Election of Directors

The Board of Directors recommends that shareholdersa vote FOR the election of each nominee.

Overview

The Vericel Board of Directors provides oversight of, and strategic guidance to, our Company’s senior management. The core responsibility of a director is to fulfill his or her duties of care and loyalty and otherwise exercise his or her business judgment in the best interests of the Company and its shareholders. The Board is responsible for overseeing the Company’s officers, including the President and Chief Executive Officer, and for ensuring that management advances the interests of the shareholders through the operation of the Company’s business. The Board recognizes that it is management’s responsibility to carry out the policies and strategies approved by the Board and to manage and carry out the operation of the Company’s business. Our Board is committed to legal and ethical conduct in fulfilling its responsibilities and it expects all directors, as well as officers and employees of the Company, to adhere to Vericel’s Code of Business Conduct and Ethics, a copy of which is available on the Company’s website.

Our Board is committed to the continuous improvement of our corporate governance structure, the principles of enterprise-wide diversity and inclusion, the oversight of our corporate ESG goals and enhancing the composition and effectiveness of the Board itself.

	Recent Governance Enhancements ●  Implementation of enhanced Compensation Clawback Policy, as discussed further on page 44 (2022) ●  Oversight of the completion of an in-depth initiative to evaluate and enhance the Company’s cybersecurity incident response framework and readiness ●  Termination of shareholder rights plan or “poison” pill (2021) ●  Implementation of comprehensive Corporate Governance Guidelines as discussed further on page 10 (2021) ●  Adoption of formal stock ownership guidelines, as discussed further on pages 32 and 44 (2021)
	Board Composition and Effectiveness ●  Added new director with expertise in healthcare operations and payer matters (2021)

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	Diversity & Inclusion ●  Increased gender and racial diversity of Board (2021) ●Approved and evaluated performance against DE&I-related goals as part of executive annual incentive plan, as discussed further on pages 41 and 42 (2021 and 2022)
	ESG Oversight ●  Oversaw the creation and publication of Vericel’s inaugural ESG report highlighting our Company’s commitment to incorporating ESG principles into our everyday business activities (2022) ●  Designated the Governance and Nominating Committee to oversee management of ESG-related matters, as discussed further on page 27 (2022)

Our Company’s Bylaws provide that the Board of Directors will consist of not less than five nor more than nine members, as fixed from time-to-time by a resolution of the Board, of Directors, and that all directors will be elected annually. The Board of Directors currently consists of seven (7)eight (8) directors. The persons named below as nominees for director will, if elected, each serve a term of one year expiring at the 20222024 annual meeting of shareholders or until their successors are elected and qualified.

Vote Required

The affirmative vote of a plurality of the total shares of common stock entitled to vote and be represented in person or by proxy is required for the election of each of the nominees. It is the intention of the persons named as proxies to vote such proxy FOR the election of all nominees, unless otherwise directed by the shareholder. The Board of Directors knows of no reason why any of the nominees would be unable or unwilling to serve, but if any nominee should for any reason be unable or unwilling to serve, the proxies will be voted for the election of such other person for the office of director as the Board of Directors may recommend in the place of such nominee.

Shares present or represented and not so marked as to withhold authority to vote for a particular nominee will be voted in favor of a particular nominee and will be counted toward such nominee’s achievement of a plurality. Shares present at the meeting or represented by proxy where the shareholder properly withholds authority to vote for such nominee in accordance with the proxy instructions and “broker non-votes” will not be counted toward such nominee’s achievement of a plurality.

Board’s Skills and Experience

Selection of Directors

We examineThe Company regularly examines the experience and expertise of our Board as a whole to ensure alignment between the Board’s abilities and expertise of our Board and our strategic priorities and long-range plan. We seek directors who will bring to the Board a deep and wide range of experienceexperiences in the business world and diverse problem-solving talents. The Company believes that the Board should represent an appropriate and relevant mix of skills, industry experience, backgrounds, ages and diversity (inclusive of race, gender and ethnicity). Typically, directors will be individuals who have demonstrated high achievement in business or another field, enabling them to provide strategic support and guidance to the Company. Particular areas of expertise include corporate strategy and development, commercial sales and marketing, commercial operations and execution, research and development, technical operations, familiarity with manufacturing biotechnology and medical device products, knowledge of the legal and compliance issues facing the life science industry, experience concerning the policies and procedures of public and private payers in the medical technology and biopharmaceutical space, corporate finance, financial and/or accounting expertise, organizational leadership, development and management, public company management and disclosure, and corporate risk assessment and prior experience in the medical technology, biopharmaceutical and complex biologics industries.

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All of our director nominees exhibit high integrity, sound business judgment, innovative thinking, collegiality and a knowledge of corporate governance requirements and practices. As a group, our director nominees bring a balance of relevant skills and experience to our boardroom, including those listed below:

Robert L. Zerbe, M.D.

Dominick C. Colangelo

Heidi Hagen

Alan L. Rubino

Kevin F. McLaughlin

Steven C. Gilman, Ph.D.

Paul K. Wotton, Ph.D.

Robert Zerbe, M.D.

Dominick Colangelo

Heidi Hagen

Alan Rubino

Kevin McLaughlin

Steven Gilman, Ph.D.

Paul Wotton, Ph.D.

Lisa Wright

Prior BOD Experience

Industry Experience

Medical Technologies

BioPharma

Complex Biologics

Payer

Healthcare Operations

Functional Expertise

CEO/GM

Finance

Chief Operating Officer

Marketing/Sales

Research and Development

Technical Operations

Business Development

Geography

North America

Asia/Middle East

Europe

Demographics

Age

70

57

52

66

64

68

60

72

59

54

68

66

70

62

48

Tenure

2006

2013

2005

2015

2006

2013

2005

2015

2021

Male/Female

M

F

M

M

F

M

F

Race/Ethnicity

African American or Black

Alaskan Native or Native American

Asian

Hispanic or Latinx

Native Hawaiian or Pacific Islander

White

LGBTQ+

Directors who are Military Veterans: 0

Directors with Disabilities: 0

Directors who Identify as Middle Eastern: 0

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Director Nominees for Election at the 20212023 Annual Meeting of Shareholders

The biographical description below for each director nominee includes the specific experience,experiences, qualifications, attributes and skills that led to the conclusion by the Board of Directors that such person should serve as a director of Vericel.

Age: 72 Director Since: 2006 Other Current Public Company Directorships: None Vericel Board committee(s): Audit Committee		Robert L. Zerbe, M.D.Independent Chairman of the Board Retired Chief Executive Officer, QUATRx Pharmaceuticals Company
		Professional HighlightsPROFESSIONAL HIGHLIGHTS Robert L. Zerbe, M.D., has served as a director of Vericel since January 2006 and as the Chairman of our Board of Directors since October 2012. Until July 2016, Dr. Zerbe served as the Chief Executive Officer of QUATRx Pharmaceuticals Company, a venture-backed drug development company, which he co-founded in 2000. Prior to his role at QUATRx, Dr. Zerbe held several senior executive management positions with major pharmaceutical companies, including Eli Lilly and Company (from 1982 to 1993) and Pfizer (formerly Parke-Davis) (from 1993 to 2000). During his tenure at Eli Lilly, Dr. Zerbe’s clinical research and development positions included Managing Director, Lilly Research Center U.K., and Vice President of Clinical Investigation and Regulatory Affairs. He joined Parke-Davis in 1993, becoming Senior Vice President of Worldwide Clinical Research and Development. In thisthat capacity, he led the clinical development programs for a number of key products, including Lipitor and Neurontin. Other Leadership Positions and ExperiencesOTHER LEADERSHIP POSITIONS AND EXPERIENCES Dr. Zerbe also serves on the board of directors of Metabolic Solutions Development Company and Cirius Therapeutics, both private companies focusingfocused on metabolic diseases. Qualifications of Particular Relevance to VericelQUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL Dr. Zerbe received his M.D. from the Indiana University School of Medicine, and has completed post-doctoral work in internal medicine, endocrinology and neuroendocrinology at Indiana University and the National Institutes of Health. The Board of Directors believes Dr. Zerbe’s qualifications to serve on our Board of Directors include his senior management positions at major pharmaceutical companies and his clinical development experience.

Age: 7059 Director Since: 20062013 Other Current Public Company Directorships: NoneTrevi Therapeutics, Inc. Vericel Board committee(s): Audit and Governance and Nominating CommitteesNone

		Dominick C. Colangelo President and Chief Executive Officer, Vericel Professional Highlights
	PROFESSIONAL HIGHLIGHTS Dominick C. Colangelo has served as a director and as Vericel’s President and Chief Executive Officer since March 2013. Mr. Colangelo has more than 20 years of executive management and corporate development experience in the biopharmaceutical industry, including nearly a decade with Eli Lilly and Company. During his career, he has held a variety of executive positions of increasing responsibility in product development, pharmaceutical operations, sales and marketing, and corporate development. He has extensive experience in the acquisition, development and commercialization of products across a variety of therapeutic areas. During his tenure at Eli Lilly, Mr. Colangelo held positions as Director of Strategy and Business Development for Eli Lilly’s Diabetes Product Group and also served as a founding Managing Director of Lilly Ventures. Other Leadership Positions and ExperiencesOTHER LEADERSHIP POSITIONS AND EXPERIENCES Mr. Colangelo also serves on the board of directors of Trevi Therapeutics, Inc., a publicly-traded clinical-stage biopharmaceutical company focused on the development and commercialization of treatments for serious neurologically-mediatedchronic cough conditions. Mr. Colangelo is a member of both the Audit and Compensation Committees of the Trevi Therapeutics board. Qualifications of Particular Relevance to VericelQUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL Mr. Colangelo received his B.S.B.A. in Accounting, Magna Cum Laude,, from the State University of New York at Buffalo and a J.D. degree, with honors, from the Duke University School of Law. The Board of Directors believes Mr. Colangelo’s qualifications to serve on our Board of Directors include his significant contributions within the biopharmaceutical industry, as well as the experiences developed through his legal and accounting backgrounds.

Age: 2023 Proxy Statement57 Director Since: 2013 Other Current Public Company Directorships: Trevi Therapeutics, Inc. Vericel Board committee(s): None	19

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Age: 54 Director Since: 2013 Other Current Public Company Directorships: None Vericel Board committee(s): Compensation and Governance and Nominating (Chair) Committees		Heidi Hagen	Independent
		Chief Technical Officer, Sonoma Biotherapeutics
		PROFESSIONAL HIGHLIGHTS Heidi Hagen Independent Interim Chief Executive Officer, Ziopharm Oncology, Inc.; Biotechnologyhas beena member of the Vericel Board of Directors since 2013. She has extensive experience in operations management and Pharmaceutical Operationscommercializing innovative technologies, including more than 20 years in the cell and Technology Consultant, HH Consulting LLC Professional Highlights Heidigene therapy industries. Currently, Ms. Hagen a director since August 2013, currently serves as Interim Chief ExecutiveTechnical Officer of Sonoma Biotherapeutics, a privately-held company leading the development of adoptive TREG cell therapies for autoimmune and inflammatory diseases. From 2019 to 2021, she sat on the board of directors of Ziopharm Oncology, Inc., a publicly-traded company focused on developing the next generation of immune-oncology gene and cell therapies. She also served as Ziopharm’s interim CEO during 2021. Ms. Hagen was appointed Interim CEO in February 2021is also co-founder and has served on the Ziopharm Oncology board of directors since June 2019. Ms. Hagen also continues her work as a biotechnology and pharmaceutical operations and technology consultant with HH Consulting LLC, an organization she began in October 2012. Additionally, since October 2015, Ms. Hagen has served as Co-founder and Advisor (formerlyformer Chief Strategy Officer) forOfficer of Vineti, Inc., a privately-heldsoftware platform company that developsfor cell and sells cloud-based software platforms for ordering, manufacturing and delivering personalized medicines. Previously,gene therapy supply chain management. Formerly, Ms. Hagen served as interim Chief Commercial Officer at ZappRx, Inc. from January 2015 to June 2015, and as Global Chief Operating Officer at Sotio LLC, a biotechnology company developing new therapies for the treatment of cancer and autoimmune diseases using its immunotherapy platform and proprietary cell-based technologies, from March 2013 to April 2014. Prior to joining Sotio, Ms. Hagen was Senior Vice Presidentand as SVP of Operations atfor Dendreon Corporation from 2002 to 2012, where she was responsible for, among other duties, manufacturing and supply chain operations. Prior to joining Dendreon, Ms. Hagen spent nearly ten yearsCorporation. She began her career at Immunex Corporation where she held positions in drug development, supply chain and operations. Other Leadership Positions and ExperiencesOTHER LEADERSHIP POSITIONS AND EXPERIENCES In addition to serving on the Ziopharm Oncology board of directors, since June 2019, Ms. Hagen has been a member ofcurrently serves on the board of directors of Obsidian Therapeutics, Inc., a privately-held organization focused on treating cancer through cell and gene therapies, and previously served as a board member of Lykan Biosciences, a privately-heldprivate company focused on cell and gene manufacturing. Qualifications of Particular Relevance to VericelQUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL Ms. Hagen earned a B.S. in cell and molecular biology, M.S. in bioengineering, and M.B.A. at the University of Washington. The Board of Directors believes Ms. Hagen’s qualifications to serve on our Board of Directors include her leadership roles in the biotechnology industry in a wide range of positions, as well as her significant expertise in manufacturing, quality and other technical operations in the biotechnology and pharmaceutical space.

			Alan L. Rubino   Independent Chairman, President andFormer Chief Executive Officer, RenovaCare,Emisphere Technologies, Inc.
	PROFESSIONAL HIGHLIGHTS Professional Highlights A Vericel Board member since 2005, Alan L. Rubino possesses a director since September 2005, haswealth of experience spanning nearly 40 years across a multitude of disciplines within the biotechnology and pharmaceutical industries. He recently served for seven years as Chairman, President and Chief Executive Officer of RenovaCare, Inc., a publicly-traded biotechnology company, since November 2019. Prior to RenovaCare, from September 2012 to November 2019, Mr. Rubino served as Chief Executive Officer and PresidentCEO of Emisphere Technologies, Inc. Prior to joining Emisphere, Mr. Rubino served, a successful publicly-held drug delivery company, which was acquired by Novo Nordisk for $1.8B. He also was President and CEO of RenovaCare, a publicly-held biotechnology company, as Chief Executive Officerwell as CEO and Presidentco-founder of New American Therapeutics, Inc., which acquired Denavir from Novartis. New American was subsequently sold to Renaissance Pharma, LLC for a specialty pharmaceutical company, from October 201049% IRR to August 2012, whereinvestors. Prior to that, he led the acquisition of penciclovir from Novartis AG. From February 2008 to September 2010, Mr. Rubino served as the Chief Executive Officerwas CEO and Presidenta co-founder of Akrimax Pharmaceuticals, LLC, an integrated specialty pharmaceutical company. Prior to this,where he in-licensed Tirosint from IBSA Institut Biochimique SA for the U.S. market. Mr. Rubino also spent 24 years with Roche where he served as President and Chief Operating Officer of Pharmos Corporation, a biopharmaceutical company. Mr. Rubino has continued to expand upon a highly successful and distinguished career that included Hoffmann-La Roche, Inc., a research-focused healthcare company, from 1977 to 2001, where he was a member of the U.S. Executiveexecutive committee for ten years and Operating Committeespresided over 30 product launches and an executive officer. Duringbrand marketing execution plans and had leading roles in the acquisitions of Syntex Labs and Boehringer-Mannheim. Throughout his Hoffman-La Roche tenure,career, Mr. Rubino held a series of key executive positions inhas provided enterprise-wide leadership over corporate, marketing, sales, business operations, supply chain and human resource management. In addition, he was assigned to various executive committee roles in the areas of marketing, project management and globalization of Roche Holdings.functions. Other Leadership Positions and ExperiencesOTHER LEADERSHIP POSITIONS AND EXPERIENCES Since 2014, Mr. Rubino has previously served on the boardboards of directors of numerous public and privately-held organizations, including SANUWAVE Health, Inc. Additionally, since 2010, Mr. Rubino has served on the board of directors ofand Genisphere, Inc., a privateprivately-held company that provides a nanotechnology platform for targeted drug delivery. Since 2021, Mr. Rubino also serves onhas served as the chairman of the board of advisorsdirectors of Rutgers University School of Business and the Lerner CenterAMO Pharma Limited, a privately-held UK-based company developing therapies for Pharmaceutical Studies.rare genetic disorders including congenital myotonic dystrophy. Qualifications of Particular Relevance to VericelQUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL Mr. Rubino received a B.A. degree in economics from Rutgers University with a minor in biology/chemistry and also completed post-graduate educational programs at the University of Lausanne and Harvard Business School. The Board of Directors believes Mr. Rubino’s qualifications to serve on our Board of Directors include his financial acumen as well as his leadership roles in the life sciences industry in a wide range of positions, including those focused on sales and marketing and SEC matters. Additionally, Mr. Rubino possesses significant expertise in human resources, compensation and business development matters.

Age: 2066 Director Since: 2005 Other Current Public Company Directorships: SANUWAVE Health, Inc. RenovaCare, Inc. (Chairman and Chief Executive Officer) Vericel Board committee(s): Audit and Compensation (Chair) Committees

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Age: 66 Director Since: 2015 Other Current Public Company Directorships: Decibel Therapeutics Vericel Board committee(s): Audit (Chair) Committee		Kevin McLaughlin	Independent
		Kevin F. Mclaughlin   Independent Former Senior Vice President, Chief Financial Officer and Treasurer, Acceleron Pharma Inc.
		PROFESSIONAL HIGHLIGHTS Professional Highlights Kevin F. McLaughlin has served as a directorVericel Board member and the chair of its Audit Committee since January 2015,2015. Mr. McLaughlin has beenmore than 40 years of financial and operating management experience spanning the biotech, high-tech and education industries. From 2010 to 2021, he served as Senior Vice President, Chief Financial Officer and Treasurer of Acceleron Pharma until its acquisition by Merck & Co., Inc. since 2010. Previously he served as Senior Vice Presidentin December 2021. Prior to Acceleron, Mr. McLaughlin was SVP and Chief Financial OfficerCFO of Qteros, Inc., a cellulosic biofuels company, from 2009 to 2010. From 2007 through 2009, he served as theand co-founder, Chief Operating Officer and a director of Aptius Education, Inc., a publishing services company, which he co-founded in 2007. From 1996 through 2007,company. Prior to that, Mr. McLaughlin held several executive positions with PRAECIS Pharmaceuticals, Inc.Pharmaceuticals. He joined PRAECISthe company as their first Chief Financial Officer andCFO, later becamebecoming Chief Operating Officer, and then President and Chief Executive Officer, while serving asand a member of the board of directors. He remained in this capacity until the sale of the company to GSK plc (formerly GlaxoSmithKline). He began his career in senior financial roles at Prime Computer and Computervision Corporation. Other Leadership Positions and ExperiencesOTHER LEADERSHIP POSITIONS AND EXPERIENCES Mr. McLaughlin is a member of the board of directors of Decibel Therapeutics, a clinical-stage and Chairmanpublic biotechnology company dedicated to discovering treatments to restore and improve hearing and balance. He is also a member of the audit committeeboard of Stealth Biotherapeutics Corp.directors of Combined Therapeutics, Inc., a privately-held company focused on the development of mRNA treatments. Qualifications of Particular Relevance to VericelQUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL Mr. McLaughlin received a B.S. in business from Northeastern University and an MBAM.B.A. from Babson College. The Board of Directors believes Mr. McLaughlin’s qualifications to serve on our Board of Directors include his leadership roles in the biopharmaceutical industry in a wide range of positions and his expertise handling financial and accounting matters.

