSUs, as determinedThe compensation received by our Compensation Committee.
Under his 2020named executive officers in accordance with these employment agreement, Dr. Sandleragreements is also eligible to receive a sign-on bonusdisclosed elsewhere in the amount of $800,000, the first $500,000 of which was paid on December 31, 2020. The remaining $300,000 will be payable on December 1, 2021, subject to Dr. Sandler’s continuous employment with the Company on the payment date. The amount of Dr. Sandler’s sign-on bonus was intended to compensate him for the value of the equity and bonus awards that he forfeited in connection with terminating his prior employment. If Dr. Sandler’s employment is terminated by the Company for cause within the three-year period following December 1, 2020, he is required to repay the full amount of the sign-on bonus within thirty days following the date of termination. In the event that Dr. Sandler resigns from the Company prior to the third anniversary of December 1, 2020, he is required to repay to the Company a prorated portion of the sign-on bonus based on the number of full and partial months remaining in such three-year period as of the date of such termination of employment.
this CD&A.
Each of our named executive officers is afforded severance protection through his or her employment agreement. These severance protections are described in more detail below under “Potential Payments Upon Termination or Change in Control.”
-45-
Dr. Sandler was also employed by Zai Lab (US) LLC pursuant to an agreement that became effective on December 1, 2020. He resigned from the Company, effective October 28, 2022, to pursue another professional opportunity, and the Company entered into a Severance Agreement and General Release in connection with his resignation. In light of Dr. Sandler’s commitment and contributions to the Company, this agreement provided Dr. Sandler with a payment equal to his annual base salary, a pro-rated bonus, and a low six-figure additional severance payment.
Other Benefits and Perquisites
We provide standard group health and welfare benefits, including medical, life, and disability insurance to our employees located in the United States, including our named executive officers, as applicable. We also provide benefits required by statute to our employees, including our named executive officers, located outside of the United States. In addition, Drs. Du, Amado, and Reinhart and Mr. Smiley participate, and Dr. Sandler and Messrs. Fu and Edmondson participateparticipated, in our tax-qualified 401(k) plan, a broad-based, defined contribution retirement plan in which all of our employees who are United States taxpayers and who meet certain age and service requirements are eligible to participate. We make a matching contribution equal to 50% of the first 5% of the employee’s elective contributions under the plan, up to
2.5% of an employee’s eligible compensation. We also provide required Mandatory Provident Fund payments for our employees located in Hong Kong, including our named executive officers, as applicable. The annual value of the contributions to our retirement plan for
20202022 for each
NEOnamed executive officer is reflected in the “All Other Compensation” column of the Summary Compensation Table below. We do not maintain a defined benefit pension plan or supplemental executive retirement plan.
During
fiscal year 2020,2022, we did not provide our named executive officers with any perquisites.
CEO to Median Employee Pay Ratio
We determined that the 2020 annual total compensation of the median of all our employees who were employed as of December 31, 2020, other than our CEO, Samantha (Ying) Du, was $59,025. Dr. Du’s 2020 annual total compensation was $8,536,036, and the ratio of these amounts was 1 to 145.
To identify the median compensated employee, we used cash compensation consisting of base salary paid with respect to 2020 (annualized for those individuals who were not employed for the full year), annual bonus or incentives paid with respect to 2020, and the grant date fair value of any equity granted in 2020. We then identified the employee closest to the median that had been employed for the full year to serve as our median compensation individual for purposes of this analysis.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
Share Ownership Guidelines
On April 1, 2021, we adopted
a policy with share ownership guidelines for our executive officers to strengthen and reinforce the link our compensation programs create between our
executivesexecutive officers and our shareholders. A summary of our share ownership guidelines is set forth below.
| | | | | | | | |
Level | | Number of Shares Equal in Value to: |
CEO | | 6x base salary |
Section 16 Officers | | 2x base salary |
Executive officers have five years from their initial appointment to
meetcomply with this
requirement.policy. Only shares beneficially owned
which areand vested are
credited towardincluded in the share ownership
requirement.calculation. Shares underlying unvested options or RSUs are not included in the calculation. All of our
named executive officers currently meet the
applicable share ownership
requirementguideline or are still within the five-year period to meet such
requirement.guideline. Once
thean executive officer’s level of share ownership satisfies the applicable guideline,
ownership ofthe executive officer is expected to continue to comply with the guideline amount
is expected to be-46-
maintained for as long as the individual is subject to this Policy.policy. Future declines in share price will not affect the covered person’s compliance with this Policypolicy as long as the covered person holds a number of shares equal to or greater than the number of shares he or she hadheld at the time he or she achieved the required ownership level.
compliance.
Policies on Clawback and Recovery of Compensation
We do not currently have a formal policy that provides us with the right to recover amounts paid on the basis of financial results that are subsequently restated.
UnderHowever, we intend to adopt a policy that addresses recovery of erroneously awarded incentive compensation in compliance with the requirements of the Dodd-Frank Act, SEC rules, and applicable listing standards. In addition, under the provisions of the Sarbanes-Oxley Act, the chief executive officer and chief financial officer of a public company may be required to forfeit certain equity- or incentive-based compensation in the event of an accounting restatement due to the material noncompliance of the issuer, as a result of misconduct, with respect to one or more reporting requirements under the securities laws. These Sarbanes-Oxley requirements would be enforced as a matter of law if the circumstances arose that warranted it.
Hedging and Pledging Prohibitions
In
November 2020, we adopted an Amended and Restated Insider Trading Material Non-Public Information Policy which prohibitsaccordance with the Company’s insider trading policy, our executive officers
are prohibited from engaging in pledging or hedging transactions with respect to our shares.
Compensation Risk Management
Our
The Compensation Committee has reviewed our compensation policies and practices and does not believe that these policies and practices create risks that are reasonably likely to have a material adverse effect on us.
Tax and Accounting Treatment
The Compensation Committee believes that shareholder interests are best served if the Compensation Committee retains the discretion to approve compensation arrangements that support our corporate objectives, even if an arrangement does not qualify for full or partial tax deductibility under U.S. or other tax law or results in adverse accounting consequences to the Company.COMPENSATION COMMITTEE REPORT
The information contained in this report shall not be deemed to be (1) “soliciting material,” (2) “filed” with the SEC, (3) subject to Regulations 14A or 14C of the Exchange Act, or (4) subject to the liabilities of Section 18 ofthe Exchange Act. This report shall not be deemed incorporated by reference into any of our other filings under the Exchange Act or the Securities Act, except to the extent that we specifically incorporate it by reference into such filing.
| | |
| COMPENSATION COMMITTEE REPORT |
The Compensation Committee has reviewed and discussed the
“CompensationCompensation Discussion and
Analysis”Analysis required by Item 402(b) of
Regulation S-K with management. Based upon such review and discussion, the Compensation Committee recommended to the Board of Directors that such section be included in this Proxy Statement and incorporated by reference in our Annual Report on
Form 10-K for the
fiscal year ended December 31,
2020,2022, which was filed with the SEC on March 1,
2021.2023.The Compensation Committee
Peter Wirth, Chair
John Diekman
Leon O. Moulder, Jr.
| | |
|
THE COMPENSATION COMMITTEE |
Peter Wirth (Chair) |
Leon O. Moulder, Jr. |
| | |
Nisa LeungEXECUTIVE COMPENSATION TABLES |
-47-
COMPENSATION TABLES
Summary Compensation Table
The following table sets forth the compensation paid to, received by or earned during each of the fiscal years set forth below by our named executive officers:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Fiscal Year | | | Salary ($) | | | Bonus
($)(1) | | | Stock Awards
($) (2) | | | Option
Awards
($) (2) | | | Non-Equity
Incentive Plan
Compensation
($) (3) | | | All Other
Compensation
($) (4) | | | Total
($) | |
Ying (Samantha) Du, Chairwoman and Chief Executive Officer | | | 2020 | | | $ | 688,921 | | | | — | | | | — | | | $ | 7,160,000 | | | $ | 683,060 | | | $ | 4,055 | | | $ | 8,536,036 | |
| | | 2019 | | | $ | 656,115 | | | | — | | | | — | | | $ | 7,569,000 | | | $ | 650,740 | | | $ | 1,338 | | | $ | 8,877,194 | |
| | | 2018 | | | $ | 638,206 | | | | — | | | | — | | | $ | 4,833,500 | | | $ | 619,752 | | | | — | | | $ | 6,091,458 | |
Billy Cho, Chief Financial Officer | | | 2020 | | | $ | 421,270 | | | | — | | | | — | | | $ | 859,200 | | | $ | 203,693 | | | | — | | | $ | 1,484,163 | |
| | | 2019 | | | $ | 409,000 | | | | — | | | | — | | | | — | | | $ | 164,800 | | | | — | | | $ | 573,800 | |
| | | 2018 | | | $ | 300,000 | | | $ | 300,000 | | | $ | 2,184,000 | | | $ | 5,784,000 | | | $ | 133,699 | | | | — | | | $ | 8,701,699 | |
Tao Fu, President and Chief Operating Officer | | | 2020 | | | $ | 456,750 | | | | — | | | | — | | | | — | | | $ | 185,895 | | | $ | 7,125 | | | $ | 649,770 | |
| | | 2019 | | | $ | 450,000 | | | $ | 300,000 | | | | — | | | | — | | | $ | 202,500 | | | $ | 7,000 | | | $ | 959,500 | |
| | | 2018 | | | $ | 98,437 | | | | — | | | $ | 4,049,375 | | | $ | 6,275,000 | | | $ | 65,910 | | | $ | 940 | | | $ | 10,489,663 | |
Ty Edmondson, Chief Legal Officer | | | 2020 | | | $ | 192,262 | | | | — | | | $ | 2,000,625 | | | $ | 1,970,173 | | | $ | 244,800 | | | $ | 1,068 | | | $ | 4,408,928 | |
Alan Bart Sandler, President, Head of Global Development, Oncology | | | 2020 | | | $ | 45,000 | | | $ | 500,000 | | | $ | 3,267,900 | | | $ | 3,250,990 | | | | — | | | | — | | | $ | 7,063,890 | |
(1) | Reflects the sign-on bonus awarded to the applicable named executive officer in connection with his commencement of employment.
|
(2) | Reflects the aggregate grant date fair value of restricted share awards, restricted share unit awards and stock options granted during the applicable fiscal year, computed in accordance with ASC Topic 718, disregarding the effects of estimated forfeitures. The underlying valuation assumptions for equity awards granted during 2020 are further discussed in Note 17 to our audited financial statements filed with our Annual Report on Form 10-K for 2020.
|
(3) | Reflects amounts earned by each of the named executive officers under our annual bonus plan for the applicable fiscal year.
|
(4) | Reflects the value of company matching contributions to the Zai Lab US 401(k) Plan.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Fiscal
Year | | Salary ($) | | Bonus
($) | | Stock Awards
($)(1) | | Option Awards
($) (1) | | Non-Equity Incentive Plan Compensation
($) (2) | | All Other Compensation
($) (3) | | Total
($) |
| Samantha (Ying) Du, | | 2022 | | $ | 830,000 | | | — | | | $ | 10,529,796 | | | $ | 8,015,244 | | | $ | 831,600 | | | $ | 5,501 | | | $ | 20,212,141 | |
| Chief Executive Officer and Chairperson of the Board of Directors | | 2021 | | $ | 774,305 | | | — | | | $ | 6,726,276 | | | $ | 6,946,588 | | | $ | 864,000 | | | $ | 4,410 | | | $ | 15,315,579 | |
| 2020 | | $ | 688,921 | | | — | | | $ | — | | | $ | 7,160,000 | | | $ | 683,060 | | | $ | 4,055 | | | $ | 8,536,036 | |
| Billy Cho, | | 2022 | | $ | 494,400 | | | — | | | $ | 2,208,554 | | | $ | 1,424,383 | | | $ | 253,843 | | | $ | — | | | $ | 4,381,180 | |
| Chief Financial Officer | | 2021 | | $ | 466,090 | | | — | | | $ | 1,602,414 | | | $ | 1,920,292 | | | $ | 254,880 | | | $ | — | | | $ | 4,243,676 | |
| 2020 | | $ | 421,270 | | | — | | | $ | — | | | $ | 859,200 | | | $ | 203,693 | | | $ | — | | | $ | 1,484,163 | |
| Rafael Amado, | | 2022 | | $ | 2,385 | | (4) | — | | | $ | 3,868,200 | | | $ | 3,631,121 | | | $ | — | | | $ | — | | | $ | 7,501,706 | |
| President, Head of Oncology Research and Development | | | | | | | | | | | | | | | | |
| Harald Reinhart | | 2022 | | $ | 567,000 | | | | | $ | 3,265,075 | | | $ | 2,492,656 | | | $ | 348,705 | | | $ | 7,625 | | | $ | 6,681,061 | |
| President, Head of Global Development, Neuroscience, Autoimmune, and Infectious Diseases. | | 2021 | | $ | 466,090 | | | $ | 107,640 | | (5) | $ | 5,238,208 | | | $ | 2,127,892 | | | $ | 264,960 | | | $ | 7,250 | | | $ | 8,212,040 | |
Joshua Smiley
| | 2022 | | $ | 250,000 | | (4) | $ | 250,000 | | (6) | $ | 3,639,510 | | | $ | 4,009,898 | | | $ | 142,101 | | | $ | 5,008 | | | $ | 8,296,517 | |
| President, Chief Operating Officer | | | | | | | | | | | | | | | | |
| Alan Bart Sandler, | | 2022 | | $ | 463,602 | | | — | | | $ | 3,265,075 | | | $ | 2,492,656 | | | $ | — | | | $ | 1,108,415 | | | $ | 7,329,748 | |
| Former President, Head of Global Development, Oncology | | 2021 | | $ | 540,000 | | | $ | 300,000 | | | $ | 3,194,047 | | | $ | 2,235,684 | | | $ | 345,600 | | | $ | 6,708 | | | $ | 6,622,039 | |
| 2020 | | $ | 45,000 | | | $ | 500,000 | | | $ | 3,267,900 | | | $ | 3,250,990 | | | $ | — | | | $ | — | | | $ | 7,063,890 | |
(1)Reflects the aggregate grant date fair value of restricted share awards, restricted share unit awards, performance share unit awards, and stock options granted during the applicable fiscal year, computed in accordance with ASC Topic 718. The underlying valuation assumptions for equity awards granted during 2022 are further discussed in Note 15 in our 2022 Annual Report on Form 10-K.
(2)Reflects amounts earned by each of the named executive officers under our annual bonus plan for the applicable fiscal year.
(3)Reflects the value of company matching contributions to the Zai Lab US 401(k) Plan and, for Dr. Sandler, the payment made in accordance with his Severance Agreement and General Release upon his resignation from the Company in October 2022.
(4)Salaries for Dr. Amado and Mr. Smiley were pro-rated for their periods of service in 2022, which commenced on December 30, 2022 and August 1, 2022, respectively.
(5)Reflects a one-time discretionary bonus payment awarded in connection with Dr. Reinhart’s promotion.
(6)Reflects a cash sign-on award paid in August 2022 in connection with the commencement of Mr. Smiley’s employment.
Grants of Plan-Based Awards
The following table reports potential payouts for awards made under our annual cash bonus plan
for our named executive officers in 2022 and stock
optionsoption and restricted share
unitsunit awards
in each case(“RSUs”) that were granted during
20202022 to our named executive officers:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Award
Type | | Grant Date | | | Estimated Future Payouts Under Non-Equity
Incentive Plan
Awards($) (1) | | | All Other Stock
Awards:
Number of
Shares of Stock
or Units | | | All Other
Option Awards:
Number of
Securities
Under- lying
Options(#) | | | Exercise or Base
Price of Option
Awards ($) | | | Grant Date Fair
Value of Stock
and Option
Awards($)(2) | |
| | | | | | Threshold | | | Target | | | Maximum | | | | | | | | | | | | | |
Ying (Samantha) Du | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annual Bonus | | | — | | | | — | | | $ | 488,055 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Stock Options | | | 3/12/2020 | | | | — | | | | — | | | | — | | | | — | | | | 250,000 | | | $ | 44.94 | | | $ | 7,160,000 | |
Billy Cho | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annual Bonus | | | — | | | | — | | | $ | 169,744 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Stock Options | | | 3/12/2020 | | | | — | | | | — | | | | — | | | | — | | | | 30,000 | | | $ | 44.94 | | | $ | 859,200 | |
Tao Fu | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annual Bonus | | | — | | | | — | | | $ | 206,550 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Ty Edmondson | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annual Bonus | | | — | | | | — | | | $ | 204,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Stock Options | | | 8/17/2020 | | | | — | | | | — | | | | — | | | | — | | | | 37,750 | | | $ | 82.50 | | | $ | 1,970,173 | |
Restricted Share Units | | | 8/17/2020 | | | | — | | | | — | | | | — | | | | 24,250 | | | | — | | | | — | | | $ | 2,000,625 | |
Alan Bart Sandler | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annual Bonus | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Stock Options | | | 12/1/2020 | | | | — | | | | — | | | | — | | | | — | | | | 47,000 | | | $ | 108.93 | | | $ | 3,250,990 | |
Restricted Share Units | | | 12/1/2020 | | | | — | | | | — | | | | — | | | | 30,000 | | | | — | | | | — | | | $ | 3,267,900 | |
-48-
(1) | Non-Equity Incentive Plan amounts above reflect short-term cash incentive opportunities granted under our annual bonus plan, which is discussed in more detail in “Compensation Discussion & Analysis–Annual Incentive Awards.” Actual amounts earned by each of the named executive officers under our annual bonus plan for 2020 are disclosed above in the Summary Compensation Table.
|
(2) | Amounts reflect the aggregate grant date fair value of restricted share unit awards and stock options granted during 2020, computed in accordance with ASC Topic 718, disregarding the effects of estimated forfeitures. The underlying valuation assumptions for equity awards granted during 2020 are further discussed in Note 17 to our audited financial statements filed with our Annual Report on Form 10-K for 2020.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Award (Type) | | Grant
Date | | Estimated Future Payouts
Under Non- Equity Incentive
Plan Awards ($)(1) | | All Other
Stock
Awards:
No of
Shares of
Stock or
Units (2) | | All Other
Option
Awards:
No. of
Securities
Underlying
Options (2) | | Exercise or
Base:
Price of
Option
Awards ($) (2) | | Grant Date
Fair Value
of Stock
and Option
Awards
($)(3) |
| | | | | Threshold | | Target | | Maximum | | | | | | | | |
| Samantha (Ying) Du | | | | | | | | | | | | | | | | |
| Annual Bonus | | — | | | — | | | $ | 756,000 | | | — | | | — | | | — | | | $ | — | | | $ | — | |
| Stock Options | | 4/1/2022 | | — | | | $ | — | | | — | | | — | | | 282,000 | | | $ | 45.47 | | | $ | 8,015,244 | |
| RSUs | | 4/1/2022 | | — | | | $ | — | | | — | | | 54,000 | | | — | | | $ | | | | $ | 2,455,380 | |
| | 6/25/2022 | | — | | | $ | | | | — | | | 235,200 | | | — | | | $ | | | | $ | 8,074,416 | |
| Billy Cho | | | | | | | | | | | | | | | | |
| Annual Bonus | | — | | | — | | | $ | 224,640 | | | — | | | — | | | — | | | $ | — | | | $ | — | |
| Stock Options | | 4/1/2022 | | — | | | $ | — | | | — | | | — | | | 50,114 | | | $ | 45.47 | | | $ | 1,424,383 | |
| RSUs | | 4/1/2022 | | — | | | $ | — | | | — | | | 9,538 | | | | | $ | | | | $ | 433,693 | |
| | 6/25/2022 | | — | | | $ | | | | — | | | 51,700 | | | | | $ | | | | $ | 1,774,861 | |
| Rafael Amado | | | | | | | | | | | | | | | | |
| Annual Bonus (4) | | — | | | — | | | $ | — | | | — | | | — | | | — | | | $ | — | | | $ | — | |
| Stock Options | | 12/30/2022 | | — | | | $ | — | | | — | | | — | | | 183,700 | | | $ | 30.7 | | | $ | 3,631,121 | |
| RSUs | | 12/30/2022 | | — | | | $ | — | | | — | | | 126,000 | | | — | | | $ | — | | | $ | 3,868,200 | |
| Harald Reinhart | | | | | | | | | | | | | | | | |
| Annual Bonus | | — | | | — | | | $ | 283,500 | | | — | | | — | | | — | | | $ | — | | | $ | — | |
| Stock Options | | 4/1/2022 | | — | | | $ | — | | | — | | | — | | | 87,699 | | | $ | 45.47 | | | $ | 2,492,656 | |
| RSUs | | 4/1/2022 | | — | | | $ | — | | | — | | | 16,692 | | | — | | | $ | — | | | $ | 758,985 | |
| | 6/25/2022 | | — | | | $ | — | | | — | | | 73,000 | | | — | | | $ | — | | | $ | 2,506,090 | |
| Joshua Smiley | | | | | | | | | | | | | | | | |
| Annual Bonus | | — | | | — | | | $ | 300,000 | | | — | | | — | | | — | | | $ | — | | | $ | — | |
| Stock Options | | 8/15/2022 | | — | | | — | | | — | | | | | 139,000 | | | $ | 45.78 | | | $ | 4,009,898 | |
| RSUs | | 8/15/2022 | | — | | | — | | | — | | | 79,500 | | | — | | | $ | — | | | $ | 3,639,510 | |
| Alan Bart Sandler | | | | | | | | | | | | | | | | |
| Annual Bonus | | — | | | — | | | $ | 283,500 | | | — | | | — | | | — | | | $ | — | | | $ | — | |
| Stock Options | | 4/1/2022 | | — | | | $ | — | | | — | | | — | | | 87,699 | | | $ | 45.47 | | | $ | 2,492,656 | |
| RSUs | | 4/1/2022 | | — | | | $ | — | | | — | | | 16,692 | | | — | | | $ | — | | | $ | 758,985 | |
| | 6/25/2022 | | — | | | $ | — | | | — | | | 73,000 | | | — | | | $ | — | | | $ | 2,506,090 | |
(1)Non-Equity Incentive Plan amounts above reflect short-term cash incentive opportunities granted under our annual bonus plan, which is discussed in more detail in CD&A – Annual Incentive Awards. Actual amounts earned by each of the named executive officers under our annual bonus plan for 2022 are disclosed above in the Summary Compensation Table.
(2)Each RSU represents a contingent right to receive one ADS, and the stock options are exercisable for ADSs. As a result, the number of shares and exercise price in these columns are represented in terms of ADSs. Each ADS represents ten ordinary shares.
(3)Amounts reflect the aggregate grant date fair value of restricted share unit awards and stock options granted during 2022, computed in accordance with ASC Topic 718. The underlying valuation assumptions for equity awards granted during 2022 are further discussed in Note 15 in our 2022 Annual Report on Form 10-K
(4)Dr. Amado will be eligible for an annual bonus beginning in 2023.
Each of our named executive officers has entered into an employment agreement that governs the terms and conditions of their
serviceemployment relationship with us, including the
terms and conditions with respect to their compensation and
benefits to which they are entitled.benefits. Among other items, the employment agreements set out the annual bonus targets, as a percentage of base salary, for each of our named executive officers. Please see
“Compensation Discussion & Analysis–CD&A – Annual Incentive
Awards”Awards above for the
20202022 bonus targets applicable to our named executive officers.
The employment agreements with Mr. Edmondson and Dr. Sandler also specify the amount of the initial equity grants awarded to these executives, as set forth in the table above.
Outstanding Equity Awards at December 31,
20202022
The following table provides information on the outstanding stock
option andoptions, restricted share
awardsunits, and performance share units, in each case held as of December 31,
20202022 by our named executive officers:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | | | | | Stock Awards | |
Name | | Number of
securities
underlying
unexercised options
(#) exercisable(1) | | | Number of
securities
underlying
unexercised options
(#) unexercisable | | | Option exercise
price
($) | | | Option expiration
date | | | Number of shares
or units of stock
that have not
vested
(#) (3) | | | Market value of
shares of units of
stock that have not
vested
($)(4) | |
Ying (Samantha) Du | | | 1,555,832 | (2) | | | — | | | $ | 0.60 | | | | 10/21/2025 | | | | | | | | | |
| | | 483,500 | | | | 120,876 | | | $ | 1.20 | | | | 3/8/2026 | | | | | | | | | |
| | | 737,744 | | | | 184,440 | | | $ | 1.74 | | | | 8/24/2026 | | | | | | | | | |
| | | 140,000 | | | | 210,000 | | | $ | 20.90 | | | | 3/27/2028 | | | | | | | | | |
| | | 60,000 | | | | 240,000 | | | $ | 38.93 | | | | 3/7/2029 | | | | | | | | | |
| | | — | | | | 250,000 | | | $ | 44.94 | | | | 3/11/2030 | | | | | | | | | |
Billy Cho | | | 130,000 | | | | 240,000 | | | $ | 21.84 | | | | 3/1/2028 | | | | | | | | | |
| | | — | | | | 30,000 | | | $ | 44.94 | | | | 3/11/2030 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 60,000 | | | $ | 8,120,400 | |
Tao Fu | | | 200,000 | | | | 300,000 | | | $ | 18.92 | | | | 9/23/2028 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 120,000 | | | $ | 16,240,800 | |
Ty Edmondson | | | — | | | | 37,750 | | | $ | 82.50 | | | | 8/16/2030 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 24,250 | | | $ | 3,281,995 | |
Alan Bart Sandler | | | — | | | | 47,000 | | | $ | 108.93 | | | | 11/30/2030 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 30,000 | | | $ | 4,060,200 | |
(1) | Unless otherwise noted, all option awards have a maximum term of ten years from the grant date and vest in equal annual installments over five years, beginning on the first anniversary of the grant date, subject to the executive remaining in continuous service with us on each such vesting date.
|
(2) | Option has a maximum term of ten years from the grant date and vested as to 20% of the number of shares subject to the option on the first anniversary of the date of grant, with the remaining portion of the award vesting over 48 months in equal monthly installments.
|
(3) | Restricted share awards and restricted share unit awards vest in equal annual installments over five years, beginning on the first anniversary of the grant date, subject to the executive remaining in continuous service with us on each such vesting date.
|
(4) | Market values reflect the closing price of our common stock on the Nasdaq Global Select Market on December 31, 2020, which was $135.34.