		Steven C. Gilman, Ph.D.	Independent
Retired Chairman and Chief Executive Officer, ContraFect Corporation
	PROFESSIONAL HIGHLIGHTS Professional Highlights Steven C. Gilman, Ph.D., a director since January 2015, served as the Chairman of the board of directors and Chief Executive Officer of ContraFect Corporation until his retirement in April 2019. He previously served as the Executive Vice President, Research & Development and Chief Scientific Officer at Cubist Pharmaceuticals from September 2010 until its acquisition by Merck & Co., in January 2015. Prior to joining Cubist, Dr. Gilman served as Chairman of the board of directors and Chief Executive Officer of ActivBiotics, Inc., a privately-held biopharmaceutical company, from March 2004 to October 2007. Previously, Dr. Gilman worked at Millennium Pharmaceuticals, Inc., where he held a number of senior leadership roles, including Vice President and General Manager, Inflammation. Prior to Millennium, he was Group Director at Pfizer Global Research and Development and has also held scientific, business, and academic appointments at Wyeth Pharmaceuticals, Inc., Cytogen Corporation, Temple Medical School, and Connecticut College. Other Leadership Positions and ExperiencesOTHER LEADERSHIP POSITIONS AND EXPERIENCES Dr. Gilman currently serves on the boards of directors of ContraFect Corporation, SCYNEXIS, Inc. and Akebia Therapeutics, Inc., and previously served on the board of directors of Momenta Pharmaceuticals, Inc. Dr. Gilman has also served on the board of directors of the Massachusetts Biotechnology Association and held advisory roles on the Penn State University biotechnology board and the Northeastern University drug discovery board. Qualifications of Particular Relevance to VericelQUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL Dr. Gilman received his B.A. in microbiology from Miami University of Ohio and a Ph.D. and M.S. degreedegrees in microbiology from Pennsylvania State University. Dr. Gilman performed his post-doctoral training at Scripps Clinic and Research Foundation. The Board of Directors believes Dr. Gilman’s qualifications to serve on our Board of Directors include his leadership roles in the biopharmaceutical industry in a wide range of positions.

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Age: 62 Director Since: 2015 Other Current Public Company Directorships: Cynata Therapeutics Limited Vericel Board committee(s): Governance and Nominating Committee		Paul K. Wotton, Ph.D.	Independent
		Former President and Chief Executive Officer, Obsidian Therapeutics, Inc.
		PROFESSIONAL HIGHLIGHTS Professional Highlights Paul K. Wotton, Ph.D., has served as a directorVericel Board member and as a member of the Board’s Governance and Nominating Committee since January 2015, currently serves on the board of directors and2015. Mr. Wotton is the former President and Chief Executive Officer and a board member of Obsidian Therapeutics, Inc., a position he has held since April 2019.from 2019 until 2022. Previously, he was the founding President and Chief Executive Officer of Sigilon Therapeutics, Inc., a cell therapeutics company started in May 2016. Prior to that, he served as the President and Chief Executive Officer and as a member of the board of directors of Ocata Therapeutics, Inc. from July 2014 until its acquisition by Astellas Pharma US, Inc. in February 2016, where he also served as the Co-Chairman of the Integration Management Office from February 2016 until May 2016. Prior to Ocata, Dr. Wotton served as President and Chief Executive Officer and as a member of the board of directors of Antares Pharma, Inc. from October 2008 to June 2014. Prior to joining Antares, Dr. Wotton was the Chief Executive Officer of Topigen Pharmaceuticals. Prior to Topigen, he was the Global Head of Business Development of SkyePharma PLC. Earlier in his career, Dr. Wotton held senior level positions at Eurand International BV, Penwest Pharmaceuticals, Abbott Laboratories and Merck, Sharp and Dohme. Other Leadership Positions and ExperiencesOTHER LEADERSHIP POSITIONS AND EXPERIENCES Dr. Wotton serves as a member of the board of directors of Cynata Therapeutics LimitedLimited. He also serves as the Chair of the board of directors of Kytopen, a privately-held biotechnology company focused on developing cellular and PaxMedica, Inc. and, previously,genome engineering platforms. Previously, Dr. Wotton was a member of the board of directors and Chairman of the compensation committee of Veloxis Pharmaceuticals A/S, until its acquisition by Asahi Kasei in January 2020. Dr. Wotton is also past Chairman of the Emerging Companies Advisory Board of BIOTEC Canada and was named Ernst & Young Entrepreneur of the Year for Life Sciences, New Jersey, in 2014. Qualifications of Particular Relevance to VericelQUALIFICATIONS OF PARTICULAR RELEVANCE TO VERICEL Dr. Wotton received his Bachelor’s in Pharmacy, with honors, from University College London, his Ph.D. in pharmaceutical sciences from the University of Nottingham and his M.B.A. from Kingston Business School. The Board of Directors believes Dr. Wotton’s qualifications to serve on our Board of Directors include his leadership roles in the life sciences industry in a wide range of positions.

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Identifying and Evaluating Candidates for Director

The Governance and Nominating Committee (the “Governance Committee”) evaluates and recommends to the Board of Directors the nominees for each election of directors. Both the Governance and Nominating Committee and the Board use a variety of methods for identifying and evaluating such nominees, and the Governance and Nominating Committee, in consultation with the Chairman and other Board members, regularly assesses the composition of the Board and each committee to evaluate their effectiveness and whether or not changes should be considered. The full Board annually determines the diversity of specific skills and characteristics that could improve the overall quality and ability of the Board to carry out its oversight of the Company and other functions.

The Governance and Nominating Committee’s goal is to assemble a Board of Directors that brings to Vericel a variety of perspectives and skills derived from high quality business and professional experience, while considering the appropriate size of both the Board and its committees. In doing so, the Governance and Nominating Committee also considers candidates with appropriate non-business backgrounds. In general, the Governance and Nominating Committee seeks director nominees with the talents and backgrounds that provide the Board of Directors with an appropriate mix of knowledge, skills and experience for the needs of Vericel’s business. There are no stated minimum criteria for director nominees, and the Governance and Nominating Committee may consider such other factors as it deems are in the best interests of Vericel and its shareholders. In general, and given Vericel’s position as a leader in the biotechnology and medical technology/medical devicetechnology space, the Board believes it should be comprised of persons with skills and experience in areas such as:

The Governance and Nominating Committee also actively seeks out highly-qualified diverse candidates. In February 2020, the Board formalized its longstanding practice of considering women and minority candidates for open director positions by amending the Charter of the Governance and Nominating Committee and its Director Nominations Policy to clearly state that in filling each open director position the Governance and Nominating Committee will endeavor to actively seek out highly-qualified diverse candidates (including diversity on the basis of gender, race and ethnicity) to include in the pool from which director nominees are chosen. Additionally, in situations where the Governance and Nominating Committee engages a third-party search firm to assist in a Board member search, itthe policy requires that the search firm actively seek out highly qualified female and racially/ethnically diverse candidates, as well as individuals with diverse backgrounds, skills and experiences, to include in the candidate pool. The Board most recently added a member in 2021, when it conducted a nationwide search for a new director that resulted in the appointment of Lisa Wright on June 1, 2021.

The Governance and Nominating Committee recognizes that under applicable regulatory requirements at least one member of the Board of Directors must, and believes that it is preferable that, more than one member of the Board of Directors should, meet the criteria for an “audit committee financial expert” as defined by SEC rules, and that at least a majority of the members of the Board of Directors must meet the definition of “independent director” under the Nasdaq listing standards or the listing standards of any other applicable self-regulatory organization that Vericel is subject to or governed by. The Governance and Nominating Committee also believes that it is appropriate for at least one member of Vericel’s management to participate as a member of the Board of Directors.Board.

The Governance and Nominating Committee identifies nominees by first evaluating the current members of the Board of Directors willing to continue in service. Current members of the Board of Directors with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If any member of the Board of Directors that is up for re-election at an upcoming annual meeting of shareholders does not wish to continue in service, the Governance and Nominating Committee identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of the Governance and Nominating Committee and the Board are polled for suggestions as to individuals meeting the criteria of the Governance and Nominating Committee. Research may also be performed to identify qualified individuals. If the Governance and Nominating Committee believes that the Board of Directors requires additional candidates for nomination, the Governance and Nominating Committee may explore alternative sources for identifying additional candidates. This may include engaging, as appropriate, a third-party search firm to assist in identifying qualified candidates.

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Shareholder Recommendations

The Governance and Nominating Committee will evaluate any recommendation for director nominees proposed by a shareholder who (i) has continuously held at least 1% of the outstanding shares of our common stock entitled to vote at the Annual Meetingannual meeting for at least one year by the date the shareholder makes the recommendation, and (ii) undertakes to continue to hold the common stock through the date of the meeting. In order to be evaluated in connection with Vericel’s established procedures for evaluating potential director nominees, any recommendation for a director nominee submitted by a qualifying shareholder must be received by Vericel no later than 120 days prior to the anniversary of the date proxy statements were made available to shareholders in connection with the prior year’s annual meeting. Any shareholder recommendation for a director nominee must be submitted to the General Counsel and Secretary, in writing, at 64 Sidney St., Cambridge, Massachusetts 02139, and must contain the following information:

The Governance and Nominating Committee will evaluate recommendations for director nominees submitted by directors, management or qualifying shareholders in the same manner, using the criteria stated above.

All directors and director nominees will submit a completed director and officer questionnaire as part of the nominating process. The process may also include interviews and additional background and reference checks for non-incumbent nominees, at the discretion of the Governance and Nominating Committee.

Board’s Role and Responsibilities

Overall Role of the Board of Directors

The Board is elected by the shareholders to oversee their interests in the long-term success of the Company. The Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with the shareholders. The core responsibility of a director is to fulfill his or her duties of care and loyalty and to otherwise exercise sound business judgment in the best interests of Vericel and its shareholders. The Board oversees the proper safeguarding of the Company’s assets, the maintenance of appropriate financial and other internal controls and the Company’s compliance with applicable laws and regulations and proper governance. The Board selects the Chief Executive Officer (or “CEO”) and oversees the members of senior management, who are charged by the Board with conducting the business of the Company.

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Key Responsibilities of the Board

Oversight of Corporate Strategy

Our Board actively oversees management’s establishment and execution of corporate strategy, including major business and organizational initiatives, annual budget and long-term strategic plans, capital allocation priorities and corporate development opportunities. Our Board also reviews and approves strategic transactions, including significant investments, acquisitions and collaborations. At the Board and committee meetings and throughout the year, our Board regularly receives information and formal updates from our management and actively engages with the senior leadership team with respect to our corporate strategy. The Board’s independent directors also hold regularly scheduled executive sessions at which strategic matters are discussed.

Board’s Role and Responsibilitiesin the Oversight of Risk Management

Board Role in Risk Management/Oversight

AssessingVericel management is responsible for assessing and managing risk isto the responsibility of Vericel’s management. The Board of Directors oversees and reviews certain aspects of our risk management efforts. The Board of Directors is involved in risk oversight through direct decision-making authority with respectCompany, subject to significant matters and the oversight of management by the Board. The Board of Directorsexercises its oversight responsibility directly and through its committees. Among other areas,The Board considers specific risk topics directly, such as risks associated with the Board of Directors is directly involved in overseeing risks related to Vericel’sCompany’s overall strategy, including clinical, and product development, strategies,and financing strategies, business continuity, crisis preparedness and corporate reputational risks. The Board is kept informed of the committees’ risk oversight activities through periodic reports to the Board. The Board and its committees meet regularly with members of management responsible for managing risk.

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The committees of the Board of Directors execute their oversight responsibility for risk management as follows:

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CYBERSECURITY RISK MANAGEMENT The Board is particularly focused on cybersecurity. Although specific responsibility for cybersecurity risk is delegated to the Audit Committee, the Board of Directors receives regular reports from management on both the cybersecurity risks facing the Company and various mitigation and protective measures that are currently being implemented across the organization. Additionally, as part of its continuing education initiatives, the Board receives training on cybersecurity matters from outside experts in the field.

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Oversight of Environmental, Social and Governance Matters

Our Governance and Nominating Committee periodically reviews and oversees management of Vericel’s strategy, initiatives, risks, opportunities and related reporting with respect to significant ESG matters. In that connection, the Governance and Nominating Committee oversees corporate ESG matters as they pertain to the Company’s business and long-term strategy and identifies emerging trends and issues that may affect our operations, performance and external stakeholder relationships. Importantly, the Governance and Nominating Committee periodically receives updates on the Company’s ongoing and future ESG programs, products and disclosures, the Company’s progress and performance against ESG goals and the Company’s corporate social responsibility and diversity and inclusion programs and activities.

Human Capital Management

The Board is actively engaged in overseeing the Company’s people and culture strategy. Our Board believes that human capital management and succession planning, including DE&I initiatives, are vital to Vericel’s continued success. Our Board’s involvement in leadership development and succession planning is ongoing, and the Board provides input on important decisions in each of these areas. Our Board, with leadership from our Chairman, has primary responsibility for succession planning for the Chief Executive Officer and talent retention and development programs for members of senior management. Our Compensation Committee performs an annual formal evaluation of the Chief Executive Officer in consultation with the Governance and Nominating Committee, recommends to the Board an emergency succession plan that covers such matters as the unexpected departure, disability or death of the CEO or other key members of senior management.

During 2022, the Board again approved a specific ESG-related corporate goal for management, which included the creation and publication of the Company’s inaugural ESG Report. This past year, our ESG goals also focused on the continuation of robust DE&I awareness and education programs for management and employees, and on enhancing DE&I initiatives at all levels of the organization through the work of our Company-level Diversity and Inclusion Advisory Committee, which has a direct line of communication to our Executive Leadership Team. The Company executed on the Board’s direction during the past year, achieving all of its ESG-related initiatives.

Management Succession Planning

At least annually, the Governance and Nominating Committee meets with our President and CEO to discuss succession planning for the executive management team. The Governance and Nominating Committee also considers the procedure for timely and efficient transfer of CEO responsibilities in the event of an emergency or the sudden incapacity, death, resignation or retirement of Mr. Colangelo, or the occurrence of any other event that would have a material impact on Mr. Colangelo’s ability to fulfill his job duties.

Code of Ethics

The Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors as well as a separate Code of Ethics for Senior Financial Officers. These documents are available on the Investor Relations page of our website, www.vcel.com, and by following the Corporate Governance link.www.vcel.com. We will also make information related to any amendments to, or waivers from, these Codes of Ethics available on the website as required by law.

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Board Structure

Board Leadership Structure

The Board of Directors’ generalDirectors does not have a formal policy is thaton whether the positionpositions of ChairmanCEO and Chairperson of the Board should be separate or united, but rather will make that determination from time to time in its judgment. The Chairperson of Directors may be held by the Chief Executive Officer,Board is currently an independent director, but that if those positions are held by the same individual or if the ChairmanChairperson of the Board is otherwise not independent, the Board of Directors shallwill appoint an independent Lead Director.lead director. The CEOChairperson of the Board shall preside at all meetings of the shareholdersBoard and at all meetings of the Board of Directors at which he or she is present, in each case unless a Chairman has been elected. If a Chairman has been elected, he or she shall preside at all shareholder and Board of Directors meetings at which he or she is present and, if independent, at all executive sessions of the independent directors,shareholders, and shall perform such other duties, and exercise such powers, and duties as may be assigned to himprescribed by the Bylaws or her by the Board of Directors.from time to time. If the ChairmanChairperson of the Board is not independent and a Lead Director islead director has been appointed, he or she shall preside at executive sessions of the independent directors and will bear such further responsibilities as the full Board of Directors may designate from time to time. Currently, Dr. Zerbe serves as the Board’s independent Chairman.

The independent members of the Board of Directors have periodically reviewed this leadership structure and believe it is appropriate for Vericel at the current time. The CEO is responsible for setting the strategic direction for Vericel, andas well as the day-to-day leadership and performance of Vericel,the Company, while the Chairman of the Board of Directors provides guidance to the CEO and sets the agenda for, Board of Directors meetings and presides over, meetings of the full Board of Directors. The CEO and Chairman of the Board of Directors provide leadership to the Board of Directors and work with the Board of Directorsit to define its structure and activities in the fulfillment of its responsibilities. The Chairman of the Board of Directors presides over executive sessions and ensures that no conflict of interest arises between management and the functions of the Board of Directors

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and facilitates communication among the directors. The Chairman of the Board of Directors and the CEO work together to provide an appropriate information flow to the Board, of Directors, and the Chairman of the Board of Directors works with other Board members to provide strong, independent oversight of Vericel’s management and affairs. Thus, the Board of Directors believes that the current structure balances the needs for the CEO to run Vericel on a day-to-day basis with the benefit provided to Vericel by significant involvement and leadership of an independent Chairman of the Board of Directors.

Board Independence

The Board of Directors has affirmatively determined that all of the members of the Board of Directors and each director nominee, other than Mr. Colangelo, are independent within the meaning of the director independence standards of Nasdaq and the SEC. Mr. Colangelo is not considered independent because of his current employment as the President and CEO of Vericel. There are no family relationships between any of our directors and any of our executive officers.

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Executive Sessions

Applicable Nasdaq listing standards require that the independent directors meet from time-to-time in executive session.sessions. In fiscal year 2020,2022, our independent directors met in regularly scheduled executive sessions with only independent directors present at each Board and committee meeting.

Committees of the Board

Audit Committee

Kevin McLaughlin Chairperson Members: Alan Rubino Robert Zerbe, M.D.	Audit Committee	RESPONSIBILITIES
	Chairperson Kevin F. McLaughlin Members Alan L. Rubino Robert L. Zerbe, M.D.		Responsibilities Under the terms of its current Charter, the Audit Committee’s responsibilities include: include, in part: ●Reviewing with Vericel’s independent accountants and management the annual financial statements and independent accountants’ opinion opinion; ●Reviewing the scope and results of the examination of Vericel’s financial statements by the independent accountants accountants; ●Reviewing all professional services performed by, and related fees byof, the independent accountants accountants; ●Approving the retention of the independent accountants accountants; and ●Periodically reviewing Vericel’s accounting policies and internal accounting and financial controls controls. The Audit Committee may delegate duties or responsibilities to subcommittees or to one member of the Audit Committee. During the fiscal year ended December 31, 2020,2022, the Audit Committee held five (5)four (4) meetings. All members of our Audit Committee are independent (as independence is defined in Rule 5605(a)(2) and as required under Rule 5605(c)(2) of the Nasdaq listing standards). Since March 2015, Mr. McLaughlin, an independent director, has been designated as an audit committee financial expert as defined inby the rules of the SEC. The Audit Committee acts pursuant to a written charter, a current copy of which is available on the Investor Relations page of our website, www.vcel.com, and by following the Corporate Governance link.www.vcel.com. For additional information concerning the Audit Committee, see “Report of the Audit Committee of the Board of Directors.” Past-Year HighlightsPAST-YEAR HIGHLIGHTS In addition to its important oversight of Vericel’s financial statements and of our independent registered public accounting firm, during 20202022 the Audit Committee conducted a thorough review of,received regular reports and made certain amendments to its Charter to memorialize its significantprovided key oversight of risk management activities at the organization level, to include management’s significant enhancements to the Company’s commercial compliance and risk management initiatives. In its oversight function, the Audit Committee also implemented changes to the Vericel Insider Trading Policy and Special Trading Procedures for Insiders which, among other things, implemented blanket prohibitions of hedging, pledging or other forms of speculative transactions in Vericel common stock by Company insiders.
				cybersecurity readiness.

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Compensation Committee

Alan Rubino Chairperson Members: Heidi Hagen Steven Gilman, Ph.D.	Compensation Committee	RESPONSIBILITIES
	Chairperson Alan L. Rubino Members Heidi Hagen Steven C. Gilman, Ph.D.		Responsibilities Under the terms of its current Charter, the Compensation Committee’s responsibilities include, in part: ●    ●Determining and approving salary and bonus levels and equity award grants with respect to executive officers, and making recommendations to the Board of Directors regarding Mr. Colangelo’s compensation compensation; ●Determining and approving equity award grants with respect to all employees and pools of grants therefor employees; ●Reviewing and proposing to the Board of Directors changes in director compensation compensation; and ●Retaining and approving the compensation of any compensation advisers and evaluating the independence of any such compensation advisers advisers. In carrying out these responsibilities, the Compensation Committee reviews all components of executive officer compensation for consistency with the Compensation Committee’s compensation philosophy and strategy as well as relevant compensation guidelines. The Compensation Committee may delegate duties or responsibilities to subcommittees or to one member of the Compensation Committee. During the fiscal year ended December 31, 2020,2022, the Compensation Committee held five (5)four (4) meetings. All members of our Compensation Committee are independent (as independence is defined in Rule 5605(a)(2) of the Nasdaq listing standards). The Compensation Committee acts pursuant to a written Charter, a current copy of which is available on the Investor Relations page of our website, www.vcel.com, and by following the Corporate Governance link.www.vcel.com.