|
-49-
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Option Awards | | Stock Awards |
| Name | | Grant Date | | Number of
securities
underlying
unexercised
options
(#)
exercisable (1)(2) | | Number of
securities
underlying
unexercised
options
(#)
unexercisable | | Option
exercise
price
($)(1) | | Option
expiration
date | | Number of
shares
or units of
stock
that have
not
vested
(#)(1)(3) | | Market value of
shares or
units of
stock that
have not
vested
($)(4) | | Equity
Incentive
Plan
Awards:
Number of
unearned
shares,
units or
other
rights
that have
not
vested
(#)(1)(5) | | Equity
Incentive
Plan
Awards:
Market or
payout
value of
unearned
shares,
units or
other
rights that
have not
vested
($)(4) |
| Samantha (Ying) Du | | 10/22/2015 | | 889,165 | | (6) | — | | | $ | 0.60 | | | 10/21/2025 | | | | | | | | |
| 3/9/2016 | | 604,376 | | | — | | | $ | 1.20 | | | 3/8/2026 | | | | | | | | |
| 8/25/2016 | | 922,184 | | | — | | | $ | 1.74 | | | 8/24/2026 | | | | | | | | |
| 3/28/2018 | | 280,000 | | | 70,000 | | | $ | 20.90 | | | 3/27/2028 | | | | | | | | |
| 3/8/2019 | | 180,000 | | | 120,000 | | | $ | 38.93 | | | 3/7/2029 | | | | | | | | |
| 3/12/2020 | | 100,000 | | | 150,000 | | | $ | 44.94 | | | 3/11/2030 | | | | | | | | |
| 4/1/2021 | | 17,400 | | | 69,600 | | | $ | 130.96 | | | 3/31/2031 | | | | | | | | |
| 4/1/2021 | | | | | | | | | | 13,600 | | | $ | 417,520 | | | | | |
| 12/1/2021 | | | | | | | | | | | | | | 63,175 | | | $ | 1,939,473 | |
| 4/1/2022 | | — | | | 282,000 | | | $ | 45.47 | | | 3/31/2032 | | | | | | | | |
| 4/1/2022 | | | | | | | | | | 54,000 | | | $ | 1,657,800 | | | | | |
| 6/25/2022 | | | | | | | | | | 235,200 | | | $ | 7,220,640 | | | | | |
| Billy Cho | | 3/2/2018 | | 290,000 | | | 80,000 | | | $ | 21.84 | | | 3/1/2028 | | | | | | | | |
| 3/2/2018 | | | | | | | | | | 20,000 | | | $ | 614,000 | | | | | |
| 3/12/2020 | | 12,000 | | | 18,000 | | | $ | 44.94 | | | 3/11/2030 | | | | | | | | |
| 4/1/2021 | | 4,810 | | | 19,240 | | | $ | 130.96 | | | 3/31/2031 | | | | | | | | |
| 4/1/2021 | | | | | | | | | | 3,680 | | | $ | 112,976 | | | | | |
| 12/1/2021 | | | | | | | | | | | | | | 14,039 | | | $ | 430,997 | |
| 4/1/2022 | | — | | | 50,114 | | | $ | 45.47 | | | 3/31/2032 | | | | | | | | |
| 4/1/2022 | | | | | | | | | | 9,538 | | | $ | 292,817 | | | | | |
| 6/25/2022 | | | | | | | | | | 51,700 | | | $ | 1,587,190 | | | | | |
| Rafael Amado | | 12/30/2022 | | — | | | 183,700 | | | $ | 30.70 | | | 12/29/2032 | | | | | | | | |
| 12/30/2022 | | | | | | | | | | 126,000 | | | $ | 3,868,200 | | | | | |
| Harald Reinhart | | 5/12/2017 | | 11,480 | | | — | | | $ | 3.00 | | | 5/11/2027 | | | | | | | | |
| 9/20/2017 | | 40,000 | | | — | | | $ | 18.00 | | | 9/19/2027 | | | | | | | | |
| 3/28/2018 | | 40,000 | | | 20,000 | | | $ | 20.90 | | | 3/27/2028 | | | | | | | | |
| 11/16/2018 | | 20,000 | | | 10,000 | | | $ | 17.99 | | | 11/15/2028 | | | | | | | | |
| 4/1/2021 | | 5,330 | | | 21,320 | | | $ | 130.96 | | | 3/31/2031 | | | | | | | | |
| 4/1/2021 | | | | | | | | | | 4,040 | | | $ | 124,028 | | | | | |
| 12/1/2021 | | | | | | | | | | | | | | 35,097 | | | $ | 1,077,478 | |
| 4/1/2022 | | — | | | 87,699 | | | $ | 45.47 | | | 3/31/2032 | | | | | | | | |
| 4/1/2022 | | | | | | | | | | 16,692 | | | $ | 512,444 | | | | | |
| 6/25/2022 | | | | | | | | | | 73,000 | | | $ | 2,241,100 | | | | | |
| Joshua Smiley | | 8/15/2022 | | — | | | 139,000 | | | $ | 45.78 | | | 8/14/2032 | | | | | | | | |
| 8/15/2022 | | | | | | | | | | 79,500 | | | $ | 2,440,650 | | | | | |
| Alan Bart Sandler (7) | | 12/1/2020 | | 9,400 | | | — | | | $ | 108.93 | | | 11/30/2030 | | | | | | | | |
| 4/1/2021 | | 5,600 | | | — | | | $ | 130.96 | | | 3/31/2031 | | | | | | | | |
(1)The stock options are exercisable for ADSs, and each of the stock awards represents a contingent right to receive one ADS. As a result, the number of shares and exercise price in these columns are represented in terms of ADSs. Each ADS represents ten ordinary shares.
(2)Unless otherwise noted, all option awards have a maximum term of ten years from the grant date and vest in equal annual installments over five years, beginning on the first anniversary of the grant date, subject to the executive remaining in continuous service with us on each such vesting date.
(3)Restricted share awards and restricted share unit awards vest in equal annual installments over five years, beginning on the first anniversary of the grant date, subject to the executive remaining in continuous service with us on the vesting date, other than (i) the restricted share unit awards granted on June 25, 2022, which vest in equal amounts over four years, beginning on the first anniversary of the grant date, subject to the executive remaining in continuous service with us on the vesting date, and (ii) a one-time restricted share unit award of 21,000 shares granted to Dr. Amado on December 30, 2022 in connection with the commencement of his employment, which vests in full on the first anniversary of the grant date, subject to the executive remaining in continuous service with us on the vesting date.
(4)Market values reflect the closing price of our ADSs on Nasdaq on December 30, 2022, which was $30.70.
(5)Performance based share units vest based on the satisfaction of specified product advancement milestones over the performance period beginning December 1, 2021 and ending on December 31, 2025.
(6)Option has a maximum term of ten years from the grant date and vested as to 20% of the number of shares subject to the option on the first anniversary of the grant date, with the remaining portion of the award vesting over 48 months in equal monthly installments.
(7)The unvested portions of equity awards previously granted to Dr. Sandler were forfeited in connection with his resignation from the Company in October 2022. Under the 2017 Plan, the vested and unexercised portion of equity awards previously granted to Dr. Sandler remained exercisable for a period of three months from the date of Dr. Sandler’s resignation from the Company in October 2022.
Options Exercised and Shares Vested During
20202022
The following table provides information relating to stock option exercises and stock award vesting for our named executive officers during the year ended December 31,
2020. | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
Name | | Number of Shares
Acquired on
Exercise(#) | | | Value Realized
on Exercise($)(1) | | | Number of Shares
Acquired on
Vesting(#) | | | Value Realized on
Vesting($)(2) | |
Ying (Samantha) Du | | | 400,000 | | | $ | 31,840,676 | | | | — | | | | — | |
Billy Cho | | | 30,000 | | | $ | 1,554,045 | | | | 20,000 | | | $ | 1,124,600 | |
Tao Fu | | | — | | | | — | | | | 48,334 | | | $ | 3,745,436 | |
Ty Edmondson | | | — | | | | — | | | | — | | | | — | |
Alan Bart Sandler | | | — | | | | — | | | | — | | | | — | |
(1) | Represents the stock price on the Nasdaq Global Select Market at exercise minus the stock option exercise price multiplied by the number of shares acquired on exercise.
|
(2) | Represents the fair market value of the shares on the vesting date, calculated as the closing stock price on the Nasdaq Global Select Market on the vesting date (or the previous business day if vesting occurred during a weekend) multiplied by the number of shares vesting.
|
2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | | Number of Shares
Acquired on
Exercise(#) (1) | | Value Realized
on
Exercise($)(2) | | Number of Shares
Acquired on
Vesting(#) (1) | | Value Realized on
Vesting($)(3) |
| Samantha (Ying) Du | | — | | | $ | — | | | 3,400 | | | $ | 154,598 | |
| Billy Cho | | — | | | $ | — | | | 20,920 | | | $ | 1,092,432 | |
| Rafael Amado | | — | | | $ | — | | | — | | | $ | — | |
| Harald Reinhart | | 1,854 | | | $ | 68,601 | | | 16,010 | | | $ | 506,425 | |
| Joshua Smiley | | — | | | $ | — | | | — | | | $ | — | |
| Alan Bart Sandler | | — | | | $ | — | | | 1,060 | | | $ | 48,198 | |
(1)The stock options are exercisable for ADSs, and each of the stock awards represents a contingent right to receive one ADS. As a result, the number of shares in these columns are represented in terms of ADSs. Each ADS represents ten ordinary shares.
(2)Represents the price of our ADSs on Nasdaq at exercise minus the stock option exercise price multiplied by the number of ADSs acquired on exercise.
(3)Represents the fair market value of the shares on the vesting date, calculated as the closing price of our ADSs on Nasdaq on the vesting date (or the previous business day if vesting occurred during a weekend) multiplied by the number of shares vesting.
Potential Payments Upon Termination or Change of Control
| | | | | | | | | | | | | | |
Name | | Benefit Type | | Termination due to
death or disability
($) | | | Termination without
Cause or for Good
Reason ($) | | | Termination without
Cause or for Good
Reason in
connection with a
Change of
Control ($) | |
Ying (Samantha) Du | | Severance | | $ | 58,102 | | | $ | 1,533,886 | | | $ | 2,386,102 | |
| | Benefits Continuation | | $ | 2,592 | | | $ | 46,651 | | | $ | 46,651 | |
| | Value of Equity Acceleration | | $ | 110,626,291 | | | $ | 110,626,291 | | | $ | 110,626,291 | |
Billy Cho | | Severance | | $ | 35,363 | | | $ | 212,180 | | | $ | 594,104 | |
| | Benefits Continuation | | $ | 465 | | | $ | 2,792 | | | $ | 5,584 | |
| | Value of Equity Acceleration | | | N/A | | | | N/A | | | $ | 38,072,400 | |
Tao Fu | | Severance | | $ | 38,250 | | | $ | 665,550 | | | $ | 665,550 | |
| | Benefits Continuation | | $ | 104 | | | $ | 1,245 | | | $ | 1,245 | |
| | Value of Equity Acceleration | | | N/A | | | | N/A | | | $ | 51,166,800 | |
Ty Edmondson | | Severance | | $ | 42,500 | | | $ | 587,475 | | | $ | 714,975 | |
| | Benefits Continuation | | $ | 3,367 | | | $ | 40,405 | | | $ | 50,506 | |
| | Value of Equity Acceleration | | | N/A | | | $ | 5,276,705 | | | $ | 5,276,705 | |
| | | | |
| | | |
| * Death only.
Disability
termination
is treated
the same as
termination
without cause. |
| | | | | | | | |
Alan Bart Sandler | | Severance | | $ | 45,000 | | | $ | 562,869 | | | $ | 562,869 | |
| | Benefits Continuation | | $ | 3,374 | | | $ | 40,492 | | | $ | 40,492 | |
| | Value of Equity Acceleration | | | N/A | | | | N/A | | | $ | 5,301,470 | |
-50-
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Benefit Type | | Termination due to
death or disability
($) | | Termination without
Cause or for Good
Reason ($) | | Termination without
Cause or for Good
Reason in
connection with a
Change of
Control ($) |
| Samantha (Ying) Du | | Severance | | $ | 70,000 | | | $ | 201,600 | | | $ | 3,204,210 | |
| Benefits Continuation | | $ | 2,035 | | | $ | 36,629 | | | $ | 36,629 | |
| Value of Equity
Acceleration | | $ | 11,921,433 | | | $ | 11,921,433 | | | $ | 11,921,433 | |
| Billy Cho | | Severance | | $ | 41,600 | | | $ | 499,200 | | | $ | 723,840 | |
| Benefits Continuation | | $ | 445 | | | $ | 5,335 | | | $ | 5,335 | |
| Value of Equity
Acceleration | | N/A | | N/A | | $ | 3,746,780 | |
| Rafael Amado | | Severance | | $ | 51,667 | | | $ | 621,699 | | | $ | 621,699 | |
| Benefits Continuation | | $ | — | | | $ | — | | | $ | — | |
| Value of Equity
Acceleration | | N/A | | N/A | | $ | 3,868,200 | |
| Harald Reinhart | | Severance | | $ | 47,250 | | | $ | 850,500 | | | $ | 850,500 | |
| Benefits Continuation | | $ | 2,249 | | | $ | 26,984 | | | $ | 26,984 | |
| Value of Equity
Acceleration | | N/A | | N/A | | $ | 4,278,150 | |
| Joshua Smiley | | Severance | | $ | 50,000 | | | N/A | | $ | 725,753 | |
| Benefits Continuation | | $ | 1,634 | | | N/A | | $ | 19,609 | |
| Value of Equity
Acceleration | | N/A | | N/A | | $ | 2,440,650 | |
Each of our named executive officers is entitled to receive certain benefits upon a qualifying termination of employment, including following a change in control of the Company, or in the event of a termination of employment due to the executive’s death or disability, in each case as described below.
Under the terms of their respective employment agreements, in the event of a termination of employment, each of our named executive officers will be entitled to receive any accrued but unpaid base salary, reimbursement for unpaid business expenses incurred prior to termination, and any additional compensation as may be expressly required under applicable law, including accrued but unused vacation time (the “Final Compensation”).
In addition to the Final Compensation, upon termination of the named executive officer’s employment by us without “cause” or by the executive for “good reason” (each as defined in the respective employment agreement and collectively, a “qualifying termination”),
the named executive officerDrs. Du, Amado, and Reinhart and Mr. Cho will be entitled to receive the following severance benefits, subject to the executive’s timely execution of a separation agreement and a general release of claims in a form reasonably satisfactory to the Company: (i) an amount equal to 12
months’months (18 months, in the case of Dr.
Du, and for Mr. Cho, six months in the event he experiences a qualifying termination prior to March 2, 2021)Du) of base salary and 12 months (18 months, in the case of Dr.
Du, and for Mr. Cho, six months in the event he experiences a qualifying termination prior to March 2, 2021)Du) of the Company’s portion of monthly premiums with respect to health, dental and vision coverage or COBRA continuation coverage, as applicable, and in each case payable as salary continuation over the 12 months (18 months, in the case of Dr.
Du, and for Mr. Cho, six months in the event he experiences a qualifying termination prior to March 2, 2021)Du) following the effective date of the qualifying termination (collectively, “Base Severance”) and (ii) for each executive other than Mr. Cho, a
pro-rated bonus based on the number of days that the executive worked in the year of termination, payable at the same time as bonuses are paid to other senior executives of the Company (the
“Pro-Rated“Pro-Rated Bonus”). In the event of a qualifying termination, Dr. Du
and Mr. Edmondson will also receive full accelerated vesting of any then-outstanding unvested stock options, restricted share, or other equity awards held by the executive (“Equity Acceleration”).