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Corporate Governance and Nominating Committee

	Governance and Nominating Committee
	Chairperson Heidi Hagen Chairperson MembersMembers: Robert L. Zerbe, M.D.Lisa Wright Paul K. Wotton, Ph.D.		ResponsibilitiesRESPONSIBILITIES Under the terms of its current Charter, the Governance and Nominating Committee’s responsibilities include: include, in part: ●Assisting Vericel’s Board of Directors in fulfilling its responsibilities by reviewing and reporting to the Board of Directors on (i) corporate governance compliance mechanisms, (ii) corporate governance roles amongst management and directors, and (iii) establishing a process for identifying and evaluating nominees for the Board of Directors Directors; and ●Considering qualified candidates for appointment and nomination for election to the Board of Directors and making recommendations concerning such candidates candidates. Consistent with this function, the Governance and Nominating Committee encourages continuous improvement of, and fosters adherence to, our corporate governance policies, procedures and practices at all levels. The Governance and Nominating Committee may delegate duties or responsibilities to subcommittees or to one member of the Governance and Nominating Committee. During the fiscal year ended December 31, 2020,2022, the Governance and Nominating Committee held four (4) meetings. All members of the Governance and Nominating Committee are independent (as independence is defined in Rule 5605(a)(2) of the Nasdaq listing standards). The Governance and Nominating Committee acts pursuant to a written charter, a current copy of which is available on the Investor Relations page of our website, www.vcel.com, and by following the Corporate Governance link. www.vcel.com. Past-Year HighlightsPAST-YEAR HIGHLIGHTS As part of the Board’s regular governance enhancement process, and recognizing the Governance Committee recognized that terminating the Company’s existing shareholder rights plan was in the best interestsneed for effective and centralized oversight of the Company’s shareholders. TheESG strategies, opportunities and risks, during 2022 the Governance and Nominating Committee subsequently recommendedamended its charter to the Board that it terminate the plan – which the Board did in February of 2021. memorialize its oversight responsibility for ESG matters, including important corporate responsibility and DE&I initiatives.

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Board Practices, Policies and Processes

History of Commitment to Good Governance Practices

Board Practices		Board Enhancement		Shareholder Rights
●   Non-employee members meet in executive sessionwithout management at each regularly scheduled Board and committee meeting 6●   7 of 7 8director nominees are independent ●   Director educationprograms	●	Board performance evaluationsand assessment of needed skills ●   Commitment to diversityand Board refreshment	●	Removal Noof active Shareholder Rights Planin February 2021 ●   Robust stock ownership guidelines that apply to our directors and named executive officers

Board Meetings and Committees

During the fiscal year ended December 31, 2020,2022, the Board of Directors held six (6) meetings. Each director serving on the Board of Directors in such fiscal yearduring 2022 attended 100% of the meetings of the full Board of Directors and 80% or more100% of the meetings of the Committeescommittees on which he or she served.

Director Attendance at Annual Meetings

The Board of Directors has adopted a Board Member Attendance at Annual Meetings Policy, which was last updated in July 2020.Policy. This policy is available on the Investor Relations page of our website, www.vcel.com, and by following the Corporate Governance link.www.vcel.com. All of the directors then in office attended our 2022 annual meeting of shareholders, which was held in April 20202022 and conducted in a virtual, audio webcast format because of restrictions related to the COVID-19 pandemic.format.

Shareholder Communications with Directors

Our relationship with our shareholders is an important part of our corporate governance program. Engaging with shareholders helps us to understand how they view us, tothe Company, set goals and expectations for our performance and to identify emerging issues that may affect our strategies, corporate governance, compensation practices or other aspects of our operations. The Board of Directors has adopted a Shareholder Communications with Directors Policy to inform shareholders how they may pose their questions or communicate their views to our Board of Directors. The Shareholder Communications with Directors Policy is available on the Investor Relations page of our website, www.vcel.com, and by following the Corporate Governance link.www.vcel.com.

Director Continuing Education

The Board of Directors recognizes the importance of ensuring that its members are continuously updated on matters of importance to its oversight of the Company from both an internal and external perspective. The Governance and Nominating Committee maintains responsibility for determining issues and subject matter areas that require further education for the Board members, whether because of external developments or changes in Company direction. During 2020,2022, the Board of Directors received education from Vericel’s General Counsel and outside advisors in the areas of cybersecurity, sustainability, and environmental, social and corporate governanceESG matters.

Certain Relationships and Related-Party Transactions

The Board of Directors is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related-party transactions can present a heightened risk of potential or actual conflicts of interest. Accordingly, and as a general matter, it is Vericel’s preference to avoid related-party transactions.

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Our Audit Committee has primary responsibility for reviewing and approving in advance, or ratifying, all related-party transactions. In conformance with SEC regulations, we define related persons to include our executive officers, our directors and nominees to become a directordirectors of our Company, any person who is known to us to be a beneficial owner of more than 5% of any class of our voting securities, any immediate family member of any of the foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons is employed, is a general partner or in which such a person has a 5% or greater beneficial ownership interest.

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We have several processes that we use to ensure that we identify and review all related-party transactions. First, each executive officer is required to notify either our General Counsel ofor Chief Financial Officer of any potential transaction that could create a conflict of interest, and the General Counsel or Chief Financial Officer is required to notify the Audit Committee of the potential conflict. The directors, President and Chief Executive Officer, Chief Financial Officer and General Counsel are required to notify the Audit Committee of any potential transaction that could create a conflict of interest. Second, each year, we require our directors and executive officers to complete directors’ and officers’ questionnaires identifying any transactions with us in which the executive officer or director or their family members have an interest.

The Audit Committee reviews related-party transactions due to the potential for such transactions to create a conflict of interest. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, with our interests. Our Board orand its committees only approve a related-party transaction if it is determined that a transaction is in the best interests of shareholders or is at least not inconsistent with those interests. This includes situations where the Company may obtain products or services of a nature, quantity or quality, or on other terms, that are not readily available from alternative sources or when the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated party. There were no such reportable relationships or related party transactions during the fiscal year ended December 31, 2020.2022.

Compensation of Directors

Our directors play a critical role in guiding our strategic direction and overseeing the management of Vericel. The many responsibilities and risks and the substantial time commitment of being a director require that we provide adequate compensation commensurate with our directors’ workload and opportunity costs. Our philosophy is to provide competitive compensation necessary to attract and retain high-quality non-employee directors and appropriately compensate them for the time, expertise and effort required to serve as a director of a commercial stage, publicly-traded company that operates in a dynamic and highly-regulated industry. Non-employee directors receive a combination of annual cash retainers and stock option and restricted stock unit (RSU)RSU grants in amounts that correlate to their responsibilities and levels of Board participation, including service on Board committees. At least every three years, the Compensation Committee engages an independent consultant to perform an analysis of the non-employee director compensation program. In 2019,2022, the Compensation Committee engaged Frederic W. Cook & Co., Inc. (“F.W.FW Cook”) to perform an independent review of the compensation program for non-employee directors.

The director compensation table reflects all compensation awarded to, earned by or paid to our non-employee directors for the fiscal year ended December 31, 2020.2022.

Name		Fees Earned or Paid in Cash ($)		Stock Awards ($)(1)(3)		Option Awards ($)(2)(3)		Total ($)
Robert L. Zerbe		80,000		25,480		117,439		222,919
Kevin F. McLaughlin		60,000		25,480		117,439		202,919
Alan L. Rubino		64,500		25,480		117,439		207,419
Heidi Hagen		57,000		25,480		117,439		199,919
Paul K. Wotton		45,000		25,480		117,439		187,919
Steven C. Gilman		47,000		25,480		117,439		189,919

Director(1)		Fees Earned or Paid in Cash ($)				Stock Awards ($)(2)				Option Awards ($)(3)				Total ($)
Robert Zerbe			90,000				83,174				126,874				300,048
Kevin McLaughlin			70,000			��	83,174				126,874				280,048
Alan Rubino			75,000				83,174				126,874				285,048
Heidi Hagen			67,500				83,174				126,874				277,548
Paul Wotton			55,000				83,174				126,874				265,048
Steven Gilman			57,500				83,174				126,874				267,548
Lisa Wright			55,000				83,174				126,874				265,048

(1)	As permitted by SEC rules, Mr. Colangelo’s compensation from the Company for 2022 is set forth in the 2022 Summary Compensation Table. Mr. Colangelo did not receive any additional compensation for his service as a director.
(2)	Amount reflects the grant date fair value of awards of time-based RSUs made to the named director in 2020,2022, calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. For purposes of this calculation, we have disregarded forfeiture assumptions related to service-based vesting conditions. For a discussion of the assumptions used in calculating these values, see Note 7 to our consolidated financial statements in our annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 23, 2023.
(3)	Amount reflects the grant date fair value of stock option awards made to the named director in 2022, calculated in accordance with FASB ASC Topic 718. For purposes of this calculation, we have disregarded forfeiture assumptions related to service-based vesting conditions. For a discussion of the assumptions used in calculating these values, see Note 97 to our consolidated financial statements in our annual report on Form 10-K for the fiscal year ended December 31, 2020,2022, filed with the SEC on February 24, 2021. The table below provides details as to the aggregate number of unvested stock awards held by our non-employee directors at fiscal year-end.23, 2023.

(2)2023 Proxy Statement	Amount reflects the grant date fair value of stock option awards made to the named director in 2020, calculated in accordance with FASB ASC Topic 718. For purposes of this calculation, we have disregarded forfeiture assumptions related to service-based vesting conditions. For a discussion of the assumptions used in calculating these values, see Note 9 to our consolidated financial statements in our annual report on Form 10-K for the fiscal year ended December 31 2020, filed with the SEC on February 24, 2021. The table below provides details as to the aggregate number of shares underlying stock option awards held by our non-employee directors at fiscal year-end.
(3)	Non-employee directors held the following unvested RSUs and unexercised stock options as of December 31, 2020:

Director		Stock Awards		Shares Underlying Stock Options
Robert L. Zerbe		1,750		61,750
Alan L. Rubino		1,750		109,250
Heidi Hagen		1,750		102,000
Steven C. Gilman		1,750		63,750
Kevin F. McLaughlin		1,750		96,250
Paul K. Wotton		1,750		43,750

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Additionally, non-employee directors held the following unvested RSUs and unexercised stock options as of December 31, 2022:

Director		Stock Awards				Shares Underlying Stock Options
Robert Zerbe			2,600				66,750
Alan Rubino			2,600				114,250
Heidi Hagen			2,600				108,250
Steven Gilman			2,600				61,750
Kevin McLaughlin			2,600				109,250
Paul Wotton			2,600				13,000
Lisa Wright			3,467				15,627

Fees Earned or Paid in Cash. Cash. The Chairman of the Board of Directors receives an annual fee of $80,000$90,000 paid in equal quarterly increments and does not receive additional fees for service as a member of the Board of Directors or as an individual committee member. Each other non-employee director receives an annual fee of $40,000$50,000 paid in equal quarterly increments. The chairperson of each standing committee receives an additional annual fee of $20,000 for the Audit Committee, $14,500$15,000 for the Compensation Committee and $10,000 for the Governance and Nominating Committee. The non-chair members of the Audit Committee each receives an additional $10,000 annual fee, each non-chair committee member of the Compensation Committee receives an additional $7,000$7,500 annual fee and each non-chair committee member of the Governance and Nominating Committee receives an additional annual fee of $5,000, in each case payable quarterly.

Equity Awards. Awards. Under Vericel’s 2022 Omnibus Incentive Plan (the “2022 Plan”) and Vericel’s Amended and Restated 2019 Omnibus Incentive Plan (the 2019 Plan) and Vericel’s non-employee director compensation policy, aNon-Employee Director Compensation Guidelines, each non-employee director who continuedcontinues to serve beyond an annual meeting receives a stock option to purchase 13,1256,500 shares granted on the date of each annual meeting, with an exercise price equal to the fair market value of our common stock on the date of grant, and a grant of 1,7502,600 RSUs. Each non-employee director received a stock option to purchase 13,1256,500 shares and a grant of 1,7502,600 RSUs at the 20202022 annual meeting. Such stock options vest in equal monthly increments over a period of one year, subject to continued service through the applicable vesting date.dates. The RSUs vest on the earlier of the first anniversary date of the RSU grant or the date of the first annual meeting following the grant, subject to continued service through the vesting date. Newly-elected directors joining the Board of Directors during the period between annual meetings receive a grant forrepresenting a pro ratapro-rata amount of the shares subject to the option (reflecting the period of time until the next annual meeting) and a pro ratapro-rata amount of the annual RSUs awarded (reflecting the period of time until the next annual meeting).

In addition, each future non-employee director who joins the Board of Directors will also receive a one-time initial stock option to purchase 17,5003,250 shares on the date of such director’s appointment, which will vest in equal monthly installments over three years, subject to continued service through the applicable vesting date. These equity grants are made underdates and a one-time initial grant of 1,300 RSUs, which will vest in 1/3 annual increments over the termscourse of Vericel’s then-existing equity compensation plans, as previously approved bythree years, subject to continued service through the shareholders.applicable vesting dates. Stock options issued to directors shall terminate and may no longer be exercised after the first to occur of (a) the expiration date of the option, (b) 24 months after the date on which the director’s service with Vericel is terminated, or (c) a change in controlchange-in-control to the extent provided in the stock option agreement.

Non-employee directors have the ability, under Vericel’s Non-Employee Director Deferred Compensation Program, to elect to receive RSUs upon vesting or RSUs with a deferred settlement. A non-employee director must elect to defer the receipt of a RSU grant by December 31^st 31st of the year prior to the grant and during an open-trading window. Newlywindow; provided, however, newly elected non-employee directors must make an election within thirty (30) days of joining the Board. RSUs with deferred settlement are subject to vesting but the shares are not issued until the earlier of (i) the non-employee director’s separation from service towith Vericel, is terminated, or (ii) a change in controlchange-in-control, as defined in the 20192022 Plan. Further, under the Non-Employee Director Deferred Compensation Program, upon the occurrence of such event, the amounts credited in the non-employee director’s account shall be paid in shares of stock as soon as practicable, but in no event after the last day of the calendar year in which the event occurs or two and one-half months after the event occurs, whichever comes later.

Stock Ownership Guidelines for Directors

In April 2021, the Board adopted Stock Ownership Guidelines applicable to non-employee directors. Pursuant to these guidelines, non-employee directors are expected to meet share ownership targets that are determined based on their annual retainer within five years of the adoption of the guidelines. In addition, non-employee directors who join the Board after the establishment of the guidelines have five years from such date to reach their target. The share ownership target for non-employee directors is three times (3X) their annual retainer.

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Executive Compensation

Proposal

PROPOSAL 2: Advisory Vote to Approve the Compensation of Our Named Executive Officers

Advisory Vote to Approve the Compensation of Our Named Executive Officers

	The Board of Directors unanimously recommends a vote FOR the approval of this resolution.

Overview

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), this proposal gives our shareholders the opportunity to vote to approve or not approve, on an advisory basis, the compensation of our named executive officers. This is commonly known, and referred to herein, as a “say-on-pay” proposal or resolution. Under Section 14A(a)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), generally, each public company must submit a say-on-pay proposal to its shareholders not less frequently than once every three years. We intend to hold an advisory vote to approve the compensation of our named executive officers annually until at least the next advisory vote on the frequency of such advisory say-on-pay votes, which will occur no later than our 2024 annual meeting.

As discussed under the Compensation Discussion and Analysis (“CD&A”) below, we believe that our executive compensation programs emphasize sustainable growth through a pay-for-performance orientation and a commitment to both operational and organizational execution. We believe that the compensation program for our named executive officers was instrumental in helping us achieve strong strategic and financial performance in 2020,2022, notwithstanding the wide-ranginglingering impacts of the COVID-19 pandemic.

We are asking our shareholders to vote “FOR” the following resolution at our Annual Meeting:

“RESOLVED, that the compensation paid to Vericel’s named executive officers, as disclosed in this proxy statementProxy Statement pursuant to Item 402 of Regulation S-K, including the compensation tables and narrative discussion, is hereby APPROVED.”

We are asking shareholders to indicate their support for our named executive officers’ compensation as described in this proxy statement.Proxy Statement. This vote is not limited to any specific item of compensation, but rather addresses the overall compensation of our named executive officers and our philosophy, policies and practices relating to their compensation as described in this proxy statementProxy Statement pursuant to Item 402 of Regulation S-K.

Vote Required

The say-on-pay resolution is advisory, and therefore will not have any binding legal effect on Vericel, the Board of Directors or the Compensation Committee. However, the Board of Directors and the Compensation Committee value the opinions of our shareholders and intend to take the results of the vote on this proposal into account in its future decisions regarding the compensation of our named executive officers. Abstentions and broker non-votes will have no effect on this Proposal 2. If you sign and submit your proxy card without marking your voting instructions, your shares will be voted “FOR” Proposal 2.

We believe that our compensation program for our named executive officers is in the best interests of Vericel and the Company’s shareholders.

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Executive Compensation

Vericel’s Executive Officers

Dominick C. Colangelo President and Chief Executive Officer Dominick C. Colangelo, age 59, joined Vericel in 2013 with more than 20 years of executive management and corporate development experience in the biopharmaceutical industry, including nearly a decade with Eli Lilly and Company. During his career, he has held a variety of executive positions of increasing responsibility in product development, pharmaceutical operations, sales and marketing, and corporate development. He has extensive experience in the acquisition, development, and commercialization of products across a variety of therapeutic areas. During his tenure at Eli Lilly and Company, Mr. Colangelo held positions as Director of Strategy and Business Development for Lilly’s Diabetes Product Group and also served as a founding Managing Director of Lilly Ventures. Mr. Colangelo received his B.S.B.A. in Accounting, Magna Cum Laude, from the State University of New York at Buffalo and a J.D. degree, with Honors, from the Duke University School of Law.

			Joe Mara Chief Financial Officer Joe Mara, age 48, joined Vericel in January 2021 with more than 20 years of financial, strategic and operational experience, including more than 14 years of experience in the biotech industry. Prior to joining Vericel, Mr. Mara served as Vice President, Finance and Head of Investor Relations at Biogen Inc. While at Biogen, Mr. Mara held several finance leadership roles, including Vice President, Global Financial Planning and Analysis and Strategic Corporate Finance and Vice President, U.S. Finance and Operations. Mr. Mara worked across the entire Biogen organization in roles of increasing responsibility within Finance, including R&D, Corporate Finance, Corporate Strategy and Commercial operations, supporting company strategy, business development and several commercial launches. Prior to joining Biogen, Mr. Mara held finance and strategy roles in the financial services and technology industries, including at Thomson Reuters Corporation and Fidelity Investments. Mr. Mara earned a B.A. degree in Economics and International Studies from Northwestern University and an M.B.A. from the Sloan School of Management at M.I.T.

			Michael Halpin Chief Operating Officer Michael Halpin, age 61, joined Vericel in April of 2017 with over 28 years of regulatory, quality assurance, and clinical research experience with a variety of medical device, combination product, small molecule, biologic, and advanced therapy technologies. Prior to joining Vericel, Mr. Halpin was with Sanofi and Genzyme Corporation, most recently as Vice President, North American region regulatory head with responsibility for Sanofi Genzyme’s rare disease, immuno-inflammatory, multiple sclerosis and other business unit products. Mr. Halpin has also served as Vice President, Regulatory Affairs for Genzyme’s biosurgery division, with regulatory oversight of all biosurgery and cell and gene therapy products, including Carticel®, Epicel, and MACI. Prior to Genzyme, Mr. Halpin held a number of regulatory, quality, and clinical affairs positions at several medical device companies, including Abbott/MediSense, C.R. Bard, and Abiomed, Inc. Mr. Halpin received his master’s degree in biomedical engineering and bachelor’s degree in biochemistry from the University of Virginia.

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Sean C. Flynn Senior Vice President, General Counsel and Secretary Sean Flynn, age 49, joined Vericel in 2019, having served as corporate and litigation counsel for nearly 20 years in both the public and private sectors. Prior to joining Vericel, Mr. Flynn held the position of Vice President and General Counsel of Verastem, Inc. where he was responsible for all legal matters across the organization. Mr. Flynn also served as Associate General Counsel and Chief Compliance Officer for Abiomed, Inc. during a period of rapid revenue and market growth. In that capacity, Mr. Flynn handled a wide variety of business and legal matters for the organization, while maintaining responsibility for the compliance readiness of the company on a global scale. Prior to joining Abiomed, Mr. Flynn served for seven years as a federal prosecutor with the Offices of the United States Attorney for the Eastern District of California and the Eastern District of New York. Mr. Flynn began his legal career as a litigator with Bingham McCutchen LLP, after clerking for the Honorable Ruggero J. Aldisert, Senior Circuit Judge, United States Court of Appeals for the Third Circuit, and after receiving his Juris Doctor, cum laude,, from Vermont Law School. Prior to beginning his legal career, Mr. Flynn served as an Air Defense Artillery Officer in the United States Army, having graduated from the United States Military Academy at West Point in 1995.

			Dr. Jonathan Hopper Chief Medical Officer Jonathan Hopper, age 60, is a seasoned industry executive with previous experience as a surgeon and government regulator. He qualified in medicine in the United Kingdom in 1987 and trained as an orthopaedicorthopedic and trauma surgeon, gaining additional clinical experience in Accident and Emergency, Sports Medicine and Trauma Intensive Care. Dr. Hopper became a Fellow of the Royal College of Surgeons of Edinburgh in 1992. In 1997, he joined the UK’s Senior Civil Service as a senior medical officer at the UK’s Department of Health, regulating medical device manufacturers and advising senior government officials and Ministers of State. Dr. Hopper attained the degree M.B.A. (Health Executive) from the University of Keele in 2003. In 2006, Dr. Hopper joined the medical device industry and moved to the United States in 2009. He has held various Global Medical Affairs and Clinical Development Executive roles for ConvaTec, Stryker, Osiris Therapeutics and Ferring Pharmaceuticals. Dr. Hopper joined Vericel in August 2018 and leads the Clinical Development, Pharmacovigilance and Medical Affairs functions.

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Compensation Discussion and Analysis

The Compensation Committee of our Board of Directors, which is comprised solely of independent directors as defined by Nasdaq, outside directors as defined by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and non-employee directors as defined by Rule 16b-3 of the Exchange Act, has been delegated the authority and responsibility to review and determine (and in the case of our CEO,Chief Executive Officer, Mr. Colangelo, recommend for approval by the Board of Directors) the compensation packages of our executive officers. The individuals who served as our named executive officers during fiscal year 2020 are those individuals listed in the “2020 Summary Compensation Table” below. Other information concerning the structure, roles and responsibilities of our Compensation Committee is set forth in the “Board Meetings and Committees—“Committees of the Board—Compensation Committee” section of this Proxy Statement.

A discussion of the policies and decisions that shape our executive compensation program, including the specific objectives and elements, is set forth below.

This CD&A focuses on the compensation for our CEO, each person who served as our Principal Financial Officer, during 2020 and our three other most highly compensated executive officers. Collectively, these officers are referred to as the named executive officers or NEOs. At times during 2020, both Gerard Michel (our former Chief Financial Officer and Vice President of Corporate Development) and Sandra Pennell (our Vice President and Controller) served as Principal Financial OfficerOur NEOs for the Company. Mr. Michel resigned and his employment with Vericel terminated on September 30, 2020. Following Mr. Michel’s departure, Ms. Pennell was appointed Principal Financial Officer and Principal Accounting Officer and served in that capacity between September 30, 2020 and January 25, 2021. Following Joe Mara’s appointment as Chief Financial Officer and Principal Financial Officer in January 2021, Ms. Pennell continues to serve as Vericel’s Principal Accounting Officer.2022 are:

34       Dominick Colangelo

Joe Mara

Michael Halpin

Sean Flynn

Jonathan Hopper

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Table of ContentsExecutive Summary

Executive Compensation

Our Approach to Compensation

Executive Compensation Objectives and Philosophy

The objectives of our executive compensation program are to attract, retain and motivate talented executives who are critical for the continued growth and success of Vericel and to align the interests of these executives with those of our shareholders. In this vein,As such, our executive compensation program seeks to focus our leadership team on those key metrics that are critical drivers for executing on the Company’s strategy and achieving long-term sustainable growth. We foster a “pay-for-performance”pay-for-performance culture by setting metrics in our incentive compensation plans that reflect our business plan, the operating framework for achieving it and the goals we communicate to investors. We set target performance levels that are challenging but achievable and are aligned with our strategy and our longer-term financial outlook. To this end, our compensation programs for executive officers are designed to achieve the following objectives:

		Attract talented and experienced executives to join Vericel				Motivate, reward and retain executives whose knowledge, skills and performance are critical to our success				Focus executive behavior on the achievement of our corporate mission and short-term and long-term corporate objectives and strategy
		Maintain a culture of “pay for performance”				Ensure fairness among the executive management team by recognizing the contributions each executive makes to our success				Align the interests of management and shareholders by providing management with longer-term incentives through equity ownership

Elements of Compensation

We also strive to provide an effective mix of compensation elements, including providing an appropriate balance between current and long-term compensation and between cash and equity incentive compensation. Cash payments are primarily are aligned with and reward short-term performance, while equity awards encourage our named executive officers to deliver sustained strong results over multi-year performance periods, thereby encouraging strong performance, ensuring fairness among the executive management team by recognizing the contributions each executive makes to our success, supporting our talent attraction and retention objectives, and fostering alignment with investors.

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Elements ofExecutive Compensation

Target Total Direct Compensation

CEO		Other NEOs

Highlights of 2022 Performance Metrics That Determine Our Variable Compensation and Their Relation to Our StrategyImpact on Executive Pay

OUR STRATEGY

Vericel is a high-growth commercial-stage biopharmaceutical company, with a portfolio consisting ofwhich markets two commercialautologous cell therapy products, MACI and Epicel, which are currently soldand one specialty biologic product, NexoBrid, in the U.S. market, and a development stage asset, NexoBrid, which is the subject of a BLA currently under review by the FDA.United States. Our objective is to become the leading developer of advanced therapies and specialty biologics for the sports medicine and severe burn care markets. In pursuing this strategy, we seek to increase our commercial product revenue by increasing the number of surgeons implanting MACI, the average number of MACI procedures each such surgeon performs, expanding the clinical indications for which the MACI procedure is approved, and optimizing the ease of use of the MACI procedure for surgeons through, among other efforts, developing and potentially commercializing an arthroscopic delivery method for MACI. Additionally, we seek to increase our burn care revenues by expanding the number of burn centers and surgeons consistently using Epicel. Additionally, it is our objective to lowerEpicel, and achieving the marginal manufacturing costs for MACI and Epicel through increased product volumes, while generating operating income by keeping the growth in commercial expense lower than growth in revenue, through product improvements and other strategies. We also are focused on helping secure the approval of NexoBrid by the FDA and adding it to our commercial portfolio in the near future.

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Our executive officers’ performance metrics have been designed by our Board of Directors. Those metrics consist of both revenue and financial targets, as well as product-related and operations goals in order to focus our management on advancing our overall corporate strategy and furthering both the short-successful launch and long-term growth of our organization. During 2020, those performance metrics consisted ofNexoBrid in the following targets:U.S. market beginning later this year.

		Our Goals	Our Metrics
		Total net revenue	Generate total net revenue of at least $152.6 million
		Budget expense	Achieve budget expense target of $121.5 million
		Commercial Product Goals	Achieve budgeted MACI biopsy conversation rate and MACI surgeon engagement goals
		Long-Term Brand Development Goals	Complete MACI, Epicel and NexoBrid long-term brand development initiatives
		Product Development Goals	Submit NexoBrid BLA to the FDA with subsequent acceptance for filing
		Manufacturing Capacity and Risk Mitigation Projects	Complete manufacturing capacity assessment and secure Board approval of long-term manufacturing plan
		Operational Improvement Initiatives	Complete key manufacturing and information technology efficiency improvement initiatives
		Business Development	Execute high-quality business development transaction

Highlights of 2020 Performance and Impact on Executive Compensation

2020 Performance Impact on Executive Pay

Led by its executive management team, Vericel achieveddelivered strong performance during 2020 across a variety2022, as the Company achieved record full-year commercial revenues of metrics in one of$164.4 million. The Company’s 2022 commercial and financial performance was accomplished notwithstanding the most challenging environments in recent years. Notwithstanding the widespread restrictions on elective surgical procedures across the United States during the second quarter of 2020 as a resultlingering impacts of the COVID-19 pandemic, we wereparticularly during the first half of 2022, which caused disruptions in the healthcare industry that affected both the scheduling of elective MACI surgeries, as well as patient behavior. Nevertheless, the Company was able to drive full-year net revenue growth for both MACI and Epicel, securing record volumes for both products in the process. Total full-year 2020 net revenue was $124.2 million and consisted of record full-year MACI revenue of $94.4$132 million, representing growth of 18% over 2021. Importantly, as COVID-19 effects waned during the second half of 2022 and record full-year Epicel revenue of $27.5 million. Although the impact of COVID-19 caused total net revenueoverall operating environment improved, MACI achieved 30% and 24% year-over-year growth during the third and fourth quarters, respectively, and MACI continues to fall short ofbe well-positioned for continued growth as we enter 2023. Additionally, the Company’s full-year goal, our commercial team’s agilityperseverance during 2022 helped continue to grow surgeon adoption of MACI as the Company finished the year with approximately 2,000 surgeons taking MACI biopsies in consistently engaging2022, representing an increase of approximately 10% from 2021. Epicel volume was lower than anticipated for the year, primarily the result of a marked decrease throughout the U.S. in the incidence of large burns greater than 30% during 2022. Notwithstanding these dynamics, the Company continued to see broad burn center engagement with customersEpicel, as we had a record number of burn centers take Epicel biopsies during the year.

Ultimately, the ability of our team to adapt and execute in virtual settings,a challenging environment and our disciplined approach to expense management and our significant efforts to protect the health and well-being of our critical production employeesduring 2022 allowed Vericel to help treat more sports medicinegenerate approximately $24.2 million of adjusted EBITDA* and severe burn care patients than ever –grow our cash and achieve gross margins forinvestments balance by approximately $10 million in 2022, ending the year of 68%, which translated into our first ever full-year of positive net income. We generated $17.6 million in operating cash flow during the year and concluded 2020 with $100$140 million in cash and investments and no debt.

AtIn addition to generating strong financial results, Vericel also made significant progress advancing our pipeline during 2022, highlighted by an accelerated potential launch timeline for the MACI arthroscopic delivery program and the FDA’s December 28, 2022 approval of the NexoBrid BLA. Following a Type C meeting with the FDA, the Company is now planning to initiate a human factors validation study during 2023 to support expanding the MACI label to include the arthroscopic administration of the product for the treatment of cartilage defects in the knee. We now anticipate the potential launch of arthroscopic MACI in 2024, which is several years earlier than if an additional clinical study was required. Importantly, we believe that an arthroscopic option for MACI will be an attractive alternative for both patients and surgeons and help drive significant revenue growth, while at the same time allowing more patients to benefit from receiving MACI.

*

For more information concerning Vericel’s presentation of non-GAAP measures, including a reconciliation of reported net (loss) income (GAAP) to adjusted EBITDA (non-GAAP), please refer to the Company’s discussion of “GAAP versus non-GAAP Measures”, on page 63 of this Proxy Statement. Adjusted EBITDA was calculated by adjusting GAAP Net (loss) income for (1) stock-based compensation expense, (2) depreciation and amortization, (3) net interest income, and (4) income tax expense (benefit).

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Additionally, the FDA’s recent approval of NexoBrid (anacaulase-bcdb) for the removal of eschar in adult patients with deep partial-thickness and/or full thickness thermal burns was a significant milestone for Vericel during 2022. NexoBrid’s approval in the United States significantly increases the addressable market for our burn care franchise to approximately $600 million and, we were ablebelieve, its addition to advance our long-term productcommercial portfolio will enable us to build a second high-growth commercial franchise in the years ahead.

Finally, during 2022, the Board approved a specific ESG-related corporate goal for management which was focused, in part, on developing the Company’s first-ever ESG Report and operational objectives, completing a key manufacturing capacity assessmentenhancing diversity and long-term manufacturing plan,inclusion initiatives at all levels of the organization. The Company executed on the Board’s direction during the past year and Vericel’s inaugural ESG Report, which will help ensure that the significant growthis available on our Company’s website, was published in MACI and Epicel will be sustainable for years to come. In 2020, the FDA also accepted for review MediWound’s BLA submission for NexoBrid.June of 2022.

We have continued to generate significant revenue growth since 2017, which has been driven by the strong growthConsideration of both MACI and Epicel. Prior to the COVID-19 pandemic, and since 2017, our business had delivered 30%-plus compounded annual revenue growth. MACI and Epicel revenue grew 30% in 2019, with our cartilage repair franchise having more than doubled since the launch of MACI, and Epicel growing at a double-digit rate for three consecutive years.

Say-On-Pay Vote

There was strong support at the 20202021 and 2022 annual meetingmeetings for the compensation program offeredprovided to Vericel’s named executive officers, with more than 96% and 86% of votes cast in favor, of approval of the compensation paid to Vericel’s named executive officers in 2019.respectively. In light of the recent strong support for our executive compensation program reflected by the results of the 2020these “say-on-pay” proposal,proposals, the Compensation Committee maintained the same general structure and approach forto Vericel’s executive compensation program for 2020.2022. Although the results of the say-on-pay proposal are not binding, on us, our Board and Compensation Committee value the input of our shareholders and intend to continue to consider the outcome of say-on-pay votes, as well as feedback received throughout the year, when making compensation decisions for our named executive officers in the future.

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Executive Compensation Best Practices

		What We Do				What We Don’t Do
Design executive compensation to align pay with performance Balance short- andshort-and long-term incentive compensation to incentivize achievement of short- andshort-and long-term goals Retain an independent compensation consultant reporting directly to the Compensation Committee Provide shareholders with an annual say-on-pay vote Prohibit short-sales,short sales, hedging, pledging or other inherently speculative transactions by our executives, non-employee directors and other Company employees (for more information, please see our Special Trading Procedures for Insiders, which can be found on our websiteavailable at www.vcel.com) Conduct competitive benchmarking to align executive compensation with the market   Maintain robust stock ownership guidelines that apply to our directors and named executive officers   Maintain a compensation clawback policy, which covers both cash and equity and allows for recoupment of executive compensation if financial results are subsequently restated as the result of misconduct				No excessive perquisites   No tax gross-ups on executive perquisites or on executive severance or change in controlchange-in-control benefits   No single-trigger change in controlchange-in-control benefits No liberal share recycling   Do not provide supplemental company-paid retirement benefits   Our equity plan does not permit “evergreen” replenishment of shares   Do not provide dividends or dividend equivalents on unearned equity awards No repricing of underwater   Do not reprice stock options without prior shareholder approval

Design and Structure of 2020 Executive Compensation

Our Business and Our Compensation Philosophy

The objectives of our executive compensation program are to attract, retain and motivate talented executives who are critical for the continued growth and success of Vericel and to align the interests of these executives with those of our shareholders. To this end, our compensation programs for executive officers are designed to achieve the following objectives:

●38	Maintain a culture of “pay for performance”
●	Attract talented and experienced executives to join Vericel
●	Motivate, reward and retain executives whose knowledge, skills and performance are critical to our success
●	Ensure fairness among the executive management team by recognizing the contributions each executive makes to our success
●	Focus executive behavior on achievement of our corporate mission and short-term and long-term corporate objectives and strategy
●	Align the interests of management and shareholders by providing management with longer-term incentives through equity ownership

The Compensation Committee reviews the allocation of compensation components regularly to help ensure alignment with strategic and operating goals, competitive market practices and legislative changes. The Compensation Committee does not apply a specific formula to determine the allocation between cash and non-cash forms of compensation. Certain compensation components, such as base salaries, benefits and perquisites, are intended primarily to attract and retain qualified executives. Other compensation elements, such as annual and long-term incentive opportunities, are designed to motivate and reward performance. The annual incentive motivates named executive officers to achieve specific operating objectives for the fiscal year. Long-term incentives are intended to reward our long-term performance and achievement of specific financial goals and to strongly align named executive officers’ interests with those of shareholders.

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Components of 2020 Compensation

The primary components of our executive officer compensation program are: (i) annual base salary; (ii) annual incentive compensation, which is based on the achievement of specified Company goals; and (iii) long-term equity incentive compensation in the form of periodic stock option and RSU grants, with the objective of aligning the executive officers’ long-term interests with those of our shareholders.

In establishing overall executive compensation levels and making specific compensation decisions for the executives in 2020, the Compensation Committee considered a number of criteria, including the executive’s position, prior compensation levels, scope of responsibilities, prior and current period performance, attainment of individual and overall Company performance objectives, and external market data. In addition, the Compensation Committee considered the results of the advisory vote by shareholders on the “say-on-pay” proposal presented to shareholders at Vericel’s 2020 annual meeting.

		Element	Target Mix	Strategy and Performance Alignment
		Base Salary		We believe that a competitive base salary is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives. We also believe that attractive base salaries can motivate and reward executives for their overall performance. Base salaries are established in part based on the individual experience, skills and expected contributions of our executives and our executives’ performance during the prior year.
		Annual Non-Equity Incentive Compensation		Given the nature of our business, the determination of annual incentives for our executives has been tied to achieving our financial targets, advancing our commercial and development stage products and accomplishing operational goals. Each executive officer has a target cash incentive amount that is set as a percentage of his or her base salary. The amount of the cash incentives awarded by the Compensation Committee to our named executive officers each year is based on the achievement of performance and corporate goals set by the Compensation Committee in advance, which are designed to capture the important strategic, operational and financial aspects of the organization.
		Long-Term Equity Incentive Compensation		Long-term incentive compensation allows the executive officers to share in any appreciation in the value of our common stock. In 2020, our Board of Directors awarded stock options and RSUs to our CEO, and the Compensation Committee awarded stock options and RSUs to our other named executive officers, to aid in their retention, to motivate them to achieve both near-term and long-term corporate objectives and to align their interests with those of our shareholders by creating a return tied to the performance of our stock price.

Base Salary

The Compensation Committee performs a review of base salaries for our executive officers annually. We may also change the base salary of an executive officer at other times due to market conditions or if a change in the scope of the officer’s responsibilities justifies such adjustment. We believe that a competitive base salary is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives. We also believe that attractive base salaries can motivate and reward executives for their overall performance. Base salaries are established in part based on the individual experience, skills and expected contributions of our executives and our executives’ performance during the prior year.

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In February 2020, our Compensation Committee approved merit increases in base salary for each of our named executive officers serving at that time, based upon various factors, including a review of individual performance during 2019 and a comparison of projected cash compensation against peer group benchmarks. Salary adjustments were based on the goal of providing cash compensation at or near the peer group median, taking into account tenure in the executive’s position and the executive’s performance. The Compensation Committee approved base salary increases in order to maintain competitive compensation arrangements for executive officers relative to our peer group and as a reward for strong performance during 2019. The resulting salaries were generally consistent with or less than the median salary rate in our peer group. The table below sets forth the adjustments to base salary, in dollars and as a percentage, for each of our named executive officers:

	Base Salary Adjustments
Name	2019 Base Salary ($)		2020 Base Salary ($)		Increase (%)
Dominick C. Colangelo	634,000		675,000		6.5%
Michael Halpin	370,000		395,000		6.8%
Sean C. Flynn	340,000		350,000		2.9%
Jonathan Hopper	350,000		365,000		4.3%
Gerard Michel(1)	398,000		410,000		3.0%
Sandra Pennell(2)	200,000		222,500		11.3%

(1)

Mr. Michel resigned as Chief Financial Officer and Vice President Corporate Development and his employment with Vericel terminated on September 30, 2020. Joe Mara was appointed Vericel’s Chief Financial Officer, effective January 25, 2021.

(2)

Ms. Pennell serves as Vericel’s Vice President and Controller. Following Mr. Michel’s resignation as Chief Financial Officer and Vice President of Corporate Development, effective September 30, 2020, Ms. Pennell was appointed Vericel’s Principal Financial Officer and Principal Accounting Officer, effective September 30, 2020. Following Mr. Mara’s appointment as Chief Financial Officer and Principal Financial Officer on January 25, 2021, Ms. Pennell continues to serve as Vericel’s Principal Accounting Officer. Ms. Pennell’s base salary was increased from $200,000 to $222,500 upon her appointment as our Principal Financial Officer and Principal Accounting Officer.