In the event of a qualifying termination within 12 months following a change in control (a “change in control termination”), in addition to the Final Compensation, the Base Severance, and the Equity Acceleration but in lieu of the
Pro-Rated Bonus, Dr. Du will receive a payment equal to the sum of (x) six
months’month of base salary, (y) two times the executive’s target bonus, and (z) six months of the Company’s portion of monthly premiums payable immediately prior to the effective date of such termination with respect to health, dental, and vision insurance coverage (the “CiC Payment”). In the event of a change in control termination and in addition to the Final Compensation,
Mr.Messrs. Cho
and Smiley and Drs. Amado and Reinhart will receive Base Severance over a
12-month period, the
Pro-Rated Bonus, and the Equity
Acceleration; Mr. Fu will receive Base Severance, the Pro-Rated Bonus and the Equity Acceleration; Mr. Edmondson will receive Base Severance over a 15-month period, the Pro-Rated Bonus and the Equity Acceleration; and Dr. Sandler will receive the Base Severance, the Pro-Rated Bonus and the Equity Acceleration.
In addition to the Final Compensation, upon termination of an executive’s employment as a result of her or his death or disability, each
named executive
other than Mr. Edmondson,officer will be entitled to receive an amount equal to one
months’month of base salary and one month of the Company’s portion of monthly premiums with respect to health, dental, and vision coverage or COBRA continuation coverage, as applicable.
Mr. Edmondson would receive these same benefits in the event of a termination of his employment as a result of his death, but a termination due to his disability would be treated in the same manner as a qualifying termination, as described above. In addition, upon termination of Dr. Du’s employment as a result of her death or disability, she would be entitled to the Equity Acceleration.
-51-
DIRECTOR COMPENSATION
Dr. Sandler resigned from the Company, effective October 28, 2022. Upon his resignation, and in consideration of his commitments and contributions to the Company as well as the Severance Agreement and General Release he entered into with the Company, we paid Dr. Sandler $1.1 million. For 2020,more information regarding the Severance Agreement and General Release, see CD&A – Employment Agreements.
| | |
| ADDITIONAL EXECUTIVE COMPENSATION INFORMATION |
CEO to Median Employee Pay Ratio
We determined that the annual total compensation of our median compensated employee was $106,671 for 2022. The annual total compensation of our CEO, Samantha (Ying) Du, was $20,212,141 for 2022, as reported in the “Total” column of the Summary Compensation Table. We calculated the median compensated employee’s annual total compensation using the same methodology required for calculating total annual compensation for our CEO (and other named executive officers) for purposes of the Summary Compensation Table. The ratio of these two amounts was 1 to 189.
To identify the median compensated employee, we used cash compensation consisting of base salary and allowance paid with respect to 2022 (annualized for those individuals who were not employed for the full year) and annual cash bonus or incentives paid with respect to 2022. We then identified the employee closest to the median that had been employed for the full year to serve as our median compensated individual for purposes of this analysis.
We believe this pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above.
Pay Versus Performance
In accordance with the pay versus performance (“PvP”) disclosure requirements in Item 402(v) of Regulation S-K, this section presents information that describes the relationship between Compensation Actually Paid (“CAP”), as that term is defined under the rules prescribed by Item 402(v), to the Company’s CEO, other named executive officers (“NEOs”) as a group, and certain financial performance measures of the Company.
While the Compensation Committee (or Board of Directors for our CEO) makes executive compensation decisions after considering a variety of factors, including corporate and individual performance, the decisions of the Compensation Committee and Board of Directors in 2022 were made independently of these PvP disclosure requirements. For more information regarding our executive compensation program and related decisions, please refer to Executive Compensation – Compensation Disclosure & Analysis.
Pay Versus Performance Table
The following table sets forth information for each applicable year regarding the CAP of our CEO, Samantha (Ying) Du, and of our other NEOs as a group, as well as certain Company financial performance measures, including our total shareholder return (“TSR”), the TSR of the NASDAQ Biotechnology Index (our Company-Selected Peer Group), our net income, and our revenue growth. We selected revenue growth to be our Company-Selected Measure as it represents the most important financial performance measure used to link CAP for 2022 to Company financial performance for purposes of this disclosure.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | |
| | Summary Compensation Table Total for CEO (1) | | Compensation Actually Paid to CEO (1)(2) | | Average Summary Compensation Table Total for Non-CEO
NEOs (2)(3) | | Average Compensation Actually Paid to Non-CEO
NEOs (2)(3)(4) | | TSR (5) | | Peer Group TSR (5) | | Net Income (Loss)
(in millions) | | Revenue Growth (6) |
| Year | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | % |
| 2022 | | 20,212,141 | | | 739,598 | | | 6,838,043 | | | 3,457,925 | | | 73.82 | | 113.65 | | (443.3) | | | 49 | % |
| 2021 | | 15,315,579 | | | (30,500,547) | | | 6,176,702 | | | (4,953,682) | | | 151.12 | | 126.45 | | (704.5) | | | 195 | % |
| 2020 | | 8,536,036 | | | 112,741,937 | | | 3,401,688 | | | 22,645,622 | | | 325.41 | | 126.42 | | (268.9) | | | 277 | % |
(1) Samantha (Ying) Du has been the CEO of the Company since 2014.
(2) Deductions from, and additions to, total compensation in the Summary Compensation Table by year to calculate Compensation Actually Paid include:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2022 | | 2021 | | 2020 |
| | Samantha
(Ying) Du | Average
Non-CEO NEOs | | Samantha
(Ying) Du | Average
Non-CEO NEOs | | Samantha
(Ying) Du | Average
Non-CEO NEOs |
| | $ | $ | | $ | $ | | $ | $ |
| Total Compensation from Summary Compensation Table | | 20,212,141 | | 6,838,043 | | | 15,315,579 | | 6,176,702 | | | 8,536,036 | | 3,401,688 | |
| Adjustments for Equity Awards | | | | | | | | | |
| Adjustment for grant date values in the Summary Compensation Table | | (18,545,040) | | (6,059,426) | | | (13,672,864) | | (5,279,647) | | | (7,160,000) | | (2,837,222) | |
| Year-end fair value of unvested awards granted in the current year | | 13,913,094 | | 4,783,831 | | | 3,708,060 | | 1,299,614 | | | 27,099,276 | | 4,659,848 | |
| Year-over-year difference of year-end fair values for unvested awards granted in prior years | | (10,827,207) | | (1,408,060) | | | (36,638,677) | | (7,338,300) | | | 66,533,031 | | 16,035,472 | |
| Fair values at vest date for awards granted and vested in current year | | — | | — | | | — | | 259,613 | | | — | | — | |
| Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years | | (4,013,390) | | (696,463) | | | 787,355 | | (71,664) | | | 17,733,594 | | 1,385,836 | |
| Total Adjustments for Equity Awards | | (19,472,543) | | (3,380,118) | | | (45,816,126) | | (11,130,384) | | | 104,205,901 | | 19,243,934 | |
| Compensation Actually Paid (as calculated) | | 739,598 | | 3,457,925 | | | (30,500,547) | | (4,953,682) | | | 112,741,937 | | 22,645,622 | |
(3) The valuation assumptions for stock option awards included in Compensation Actually Paid are as follows:
•The expected life of each stock option, which is determined using the “simplified method” and which takes into account the average of the remaining vesting period and remaining term as of the vest or fiscal year end date.
•The exercise price and the asset price, which are based on the closing price for our ADSs on Nasdaq on the vest and fiscal year end date, respectively.
•The risk-free rate, which is based on the Treasury Constant Maturity rate closest to the remaining expected life as of the vest or fiscal year end date.
•Our historical volatility, which is based on the daily price history for our ADSs traded on Nasdaq for each expected life prior to each vest or fiscal year end date.
•The annual dividend yield, which for Zai Lab was zero as we did not pay dividends and do not expect to pay any in the foreseeable future.
(4) The Non-CEO NEOs included the following executives by year:
2022: Billy Cho, Rafael Amado, Harald Reinhart, Alan Bart Sandler, and Josh Smiley;
2021: Billy Cho, F. Ty Edmondson, Harald Reinhart, and Alan Bart Sandler; and
2020: Billy Cho, F. Ty Edmondson, Alan Bart Sandler, and Tao Fu.
(5) TSR is determined based on the value of an initial fixed investment of $100, and the reinvestment of all dividends are assumed. The TSR peer group consists of the NASDAQ Biotechnology Index.
(6) Revenue growth is calculated as follows: (total revenues from our audited annual consolidated statements of operations for the current year - total revenues from our audited annual consolidated statements of operations for the prior year) / total revenues from our audited annual consolidated statements of operations for the prior year.
Financial Performance Measures
The most important financial performance measures identified by the Company as linking executive compensation actually paid to our NEOs, for the most recently completed fiscal year, to our performance are as follows:
•Revenue growth
•Product revenues
•Year-end cash and cash equivalents
Pay Versus Performance: Graphical Description
The illustrations below provide a graphical description of CAP (as calculated in accordance with the SEC rules) compared to: (1) our cumulative TSR and the cumulative TSR of the Peer Group, (2) our net income, and (3) revenue growth. Since a significant portion of compensation for our CEO and other NEOs consists of equity awards, the change in value of Compensation Actually Paid is directionally aligned with changes in our TSR, net income, and revenue growth.
CAP Versus Cumulative TSR for the Company and Cumulative TSR of the Peer Group
CAP Versus Net Income
CAP Versus Revenue Growth
For 2022, each member of our Board of Directors who is not an employee of the Company or one of our affiliates
or our non-employee directors, werewas entitled to the following compensation under our
non-employee director compensation policy:
•Annual cash retainer of $50,000 for each non-employee director;
•Additional annual cash retainer of $35,000 for the Lead Independent Director;
•Additional annual cash retainer of $20,000 for the Audit Committee chair;
•Additional annual cash retainer of $10,000 for each Audit Committee member;
•Additional annual cash retainer of $15,000 for the Compensation Committee chair;
•Additional annual cash retainer of $7,500 for each Compensation Committee member;
•Additional annual cash retainer of $10,000 for the Nominating and Corporate Governance Committee chair;
•Additional annual cash retainer of $5,000 for each Nominating and Corporate Governance Committee member;
•Additional annual cash retainer of $10,000 for the Research and Development Committee chair through October 19, 2022, upon which date this retainer was increased to $15,000 in recognition of the time commitment of the committee and in consideration of market practices;
•Additional annual cash retainer of $5,000 for each Research and Development Committee member through October 19, 2022, upon which date this retainer was increased to $7,500 in recognition of the time commitment of the committee and in consideration of market practices; and
•An annual grant of restricted shares under our 20172022 Equity Plan.
Our In accordance with our non-employee director compensation policy,
provides that each
non-employee director,
will receiveother than Dr. Gaynor and Mr. Morrison, received an annual grant of
10,000 restricteda number of shares
(subjectof Restricted Shares (as defined in the 2022 Equity Plan) equal to
a maximum$500,000 divided by the Nasdaq closing price of the Company’s ADS on the date of grant
(or on the next succeeding business day if Nasdaq is not open for trading on the date
fair value limitation of
$500,000 per year)grant),
rounded down to the nearest whole number, which vests in full on the first anniversary of the date of grant, subject to continued service as a member of
our boardthe Board of
directorsDirectors through such date.
In 2020, each non-employeeDr. Gaynor and Mr. Morrison were not eligible to receive an annual director
received agrant in 2022 pursuant to the non-employee director compensation policy as their appointment date was within 180 days of the date of grant of
10,000 restricted shares under our 2017 Equity Incentive Plan which vested on January 1, 2021. In 2021, the
maximum grant date fair value limitation of $500,000 reduced the number of shares of restricted stock granted to each non-employee director under our 2017 Equity Incentive Plan to 3,852 restricted shares, which will vest on January 1, 2022, subject to continued service as a member of our board of directors through such date.annual equity award.
Our
non-employee directors are also reimbursed by the Company for reasonable and customary expenses incurred in connection with attendance at board of director and committee meetings, in accordance with the Company’s
policies as in effect from time to time.policies. Dr. Du
and Ms. Leung
and, following the commencement of his employment with the Company, Mr. Fu do not receive separate compensation for their service as directors.
The following table provides information concerning compensation for our
non-employee directors for
2020: | | | | | | | | | | | | | | | | |
Name | | Fees Earned or
Paid in Cash ($) | | | Stock Awards
($) (1) (2) | | | All Other
Compensation ($) | | | Total
($) | |
Kai-Xian Chen | | $ | 50,625 | | | $ | 415,900 | | | $ | — | | | $ | 466,525 | |
John Diekman | | $ | 75,000 | | | $ | 415,900 | | | $ | — | | | $ | 490,900 | |
Nisa Leung | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
William Lis | | $ | 60,000 | | | $ | 415,900 | | | $ | — | | | $ | 475,900 | |
Leon Moulder, Jr. | | $ | 65,274 | | | $ | 435,200 | | | $ | — | | | $ | 500,474 | |
Peter Wirth | | $ | 65,000 | | | $ | 415,900 | | | $ | 35,000 | | | $ | 515,900 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or
Paid in Cash ($) | | Stock Awards
($) (1) (2) | | All Other
Compensation ($) | | Total
($) |
| Kai-Xian Chen (3) | | $ | 55,503 | | | $ | 499,937 | | | $ | — | | | $ | 555,440 | |
| John Diekman (4) | | $ | 87,800 | | | $ | 499,937 | | | $ | — | | | $ | 587,737 | |
| Richard Gaynor, M.D. (3) | | $ | 61,005 | | | $ | — | | | $ | — | | | $ | 61,005 | |
| Nisa Leung | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| William Lis (3) | | $ | 61,253 | | | $ | 499,937 | | | $ | — | | | $ | 561,190 | |
| Scott Morrison (5) | | $ | 64,306 | | | $ | — | | | $ | — | | | $ | 64,306 | |
| Leon Moulder, Jr. | | $ | 67,500 | | | $ | 499,937 | | | $ | — | | | $ | 567,437 | |
| Peter Wirth | | $ | 75,000 | | | $ | 499,937 | | | $ | — | | | $ | 574,937 | |
(1)Reflects the grant date fair value of restricted share awards granted during 2022 in accordance with ASC Topic 718. The underlying valuation assumptions for equity awards granted during 2022 are further discussed in Note 15 in our 2022 Annual Report on Form 10-K.