Annual Non-Equity Incentive Compensation

Given the nature of our business, the determination of annual incentives for our executives has been tied to achieving our financial targets, advancing our commercial and development stage products and accomplishing operational goals. Each executive officer has a target cash incentive amount that is set as a percentage of his or her base salary which is also based, in part, on peer group benchmarks. The amount of the cash incentives awarded by the Compensation Committee to our named executive officers each year is based on the achievement of performance and corporate goals set by the Compensation Committee in advance, which are designed to capture the important operational and financial aspects of the organization. The 2020 corporate goals approved by our Compensation Committee were:

1.	Achieve Financial Targets (the “Financial Goals”) (40%):
	a.	Generate total net revenue of $152.6 million or more (excluding accounts receivable write-downs from former pharmacy provider cases)
	b.	Achieve budget expense target of $121.5 million (excluding depreciation, amortization and stock-based compensation and, on a case-by-case basis, unusual one-time expenses or changes in accounting methodology)
2.	Advance Products and Life Cycle Management (the “Product Goals”) (40%):
	a.	Achieve budgeted MACI biopsy conversion rate and MACI biopsy surgeon engagement goals
	b.	Submit NexoBrid BLA to the FDA by August 31, 2020 with subsequent acceptance for filing by the FDA
	c.	Complete MACI, Epicel and NexoBrid long-term brand development initiatives
3.	Complete Operational Goals (the “Operational Goals”) (20%):
	a.	Complete manufacturing capacity assessment and secure Board approval of long-term manufacturing plan
	b.	Complete key manufacturing and IT efficiency improvement initiatives
4.	Upside Value Goal (the “Upside Goal”) (up to 15%):
	a.	Execute a high-quality business development transaction

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Our 2020 annual incentive program includes a cap on payouts of 200% of target such that no more than 200% of target may be earned under the annual incentive program. The Compensation Committee reviewed the Company’s performance in 2020 against the corporate goals and made a determination of a 100% achievement of our corporate goals for 2020, based on the following:

1.	40% out of a targeted 40% was awarded for the Financial Goals. The Compensation Committee awarded the target percentage for these goals as a result of the Company significantly exceeding goals relating to budgeted expenses. The fiscal discipline demonstrated by the Company in light of the COVID-19 pandemic resulted in the Company achieving its first full year of positive net income in its history.
2.	40% out of a targeted 40% was awarded for Product Goals. The Compensation Committee awarded the target percentage for these goals primarily due to the Company successfully submitting the NexoBrid BLA to the FDA in advance of August 31, 2020, and the FDA’s subsequent acceptance of the BLA for filing, and the Company’s partial achievement of the long-term product brand development initiatives, and MACI biopsy conversion rate and surgeon engagement goals.
3.	20% out of a targeted 20% was awarded for the Operational Goals. The Compensation Committee awarded the target percentage for these goals primarily due to the Company’s successful completion of a manufacturing capacity assessment and the Board of Directors’ subsequent approval of the Company’s long-term manufacturing plan, as well as the Company’s completion of key manufacturing and IT efficiency improvement initiatives.
4.	0% out of a maximum 15% was awarded for the Upside Goal. During 2020, the Company chose not to move forward with any business transaction.

The Committee noted that performance against the 2020 goals was excellent when considering the widespread effects of the COVID-19 pandemic on elective surgeries throughout the country, including MACI procedures. Nevertheless, the Committee made no adjustments to the manner in which the goals were scored.

The table below shows the target award under the 2020 annual incentive program as a percentage of each named executive officer’s annual base salary in 2020, the target cash award opportunity in dollars for 2020, and the actual cash bonus payments and percentage of award opportunity paid to our named executive officers for 2020 performance.

		2020 Annual Incentive Program
Name		2020 Target Award (% of Base Salary)			2020 Target Award Opportunity ($)		2020 Actual Bonus Payment ($)		2020 Actual Bonus Payment (% of Target Award Opportunity)
Dominick C. Colangelo		75	%		506,250		506,250		100	%
Michael Halpin		45	%		177,750		177,750		100	%
Sean C. Flynn		40	%		140,000		140,000		100	%
Jonathan Hopper		40	%		146,000		146,000		100	%
Gerard Michel(1)		45	%		184,500		—		—
Sandra Pennell(2)		30	%		63,400		63,400		100	%

(1)

Mr. Michel resigned as Chief Financial Officer and Vice President of Corporate Development and his employment with Vericel terminated on September 30, 2020. Accordingly, he was not eligible to, and did not, receive a bonus under the 2020 Annual Incentive Program.

(2)

Ms. Pennell serves as Vericel’s Vice President and Controller. Following Mr. Michel’s resignation, Ms. Pennell was appointed Vericel’s Principal Financial Officer and Principal Accounting Officer, effective September 30, 2020, and served in such role until Mr. Mara’s appointment as Chief Financial Officer and Principal Financial Officer on January 25, 2021. Ms. Pennell continues to serve as Vericel’s Principal Accounting Officer. Upon her appointment as Principal Financial Officer and Principal Accounting Officer, Ms. Pennell’s target bonus was raised from 25% to 30% of her base salary and was applied, retroactively, as of January 1, 2020.

Long-Term Equity Incentive Compensation

Long-term incentive compensation allows the executive officers to share in any appreciation in the value of our common stock. In 2020, the Compensation Committee awarded stock options and RSUs to our named executive officers to aid in their retention, to motivate them to achieve both near-term and long-term corporate objectives and to align their interests with those of our shareholders by creating a return tied to the performance of our stock price. In determining the form, date of issuance and value of a grant, the Compensation Committee considers the contributions and responsibilities of each named executive officer, appropriate incentives for the achievement of our long-term growth, the size and value of grants made to other executives at peer companies holding comparable positions, individual achievement of designated performance goals and Vericel’s overall performance relative to corporate objectives. Because employees are able to profit from stock options only if our stock price increases relative to the stock option’s exercise price, and because the value of RSUs is based on the price of our common stock when the RSUs vest, we believe stock options and RSUs provide meaningful incentives to our employees and named executive officers to achieve increases in the value of our stock over time.

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Executive Compensation

Stock options and RSU awards vest over time, generally four years, subject to continued employment with Vericel over the vesting period, which promotes executive retention. All stock options have an exercise price equal to the fair market value of our common stock on the date of grant, which is equal to our closing market price on such date.

The awards are designed to reward past performance and create incentives to meet long-term objectives. Awards are made at levels calculated to be competitive within the biotechnology and medical technology industries, as well as our peer group. In determining the amount of each grant, the Compensation Committee takes into account the number of shares held by the executive prior to the grant. In late 2018, the Compensation Committee engaged F.W. Cook to independently review the equity incentive grant practices of Vericel as compared to our peer group. The market data were used to support 2019 and 2020 compensation decisions. The Compensation Committee considered our strong compound annual shareholder return over three years, which was 79% at the end of 2019, when determining early 2020 equity awards and determined that awards would be above the peer group median for the first time in several years as a result of the high performance. The majority of the awards were in stock options, which require continued stock price growth after grant in order for the executive to recognize value from the award; however, since 2019 RSUs have been added to the long-term incentive grants to focus on retention and reduce dilution from the equity awards. Nevertheless, our CEO’s equity award was lower in 2020 than it was in 2019, notwithstanding a higher stock price at grant, because 2019 shareholder return was effectively flat.

On February 11, 2020 (or March 18, 2020 for Ms. Pennell), the Board of Directors granted our CEO, and the Compensation Committee granted our other named executive officers, the following stock options and RSUs. The grant date fair value of these awards is reported in the 2020 Summary Compensation Table below.

Name		Number of Shares Underlying Options (#)		Number of RSUs (#)
Dominick C. Colangelo		225,000		30,000
Michael Halpin		105,000		14,000
Sean C. Flynn(1)		—		—
Jonathan Hopper		48,750		6,500
Gerard Michel(2)		90,000		12,000
Sandra Pennell(3)		15,000		2,000

(1)	Mr. Flynn was appointed Vericel’s Vice President, General Counsel and Secretary, effective November 4, 2019. Upon his appointment, Mr. Flynn was awarded an initial grant of an option to purchase 150,000 shares and was therefore not eligible for an annual equity award for 2020.
(2)	Mr. Michel resigned as Chief Financial Officer and Vice President of Corporate Development and his employment with Vericel terminated on September 30, 2020; therefore, only a portion of the stock option granted to him in 2020, and none of the RSUs granted to him in 2020, vested.
(3)	Ms. Pennell serves as Vericel’s Vice President and Controller. Following Mr. Michel’s resignation, Ms. Pennell was appointed Vericel’s Principal Financial Officer and Principal Accounting Officer, effective September 30, 2020. Following Mr. Mara’s appointment as Chief Financial Officer and Principal Financial Officer on January 25, 2021, Ms. Pennell continues to serve as Vericel’s Principal Accounting Officer.

Other Compensation

Generally, benefits available to executive officers are available to all employees on similar terms and include health and welfare benefits, paid time-off, life and disability insurance and a 401(k) plan.

We provide the benefits above to attract and retain our executive officers and other employees by offering compensation that is competitive with other companies that are similar in size and stage of development. These benefits represent a relatively small portion of the total compensation of our named executive officers.

2021 Proxy Statement

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Procedures for Determining Compensation

Roles of Compensation Committee, Management Shareholders and Compensation Consultant

The Compensation Committee performs a review of compensation for our executive officers annually. As part of this review, the Compensation Committee takes into consideration its understanding of external market data, which is primarily based on compensation practices of comparable companies (based on size and stage of development). Periodically, the Compensation Committee engages FW Cook, an independent consultant, to perform an analysis of the current compensation program. In late 2018,2020, the Compensation Committee engaged F.W.FW Cook to perform an independent review of the compensation program for our executive officers to assist with setting 20192021 and 20202022 compensation. F.W.FW Cook reports directly to the Compensation Committee. Other than the work it performs for the Compensation Committee, F.W.FW Cook does not provide any consulting services to Vericel or its executive officers. Our Compensation Committee performs an annual assessment of the independence of its compensation advisers. Our Compensation Committee has determined that F.W.FW Cook is independent and that their work has not raised any conflict of interests.

Generally, our Compensation Committee reviews and approves compensation arrangements for executive officers in the first quarter of each year and in connection with the hiring of new executives. Other than with respect to the compensation of our Chief Executive Officer, our Compensation Committee also takes into consideration the recommendations for executive compensation made by our Chief Executive Officer, which recommendations are generally presented at the time of our Compensation Committee’s review of executive compensation arrangements.

The compensation decisions made at the beginning of 20202022 occurred in the context of three-yearssustained strong long-term performance, evidenced by our 31% three-year compound annual total shareholder return thatthrough December 31, 2021, which was in approximately the 93^rd percentiletop quartile of theour peer group.

For taxable years prior to 2018, Section 162(m) of the Code as then in effect and related treasury regulations restricted deductibility of compensation paid to our named executive officers (other than our principal financial officer) to the extent such compensation exceeded $1,000,000 and did not qualify for an exception as commission-based compensation or “qualified performance-based compensation.” Beginning in 2018, tax legislation (1) expanded the scope of Section 162(m) such that all named executive officers are “covered employees” and anyone who was a named executive officer in any year after 2016 will remain a covered employee for as long as he or she (or his or her beneficiaries) receives compensation from the Company, and (2) eliminated the exception to the deduction limit for commission-based compensation and performance-based compensation except with respect to certain grandfathered arrangements in effect as of November 2, 2017 that are not subsequently materially modified. Accordingly, beginning in 2018, any compensation paid to a covered employee in excess of $1,000,000 will be non-deductible, unless paid pursuant to a grandfathered arrangement, as discussed above. The Compensation Committee believes that shareholder interests are best served if the Committee retains maximum flexibility to design executive compensation programs that meet stated business objectives. For these reasons, the Compensation Committee, while considering tax deductibility as a factor in determining executive compensation, will not limit such compensation to those levels that will be deductible, particularly in light of the expansion of the covered employee group and the elimination of the exception for performance-based compensation under Section 162(m).

Peer Group

As part of its engagement, F.W.FW Cook analyzed compensation data relating to our peer group companies as approved by the Compensation Committee with input and guidance from F.W.FW Cook. The compensation analysis was performed in late 2020 and informed both the 2021 compensation program and the 2022 compensation program. The peer group companies included the following 19were selected in Fall 2020 and consisted of 17 publicly-traded biotechnology/pharmaceutical and health care equipment and supplies companies, which had a median market capitalization of $740 million$1.42 billion in 2017 (consistent with2019 (slightly lower than our $1.84 billion market capitalization of $760M in mid-January 2020)on December 31, 2021), and the majority of which either have commercial operations or an FDA-approved product:product. All peers had a 2019 average market capitalization in a range of 0.2 to 2.0 times our market capitalization on December 31, 2021. Our peer group selection process focused on peers’ market capitalization during 2019 to align their size with the timing of their compensation information disclosed in proxy statements filed in Spring 2020. The peer group companies that informed 2022 executive officer compensation decisions were: Agenus, Inc., AMAGAgios Pharmaceuticals, Inc., Amarin PLC, Amicus Therapeutics, Inc., Anika Therapeutics, Inc., Artivion, Inc., AtriCure, Inc., AxoGen, Inc., Cardiovascular Systems, Inc., Corcept Therapeutics, Inc., Cryoport, Inc., Flexion Therapeutics, Inc., Glaukos Corporation, iRhythm Technologies, Inc., Keryx Biopharmaceuticals, Inc., ProgenicsIronwood Pharmaceuticals, Inc., PTC Therapeutics, Inc., Repligen Corporation, Spark Therapeutics, Inc., STAAR Surgical Company, Supernus Pharmaceuticals, Inc., and Vanda Pharmaceuticals, Inc.

Components of 2022 Compensation

The primary components of our executive officer compensation program are: (i) annual base salary; (ii) annual incentive compensation, which is based on the achievement of specified Company goals; and (iii) long-term equity incentive compensation in the form of periodic stock option and RSU grants, with the objective of aligning the executive officers’ long-term interests with those of our shareholders.

In establishing overall executive compensation levels and making specific compensation decisions for the executives in 2022, the Compensation Committee considered a number of criteria, including each executive’s position, prior compensation levels, scope of responsibilities, prior and current period performance, attainment of individual and overall Company performance objectives, and external market data. In addition, the Compensation Committee considered the results of the advisory vote by shareholders on the “say-on-pay” proposal presented to shareholders at Vericel’s 2021 annual meeting, which had a 96% support rate.

The Compensation Committee also reviews the allocation of compensation components regularly to help ensure alignment with strategic and operating goals, competitive market practices and legislative changes. The Compensation Committee does not apply a specific formula to determine the allocation between cash and non-cash forms of compensation.

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Base Salary

We believe that a competitive base salary is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives. Base salaries are established, in part, based on the individual experience, skills and expected contributions of our executives and our executives’ performance during the prior year, with market data considered as context. The Compensation Committee reviews base salaries for our executive officers annually. We may also change the base salary of an executive officer at other times due to market conditions or if a change in the scope of the officer’s responsibilities justifies such adjustment.

In February 2022, our Compensation Committee approved base salary increases for each of our named executive officers serving at that time, based upon various factors, including a review of individual performance during 2021 and a comparison of cash compensation versus peer group data. Base salaries were within 1% of the peer group median or lower for all named executive officers before the adjustments in February 2022. Salary adjustments were focused on providing cash compensation closer to the peer group median overall, also taking into account each executive’s tenure and performance, and the Company’s strong performance in 2021. The table below sets forth the adjustments to base salaries for each of our named executive officers:

	Base Salary Adjustments
Name		2021 Base Salary ($)		2022 Base Salary ($)		Increase (%)
Dominick Colangelo		730,000		760,000		4%
Joe Mara		415,000		440,000		6%
Michael Halpin		440,000		470,000		7%
Sean Flynn		375,000		400,000		7%
Jonathan Hopper		390,000		415,000		6%

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Annual Non-Equity Incentive Compensation

We maintain an annual incentive program (or “AIP”) that is designed to drive annual performance against important strategic, operational (including ESG-related initiatives) and financial aspects of our organization. We believe the AIP focuses management on advancing our overall corporate strategy and furthering both the short-and long-term growth of the Company. Each executive officer has a target cash incentive amount that is set as a percentage of base salary, based upon consideration of potential contribution, level and market data.

2022 Performance Metrics

The determination of annual incentives for our executives in 2022 was tied to achieving our financial targets, advancing our commercial and development stage products and accomplishing operational goals. In addition, a portion of annual incentive compensation was tied to achieving ESG-related goals and a stretch upside value goal. These metrics were established by the Compensation Committee and approved by the full Board at the beginning of 2022.

		Weighting		Our Goals		Our Metrics		Achievement
Commercial and Financial Performance Goals				Total net revenue		●  Generate total net product revenues of at least $205.8 million
				Budget expense		●  Achieve budget expense of $151.5 million (excluding depreciation, amortization and stock-based compensation, and unusual one-time expenses or changes in accounting methodology)
				Commercial Product Goals		●  Achieve budgeted MACI surgeon engagement goals of target number of biopsy surgeons and biopsy conversation rate
Product Goals				Long-Term Brand Development Goals		●  Complete MACI, Epicel and NexoBrid long-term brand development initiatives
				Product Development Goals		●  Complete NexoBrid BLA resubmission to the FDA by July 31, 2022, with subsequent acceptance for filing by FDA
Operational Goals				Manufacturing Capacity and Operational Improvement Initiatives		●  Complete manufacturing facility and key manufacturing/IT efficiency improvement initiatives
ESG Goals				ESG Goals		●  Complete ESG initiatives, to include the creation and publication of the Company’s inaugural ESG Report to shareholders
Upside Value Goals				Business Development		●Execute high-quality business development transaction

No more than 200% of target may be earned under the AIP. The Compensation Committee reviewed the Company’s performance in 2022 against the corporate goals and made a determination of a 100% achievement of our corporate goals for 2022, based on the following:

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1.	40% out of a target 40% was awarded for the Commercial and Financial Performance Goals. Although the Company did not achieve its goal related to total net revenue, budget expense performance was achieved at the maximum level, and when averaged with below-target achievement for revenue resulted in overall target achievement for the commercial and financial performance goals category. The Company’s fiscal discipline in light of continued challenges presented by the COVID-19 pandemic and an overall decline in the number of patients presenting with large TBSA burns during 2022, ultimately resulted in the Company generating approximately $24.2 million of adjusted EBITDA* for the year and growing its cash and investments balance to $140 million.
2.	40% out of a target 35% was awarded for Product Goals. The Compensation Committee awarded above the target percentage for these goals primarily as a result of the Company not only achieving the timely resubmission of the NexoBrid BLA during 2022, but also securing commercial approval of NexoBrid in the United States, marking a significant milestone for the Company. The Compensation Committee also considered the significant work of the Company’s management and regulatory team in working with the FDA to agree on the submission to the agency of a human factors validation study for the MACI arthroscopic delivery program, which provides for an accelerated potential approval of arthroscopic MACI in 2024, several years earlier than if a clinical study were required. The Company fell slightly short of each of its budgeted surgeon engagement goals during 2022, however, when considering the significant 2022 achievements in advancing the Company’s pipeline, the Compensation Committee awarded moderately above the target percentage.
3.	10% out of a target 15% was awarded for the Operational Goals. The Compensation Committee awarded below the target for these goals because the Company did not meet certain of its budgeted goals relating to manufacturing improvements, as some timelines extended out beyond the end of the year. Other key initiatives, including the successful initiation of core and shell construction on the Company’s future headquarters and manufacturing facility in Burlington, Massachusetts, were successfully completed on schedule.
4.	10% out of a target 10% was awarded for the ESG Goals. The Compensation Committee awarded the target for these goals primarily due to the Company’s successful publication of its inaugural ESG Report in June 2022, as well as its completion of various diversity and inclusion awareness and education programs for management and employees throughout the year.
5.	0% out of a maximum 15% was awarded for the Upside Goal. During 2022, the Company chose not to execute any business development transactions.