(2)As of December 31, 2022, our non-employee directors held unvested restricted shares representing the following number of ADSs, each of which represents 10 ordinary shares: Dr. Chen 7,763; Dr. Diekman 7,763; Dr. Gaynor 5,942; Ms. Leung 0; Mr. Lis 7,763; Mr. Morrison 4,897; Mr. Moulder 7,763; and Mr. Wirth 7,763.
(3)The additional annual cash retainers for the Chair and members of the Research and Development Committee increased from $10,000 to $15,000 and from $5,000 to $7,500, respectively, as of October 19, 2022.
(4)Dr. Diekman was appointed Lead Independent Director and stepped down from his role as Chair of the Audit Committee, effective July 21, 2022. He continues to serve as a member of the Audit Committee. Dr. Diekman’s annual cash retainer was pro-rated for his periods of service in these roles.
(5)Mr. Morrison was appointed Chair of the Audit Committee, effective July 21, 2022. He previously served as a member of the Audit Committee. His annual cash retainer was pro-rated for his periods of service in these roles.
(1) | Reflects the grant date fair value of restricted share awards granted during 2020 in accordance with ASC Topic 718, disregarding the effects of estimated forfeitures. The underlying valuation assumptions for equity awards granted during 2020 are further discussed in Note 17 to our audited financial statements filed with our Annual Report on Form 10-K for 2020.
| |
| DELIVERY OF PROXY MATERIALS |
(2) | As of December 31, 2020, our non-employee directors held the following number of shares subject to outstanding restricted share awards: Mr. Chen 10,000 shares; Mr. Diekman 10,000 shares; Ms. Leung no shares; Mr. Lis 10,000 shares; Mr. Moulder 10,000 shares; and Mr. Wirth 10,000 shares.
|
-52-
DELIVERY OF PROXY MATERIALS
The Company may satisfy SEC rules regarding delivery of proxy materials, including this Proxy Statement, by delivering a single set of proxy materials to an address shared by two or more Company shareholders. This delivery method can result in meaningful cost savings for the Company. In order to take advantage of this opportunity, the Company may deliver only a single set of proxy materials to multiple shareholders who share an address, unless contrary instructions are received prior to the mailing date. Similarly, if you share an address with another shareholder and have received multiple copies of our proxy materials, you may write or call us at the address and phone number below to request delivery of a single copy of the proxy materials in the future. We undertake to deliver promptly upon written or oral request a separate copy of the proxy materials, as requested, to a shareholder at a shared address to which a single copy of the proxy materials was delivered. If you hold ordinary shares as a record shareholder in Hong Kong or Cayman Islands and prefer to receive separate copies of proxy materials either now or in the future, please contact Zai Lab Limited at Building 1, 4/F, Jinchuang Plaza, 4560 Jinke Road, Pudong, Shanghai, China 201210, Attention314 Main Street, Fourth Floor, Suite 100, Cambridge, MA 02142, Attention: Corporate Secretary, +86 21 6163 2588 or +1 (786) 250-1886. If you hold ordinary shares in the form of ADSs throughissued by Citibank (the depositary of our ADSs), or hold ordinary shares through a brokerage firm or bank and you prefer to receive separate copies of proxy materials either now or in the future, please contact the Depositary,Citibank (the depositary of our ADSs), or your brokerage firm or bank, as applicable.
Shareholder Communications
Generally, shareholders who have questions or concerns should contact our Investor Relations department at
Building 1, 4/F, Jinchuang Plaza, 4560 Jinke Road,
Bldg. 1, Fourth Floor, Pudong, Shanghai, China 201210. However, shareholders who wish to communicate directly with
ourthe Board of Directors, or any individual director, should direct questions in writing to our Chief Legal Officer & Corporate
Secretary.Secretary at 314 Main Street, Fourth Floor, Suite 100, Cambridge, MA 02142. Communications addressed in this manner will be forwarded directly to
ourthe Board of Directors or named individual director(s)
., as appropriate.
EACH SHAREHOLDER IS URGED TO COMPLETE, DATE, SIGN,
AND
PROMPTLY RETURN THE ENCLOSED
FORM OF PROXY-53-
Exhibit A
THE COMPANIES ACT (REVISED)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
FIFTH AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF
ZAI LAB LIMITED
(Adopted by a Special Resolution passed on June 24, 2021)
INTERPRETATION
1. | In these Articles, Table A in the Schedule in the Companies Act does not apply and unless otherwise defined, the defined terms shall have the meanings assigned to them as follows:
|
| | |
“Articles” | | these Articles of Association of the Company as altered or added to, from time to time. |
| |
“Board” or “Board of Directors” | | the board of Directors for the time being of the Company. |
| |
“Business Day” | | a day (excluding Saturdays or Sundays), on which banks in Hong Kong, Beijing and New York are open for general banking business throughout their normal business hours. |
| |
“Chairman” | | the Chairman appointed pursuant to Article 82. |
| |
“Commission” | | Securities and Exchange Commission of the United States of America or any other federal agency for the time being administering the Securities Act. |
| |
“Companies Act” | | the Companies Act (Revised) of the Cayman Islands and any statutory amendment or re-enactment thereof. Where any provision of the Companies Act is referred to, the reference is to that provision as amended by any law for the time being in force. |
| |
“Company” | | Zai Lab Limited, a Cayman Islands company limited by shares. |
| |
“Company’s Website” | | the website of the Company, the address or domain name of which has been notified to Members. |
| |
“Designated Stock Exchange” | | the Global Market of The Nasdaq Stock Market, The New York Stock Exchange, The Stock Exchange of Hong Kong Limited or any other internationally recognized stock exchange where the Company’s securities are traded. |
| |
“Directors” | | the directors of the Company for the time being, or as the case may be, the Directors assembled as a Board or as a committee thereof. |
| |
“electronic” | | the meaning given to it in the Electronic Transactions Act (Revised) of the Cayman Islands and any amendment thereto or re-enactments thereof for the time being in force and includes every other law incorporated therewith or substituted therefore. |
| | |
| |
“electronic communication” | | electronic posting to the Company’s Website, transmission to any number, address or internet website or other electronic delivery methods as otherwise decided and approved by not less than two-thirds of the vote of the Board. |
| |
“in writing” | | includes writing, printing, lithograph, photograph, type-writing and every other mode of representing words or figures in a legible and non-transitory form and, only where used in connection with a notice served by the Company on Members or other persons entitled to receive notices hereunder, shall also include a record maintained in an electronic medium which is accessible in visible form so as to be useable for subsequent reference. |
| |
“Listing Rules” | | The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. |
| |
“Member” | | the meaning given to it in the Companies Act. |
| |
“Memorandum of Association” | | the Memorandum of Association of the Company, as amended and re-stated from time to time. |
| |
“month” | | calendar month. |
| |
“Ordinary Resolution” | | a resolution:
(a) passed by a simple majority of votes cast by such Members as, being entitled to do so, vote in person or, in the case of any Member being an organization, by its duly authorized representative or, where proxies are allowed, by proxy at a general meeting of the Company; or
(b) approved in writing by all of the Members entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Members and the effective date of the resolution so adopted shall be the date on which the instrument, or the last of such instruments if more than one, is executed.
|
| |
“paid up” | | paid up as to the par value and any premium payable in respect of the issue of any shares and includes credited as paid up. |
| |
“Register of Members” | | the register to be kept by the Company in accordance with the Companies Act. |
| |
“seal” | | the Common Seal of the Company (if adopted) including any facsimile thereof. |
| |
“Securities Act” | | the Securities Act of 1933 of the United States of America, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. |
| |
“share” | | any share in the capital of the Company and includes a fraction of a share. |
| |
“signed” | | includes a signature or representation of a signature affixed by mechanical means or an electronic symbol or process attached to or logically associated with an electronic communication and executed or adopted by a person with the intent to sign the electronic communication. |
| |
“Special Resolution” | | the meaning given to it in the Companies Act and includes a unanimous written resolution. |
| | |
| |
“Statutes” | | the Companies Act and every other laws and regulations of the Cayman Islands for the time being in force concerning companies and affecting the Company. |
| |
“year” | | calendar year. |
2. | In these Articles, save where the context requires otherwise:
|
| (a) | words importing the singular number shall include the plural number and vice versa;
|
| (b) | words importing the masculine gender only shall include the feminine gender;
|
| (c) | words importing persons only shall include companies or associations or bodies of persons, whether corporate or not;
|
| (d) | “MAY” shall be construed as permissive and “SHALL” shall be construed as imperative;
|
| (e) | a reference to a dollar or dollars (or $) is a reference to dollars of the United States;
|
| (f) | references to a statutory enactment shall include reference to any amendment or re-enactment thereof for the time being in force;
|
| (g) | any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms; and
|
| (h) | Section 8 of the Electronic Transactions Act (Revised) shall not reply.
|
3. | Subject to the last two preceding Articles, any words defined in the Companies Act shall, if not inconsistent with the subject or context, bear the same meaning in these Articles.
|
PRELIMINARY
4. | The business of the Company may be conducted as the Directors see fit.
|
5. | The registered office of the Company shall be at such address in the Cayman Islands as the Directors shall from time to time determine. The Company may in addition establish and maintain such other offices and places of business and agencies in such places as the Directors may from time to time determine.
|
ISSUE OF SHARES
6. | Subject to the provisions, if any, in the Memorandum of Association, these Articles and to any direction that may be given by the Company in a general meeting, the Directors may, in their absolute discretion and without approval of the existing Members, issue shares, grant rights over existing shares or issue other securities in one or more series as they deem necessary and appropriate and determine designations, powers, preferences, privileges and other rights, including dividend rights, conversion rights, terms of redemption and liquidation preferences, any or all of which may be greater than the powers and rights associated with the shares held by existing Members, at such times and on such other terms as they think proper. The Company shall not issue shares in bearer form.
|
7. | The Directors may provide, out of the unissued shares, for series of preferred shares. Before any preferred shares of any such series are issued, the Directors shall fix, by resolution or resolutions, the following provisions of the preferred shares thereof:
|
| (a) | the designation of such series, the number of preferred shares to constitute such series and the subscription price thereof if different from the par value thereof;
|
| (b) | whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be general or limited;
|
| (c) | the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any shares of any other class or any other series of preferred shares;
|
| (d) | whether the preferred shares of such series shall be subject to redemption by the Company, and, if so, the times, prices and other conditions of such redemption;
|
| (e) | the amount or amounts payable upon preferred shares of such series upon, and the rights of the holders of such series in, a voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Company;
|
| (f) | whether the preferred shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the preferred shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;
|
| (g) | whether the preferred shares of such series shall be convertible into, or exchangeable for, shares of any other class or any other series of preferred shares or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange;
|
| (h) | the limitations and restrictions, if any, to be effective while any preferred shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Company of, the existing shares or shares of any other class of shares or any other series of preferred shares;
|
| (i) | the conditions or restrictions, if any, upon the creation of indebtedness of the Company or upon the issue of any additional shares, including additional shares of such series or of any other class of shares or any other series of preferred shares; and
|
| (j) | any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof.
|
Without limiting the foregoing and subject to Article 82, the voting powers of any series of preferred shares may include the right, in the circumstances specified in the resolution or resolutions providing for the issuance of such preferred shares, to elect one or more Directors who shall serve for such term and have such voting powers as shall be stated in the resolution or resolutions providing for the issuance of such preferred shares. The term of office and voting powers of any Director elected in the manner provided in the immediately preceding sentence of this Article 7 may be greater than or less than those of any other Director or class of Directors.
8. | The powers, preferences and relative, participating, optional and other special rights of each series of preferred shares, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. All shares of any one series of preferred shares shall be identical in all respects with all other shares of such series, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon shall be cumulative.
|
REGISTER OF MEMBERS AND SHARE CERTIFICATES
9. | The Company shall maintain a Register of its Members and a Member shall only be entitled to a share certificate if the Directors resolve that share certificates shall be issued. Share certificates (if any) shall specify the share or shares held by that person and the amount paid up thereon, provided that in respect of a
|
| share or shares held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all. All certificates for shares shall be delivered personally or sent through the post addressed to the Member entitled thereto at the Member’s registered address as appearing in the register. |
10. | All share certificates shall bear legends required under the applicable laws, including the Securities Act.
|
11. | Any two or more certificates representing shares of any one class held by any Member may at the Member’s request be cancelled and a single new certificate for such shares issued in lieu on payment (if the Directors shall so require) of US$1.00 or such smaller sum as the Directors shall determine.
|
12. | If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed, a new certificate representing the same shares may be issued to the relevant Member upon request subject to delivery up of the old certificate or (if alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity and the payment of out-of-pocket expenses of the Company in connection with the request as the Directors may think fit.
|
13. | In the event that shares are held jointly by several persons, any request may be made by any one of the joint holders and if so made shall be binding on all of the joint holders.
|
TRANSFER OF SHARES
14. (a) | Shares are transferable subject to the approval of the Board or the written consent of a Director authorized by the Board in writing to approve share transfers (excluding shares that are listed on a Designated Stock Exchange) and the Board may, in its sole discretion, decline to register any transfer of any share which is not fully paid up or on which the Company has a lien.
|
(b) | The Directors may also decline to register any transfer of any share unless:
|
| (i) | the instrument of transfer is lodged with the Company, accompanied by the certificate for the shares to which it relates and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer;
|
| (ii) | the instrument of transfer is in respect of only one class of shares;
|
| (iii) | the instrument of transfer is properly stamped, if required;
|
| (iv) | in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred does not exceed four;
|
| (v) | the shares conceded are free of any lien in favor of us; or
|
| (vi) | a fee of such maximum sum as the Designated Stock Exchange(s) may determine to be payable, or such lesser sum as the Board may from time to time require, is paid to the Company in respect thereof.
|
| (c) | If the Directors refuse to register a transfer they shall, within two months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.
|
| (d) | Notwithstanding Articles 14(a) to (c) above, transfers of shares which are listed on The Stock Exchange of Hong Kong Limited may be effected by any method of transferring or dealing in securities permitted by the Listing Rules and which has been approved by the Board for such purpose.
|
15. | The registration of transfers may, on 14 days’ notice being given by advertisement in such one or more newspapers or by electronic means, be suspended and the register closed at such times and for such periods as the Board may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.
|
16. | The instrument of transfer of any share shall be in writing and executed by or on behalf of the transferor (and if the Directors so require, signed by the transferee). The transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the Register of Members.
|
17. | All instruments of transfer that shall be registered shall be retained by the Company.
|
REDEMPTION AND PURCHASE OF OWN SHARES
18. | Subject to the provisions of the Statutes and these Articles, the Company may:
|
| (a) | issue shares on terms that they are to be redeemed or are liable to be redeemed at the option of the Company or the Member and the redemption of shares shall be effected on such terms and in such manner as the Board may, before the issue of such shares, determine;
|
| (b) | purchase its own shares (including any redeemable shares) provided that the manner of purchase have been approved by the board of Directors or by Ordinary Resolution of the Members or the manner of purchase is in accordance with the Articles 19 and 20 (this authorization is in accordance with section 37(2) of the Statutes or any modification or re-enactment thereof for the time being in force); and
|
| (c) | the Company may make a payment in respect of the redemption or purchase of its own shares in any manner permitted by the Statutes, including out of capital.
|
19. | Purchase of shares listed on a Designated Stock Exchange: the Company is authorised to purchase any share listed on a Designated Stock Exchange in accordance with the following manner of purchase:
|
| (a) | the maximum number of shares that may be repurchased shall be equal to the number of issued and outstanding shares less one share; and
|
| (b) | the repurchase shall be at such time; at such price and on such other terms as determined and agreed by the Board in their sole discretion provided however that:
|
| (i) | such repurchase transactions shall be in accordance with the relevant code, rules and regulations applicable to the listing of the shares on the Designated Stock Exchange; and
|
| (ii) | at the time of the repurchase, the Company is able to pay its debts as they fall due in the ordinary course of its business.
|
20. | Purchase of shares not listed on a Designated Stock Exchange: the Company is authorised to purchase any shares not listed on a Designated Stock Exchange in accordance with the following manner of purchase:
|
| (a) | the Company shall serve a repurchase notice in a form approved by the Board on the Member from whom the shares are to be repurchased at least two Business Days prior to the date specified in the notice as being the repurchase date;
|
| (b) | the price for the shares being repurchased shall be such price agreed between the Board and the applicable Member;
|
| (c) | the date of repurchase shall be the date specified in the repurchase notice; and
|
| (d) | the repurchase shall be on such other terms as specified in the repurchase notice as determined and agreed by the Board and the applicable Member in their sole discretion.
|
21. | The redemption or purchase of any share shall not be deemed to give rise to the redemption or purchase of any other share and the Company is not obligated to purchase any other share other than as may be required pursuant to applicable law and any other contractual obligations of the Company.
|
22. | The holder of the shares being purchased shall be bound to deliver up to the Company the certificate(s) (if any) thereof for cancellation and thereupon the Company shall pay to him the purchase or redemption monies or consideration in respect thereof.
|
VARIATION OF RIGHTS ATTACHING TO SHARES
23. | If at any time the share capital is divided into different classes or series of shares, the rights attaching to any class or series (unless otherwise provided by the terms of issue of the shares of that class or series) may, subject to these Articles, be varied or abrogated with the consent in writing of the holders of two-thirds of the issued shares of that class or series or with the sanction of a Special Resolution passed at a general meeting of the holders of the shares of that class or series.
|
24. | The provisions of these Articles relating to general meetings shall apply to every such general meeting of the holders of one class or series of shares except the following:
|
| (a) | separate general meetings of the holders of a class or series of shares may be called only by (i) the Chairman of the Board, or (ii) a majority of the entire Board of Directors (unless otherwise specifically provided by the terms of issue of the shares of such class or series). Nothing in this Article 24 or Article 23 shall be deemed to give any Member or Members the right to call a class or series meeting.
|
| (b) | the necessary quorum shall be one or more persons holding or representing by proxy at least one-tenth of the issued shares of the class or series and that any holder of shares of the class or series present in person or by proxy may demand a poll.
|
25. | The rights conferred upon the holders of the shares of any class or series shall not, unless otherwise expressly provided by the terms of issue of the shares of that class or series, be deemed to be varied by the creation or issue of further shares ranking in priority thereto or pari passu therewith.
|
COMMISSION ON SALE OF SHARES
26. | The Company may in so far as the Statutes from time to time permit pay a commission to any person in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any shares of the Company. Such commissions may be satisfied by the payment of cash or the lodgement of fully or partly paid-up shares or partly in one way and partly in the other. The Company may also on any issue of shares pay such brokerage as may be lawful.
|
NON-RECOGNITION OF TRUSTS
27. | No person shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future, or partial interest in any share, or any interest in any fractional part of a share, or (except only as is otherwise provided by these Articles or the Statutes) any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.
|
LIEN ON SHARES
28. | The Company shall have a first and paramount lien and charge on all shares (whether fully paid-up or not) registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Member or his estate, either alone or jointly with any other person, whether a Member or not, but the Directors may at any time declare any share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such share shall operate as a waiver of the Company’s lien (if any) thereon. The Company’s lien (if any) on a share shall extend to all dividends or other monies payable in respect thereof.
|
29. | The Company may sell, in such manner as the Directors think fit, any shares on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of 14 calendar days after a notice in writing, stating and demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the share, or the persons entitled thereto by reason of his death or bankruptcy.
|
30. | For giving effect to any such sale the Directors may authorise some person to transfer the shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the shares comprised in any such transfer and he shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.
|
31. | The proceeds of the sale shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable, and the residue shall (subject to a like lien for sums not presently payable as existed upon the shares prior to the sale) be paid to the person entitled to the shares at the date of the sale.
|
CALLS ON SHARES
32. | Subject to the terms of allotment, the Directors may from time to time make calls upon the Members in respect of any money unpaid on their shares, and each Member shall (subject to receiving at least 14 calendar days notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on his shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed.
|
33. | The joint holders of a share shall be jointly and severally liable to pay calls in respect thereof.
|
34. | If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest upon the sum at the rate of eight percent per annum from the day appointed for the payment thereof to the time of the actual payment, but the Directors shall be at liberty to waive payment of that interest wholly or in part.
|
35. | The provisions of these Articles as to the liability of joint holders and as to payment of interest shall apply in the case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the amount of the share, or by way of premium, as if the same had become payable by virtue of a call duly made and notified.
|
36. | The Directors may make arrangements on the issue of shares for a difference between the Members, or the particular shares, in the amount of calls to be paid and in the times of payment.
|
37. | The Directors may, if they think fit, receive from any Member willing to advance the same all or any part of the monies uncalled and unpaid upon any shares held by him, and upon all or any of the monies so advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate (not exceeding without the sanction of an Ordinary Resolution, eight percent per annum) as may be agreed upon between the Member paying the sum in advance and the Directors. No such sum paid in advance of calls shall entitle the Member paying such sum to any portion of a dividend declared in respect of any period prior to the date upon which such sum would, but for such payment, become presently payable.
|
FORFEITURE OF SHARES
38. | If a Member fails to pay any call or instalment of a call on the day appointed for payment thereof, the Directors may, at any time thereafter during such time as any part of such call or instalment remains unpaid, serve a notice on him requiring payment of such much of the call or instalment as is unpaid, together with any interest which may have accrued.
|
39. | The notice shall name a further day (not earlier than the expiration of 14 calendar days from the date of the notice) on or before which the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time appointed the shares in respect of which the call was made will be liable to be forfeited.
|
40. | If the requirements of any such notice as aforesaid are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by notice has been made, be forfeited by a resolution of the Directors to that effect.
|
41. | A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the Directors think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the Directors think fit.
|
42. | A person whose shares have been forfeited shall cease to be a Member in respect of the forfeited shares, but shall, notwithstanding, remain liable to pay to the Company all monies which at the date of forfeiture were payable by him to the Company in respect of the shares, but his liability shall cease if and when the Company receives payment in full of the fully paid up amount of the shares.
|
43. | A certificate in writing under the hand of a Director of the Company, which certifies that a share has been forfeited on a date stated in the certificate, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. The Company may receive the consideration, if any, given for the share or any sale or disposition thereof and may execute a transfer of the share in favour of the person to whom the share is sold or disposed of and he shall thereupon be registered as the holder of the share, and shall not be bound to see to the application of the purchase money, if any, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.
|
44. | The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which by the terms of issue of a share becomes due and payable, whether on account of the amount of the share, or by way of premium, as if the same had been payable by virtue of a call duly made and notified.
|
REGISTRATION OF EMPOWERING INSTRUMENTS
45. | The Company shall be entitled to charge a fee not exceeding one dollar (US$1.00) on the registration of every probate, letters of administration, certificate of death or marriage, power of attorney, notice in lieu of distringas, or other instrument.
|
TRANSMISSION OF SHARES
46. | The legal personal representative of a deceased sole holder of a share shall be the only person recognised by the Company as having any title to the share. In the case of a share registered in the name of two or more holders, the survivors or survivor, or the legal personal representatives of the deceased survivor, shall be the only person recognised by the Company as having any title to the share.
|
47. | Any person becoming entitled to a share in consequence of the death or bankruptcy of a Member shall upon such evidence being produced as may from time to time be properly required by the Directors, have the right either to be registered as a Member in respect of the share or, instead of being registered himself, to make such transfer of the share as the deceased or bankrupt person could have made. If the person so becoming entitled shall elect to be registered himself as holder he shall deliver or send to the Company a notice in writing signed by him stating that he so elects.
|
48. | A person becoming entitled to a share by reason of the death or bankruptcy of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder
|
| of the share, except that he shall not, before being registered as a Member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company, provided however, that the Directors may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within 90 calendar days, the Directors may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the share until the requirements of the notice have been complied with. |
ALTERATION OF CAPITAL
49. | The Company may by Ordinary Resolution:
|
| (a) | increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe;
|
| (b) | consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;
|
| (c) | sub-divide its existing shares or any of them into shares of a smaller amount provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived;
|
| (d) | cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.
|
50. | Subject to the provisions of the Statutes and these Articles as regards to the matters to be dealt with by Ordinary Resolution, the Company may by Special Resolution reduce its share capital and any capital redemption reserve in any manner authorized by law.
|
51. | All new shares created hereunder shall be subject to the same provisions with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the shares in the original share capital.
|
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
52. | For the purpose of determining those Members that are entitled to receive notice of, attend or vote at any meeting of Members or any adjournment thereof, or those Members that are entitled to receive payment of any dividend, or in order to make a determination as to who is a Member for any other purpose, the Directors may provide that the Register of Members shall be closed for transfers for a stated period but not to exceed in any case 30 calendar days. If the Register of Members shall be so closed for the purpose of determining those Members that are entitled to receive notice of, attend or vote at a meeting of Members such register shall be so closed for at least 10 calendar days immediately preceding such meeting and the record date for such determination shall be the date of the closure of the Register of Members.
|
53. | In lieu of or apart from closing the Register of Members, the Directors may fix in advance a date as the record date for any such determination of those Members that are entitled to receive notice of, attend or vote at a meeting of the Members and for the purpose of determining those Members that are entitled to receive payment of any dividend, the Directors may, at or within 90 calendar days prior to the date of declaration of such dividend fix a subsequent date as the record date of such determination.
|
54. | If the Register of Members is not so closed and no record date is fixed for the determination of those Members entitled to receive notice of, attend or vote at a meeting of Members or those Members that are entitled to receive payment of a dividend, the date on which notice of the meeting is posted or the date on which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Members. When a determination of those Members that are entitled to receive notice of, attend or vote at a meeting of Members has been made as provided in this section, such determination shall apply to any adjournment thereof.
|
GENERAL MEETINGS
55. | All general meetings of the Company other than annual general meetings shall be called extraordinary general meetings.
|
56. (a) | The Company shall hold an annual general meeting every year and shall specify the meeting as such in the notices calling it. The annual general meeting shall be held at such time and place as the Directors shall determine, provided that not more than 15 months should elapse between the date of one annual general meeting of the Company and the next.
|
(b) | At these meetings the report of the Directors (if any) shall be presented.
|
57. (a) | The Directors may call general meetings, and they shall on a Members requisition forthwith proceed to convene an extraordinary general meeting of the Company.
|
(b) | A Members requisition is a requisition of Members of the Company holding at the date of deposit of the requisition not less than one-tenth of the share capital of the Company as at that date carries the right of voting at general meetings of the Company.
|
(c) | The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the principal place of business of the Company (with a copy forwarded to the registered office), and may consist of several documents in like form each signed by one or more requisitionists.
|
(d) | If the Directors do not within 21 calendar days from the date of the deposit of the requisition duly proceed to convene a general meeting to be held within a further 21 calendar days, the requisitionists, or any of them representing more than one half of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened shall not be held after the expiration of three months after the expiration of the second said 21 calendar days.
|
(e) | A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors.
|
NOTICE OF GENERAL MEETINGS
58. | At least 14 calendar days’ notice shall be given for any general meeting. Every notice shall be exclusive of the day on which it is given or deemed to be given and of the day for which it is given and shall specify the place, the day and the hour of the meeting and the general nature of the business and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this regulation has been given and whether or not the provisions of these Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed:
|
| (a) | in the case of an annual general meeting by all the Members (or their proxies) entitled to attend and vote thereat; and
|
| (b) | in the case of an extraordinary general meeting by a majority in number of the Members (or their proxies) having a right to attend and vote at the meeting, being a majority together holding not less than ninety five percent in par value of the shares giving that right.
|
59. | The accidental omission to give notice of a meeting to or the non-receipt of a notice of a meeting by any Member shall not invalidate the proceedings at any meeting.