Despite the lingering effects of the COVID-19 pandemic on the national healthcare infrastructure during the first half of 2022 which, at times, affected the scheduling and conduct of MACI procedures, the Compensation Committee made no adjustments to the goals or the manner in which they were scored to account for COVID-19 or other external events.

The table below shows the target award under the 2022 AIP as a percentage of each named executive officer’s annual base salary in 2022, the target cash award opportunity in dollars for 2022, and the actual cash bonus payments and percent of award opportunity paid to our named executive officers for 2022 performance.

		2022 Annual Incentive Program
Name		2022 Target Award (% of Base Salary)		2022 Target Award Opportunity ($)		2022 Actual Bonus Payment ($)		2022 Actual Bonus Payment (% of Target Award Opportunity)
Dominick Colangelo		85%		646,000		646,000		100%
Joe Mara		50%		220,000		220,000		100%
Michael Halpin		50%		235,000		235,000		100%
Sean Flynn		45%		180,000		180,000		100%
Jonathan Hopper		45%		186,750		186,750		100%

*

For more information concerning Vericel’s presentation of non-GAAP measures, including a reconciliation of reported net (loss) income (GAAP) to adjusted EBITDA (non-GAAP), please refer to the Company’s discussion of “GAAP versus non-GAAP Measures”, on page 63 of this Proxy Statement. Adjusted EBITDA was calculated by adjusting GAAP Net (loss) income for (1) stock-based compensation expense, (2) depreciation and amortization, (3) net interest income, and (4) income tax expense (benefit).

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Equity Incentive Compensation

Equity incentive compensation aligns executives with shareholders and allows them to share in any appreciation in the value of our common stock. In 2022, the Compensation Committee awarded stock options and RSUs to our named executive officers to aid in their retention, to motivate them to achieve both near-term and long-term corporate objectives and increase share price. In determining the form and value of a grant, the Compensation Committee considers the contributions and responsibilities of each named executive officer, appropriate incentives for the achievement of our long-term growth, the size and value of grants made to other executives at peer companies holding comparable positions, individual achievement of designated performance goals, Vericel’s overall performance relative to corporate objectives, and our overall equity compensation burn rate.

Stock options and RSU awards vest over time, generally four years, subject to continued employment with Vericel over the vesting period, which promotes executive retention. All stock options have a ten-year term and an exercise price equal to the fair market value of our common stock on the date of grant, which is equal to our closing market price on such date.

Awards are made at levels calculated to be competitive within our peer group. In determining the amount of each grant, the Compensation Committee also reviews the number of shares held by the executive prior to the grant. In late 2020, the Compensation Committee engaged FW Cook to independently review the equity incentive grant practices of Vericel as compared to our peer group, and this market data was used to support compensation decisions for 2021 and 2022. The Compensation Committee considered our significant 31% compound annual shareholder return between 2019 and 2021, which was in the top quartile of our peer group, and well above the peer group median of 4% compound annual shareholder return over this period.

The executive equity award strategy for 2022 was consistent with the strategy used in 2021 and focused on providing a competitive number of stock options and RSUs with the vast majority of equity awards provided in stock options to ensure that our executives are aligned with shareholder value creation and to ensure the program pays for performance. The Compensation Committee reviewed the Company’s projected 2022 equity compensation burn rate and determined that the number of shares granted to executives would maintain the burn rate near the median of our peer group, which was verified at the end of the year. The grant date fair values of our executive officer equity awards were meaningfully lower in 2022 than in 2021, as shown in the Summary Compensation Table below.

On February 18, 2022, the Board of Directors granted our CEO, and the Compensation Committee granted our other named executive officers, the following stock options and RSUs at a $34.90 price. The grant date fair value of these awards is also reported in the 2022 Summary Compensation Table below.

		Option and RSU Awards Granted February 18, 2022
Name		Number of Shares Underlying Options (#)		Number of RSUs (#)		Stock Awards and Option Awards Fair Value($)(1)		Stock Awards and Option Awards Intrinsic Value($)(2)
Dominick Colangelo		273,000		46,800		7,288,603		1,385,748
Joe Mara		64,269		11,018		1,715,881		326,243
Michael Halpin		89,250		15,300		2,382,813		453,033
Sean Flynn		54,250		9,300		1,448,376		275,373
Jonathan Hopper		54,250		9,300		1,448,376		275,373

(1)

Amounts reflect the grant date fair value of the stock option awards and RSUs made to the named executive officers, calculated in accordance with FASB ASC Topic 718. For purposes of this calculation, we have disregarded forfeiture assumptions related to service-based vesting conditions. For a discussion of the assumptions used in calculating these values, see Note 7 to our consolidated financial statements in our annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 23, 2023.

(2)

Amounts reflect the intrinsic value which is calculated as the number of RSUs multiplied by the proxy record date stock price of $29.61, and is $0 for stock options because the exercise price of $34.90 exceeds the proxy record date stock price of $29.61.

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Executive Compensation

Other Compensation

Generally, benefits available to executive officers are available to all employees on similar terms and include health and welfare benefits, paid time-off, life and disability insurance and a 401(k) plan.

We provide the benefits above to attract and retain our executive officers and other employees by offering compensation that is competitive with other companies that are similar in size and stage of development. These benefits represent a relatively small portion of the total compensation of our named executive officers.

Other Items

Compensation Risk Analysis/Risk Assessment

We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company. In addition, the Compensation Committee believes that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks.

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The Compensation Committee, with the assistance of F.W.FW Cook, extensively reviewed the elements of executive compensation to determine whether any portion of executive compensation encouraged excessive risk-taking and concluded:

●	Inclusion of significant long-term incentive compensation discourages short-term risk takingtaking;
●	Compensation is in a market range and is not set as an outlieroutlier;
●	For most employees, base salary makes up a meaningful portion of compensationcompensation;
●	The mix of short- andshort-and long-term compensation (base salary, annual cash incentive, equity grants) is consistent with industry normsnorms;
●	Goals are appropriately set to avoid targets that, if not achieved, result in a large percentage loss of compensationcompensation; and
●	The prohibition on hedging or pledging of our stock discourages short-term and excessive risk takingtaking. Furthermore, as described in this CD&A section, compensation decisions include subjective considerations to moderate the effects that formulae or objective factors might have on excessive risk taking.

Furthermore,Executive Stock Ownership Guidelines

In April 2021, the Board adopted Stock Ownership Guidelines applicable to the Company’s named executive officers. Pursuant to these guidelines, named executive officers are expected to meet share ownership targets that are determined based on their annual salary, within five years of the adoption of the guidelines. In addition, named executive officers who join the Company after the establishment of the guidelines have five years from such date to reach their target. The share ownership target for the Company’s CEO is five times (5X) his or her base salary, while other named executive officers have a target of two times (2X) base salary.

Clawback Policy

We maintain a robust compensation recovery or “clawback” policy covering each of our executive officers. The policy provides that in the event an executive engages in certain acts of misconduct, as describeddefined in this CD&A section,the policy, which result in the Company being required to restate or republish previously disclosed financial statements due to material non-compliance with any financial reporting requirements under applicable securities laws, the Board may seek reimbursement of any cash or equity-based incentive compensation decisions include subjective considerations(including vested and unvested equity) paid or awarded to moderate the effectsexecutive officer, or effect the cancellation of previously-granted equity awards, to the extent the compensation was based on erroneous financial data and exceeded what would have been paid to the executive officer under the restatement.

Tax Considerations

For taxable years after 2017, Section 162(m) of the Code generally disallows the deduction to a public corporation of any compensation paid to a “covered employee” in excess of $1,000,000, unless paid pursuant to a grandfathered arrangement within the meaning of Section 162(m) of the Code. The Compensation Committee believes that formulae or objective factors might have on excessive risk taking.shareholder interests are best served if the Compensation Committee retains maximum flexibility to design executive compensation programs that meet stated business objectives. For these reasons, the Compensation Committee, while considering tax deductibility as a factor in determining executive compensation, will not limit such compensation to those levels that will be deductible under Section 162(m) of the Code.

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Compensation Committee Report

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.Proxy Statement.

COMPENSATION COMMITTEE MEMBERS:

Alan L. Rubino, Chairman

Heidi Hagen

Steven C. Gilman, Ph.D.

This report shall not constitute “soliciting material,” shall not be deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference into any of our other filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this report by reference therein.

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended December 31, 2020,2022, Mr. Rubino, Ms. Hagen and Dr. Gilman served as the members of our Compensation Committee. None of the members of our Compensation Committee is, or has been, an officer or employee of ours or any of our subsidiaries. During the last year, none of our executive officers served as: (1) a member of the compensation committee (or other committee of the board of directors performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on the compensation committee; (2) a director of another entity, one of whose executive officers served on the compensation committee; or (3) a member of the compensation committee (or other committee of the board of directors performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director on our Board of Directors.

2021
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Executive Compensation Tables

Summary Compensation Table

The following table summarizes all compensation earned by or paid to Dominick C. Colangelo, our President and Chief Executive Officer, effective March 1, 2013; Joe Mara, our Chief Financial Officer, effective January 25, 2021; Michael Halpin, our Chief Operating Officer, effective June 15, 2019; Sean C. Flynn, our Senior Vice President, General Counsel and Secretary, effective November 4, 2019; and Jonathan Hopper, our Chief Medical Officer, effective August 20, 2018; Sandra Pennell, our Vice President and Controller, who served as our Principal Financial Officer and Principal Accounting Officer from September 30, 2020 to January 25, 2021; and Gerard Michel, our Chief Financial Officer and Vice President of Corporate Development from June 2, 2014 to September 30, 20202018 (the “named executive officers”) during the fiscal years indicated.

Name and Principal Position		Year		Salary ($)		Bonus ($)(1)		Stock Awards ($)(2)		Option Awards ($)(3)		Non-Equity Incentive Plan Compensation ($)(4)		All Other Compensation ($)(5)			Total ($)
Dominick C. Colangelo President and CEO		2020		675,000		—		540,000		2,678,783		506,250		12,685	(6)		4,412,718
		2019		634,000		—		462,315		3,766,325		510,370		12,517			5,385,527
		2018		592,000		106,560		—		1,548,692		355,200		11,842			2,614,294
Michael Halpin Chief Operating Officer		2020		395,000		—		252,000		1,250,099		177,750		12,685	(7)		2,087,534
		2019		370,000		—		124,950		926,395		185,592		12,510			1,619,447
Sean C. Flynn VP, General Counsel and Secretary		2020		350,000		—		—		—		140,000		12,685	(8)		502,685
Jonathan Hopper Chief Medical Officer		2020		365,000		—		117,000		580,403		146,000		12,685	(9)		1,221,088
Gerard Michel(12) Former CFO and VP of Corporate Development		2020		315,385		—		216,000		1,071,513		—		12,008	(10)		1,614,906
		2019		398,000		—		199,920		1,488,306		205,965		12,510			2,304,701
		2018		386,000		46,320		—		516,231		154,400		11,822			1,114,773
Sandra Pennell Vice President and Controller		2020		204,289		—		14,500		73,449		63,400		9,227	(11)		364,865

Name and Principal Position		Year		Salary ($)		Bonus ($)			Stock Awards ($)(1)		Option Awards ($)(2)		Non-Equity Incentive Plan Compensation ($)(3)		All Other Compensation ($)(4)			Total ($)
Dominick Colangelo President and CEO		2022		760,000		—			1,633,320		5,655,283		646,000		13,764	(5)		8,708,367
		2021		730,000		—			1,837,550		9,981,859		620,500		13,386			13,183,295
		2020		675,000		—			540,000		2,678,783		506,250		12,685			4,412,718
Joe Mara Chief Financial Officer		2022		440,000					384,528		1,331,353		220,000		13,439	(6)		2,389,320
		2021		383,077		50,000	(10)		698,080		4,438,361		193,300		9,865			5,772,683
Michael Halpin Chief Operating Officer		2022		470,000		—			533,970		1,848,843		235,000		13,238	(7)		3,101,051
		2021		440,000		—			578,250		3,327,286		220,000		12,860			4,578,396
		2020		395,000		—			252,000		1,250,099		177,750		12,685			2,087,534
Sean Flynn SVP, General Counsel and Secretary		2022		400,000		—			324,570		1,123,806		180,000		13,238	(8)		2,041,615
		2021		375,000		—			359,800		1,996,372		168,800		12,860			2,912,782
		2020		350,000		—			—		—		140,000		12,685			502,685
Jonathan Hopper Chief Medical Officer		2022		415,000		—			324,570		1,123,806		186,750		13,490	(9)		2,063,617
		2021		390,000		—			359,800		1,996,372		175,500		12,860			2,934,532
		2020		365,000		—			117,000		580,403		146,000		12,685			1,221,088

(1)	Amounts reported in this column represent additional cash bonuses granted in the Compensation Committee’s discretion, which were awarded based on exceptional achievement of the overall corporate performance for 2018.
(2)	Amounts reflect the grant date fair value of awards of time-based RSUs made to the named executive officer in the year indicated, computed in accordance with FASB ASC Topic 718. For purposes of this calculation, we have disregarded forfeiture assumptions related to service-based vesting conditions. For a discussion of the assumptions used in calculating these values, see Note 97 to our consolidated financial statements in our annual report on Form 10-K for the fiscal year ended December 31, 2020,2022, filed with the SEC on February 24, 2021.23, 2023.
(3)(2)	Amounts reflect the grant date fair value of the stock option awards made to the named executive officers in the year indicated, calculated in accordance with FASB ASC Topic 718. For purposes of this calculation, we have disregarded forfeiture assumptions related to service-based vesting conditions. For a discussion of the assumptions used in calculating these values, see Note 97 to our consolidated financial statements in our annual report on Form 10-K for the fiscal year ended December 31, 2020,2022, filed with the SEC on February 24, 2021.23, 2023.
(4)(3)	Amounts reported in this column represent annual cash incentive bonuses, which were awarded based on achievement of corporate performance goals for the year indicated. The 20202022 cash incentive bonus determinations are described in more detail above under the heading “Annual Non-Equity Incentive Compensation.”
(5)(4)	Amounts reported in the all other compensation“All Other Compensation” column include Vericel’s contributions to its 401(k) Plan and life insurance premiums, as detailed in footnotes 5, 6, 7, 8, 9, 10 and 11.9. None of the named executive officers received perquisites having an aggregate value of $10,000 or more in the fiscal years ended December 31, 2020, 20192022, 2021, or 2018, respectively.2020.
(6)(5)	This amount includes Vericel’s contributions of $9,975$10,675 made to Mr. Colangelo’s 401(k) Plan and payments of $2,710$3,089 for life insurance premiums.
(7)(6)	This amount includes Vericel’s contributions of $9,975$10,675 made to Mr. Mara’s 401(k) Plan and payments of $2,764 for life insurance premiums.
(7)	This amount includes Vericel’s contributions of $10,675 made to Mr. Halpin’s 401(k) Plan and payments of $2,710$2,563 for life insurance premiums.
(8)	This amount includes Vericel’s contributions of $9,975$10,675 made to Mr. Flynn’s 401(k) Plan and payments of $2,710$2,563 for life insurance premiums.
(9)	This amount includes Vericel’s contributions of $9,975$10,675 made to Dr. Hopper’s 401(k) Plan and payments of $2,710$2,815 for life insurance premiums.
(10)	This amount includes Vericel’s contributionsreflects the amount of $9,975 madea sign-on bonus paid to Mr. Michel’s 401(k) Plan and paymentsMara pursuant to the terms of $2,033 for life insurance premiums.
(11)	This amount includes Vericel’s contributionshis offer of $7,150 made to Ms. Pennell’s 401(k) Plan and payments of $2,077 for life insurance premiums.
(12)	Mr. Michel resigned as Chief Financial Officer and Vice President of Corporate Development and his employment with Vericel terminated on September 30, 2020. The amount reported in the Salary column reflects his base salary paid through his date of termination. All of the RSUs (reported in the Stock Awards column), and 87.5% of the value of the stock option (reported in the Option Awards column) granted to Mr. Michel in 2020 were forfeited prior to vesting, upon this departure.Vericel.

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Grants of Plan-Based Awards

The following table presents information on all grants of plan-based awards made in the fiscal year ended December 31, 20202022 to our named executive officers:

				Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)				All Other Stock Awards: Number of Shares of Stock or Units		All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards(2)
Name		Grant Date		Target ($)		Maximum ($)
Dominick C. Colangelo		—		506,250		1,012,500		—		—		—		—
		2/11/2020		—		—		30,000		—		—		540,000
		2/11/2020		—		—		—		225,000		18.00		2,678,783
Michael Halpin		—		177,750		355,500		—		—		—		—
		2/11/2020		—		—		14,000		—		—		252,000
		2/11/2020		—		—		—		105,000		18.00		1,250,099
Sean C. Flynn(3)		—		140,000		280,000		—		—		—		—
Jonathan Hopper		—		146,000		292,000		—		—		—		—
		2/11/2020		—		—		6,500		—		—		117,000
		2/11/2020		—		—		—		48,750		18.00		580,403
Gerard Michel		—		184,500		369,000		—		—		—		—
		2/11/2020		—		—		12,000		—		—		216,000
		2/11/2020		—		—		—		90,000		18.00		1,071,513
Sandra Pennell		—		63,400		126,800		—		—		—		—
		3/18/2020		—		—		2,000		—		—		14,500
		3/18/2020		—		—		—		15,000		7.25		73,449

				Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)				All Other Stock Awards: Number of Shares of Stock or Units (#)		All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards(2)
Name		Grant Date		Target ($)		Maximum ($)
Dominick Colangelo		—		646,000		1,292,000		—		—		—		—
		2/18/2022		—		—		46,800		—		—		1,633,320
		2/18/2022		—		—		—		273,000		34.90		5,655,283
Joe Mara		—		220,000		440,000		—		—		—		—
		2/18/2022		—		—		11,018		—		—		384,528
		2/18/2022		—		—		—		64,269		34.90		1,331,353
Michael Halpin		—		235,000		470,000		—		—		—		—
		2/18/2022		—		—		15,300		—		—		533,970
		2/18/2022		—		—		—		89,250		34.90		1,848,843
Sean Flynn		—		180,000		360,000		—		—		—		—
		2/18/2022		—		—		9,300		—		—		324,570
		2/18/2022		—		—		—		54,250		34.90		1,123,806
Jonathan Hopper		—		186,750		373,500		—		—		—		—
		2/18/2022		—		—		9,300		—		—		324,570
		2/18/2022		—		—		—		54,250		34.90		1,123,806

(1)

Non-equity incentive plan awards consist of performance-based cash bonuses earned based on achievement of pre-determined performance criteria during fiscal year 2020.2022. There is no threshold payout amount under the non-equity incentive plan. The 20202022 cash incentive bonus determinations are described in more detail above under the heading “Annual Non-Equity Incentive Compensation.”

(2)

This reflects the grant date fair value of option and RSU awards granted to our named executive officers during the year ended December 31, 2020,2022, calculated in accordance with FASB ASC Topic 718. For purposes of this calculation, we have disregarded forfeiture assumptions related to service-based vesting conditions. For a discussion of the assumptions used in calculating these values, see Note 97 to our consolidated financial statements in our annual report on Form 10-K for the fiscal year ended December 31, 2020,2022, filed with the SEC on February 24, 2021.23, 2023.

(3)2023 Proxy Statement	Mr. Flynn was appointed Vericel’s Vice President, General Counsel and Secretary, effective November 4, 2019. Upon his appointment, Mr. Flynn was awarded an initial grant of an option to purchase 150,000 shares and was therefore not eligible for an annual equity award for 2020.47

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Outstanding Equity Awards at Fiscal Year End

The table below reflects all outstanding equity awards made toheld by each of the named executive officers as of December 31, 2020.2022. We currently grant stock-based awards pursuant to our 20192022 Plan and have outstanding awards under our Amended and Restated 2019 Omnibus Incentive Plan (the “2019 Plan”), 2017 Omnibus Incentive Plan (the “2017 Plan”) and our Second Amended and Restated 2009 Omnibus Incentive Plan (the “2009 Plan”).