|
PROCEEDINGS AT GENERAL MEETINGS
60. | No business shall be transacted at any general meeting unless a quorum of Members is present at the time when the meeting proceeds to business. One or more Members holding not less than an aggregate of
|
| one-tenth of all voting share capital of the Company in issue present in person or by proxy and entitled to vote shall be a quorum for all purposes. |
61. | If provided for by the Company, a person may participate at a general meeting by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting.
|
62. | If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Members, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week, at the same time and place, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the meeting shall be dissolved.
|
63. | The Chairman of the Board of Directors shall preside as chairman at every general meeting of the Company.
|
64. | If at any meeting the Chairman of the Board of Directors is not present within fifteen minutes after the time appointed for holding the meeting or is unwilling to act as chairman, the Directors present shall elect one of their members to be chairman of the meeting, or, if no Director is so elected and willing to be chairman of the meeting, the Members present shall choose a chairman of the meeting.
|
65. | The chairman may with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting) adjourn a meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting is adjourned for 10 calendar days or more, not less than 14 calendar days’ notice of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
|
66. | At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by one or more Members present in person or by proxy entitled to vote, and unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, that resolution.
|
67. | If a poll is duly demanded it shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn.
|
68. | In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall be entitled to a second or casting vote.
|
69. | A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time as the chairman of the meeting directs.
|
VOTES OF MEMBERS
70. | Where any member is, under the Listing Rules, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such member whether by proxy or, as the case may be corporate representative in contravention of such requirement whether or restriction shall not be counted.
|
71. | Subject to any rights and restrictions for the time being attached to any class or classes of shares, every Member present in person and every person representing a Member by proxy at a general meeting of the Company shall have one vote for each share registered in his name in the Register of Members.
|
72. | In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.
|
73. | A Member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, or other person in the nature of a committee appointed by that court, and any such committee or other person, may on a poll, vote by proxy.
|
74. | No Member shall be entitled to vote at any general meeting unless all calls or other sums presently payable by him in respect of shares in the Company have been paid.
|
75. | On a poll, votes may be given either personally or by proxy.
|
76. | The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorized. A proxy need not be a Member of the Company.
|
77. | An instrument appointing a proxy may be in any usual or common form or such other form as the Directors may approve. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.
|
78. | The instrument appointing a proxy shall be deposited at the registered office or at such other place as is specified for that purpose in the notice convening the meeting, or in any instrument of proxy sent out by the Company:
|
| (a) | not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or
|
| (b) | in the case of a poll taken more than 48 hours after it is demanded, be deposited as aforesaid after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll; or
|
| (c) | where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded, be delivered at the meeting at which the poll was demanded to the chairman or to the secretary or to any Director;
|
provided that the Directors may in the notice convening the meeting, or in an instrument of proxy sent out by the Company, direct that the instrument appointing a proxy may be deposited (no later than the time for holding the meeting or adjourned meeting) at the registered office or at such other place as is specified for that purpose in the notice convening the meeting, or in any instrument of proxy sent out by the Company. The chairman may in any event at his discretion direct that an instrument of proxy shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted shall be invalid.
79. | Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the share in respect of which the proxy is given unless notice in writing of such death, insanity, revocation or transfer was received by the Company before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.
|
CORPORATIONS ACTING BY REPRESENTATIVES AT MEETING
80. | Any corporation which is a Member may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members, and the person so authorized shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Member.
|
CLEARING HOUSES
81. | If a clearing house (or its nominee) is a Member of the Company it may, by resolution of its directors or other governing body or by power of attorney, authorise such person or persons as it thinks fit to act as its representative or representatives at any general meeting of the Company or at any general meeting of any class of Members of the Company provided that, if more than one person is so authorized, the authorisation shall specify the number and class of shares in respect of which each such person is so authorized. A person so authorized pursuant to this provision shall be entitled to exercise the same powers on behalf of the clearing house (or its nominee) which he represents as that clearing house (or its nominee) could exercise if it were an individual Member of the Company holding the number and class of shares specified in such authorisation.
|
DIRECTORS
82. (a) | Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than one or more than ten Directors. The Directors shall be elected or appointed in the first instance by the subscribers to the Memorandum of Association or by a majority of them and thereafter by the Members at general meeting.
|
(b) | Commencing at, and following on from, the annual general meeting of the Company in 2022, each Director shall be elected annually for terms expiring at the next annual general meeting of the Company, at which he or she may be eligible for re-election, until his or her earlier death, resignation or removal.
|
(c) | The Board of Directors shall have a Chairman (the “Chairman”) elected and appointed by a majority of the Directors then in office. The Directors may also elect a Co-Chairman or a Vice-Chairman of the Board of Directors (the “Co-Chairman”). The Chairman shall preside as chairman at every meeting of the Board of Directors. To the extent the Chairman is not present at a meeting of the Board of Directors, the Co-Chairman, or in his absence, the attending Directors may choose one Director to be the chairman of the meeting. The Chairman’s voting right as to the matters to be decided by the Board of Directors shall be the same as other Directors.
|
(d) | The Company may by Ordinary Resolution elect any person to be a Director either to fill a casual vacancy on the Board or as an addition to the existing Board.
|
(e) | The Directors by the affirmative vote of a simple majority of the remaining Directors present and voting at a Board meeting or the sole remaining Director, shall have the power from time to time and at any time to appoint any person nominated by a unanimous decision of the nominating committee of the Board to serve as a Director to fill a casual vacancy on the Board or as an addition to the existing Board, subject to the Company’s compliance with director nomination procedures required under applicable corporate governance rules of the Designated Stock Exchange(s), as long as the Company’s securities are traded on a Designated Stock Exchange.
|
83. | Subject to Article 82, a Director may be removed from office by Ordinary Resolution or by the Board at any time before the expiration of his term.
|
84. | A vacancy on the Board created by the removal of a Director under the provisions of Article 83 above may be filled by the election or appointment by Ordinary Resolution at the meeting at which such Director is removed or by the affirmative vote of a simple majority of the remaining Directors present and voting at a Board meeting, provided that any such individual appointed to fill such vacancy has been nominated by a unanimous decision of the nominating committee of the Board.
|
85. | The Board may, from time to time, and except as required by applicable law or the listing rules of the Designated Stock Exchange(s) where the Company’s securities are traded, adopt, institute, amend, modify or revoke the corporate governance policies or initiatives, which shall be intended to set forth the policies of the Company and the Board on various corporate governance related matters as the Board shall determine by resolution from time to time.
|
86. | A Director shall not be required to hold any shares in the Company by way of qualification. A Director who is not a Member of the Company shall nevertheless be entitled to receive notice of and to attend and speak at general meetings of the Company and all classes of shares of the Company.
|
DIRECTORS’ FEES AND EXPENSES
87. | The Directors may receive such remuneration as the Board may from time to time determine. The Directors may be entitled to be repaid all travelling, hotel and incidental expenses reasonably incurred or expected to be incurred by him in attending meetings of the Board or committees of the Board or general meetings or separate meetings of any class of shares or of debentures of the Company or otherwise in connection with the discharge of his duties as a Director.
|
88. | Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs services which in the opinion of the Board go beyond the ordinary duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration provided for by or pursuant to any other Article.
|
ALTERNATE DIRECTOR
89. | Any Director may in writing appoint another person to be his alternate to act in his place at any meeting of the Directors at which he is unable to be present. Every such alternate shall be entitled to notice of meetings of the Directors and to attend and vote thereat as a Director when the person appointing him is not personally present and, where he is a Director, to have a separate vote on behalf of the Director he is representing in addition to his own vote. A Director may at any time in writing revoke the appointment of an alternate appointed by him. Such alternate shall be deemed for all purposes to be a Director and shall not be deemed to be the agent of the Director appointing him. An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director.
|
90. | Any Director may appoint any person, whether or not a Director, to be the proxy of that Director to attend and vote on his behalf, in accordance with instructions given by that Director, or in the absence of such instructions at the discretion of the proxy, at a meeting or meetings of the Directors which that Director is unable to attend personally. The instrument appointing the proxy shall be in writing under the hand of the appointing Director and shall be in any usual or common form or such other form as the Directors may approve, and must be lodged with the chairman of the meeting at which such proxy is to be used, or first used, prior to the commencement of the meeting.
|
POWERS AND DUTIES OF DIRECTORS
91. | Subject to the provisions of the Companies Act, these Articles and to any resolutions made in a general meeting, the business of the Company shall be managed by the Directors, who may pay all expenses incurred in setting up and registering the Company and may exercise all powers of the Company. No resolution made by the Company in a general meeting shall invalidate any prior act of the Directors that would have been valid if that resolution had not been made.
|
92. | Subject to these Articles, the Directors may from time to time appoint any person, whether or not a Director of the Company, to hold such office in the Company as the Directors may think necessary for the administration of the Company, including without prejudice to the foregoing generality, the office of the Chief Executive Officer, Chief Operating Officer, Chief Technology Officer, Chief Financial Officer, one or more Vice Presidents, Manager or Controller, and for such term and at such remuneration (whether by way of salary or commission or participation in profits or partly in one way and partly in another), and with such powers and duties as the Directors may think fit. The Directors may also appoint one or more of their body (but not an alternate Director) to the office of Managing Director upon like terms, but any such appointment shall ipso facto determine if any Managing Director ceases from any cause to be a Director, or if the Company by Ordinary Resolution resolves that his tenure of office be terminated.
|
93. | The Directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the Directors.
|
94. | The Directors may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Directors may think fit, and may also authorise any such attorney to delegate all or any of the powers, authorities and discretion vested in him.
|
95. | The Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and the provisions contained in the following paragraphs shall be without prejudice to the general powers conferred by this paragraph.
|
96. | The Directors from time to time and at any time may establish any committees, local boards or agencies for managing any of the affairs of the Company and may appoint any persons to be members of such committees or local boards and may appoint any managers or agents of the Company and may fix the remuneration of any of the aforesaid.
|
97. | The Directors from time to time and at any time may delegate to any such committee, local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorise the members for the time being of any such local board, or any of them to fill up any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any person so appointed and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby.
|
98. | Any such delegates as aforesaid may be authorised by the Directors to sub-delegate all or any of the powers, authorities, and discretions for the time being vested to them.
|
99. | The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party.
|
DISQUALIFICATION OF DIRECTORS
100. | Notwithstanding anything in these Articles, the office of Director shall be vacated, if the Director:
|
| (a) | dies, becomes bankrupt or makes any arrangement or composition with his creditors;
|
| (b) | is found to be or becomes of unsound mind;
|
| (c) | resigns his office by notice in writing to the Company; or
|
| (d) | shall be removed from office pursuant to Articles 82 or 83 or the Statutes.
|
PROCEEDINGS OF DIRECTORS
101. | The Directors may meet together (whether within or outside the Cayman Islands) for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit.
|
102. | A Board meeting may be called by a Director by giving notice in writing to the Board specifying a date, time and agenda for such meeting. The Board shall upon receipt of such notice give a copy of such notice of such meeting to all Directors and their respective alternates (if any).
|
103. (a) | At least one (1) Business Day notice shall be given to all Directors and their respective alternates (if any) for a Board meeting, provided that such notice period may be reduced or waived with the consent of all the Directors or their respective alternates (if any).
|
(b) | An agenda identifying in reasonable detail the issues to be considered by the Directors at any such meeting and copies (in printed or electronic form) of any relevant papers to be discussed at the meeting together with all relevant information shall be provided to and received by all Directors and their alternates (if any) at least one (1) Business Day prior to the date for such meeting. The agenda for each meeting shall include any matter submitted to the Company by any Director at least one (1) Business Day prior to the date for such meeting.
|
(c) | Unless approved by all Directors (whether or not present or represented at such meeting), matters not set out in the agenda need not be considered at a Board meeting.
|
104. | A Director or Directors may participate in any meeting of the Board of Directors, or of any committee appointed by the Board of Directors of which such Director or Directors are members, by means of conference telephone, video conference or similar communication equipment by way of which all persons participating in such meeting can hear each other and such participation shall be deemed to constitute presence in person at the meeting.
|
105. | The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed shall be a majority of the members of the Board of Directors , provided that a Director and his appointed alternate Director shall be considered only one person for this purpose.
|
106. | If a quorum is not present at a Board meeting within thirty (30) minutes following the time appointed for such Board meeting, the relevant meeting shall be adjourned for a period of at least three (3) Business Days and the presence of any three (3) Directors shall constitute a quorum at such adjourned meeting. A meeting of the Directors at which a quorum is present when the meeting proceeds to business shall be competent to exercise all powers and discretions for the time being exercisable by the Directors.
|
107. | Questions arising at any meeting of the Directors shall be decided by a majority of votes and each Director shall be entitled to one (1) vote in deciding matters deliberated at any meeting of the Directors.
|
108. | A Director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the Company shall declare the nature of his interest at a meeting of the Directors. A general notice given to the Directors by any Director to the effect that he is a member of any specified company or firm and is to be regarded as interested in any contract which may thereafter be made with that company or firm
|
| shall be deemed a sufficient declaration of interest in regard to any contract so made. A Director may vote in respect of any contract or proposed contract or arrangement notwithstanding that he may be interested therein and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of the Directors at which any such contract or proposed contract or arrangement shall come before the meeting for consideration. |
109. | A Director may hold any other office or place of profit under the Company (other than the office of auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine and no Director or intending Director shall be disqualified by his office from contracting with the Company either with regard to his tenure of any such other office or place of profit or as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any Director is in any way interested, be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established. A Director, notwithstanding his interest, may be counted in the quorum present at any meeting whereat he or any other Director is appointed to hold any such office or place of profit under the Company or whereat the terms of any such appointment are arranged and he may vote on any such appointment or arrangement.
|
110. | Any Director may act by himself or his firm in a professional capacity for the Company, and he or his firm shall be entitled to remuneration for professional services as if he were not a Director; provided that nothing herein contained shall authorise a Director or his firm to act as auditor to the Company.
|
111. | The Directors shall cause minutes to be made in books or loose-leaf folders provided for the purpose of recording:
|
| (a) | all appointments of officers made by the Directors;
|
| (b) | the names of the Directors present at each meeting of the Directors and of any committee of the Directors; and
|
| (c) | all resolutions and proceedings at all meetings of the Company, and of the Directors and of committees of Directors.