		Option Awards											Stock Awards
Name		Grant Date(1)			Number of Securities Underlying Unexercised Options (#) Exercisable(1)		Number of Securities Underlying Unexercised Options (#) Unexercisable(1)		Option Exercise Price ($)		Option Expiration Date		Number Shares or Units of Stock That Have Not Vested (#)(6)		Market Value of Shares or Units of Stock That Have Not Vested (#)(2)
Dominick C. Colangelo		3/6/2013	(3)		55,001		—		25.80		3/6/2023
		1/3/2014			48,397		—		3.57		1/3/2024
		1/5/2015			383,452		—		3.02		1/5/2025
		2/9/2016			53,183		—		1.95		2/9/2026
		2/8/2017			52,500		13,125		2.75		2/8/2027
		5/22/2017	(4)		28,125		5,625		2.65		5/22/2027
		2/7/2018			206,250		93,750		7.20		2/7/2028
		2/6/2019			135,625		174,375		16.66		2/6/2029		20,813		642,705
		2/11/2020			42,187		182,813		18.00		2/11/2030		30,000		926,400
Michel Halpin		4/10/2017	(3)		30,188		16,875		2.65		4/10/2027
		2/7/2018			7,975		12,604		7.20		2/7/2028
		2/6/2019			33,359		42,891		16.66		2/6/2029		5,625		173,700
		2/11/2020			19,687		85,313		18.00		2/11/2030		14,000		432,320
Sean C. Flynn		11/4/2019	(3)		37,500		112,500		16.25		11/4/2029
Jonathan Hopper		8/20/2018	(3)		32,673		59,063		10.95		8/20/2028
		2/6/2019			11,375		14,625		16.66		2/6/2029		1,950		60,216
		2/11/2020			9,140		39,610		18.00		2/11/2030		6,500		200,720
Gerard Michel(7)		—			—		—		—		—		—		—
Sandra Pennell		2/11/2015	(3)		20,000		—		3.63		2/11/2025
		3/18/2016			7,900		—		4.61		3/18/2026
		3/17/2017			7,218		482		2.90		3/17/2027
		5/22/2017	(5)		3,093		207		2.65		5/22/2027
		3/21/2018			14,437		6,563		11.10		3/21/2028
		3/20/2019			8,750		11,250		18.51		3/20/2029		1,500		46,320
		3/18/2020			2,812		12,188		7.25		3/18/2030		2,000		61,760

		Option Awards											Stock Awards
Name		Grant Date			Number of Securities Underlying Unexercised Options (#) Exercisable(1)		Number of Securities Underlying Unexercised Options (#) Unexercisable(1)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)(2)		Market Value of Shares or Units of Stock That Have Not Vested ($)(3)
Dominick Colangelo		3/6/2013	(4)		39,938		—		25.80		3/6/2023		—		—
		1/3/2014			48,397		—		3.57		1/3/2024		—		—
		1/5/2015			383,452		—		3.02		1/5/2025		—		—
		2/9/2016			53,183		—		1.95		2/9/2026		—		—
		2/8/2017			49,700		—		2.75		2/8/2027		—		—
		5/22/2017	(5)		28,125		—		2.65		5/22/2027		—		—
		2/7/2018			293,195		—		7.20		2/7/2028		—		—
		2/6/2019			290,625		19,375		16.66		2/6/2029		6,938		182,747
		2/11/2020			154,687		70,313		18.00		2/11/2030		15,000		395,100
		2/19/2021			131,250		168,750		51.40		2/19/2031		26,813		706,254
		2/18/2022			51,187		221,813		34.90		2/18/2032		46,800		1,232,712
Joe Mara		1/25/2021	(4)		70,000		90,000		43.63		1/25/2031		—		—
		2/18/22			12,050		52,219		34.90		2/18/2032		11,018		290,214
Michael Halpin		4/10/2017	(4)		2,063		—		2.65		4/10/2027		—		—
		2/7/2018			20,579		—		7.20		2/7/2028		—		—
		2/6/2019			71,484		4,766		16.66		2/6/2029		1,875		49,388
		2/11/2020			72,187		32,813		18.00		2/11/2030		7,000		184,380
		2/19/2021			43,750		56,250		51.40		2/19/2031		8,438		222,257
		2/18/2022			16,734		72,516		34.90		2/18/2032		15,300		403,002
Sean Flynn		11/4/2019	(4)		92,500		37,500		16.25		11/4/2029		—		—
		2/19/2021			26,250		33,750		51.40		2/19/2031		5,250		138,285
		2/18/2022			10,171		44,079		34.90		2/18/2032		9,300		244,962
Jonathan Hopper		8/20/2018	(4)		37,604		—		10.95		8/20/2028		—		—
		2/6/2019			14,375		1,625		16.66		2/6/2029		650		17,121
		2/11/2020			23,515		15,235		18.00		2/11/2030		3,250		85,605
		2/19/2021			26,250		33,750		51.40		2/19/2031		5,250		138,285
		2/18/2022			10,171		44,079		34.90		2/18/2032		9,300		244,962

(1)	Unless otherwise noted, options vest over a period of four years, with 6.25% vesting each quarter following the grant date.
(2)	RSUs vest over four years with 25% vesting on the first anniversary of the grant date and the remainder vesting in equal annual installments thereafter.
(3)	Based on a price of $30.88$26.34 per share, which was the closing price per share of our common stock as reported by the Nasdaq CapitalGlobal Market on December 31, 2020.30, 2022.
(3)(4)	These options vestThis option vests over a period of four years, with 25% vesting on the first anniversary of the grant date and the remainder vesting in equal monthly installments thereafter.
(4)(5)	This option vests over a period of four years, with 6.25% vesting each quarter following February 8, 2017.
(5)	This option vests over a period of four years, with 6.25% vesting each quarter following March 17, 2017.
(6)	Restricted stock units vest over four years with 25% vesting on the first anniversary of the grant date and the remainder vesting in equal annual installments thereafter.
(7)	Mr. Michel resigned as Chief Financial Officer and Vice President of Corporate Development and his employment with Vericel terminated on September 30, 2020. He held no outstanding stock options or unvested stock awards as of December 31, 2020.

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Option Exercises and Stock Vested

The following table sets forth information with respect to the exercise of options by our named executive officers as well as the vesting of RSUs during the year ended December 31, 2020.2022. None of our named executive officers held equity awards other than stock options and RSUs that were exercised or vested during the year ended December 31, 2020.2022.

		Option Awards				Stock Awards
Name		Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)(1)		Number of Shares Acquired on Vesting (#)(2)		Value Realized on Vesting ($)(3)
Dominick C. Colangelo		36,563		548,746		6,937		119,871
Michael Halpin		47,641		896,256		1,875		32,400
Sean C. Flynn		–		–		–		–
Jonathan Hopper		43,264		720,346		650		11,232
Gerard Michel		218,379		2,365,813		3,000		51,840
Sandra Pennell		–		–		500		3,970

		Option Awards				Stock Awards
Name		Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)(1)		Number of Shares Acquired on Vesting (#)(2)		Value Realized on Vesting ($)(3)
Dominick Colangelo		—		—		23,374		811,585
Joe Mara		—		—		—		—
Michael Halpin		—		—		8,187		285,130
Sean Flynn		—		—		1,750		61,075
Jonathan Hopper		20,000		523,700		4,025		140,414

(1)	Value realized on exercise of stock option awards does not represent proceeds from any sale of any common stock acquired upon exercise, but is determined by multiplying the number of shares acquired upon exercise by the difference between the per share exercise price of the option and the closing price of a share of our common stock on the Nasdaq CapitalGlobal Market on the date of exercise.
(2)	This represents total restricted stock unitsRSUs that vested for the named executive officer. A portion of these shares were withheld to cover the tax liability of the vesting and the amounts reported do not represent the total shares received by the employee.
(3)	Value realized on vesting of restricted stock unitsRSUs is determined by multiplying the number of shares vested by the closing price of a share of our common stock on the Nasdaq CapitalGlobal Market on the date of vesting.

Pension Benefits

We do not offer any defined benefit pension plans or arrangements.

Nonqualified Deferred Compensation

There were no nonqualified deferred compensation plans or arrangements offered to any of our executive officers during 2020.2022.

Employment Contracts, including Termination of Employment and Change in ControlChange-in-Control Arrangements

We entered into employment agreements with our currently serving named executive officers on the following dates: January 25, 2021 for Mr. Mara, November 4, 2019 for Mr. Flynn, August 20, 2018 for Dr. Hopper, September 14, 2017 (as amended on June 3, 2019) for Mr. Halpin, and March 1, 2013 (as amended on September 14, 2017) for Mr. Colangelo (each, an “Employment Agreement” and together, the “Employment Agreements”). We have not entered into an Employment Agreement with Ms. Pennell. Each Employment Agreement provides for specified payments and benefits in connection with a termination of employment by us without Cause or a resignation by the named executive officer for Good Reason (as such terms are defined in the Employment Agreements). Our goal in providing severance and change in controlchange-in-control benefits is to offer sufficient cash continuity protection such that our executives will focus their full time and attention on the requirements of the business rather than the potential implications for their respective positions. We prefer to have certainty regarding the potential severance amounts payable to the named executive officers, rather than negotiating severance at the time that a named executive officer’s employment terminates. We have also determined that accelerated vesting provisions with respect to equity awards in connection with a qualifying termination are appropriate because they encourage our named executive officers to stay focused on the business in those circumstances, rather than focusing on the potential implications for them personally.

In the event of a termination of a named executive officer’s employment with Vericel without Cause or by the named executive officer for Good Reason (as such terms are defined in the Employment Agreements), Vericel shall pay the named executive officer an amount equal to twelve months of the named executive officer’s then-current base salary in equal installments over the 12-month period beginning within sixty days following the date of termination of the named executive officer’s employment. All of Mr. Colangelo’s time-based equity awards that would have vested during such 12-month period shall vest and become exercisable or nonforfeitable upon the date of termination. If the named executive officer was participating in Vericel’s group health plan immediately prior to the date of termination and elects COBRA coverage, Vericel shall pay the named executive officer a monthly cash payment equal to the monthly employer contribution that Vericel would have made to provide health insurance to the named executive officer had he remained employed by Vericel (or, in the case of Mr. Colangelo, equal to the full monthly COBRA premium), until the earlier of twelve months following the termination or the end of

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the named executive officer’s COBRA health continuation period. In the event that the named executive officer breaches the restrictive covenants set forth in his Employment Agreement during the severance period, Vericel may cease severance payments to the named executive officer.

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In lieu of the severance payments and benefits described above, in the event of a termination of ana named executive officer’s employment by Vericel without Cause or by the named executive officer for Good Reason, in either case within eighteen months following a Change in ControlChange-in-Control (as defined in the Employment Agreement)Agreements), (i) Vericel shall pay the named executive officer a lump sum amount equal to (A) the sum of the named executive officer’s then-effective base salary and target bonus for the year in which termination occurs (or, in the case of Mr. Colangelo, 1.5 times the sum of his base salary and target bonus) plus (B) a pro-rated portion of the named executive officer’s target bonus for the year of termination, (ii) if the named executive officer was participating in Vericel’s group health plan immediately prior to the date of termination and elects COBRA coverage, Vericel shall pay the named executive officer a monthly cash payment equal to the monthly employer contribution that Vericel would have made to provide health insurance to the named executive officer had he remained employed by Vericel (or, in the case of Mr. Colangelo, the full monthly COBRA premium) until the earlier of twelve months (or, in the case of Mr. Colangelo, eighteen months) following termination or the end of the named executive officer’s COBRA health continuation period, and (iii) all time-based equity awards held by the named executive officer shall immediately vest and become fully exercisable or nonforfeitable as of the date of termination. The named executive officer’s right to receive any severance payments and benefits under the applicable Employment Agreement is conditioned upon and subject to the named executive officer’sofficer signing and not revoking a general release of claims.

In addition, during employment and after termination of the named executive officer’s Employment Agreement, theeach named executive officer has agreed to keep Vericel’s confidential information in confidence and trust and has agreed not to use or disclose such confidential information without Vericel’s written consent except as necessary in the ordinary course of performing duties for Vericel. During the term of the named executive officer’s Employment Agreement and for a period of twelve months (or, in the case of Mr. Colangelo, eighteen months) thereafter, the named executive officer has also agreed not to compete with Vericel and not to solicit employees, customers or suppliers of Vericel.

2023 Base Salary

Each of our named executive officer’s base salary is reviewed annually by the Compensation Committee. The named executive officers are also eligible to receive cash incentive compensation and equity awards from time to time at the discretion of the Compensation Committee. The current base salary as of March 8, 2021,6, 2023, and target annual incentive compensation (as a percentage of the base salary) for each of our currently serving named executive officers is as follows:

Name		Base Salary			Target Annual Incentive Compensation (%)
Dominick C. Colangelo		$	730,000		85	%
Michael Halpin		$	440,000		50	%
Sean C. Flynn		$	375,000		45	%
Jonathan Hopper		$	390,000		45	%
Sandra Pennell		$	240,000		30	%

Name		Base Salary		Target Annual Incentive Compensation (%)
Dominick Colangelo		$ 790,000		85%
Joe Mara		$ 475,000		50%
Michael Halpin		$ 505,000		50%
Sean Flynn		$ 430,000		45%
Jonathan Hopper		$ 440,000		45%

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Acceleration of Vesting Under Stock Option Plans

Generally, in the event of a Change in ControlChange-in-Control of Vericel (as defined in our 2022 Plan, 2019 Plan, the 2017 Plan or the 2009 Plan, as applicable), if awards under the 2019 Plan, the 2017 Plan or the 2009 Plan, as applicable plan are not assumed, continued or substituted, awards shall vest immediately prior to the Change in ControlChange-in-Control and terminate on the day of the Change in Control.Change-in-Control. If assumed, continued or substituted and the participant’s services to Vericel are terminated by Vericel or its successor without cause within twelve months following the Change in Control,Change-in-Control, the awards shall become fully vested and exercisable and may be exercised at any time prior to the earlier of the expiration date of the award or three months following the date of termination.

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Potential Payments Upon a Termination or Change in ControlChange-in-Control

The following table sets forth aggregate estimated payment obligations to each of the named executive officers assuming a termination occurred on December 31, 2020,2022, and using the salary in effect on such date. Gerard Michel resigned as Chief Financial Officer and Vice President of Corporate Development and his employment with Vericel terminated on September 30, 2020. He received no severance payments or benefits in connection with his termination and has therefore been omitted from this table.

Name		Benefit		Termination w/o Cause or for Good Reason other than in connection with a Change in Control ($)			Termination w/o Cause or for Good Reason in connection with a Change in Control ($)
Dominick C. Colangelo		Severance Pay		675,000			2,278,125
		Health Care Benefits		23,882			35,824
		Equity Award Acceleration		4,576,395	(1)		9,151,349	(2)
		Total		5,275,278			11,465,298
Michael Halpin		Severance Pay		395,000			750,500
		Health Care Benefits		19,267			19,267
		Equity Award Acceleration		—			3,089,605	(2)
		Total		414,267			3,859,373
Sean C. Flynn		Severance Pay		350,000			630,000
		Health Care Benefits		19,267			19,267
		Equity Award Acceleration		—			1,645,875	(2)
		Total		369,267			2,295,142
Jonathan Hopper		Severance Pay		365,000			657,000
		Health Care Benefits		19,267			19,267
		Equity Award Acceleration		—			2,156,206
		Total		384,267			2,832,473
Sandra Pennell		Severance Pay		—			—
		Health Care Benefits		—			—
		Equity Award Acceleration		—			684,391	(2)
		Total		—			684,391

Name		Benefit		Termination w/o Cause or for Good Reason other than in connection with a Change-in-Control ($)			Termination w/o Cause or for Good Reason in connection with a Change-in-Control ($)
Dominick Colangelo		Severance Pay		760,000			2,755,000
		Health Care Benefits		25,478			38,217
		Equity Award Acceleration		1,580,577	(1)		3,290,774	(2)
		Total		2,366,055			6,083,991
Joe Mara		Severance Pay		440,000			880,000
		Health Care Benefits		23,948			23,948
		Equity Award Acceleration		—			290,214
		Total		463,948			1,194,162
Michael Halpin		Severance Pay		470,000			940,000
		Health Care Benefits		25,478			25,478
		Equity Award Acceleration		—			1,178,822	(2)
		Total		495,478			2,144,300
Sean Flynn		Severance Pay		400,000			760,000
		Health Care Benefits		25,478			25,478
		Equity Award Acceleration		—			761,622	(2)
		Total		425,478			1,547,100
Jonathan Hopper		Severance Pay		415,000			788,500
		Health Care Benefits		25,478			25,478
		Equity Award Acceleration		—			687,960
		Total		440,478			1,501,938

(1)	This represents the cumulative value of the equity awards that would accelerate upon a termination of employment not in connection with a Change in Control.Change-in-Control. The amount represents the difference between the closing price of our common stock on December 31, 202030, 2022, of $30.88$26.34 and the exercise price (if any) multiplied by the number of shares subject to optionany in-the-money options and restricted stock unitsRSUs that would accelerate.
(2)	This represents the cumulative value of the equity awards that would accelerate upon a qualifying termination of employment within 18 months (or 12 months for Ms. Pennell) following a Change in ControlChange-in-Control (or upon a Change in ControlChange-in-Control if equity awards are not assumed in such Change in Control)Change-in-Control). The amount represents the difference between the closing price of our common stock on December 31, 202030, 2022, of $30.88$26.34 and the exercise price (if any) multiplied by the number of shares subject to optionany in-the-money options and restricted stock unitsRSUs that would accelerate.

2021
2023 Proxy Statement	4951

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Executive Compensation

CEO Pay Ratio

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the median of the annual total compensation of our employees, the annual total compensation of our Principal Executive Officer (“PEO”), Mr. Colangelo, and the ratio of these two amounts. We believe that our compensation philosophy must be consistent and internally equitable to motivate our employees to create shareholder value. The purpose of the required disclosure is to provide a measure of pay equity within the organization. We are committed to internal pay equity, and our Compensation Committee monitors the relationship between the pay our PEO receives and the pay our non-executive employees receive.

As illustrated in the table below, our 20202022 PEO to median employee pay ratio was approximately 34:57:1.

Dominick C. Colangelo (PEO) 2020 Compensation		$	4,412,718
Median Employee 2020 Compensation		$	129,834
Ratio of PEO to Median Employee Compensation			34:1

Dominick Colangelo (PEO) 2022 Compensation		$	8,708,367
Median Employee 2022 Compensation		$	151,410
Ratio of PEO to Median Employee Compensation			57:1

We determined the median employee compensation using W-2 compensation, plus estimated bonus, the fair market value of equity grants, life and disability insurance, and the estimated value of 401(k) match (whether or not vested), for all individuals who were employed by us on December 31, 20192022 (whether employed on a full-time, part-time or seasonal basis). Employees on leave of absence were included in the list and reportable wages were annualized for those employees who were not employed for the full calendar year. During the last completed fiscal year there has been no change in our employee population or employee compensation arrangements that we believe would result in a significant change to the pay ratio disclosure. Accordingly, we are using the same median employee in our pay ratio calculation for 2020.

For the fiscal year ended December 31, 2020,2022, we calculated that median employee’s total compensation using the same methodology that we used to calculate the total compensation for our CEO. The 20202022 annual total compensation of the median employee and our CEO, respectively, were $129,834$151,410 and $4,412,718.$8,708,367. The ratio of the 20202022 annual total compensation for our CEO to that of our median employee was 3457 to 1.

The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules, based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

Pay versus Performance

Pursuant to the Dodd-Frank Act and Item 402(v) of Regulation S-K, we are required to provide the following information regarding the relationship between executive compensation paid to our named executive officers and Vericel’s financial performance for each of the last three completed calendar years. In determining the Compensation Actually Paid (or “CAP”) to our Principal Executive Officer, who is our CEO, and our other named executive officers, we are required to make various adjustments to the amounts that have been previously reported in the Summary Compensation Table, as summarized below. The CAP amounts reflected in the table below do not reflect the actual amount of compensation earned by or paid to our named executive officers during the applicable year. For information regarding decisions made by our Compensation Committee with respect to executive compensation, refer to the “Compensation Discussion and Analysis” section of this Proxy Statement.