|
112. | When the chairman of a meeting of the Directors signs the minutes of such meeting, the same shall be deemed to have been duly held notwithstanding that all the Directors have not actually come together or that there may have been a technical defect in the proceedings.
|
113. | A resolution signed by all the Directors shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and constituted and when signed, a resolution may consist of several documents each signed by one or more of the Directors.
|
114. | The continuing Directors may act, notwithstanding any vacancy in their body, but if their number is reduced below the number fixed pursuant to these Articles as the necessary quorum of Directors, then the continuing Directors may act only to increase the number or to summon a general meeting of the Company, but for no other purpose.
|
115. | A committee appointed by the Directors may elect a chairman of its meetings. If no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the members present may choose one of their number to be chairman of the meeting.
|
116. | A committee appointed by the Directors may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the committee members present and in case of an equality of votes the chairman shall have a second or casting vote.
|
117. | All acts done by any meeting of the Directors or of a committee of Directors, or by any person acting as a Director, shall notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such Director or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director.
|
PRESUMPTION OF ASSENT
118. | A Director who is present at a meeting of the Board of Directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the chairman or secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favour of such action.
|
DIVIDENDS, DISTRIBUTIONS AND RESERVE
119. | Subject to any rights and restrictions for the time being attached to any class or classes of shares and these Articles, the Directors may from time to time declare dividends (including interim dividends) and other distributions on shares in issue and authorise payment of the same out of the funds of the Company lawfully available therefor.
|
120. | Subject to any rights and restrictions for the time being attached to any class or classes of shares and these Articles, the Company by Ordinary Resolution may declare dividends, but no dividend shall exceed the amount recommended by the Directors.
|
121. | The Directors may, before recommending or declaring any dividend, set aside out of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall, at the discretion of the Directors, be applicable for meeting contingencies, or for equalising dividends or for any other purpose to which those funds may be properly applied and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments (other than shares of the Company) as the Directors may from time to time think fit.
|
122. | Any dividend may be paid by cheque or wire transfer to the registered address of the Member or person entitled thereto, or in the case of joint holders, to any one of such joint holders at his registered address or to such person and such address as the Member or person entitled, or such joint holders as the case may be, may direct. Every such cheque shall be made payable to the order of the person to whom it is sent or to the order of such other person as the Member or person entitled, or such joint holders as the case may be, may direct.
|
123. | The Directors when paying dividends to the Members in accordance with the foregoing provisions may make such payment either in cash or in specie.
|
124. | No dividend shall be paid otherwise than out of profits or, subject to the restrictions of the Companies Act, the share premium account.
|
125. | Subject to the rights of persons, if any, entitled to shares with special rights as to dividends, all dividends shall be declared and paid according to the amounts paid or credited as fully paid on the shares, but if and so long as nothing is paid up on any of the shares in the Company dividends may be declared and paid according to the amounts of the shares. No amount paid on a share in advance of calls shall, while carrying interest, be treated for the purposes of this Article as paid on the share.
|
126. | If several persons are registered as joint holders of any share, any of them may give effectual receipts for any dividend or other monies payable on or in respect of the share.
|
127. | Any dividend unclaimed after a period of six years from the date of declaration of such dividend may be forfeited by the Board of Directors and, if so forfeited, shall revert to the Company.
|
128. | No dividend shall bear interest against the Company.
|
BOOK OF ACCOUNTS
129. | The books of account relating to the Company’s affairs shall be kept in such manner as may be determined from time to time by the Directors.
|
130. | The books of account shall be kept at such place or places as the Directors think fit, and shall always be open to the inspection of the Directors.
|
131. | The Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors, and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by law or authorized by the Directors or by the Company by Ordinary Resolution.
|
132. | Subject to the requirements of applicable law and the listing rules of the Designated Stock Exchange(s), the accounts relating to the Company’s affairs shall be audited in such manner and with such financial year end as may be determined from time to time by the Company by Ordinary Resolution or failing any such determination by the Directors or failing any determination as aforesaid shall not be audited.
|
ANNUAL RETURNS AND FILINGS
133. | The Board shall make the requisite annual returns and any other requisite filings in accordance with the Companies Act.
|
AUDIT
134. | The Directors may appoint an Auditor of the Company who shall hold office until removed from office by a resolution of the Directors and may fix his or their remuneration.
|
135. | Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the auditors.
|
136. | Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an ordinary company, and at the next special meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any time during their term of office, upon request of the Directors at any general meeting of the Members.
|
THE SEAL
137. | The Seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the Board of Directors provided always that such authority may be given prior to or after the affixing of the Seal and if given after may be in general form confirming a number of affixings of the Seal. The Seal shall be affixed in the presence of any one or more persons as the Directors may appoint for the purpose and every person as aforesaid shall sign every instrument to which the Seal of the Company is so affixed in their presence.
|
138. | The Company may maintain a facsimile of its Seal in such countries or places as the Directors may appoint and such facsimile Seal shall not be affixed to any instrument except by the authority of a resolution of the Board of Directors provided always that such authority may be given prior to or after the affixing of such
|
| facsimile Seal and if given after may be in general form confirming a number of affixings of such facsimile Seal. The facsimile Seal shall be affixed in the presence of such person or persons as the Directors shall for this purpose appoint, and such person or persons as aforesaid shall sign every instrument to which the facsimile Seal of the Company is so affixed in their presence. |
139. | Notwithstanding the foregoing, a Director shall have the authority to affix the Seal, or the facsimile Seal, to any instrument for the purposes of attesting authenticity of the matter contained therein but which does not create any obligation binding on the Company.
|
OFFICERS
140. | Subject to Article 92, the Company may have Chief Executive Officer, Chief Operating Officer, Chief Technology Officer, Chief Financial Officer, Company Secretary one or more Vice Presidents, Manager or Controller, appointed by the Directors. The Directors may also from time to time appoint such other officers as they consider necessary, all for such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors from time to time subscribe.
|
CAPITALISATION OF PROFITS
141. | Subject to the Statutes and these Articles, the Board may, with the authority of an Ordinary Resolution:
|
| (a) | resolve to capitalise an amount standing to the credit of reserves (including a share premium account, capital redemption reserve and profit and loss account), whether or not available for distribution;
|
| (b) | appropriate the sum resolved to be capitalised to the Members in proportion to the nominal amount of shares (whether or not fully paid) held by them respectively and apply that sum on their behalf in or towards:
|
| (i) | paying up the amounts (if any) for the time being unpaid on shares held by them respectively; or
|
| (ii) | paying up in full unissued shares or debentures of a nominal amount equal to that sum,
|
and allot the shares or debentures, credited as fully paid, to the Members (or as they may direct) in those proportions, or partly in one way and partly in the other, but the share premium account, the capital redemption reserve and profits which are not available for distribution may, for the purposes of this Article, only be applied in paying up unissued shares to be allotted to Members credited as fully paid;
| (c) | make any arrangements it thinks fit to resolve a difficulty arising in the distribution of a capitalised reserve and in particular, without limitation, where shares or debentures become distributable in fractions the Board may deal with the fractions as it thinks fit;
|
| (d) | authorise a person to enter (on behalf of all the Members concerned) an agreement with the Company providing for either:
|
| (i) | the allotment to the Members respectively, credited as fully paid, of shares or debentures to which they may be entitled on the capitalisation, or
|
| (ii) | the payment by the Company on behalf of the Members (by the application of their respective operations of the reserves resolved to be capitalised) of the amounts or part of the amounts remaining unpaid on their existing shares,
|
an agreement made under the authority being effective and binding on all those Members; and
| (e) | generally do all acts and things required to give effect to the resolution.
|
NOTICES
142. | Except as otherwise provided in these Articles, any notice or document may be served by the Company or by the person entitled to give notice to any Member either personally, by facsimile or by sending it through the post in a prepaid letter or via a recognised courier service, fees prepaid, addressed to the Member at his address as appearing in the Register of Members or, to the extent permitted by all applicable laws and regulations, by electronic means by transmitting it to any electronic number or address or website supplied by the Member to the Company or by placing it on the Company’s Website. In the case of joint holders of a share, all notices shall be given to that one of the joint holders whose name stands first in the Register of Members in respect of the joint holding, and notice so given shall be sufficient notice to all the joint holders.
|
143. | Notices posted to addresses outside the Cayman Islands shall be forwarded by prepaid airmail.
|
144. | Any Member present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting was convened.
|
145. | Any notice or other document, if served by:
|
| (a) | post, shall be deemed to have been served five calendar days after the time when the letter containing the same is posted (in proving such service it shall be sufficient to prove that the letter containing the notice or document was properly addressed and duly posted);
|
| (b) | facsimile, shall be deemed to have been served upon confirmation of receipt;
|
| (c) | recognised courier service, shall be deemed to have been served 48 hours after the time when the letter containing the same is delivered to the courier service and in proving such service it shall be sufficient to prove that the letter containing the notice or documents was properly addressed and duly delivered to the courier; or
|
| (d) | electronic means as provided herein shall be deemed to have been served and delivered on the day following that on which it is successfully transmitted or at such later time as may be prescribed by any applicable laws or regulations.
|
146. | Any notice or document delivered or sent to any Member in accordance with the terms of these Articles shall notwithstanding that such Member be then dead or bankrupt, and whether or not the Company has notice of his death or bankruptcy, be deemed to have been duly served in respect of any share registered in the name of such Member as sole or joint holder, unless his name shall at the time of the service of the notice or document, have been removed from the Register of Members as the holder of the share, and such service shall for all purposes be deemed a sufficient service of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in the share.
|
147. | Notice of every general meeting shall be given to:
|
| (a) | all Members who have supplied to the Company an address for the giving of notices to them;
|
| (b) | every person entitled to a share in consequence of the death or bankruptcy of a Member, who but for his death or bankruptcy would be entitled to receive notice of the meeting; and
|
| (c) | each Director and Alternate Director.
|
No other person shall be entitled to receive notices of general meetings.
INFORMATION
148. | No Member shall be entitled to require discovery of any information in respect of any detail of the Company’s trading or any information which is or may be in the nature of a trade secret or secret process which may relate to the conduct of the business of the Company and which in the opinion of the Board would not be in the interests of the Members of the Company to communicate to the public.
|
149. | The Board shall be entitled to release or disclose any information in its possession, custody or control regarding the Company or its affairs to any of its members including, without limitation, information contained in the Register of Members and transfer books of the Company.
|
INDEMNITY
150. | Every Director (including for the purposes of this Article any Alternate Director appointed pursuant to the provisions of these Articles) and officer of the Company for the time being and from time to time shall be indemnified and secured harmless out of the assets and funds of the Company against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by him in connection with the execution or discharge of his duties, powers, authorities or discretions as a Director or officer of the Company, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by him in defending (whether successfully or otherwise) any civil proceedings concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere.
|
151. | No such Director or officer of the Company shall be liable to the Company for any loss or damage unless such liability arises through the willful neglect or default of such Director or officer.
|
FINANCIAL YEAR
152. | Unless the Directors otherwise prescribe, the financial year of the Company shall end on December 31st in each year and shall begin on January 1st in each year.
|
WINDING UP
153. | Subject to these Articles, if the Company shall be wound up the liquidator may, with the sanction of an Ordinary Resolution of the Company, divide amongst the Members in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories as the liquidator, with the like sanction shall think fit, but so that no Member shall be compelled to accept any shares or other securities whereon there is any liability.
|
AMENDMENT OF MEMORANDUM AND ARTICLES OF ASSOCIATION AND NAME OF COMPANY
154. | The Company may at any time and from time to time by Special Resolution alter or amend these Articles or the Memorandum of Association of the Company, in whole or in part, or change the name of the Company.
|
REGISTRATION BY WAY OF CONTINUATION
155. | The Company may by Special Resolution resolve to be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing. In furtherance of a resolution adopted pursuant to this Article, the Directors may cause an application to be made to the Registrar of Companies to deregister the Company in the Cayman
|
| Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing and may cause all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company. |
ZAI LAB LIMITED BUILDING 1, 4/F JINCHUANG PLAZA 4560 JINKE ROAD PUDONG, SHANGHAI, 201210 P.R. CHINA VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/ZLAB2021 or attend in person You may attend the meeting in person or via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. If you wish to attend the meeting in person, please check the meeting materials for any special requirements for meeting attendance. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D53856-P56193 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY ZAI LAB LIMITED The Board of Directors recommends you vote FOR the following proposals: For Against Abstain 1. A special resolution to consider and approve amending and restating the Fourth Amended and Restated Articles of Association of Zai Lab Limited, or the Current Articles, to provide for the annual election of each of the Company’s directors.[ ][ ][ ] 2. A special resolution to consider and approve amending and restating the Current Articles to reflect changes required or recommended by The Stock Exchange of Hong Kong Limited.[ ][ ][ ] 3. A special resolution to consider and approve that, conditional upon the approval of special resolutions 1 and 2, the Current Articles be amended, restated and replaced in their entirety by the Fifth Amended and Restated Articles of Association in the form attached to the proxy statement as Exhibit A.[ ][ ][ ] 4. An ordinary resolution to ratify the selection of Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu as the Company’s independent auditors for the fiscal year ending December 31, 2021.[ ][ ][ ] NOTE: To transact other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. D53857-P56193 ZAI LAB LIMITED Annual Meeting of Shareholders This proxy is solicited by the Board of Directors The shareholders hereby appoint Samantha Du and F. Ty Edmondson, or either of them, as proxies, each with the power to appoint their substitute, and hereby authorize them to represent and to vote, as designated on the reverse side of this ballot, all of the ordinary shares of ZAI LAB LIMITED that the shareholders are entitled to vote at the Annual Meeting of Shareholders to be held at 8:00 a.m. (Eastern Daylight Time)/8:00 p.m. (China Standard Time) on Thursday, June 24, 2021, at Building 1, 4/F, Denali Room, Jinchuang Plaza, 4560 Jinke Road, Shanghai, China 201210 or online at www.virtualshareholdermeeting.com/ZLAB2021, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Continued and to be signed on reverse side