										Value of Initial $100 Investment Based On:
Year		Summary Compensation Table Total for CEO		Compensation Actually Paid to CEO(1)		Average Summary Compensation Table Total for Other NEOs(2)		Average Compensation Actually Paid to Other NEOs(1)(2)		Vericel TSR(3)				NASDAQ Biotechnology Index TSR(3)				Net Income ($M)(4)				Total Net Revenue ($M)(5)
2022		8,708,367		905,166		2,398,900		467,192		$	151			$	111			$	-17			$	164.36
2021		13,183,295		15,233,917		3,459,670		3,204,518		$	226			$	125			$	-7			$	156.18
2020		4,412,718		10,300,425		1,158,216		1,740,344		$	177			$	126			$	3			$	124.18

(1)	To calculate Compensation Actually Paid, the following amounts were deducted from and added to the applicable Summary Compensation Table total compensation:

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Audit MattersExecutive Compensation

					CEO
					2020			2021			2022
			Summary Compensation Table Total		$	4,412,718		$	13,183,295		$	8,708,367
	Less:		Grant Date Fair Value of Stock and Option Awards in the Covered Year		-$	3,218,783		-$	11,819,409		-$	7,288,603
	Plus:		Fair Value at Year-End of Unvested Stock and Option Awards Granted in the Covered Year*		+$	5,022,331		+$	6,387,501		+$	4,402,751
	Plus:		Fair Value of Stock and Option Awards Granted in the Covered Year that Vested in the Covered Year*		+$	522,347		+$	1,618,248		+$	724,137
			Change in Fair Value of Unvested Stock and Option Awards Granted in Prior Years*		+$	3,550,577		+$	1,965,721		-$	3,564,080
			Change in Fair Value of Stock and Option Awards from Prior Years that Vested in the Covered Year*		+$	11,235		+$	3,898,560		-$	2,077,406
	=		Compensation Actually Paid		$	10,300,425		$	15,233,917		$	905,166

					Average of Other NEOs
					2020			2021			2022
			Summary Compensation Table Total		$	1,158,216		$	3,459,670		$	2,398,900
	Less:		Grant Date Fair Value of Stock and Option Awards in the Covered Year		-$	714,993		-$	2,945,499		-$	1,748,862
	Plus:		Fair Value at Year-End of Unvested Stock and Option Awards Granted in the Covered Year*		+$	756,348		+$	1,626,544		+$	1,056,425
	Plus:		Fair Value of Stock and Option Awards Granted in the Covered Year that Vested in the Covered Year*		+$	83,133		+$	271,626		+$	173,955
			Change in Fair Value of Unvested Stock and Option Awards Granted in Prior Years*		+$	636,734		+$	299,760		-$	902,246
			Change in Fair Value of Stock and Option Awards from Prior Years that Vested in the Covered Year*		+$	5,675		+$	594,099		-$	510,980
	Less:		Fair Value of Stock and Option Awards Forfeited During the Covered Year*		-$	184,769		-$	101,683		+$	0
	=		Compensation Actually Paid		$	1,740,344		$	3,204,518		$	467,192

Proposal 3: Ratification*

All stock option valuations included in “Compensation Actually Paid” values were performed using the Black-Scholes option pricing model in a manner generally consistent with the process used to determine stock option grant date fair values in accordance with FASB ASC Topic 718 (refer to our annual report for additional detail).

(2)	The other NEOs in each covered year were as follows:
	2022 - Joe Mara, Michael Halpin, Sean Flynn, Jonathan Hopper; 2021 - Joe Mara, Michael Halpin, Sean Flynn, Jonathan Hopper, Sandra Pennell; 2020 - Michael Halpin, Sean Flynn, Jonathan Hopper, Gerard Michel, Sandra Pennell.
(3)	TSR is cumulative for the measurement period, calculated in accordance with Item 201(e) of AppointmentRegulation S-K. Our TSR Peer Group are members of Independent Registered Public Accounting Firmthe NASDAQ Biotechnology Index.
(4)	Reflects Net Income as shown in the Company’s Annual Report on Form 10-K for the years ending on December 31, 2022, 2021 and 2020.
(5)	Reflects total net revenue, the “company-selected measure” as shown in the Company’s Annual Report on Form 10-K for the years ending on December 31, 2022, 2021 and 2020.

Tabular List of Financial Performance Measures

The following measures in our assessment represent the most important financial performance measures that link compensation actually paid to our named executive officers, for 2022, to Vericel’s performance:

●	Total Net Revenue
●	Stock price
●	Budget expense (excluding depreciation, amortization and stock-based compensation, and unusual one-time expenses or changes in accounting methodology)

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Executive Compensation

Compensation Actually Paid Comparisons

The relationship between CAP and the financial performance elements reflected in the above Pay versus Performance table are described in the below charts:

Compensation Actually Paid versus TSR 2020-2022

Compensation Actually Paid versus Net Income 2020-2022

 

Compensation Actually Paid versus Revenue 2020-2022

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Audit Matters

PROPOSAL 3:

Ratification of Appointment of Independent Registered Public Accounting Firm

	The Board of Directors unanimously recommends a vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP (“PwC”) as Vericel’s independent registered public accounting firm for the fiscal year ending December 31, 2021.2023.

Overview

The Audit Committee has selected PricewaterhouseCoopers LLPPwC as Vericel’s independent registered public accounting firm to audit the consolidated financial statements of Vericel for the fiscal year ending December 31, 2021. PricewaterhouseCoopers LLP2023. PwC has acted in such capacity since its appointment in fiscal year 1996.

Shareholder ratification of the selection of PricewaterhouseCoopers LLPPwC as our independent registered public accounting firm is not required by our Bylaws or otherwise. However, the Board of Directors is submitting the selection of PricewaterhouseCoopers LLPPwC to the shareholders for ratification as a matter of good corporate practice. If the shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain PricewaterhouseCoopers LLP.PwC. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent accountant at any time during the year if it determines that such a change would be in the best interests of Vericel and its shareholders.

Representatives of PricewaterhouseCoopers LLPPwC attended all except oneof the meetings of the Audit Committee to which they were invited during the fiscal year ended December 31, 2021, and all of the meetings of the Audit Committee during the fiscal year ended December 31, 2019 and all except one of the meetings of the Audit Committee during the fiscal year ended December 31, 2020.2022. We expect that a representative of PricewaterhouseCoopers LLPPwC will attend the Annual Meeting, and the representative will have an opportunity to make a statement if he or she so desires. The representative will also be available to respond to appropriate questions from shareholders.

Vote Required

The affirmative vote of a majority of the votes cast on the proposal on the ratification of this appointment, at the Annual Meeting at which a quorum representing a majority of all outstanding shares of common stock of Vericel is present, either in person or by proxy, is required for ratification of this proposal. If you abstain from voting on this Proposal,proposal, it has no effect on the voting of the proposal. If you submit your proxy without indicating your voting instructions, your shares will be voted “FOR” this proposal. Brokers, bankers and other nominees have discretionary voting power on this routine matter and, accordingly, “broker non-votes” will have no effect on the ratification.

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Audit Matters

Fees of Independent Registered Public Accounting Firm

As part of its duties, the Audit Committee considered the provision of services, other than audit services, during the fiscal year ended December 31, 20202022, by PricewaterhouseCoopers LLP,PwC, our independent registered public accounting firm for that period, to ensure they maintain theirthe firm maintains its independence. The following table sets forth the aggregate fees accrued by Vericel for the fiscal years ended December 31, 20192021, and 2020,2022, respectively, for PricewaterhouseCoopers LLP:PwC:

		Fiscal Year Ended December 31, 2021 ($)			Fiscal Year Ended December 31, 2022 ($)
Audit Fees		1,215,608	(1)		1,261,700	(1)
Audit Related Fees		—			—
Tax Fees		—			—
All Other Fees		2,700	(2)		2,993	(2)
Total		1,218,308			1,264,693

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Audit Matters

		Fiscal Year Ended December 31, 2019 ($)			Fiscal Year Ended December 31, 2020 ($)
Audit Fees		959,000	(1)		976,000	(1)
Audit Related Fees		—			15,000	(1)
Tax Fees		—			20,893	(2)
All Other Fees		1,800	(3)		2,000	(3)
Total		960,800			1,013,893

(1)	The Audit Fees and Audit Related Fees for the years ended December 31, 20192021 and 2020, respectively,2022 were for professional services rendered for the audits and reviews of the consolidated financial statements of Vericel, professional services rendered for issuance of consents, comfort letters, assistance with review of documents filed with the SEC and out-of-pocket expenses incurred.
(2)	The Tax Fees were for professional tax consulting services rendered.
(3)	All other Fees represent an annual license fee for technical accounting research software and the use of accounting disclosure checklists.

Pre-Approval Policy

The Audit Committee approves in advance the engagement and fees of the independent registered public accounting firm for all audit services and non-audit services, based upon independence, qualifications and, if applicable, performance. The Audit Committee may form and delegate to subcommittees of one or more members of the Audit Committee the authority to grant pre-approvals for audit and permitted non-audit services, up to specific amounts. All audit services provided by PricewaterhouseCoopers LLPPwC for the fiscal years ended December 31, 20192021 and 2020, respectively,2022 were pre-approved by the Audit Committee.

Report of the Audit Committee of the Board of Directors

The Audit Committee oversees Vericel’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including internal control over financial reporting. PricewaterhouseCoopers LLPPwC is responsible for expressing an opinion as to the conformity of our consolidated audited financial statements with generally accepted accounting principles.

The Audit Committee acts pursuant to a written charter that has been adopted by the Board of Directors.

The Audit Committee consists of three directors, each of whom, in the judgment of the Board of Directors, is an “independent director” as defined in Rule 5605(a)(2) of the Nasdaq listing standards. Robert L. Zerbe, M.D., Alan L. Rubino and Kevin F. McLaughlin were members of the Audit Committee during the fiscal year ended December 31, 2020.2022.

The Committee has discussed and reviewed with the independent registered public accountants all matters required to be discussed by the Public Company Accounting Oversight Board (the “PCAOB”) in Auditing Standards No. 16 (Communication with Audit Committees). The Committee has received written disclosures and a letter from PricewaterhouseCoopers LLPPwC confirming their independence, as required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Committee concerning independence, and has discussed with PricewaterhouseCoopers LLPPwC the accountant’sfirm’s independence. The Committee has met with PricewaterhouseCoopers LLP,PwC, with and without management present, to discuss the overall scope of the PricewaterhouseCoopers LLPPwC audit, the results of its audit, its evaluations of Vericel’s internal controls and the overall quality of its financial reporting. The Committee reviewed the performance and fees of PricewaterhouseCoopers LLPPwC prior to recommending their appointment. The Committee reviewed our financial statements and discussed them with management and with PricewaterhouseCoopers LLP.PwC.

Based on the review and discussions referred to above, the Committee recommended to the Board of Directors that Vericel’s consolidated audited financial statements be included in Vericel’s Form 10-K for the fiscal year ended December 31, 2020.2022.

AUDIT COMMITTEE

Kevin F. McLaughlin, Chairman, Chairman

Alan L. Rubino

Robert L. Zerbe, M.D.

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Information about Stock Ownership

Information About Stock Ownership

Stock Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information, as of March 4, 2021,9, 2023, or as otherwise set forth below, with respect to the beneficial ownership of Vericel’s common stock by (i) all persons known by Vericel to be the beneficial owners of more than 5% of the outstanding common stock of Vericel, (ii) each director and director nominee of Vericel, (iii) each executive officer of Vericel, and (iv) all executive officers and directors of Vericel as a group.

		Shares Owned(1)
Name and Address of Beneficial Owner		Shares Subject to Options Exercisable within the 60-Day Period following March 4, 2021		Shares Individuals Have Rights to Acquire upon the Vesting of RSUs within the 60-Day Period following March 4, 2021		Number of Shares		Percentage of Class(2)
5% Shareholders:
RTW Investments, LP(3)						4,517,570		9.8	%
Brown Capital Management, LLC(4)						4,022,775		8.7	%
BlackRock, Inc.(5)						3,293,630		7.1	%
Waddell & Reed Financial, Inc.(6)						2,768,705		6.0	%
The Vanguard Group(7)						2,333,174		5.1	%
Directors and Named Executive Officers:
Robert L. Zerbe		61,750		1,750		95,295		*
Alan L. Rubino		109,250		1,750		113,644		*
Heidi Hagen		102,000		1,750		105,500		*
Steven C. Gilman		63,750		1,750		67,250		*
Kevin F. McLaughlin		96,250		1,750		99,750		*
Paul K. Wotton		43,750		1,750		47,250		*
Dominick C. Colangelo		1,047,303				1,255,213		2.7	%
Michael Halpin		121,934				127,477		*
Sean C. Flynn		56,250				58,488		*
Jonathan Hopper		66,298				91,093		*
Sandra Pennell(8)		68,400		1,000		73,133		*
All officers and directors as a group (11 persons)(9)		1,836,935		11,500		2,134,093		4.6	%

				Shares Owned(1)
Name and Address of Beneficial Owner		Shares Subject to Options Exercisable within the 60-Day Period following March 9, 2023		Shares Individuals Have Rights to Acquire upon the Vesting of RSUs within the 60-Day Period following March 9, 2023		Number of Shares		Percentage of Class(2)
5% Shareholders:
BlackRock, Inc.(3)						7,439,846		15.7%
Brown Capital Management, LLC(4)						6,931,641		14.6%
State Street Corporation(5)						3,364,203		7.1%
The Vanguard Group(6)						3,307,928		7.0%
RTW Investments, LP(7)						3,099,904		6.5%
Conestoga Capital Advisors, LLC(8)						2,479,475		5.2%
Directors and Named Executive Officers:
Robert Zerbe		66,750		2,600		101,145		*
Alan Rubino		114,250		2,600		128,844		*
Heidi Hagen		108,250		2,600		123,700		*
Steven Gilman		61,750		2,600		69,550		*
Kevin McLaughlin		109,250		2,600		117,950		*
Paul Wotton		13,000		2,600		44,802		*
Lisa Wright		14,453		2,600		19,837		*
Dominick Colangelo		1,553,052				1,729,330		3.6%
Joe Mara		106,067				119,855		*
Michael Halpin		249,954				266,820		*
Sean Flynn		154,812				161,318		*
Jonathan Hopper		123,728				176,354		*
All officers and directors as a group (12 persons)(9)		2,675,316		18,200		3,059,505		6.4%

*	Represents less than 1% of the outstanding shares of Vericel’s common stock equivalents.
(1)	Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares. Except as indicated in the footnotes to this table, to the knowledge of Vericel, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws, where applicable. The number of shares owned and percentage ownership amounts include certain options under our 2022 Plan, 2019 Plan, 2017 Plan, and 2009 Plan and our ESPP and RSUs under our 2022 Plan, 2019 Plan and 2017 Plan. Pursuant to the rules of the SEC, the number of shares of Vericel’s common stock deemed outstanding includes shares issuable pursuant to options held by the respective person or group that are currently exercisable or may be exercised within 60 days of March 4, 2021,9, 2023, and shares of our common stock that may be acquired upon the vesting of RSUs within 60 days of March 4, 2021.9, 2023.
(2)	Calculated on the basis of 46,094,15047,461,832 shares of common stock outstanding as of March 4, 2021.9, 2023.
(3)	RTW Investments LPAs reported in a Schedule 13G/A filed with the SEC on January 24, 2023, BlackRock, Inc. has sole voting power with respect to 7,386,431 shares and shared voting andpower with respect to 0 shares. BlackRock, Inc. has sole dispositive power with respect to all 4,517,5707,439,849 shares which voting and dispositive power is shared with Roderick Wong, the managing partner of RTW Investments LP. RTW Master Fund, Ltd. has shared voting and dispositive power with respect to 3,172,630 shares, which voting and dispositive power is shared with RTW Investments LP and Roderick Wong.0 shares. The address for RTW Investments LPBlackRock, Inc. is 412 West 15th55 East 52nd Street, Floor 9, New York, NY 10011.10055.
(4)	As reported in a Schedule 13G/A filed with the SEC on February 14, 2023, Brown Capital Management, LLC beneficially owns 6,931,641 shares of which 3,869,381 shares are beneficially owned by The Brown Capital Management Small Company Fund, a registered investment company, which is managed by Brown Capital Management, LLC. Brown Capital Management, LLC has sole voting power with respect to 2,421,1254,776,584 shares and sole dispositive power with respect to all 4,022,7756,931,641 shares. The address for Brown Capital Management, LLC is 1201 N. Calvert Street, Baltimore, MD 21202.

(5)2023 Proxy Statement	BlackRock, Inc. has sole voting power with respect to 3,241,062 shares and sole dispositive power with respect to all 3,293,630 shares. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.57

2021 Proxy Statement

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Information aboutAbout Stock Ownership

(6)(5)	Shares reflected as beneficially owned by Waddell & Reed Financial, Inc. are held by Ivy Investment Management Company or IICO, an investment advisory subsidiary of Waddell & Reed Financial, Inc., which advises or sub-advises open-end investment companies or other managed accounts. As reported in a Schedule 13G filed with the SEC on February 12, 2021, each of Waddell & Reed Financial, Inc. and IICO may be deemed to share9, 2023, State Street Corporation has sole voting power over,with respect to 0 shares and the power to direct the disposition of, the 2,768,705 shares reflected in the table as beneficially owned by Waddell & Reed Financial, Inc. The investment advisory contracts grant IICO all investment and/orshared voting power over securities owned by such advisory clients. The investment sub-advisory contracts grant IICO investmentwith respect to 3,260,631 shares. State Street Corporation has sole dispositive power over securities owned by such sub-advisory clientswith respect to 0 shares and in most cases, voting power.shared dispositive power with respect to all 3,364,203 shares. The address for Waddell & Reed Financial, Inc.State Street Corporation is 6300 Lamar Avenue, Overland Park, KS 66202.1 Lincoln Street, Boston, MA 02111.
(7)(6)	As reported in a Schedule 13G/A filed with the SEC on February 9, 2023, The Vanguard Group has sole voting power with respect to 0 shares and shared voting power with respect to 94,81878,190 shares. The Vanguard Group has sole dispositive power with respect to 2,208,5493,192,323 shares and shared dispositive power with respect to 124,625115,605 shares. The address for theThe Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355.
(8)(7)	As reported in a Schedule 13G/A portionfiled with the SEC on February 14, 2023, RTW Investments, LP has shared voting and dispositive power with respect to all 3,099,904 shares, which voting and dispositive power is shared with Roderick Wong, the managing partner of the RSUs vesting within 60 days of March 4, 2021RTW Investments LP. The address for Ms. Pennell will be withheld to cover the tax liability of the vesting and the amounts reported do not represent the total shares that will be received by the employee.RTW Investments LP is 40 10th Avenue Floor 7, New York, NY 10014.
(8)	As reported in a Schedule 13G filed with the SEC on January 19, 2023, Conestoga Capital Advisors LLC has sole voting power with respect to 2,346,776 and sole dispositive power with respect to 2,479,475. The address for Conestoga Capital Advisors LLC is 550 E. Swedesford Rd. Ste. 120, Wayne, PA 19087.
(9)	The address for the eleventwelve beneficial owners that are persons is c/o Vericel Corporation, 64 Sidney St., Cambridge, Massachusetts 02139.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our directors and certain officers, among others, to file forms with the SEC to report their ownership of our stock and any changes in ownership. Based on our review of reports filed with the SEC and related written representations, we believe that all of the required reports for our directors and officers were filed on a timely basis under Section 16(a) for 2022, except as follows:

54	On March 3, 2022, a late Form 4 filing made on behalf of Mr. Siegal, the Company’s Principal Accounting Officer, to report a grant of 4,198 stock options and 1,679 RSUs, which were granted to Mr. Siegal on February 18, 2022.

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Additional Information

Additional Information

General Information about the Meeting, Solicitation and Voting

What am I voting on?

There are three proposals scheduled to be voted on at the Annual Meeting:

1.	To elect seven (7)eight (8) directors, each to each serve a term of one year expiring at the 20222024 annual meeting of shareholders;
2.
2.	To approve, on an advisory basis, the compensation of our named executive officers; and
3.
3.	To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.2023.

Who is entitled to vote?

Shareholders as of the close of business on March 4, 20219, 2023 (the “Record Date”) may vote at the Annual Meeting. You have one vote for each share of common stock you held on the Record Date, including shares:

●	Held directly in your name as “shareholder of record” (also referred to as “registered shareholder”); and
●
●	Held for you in an account with a broker, bank or other nominee (also referred to as shares held in “street name”). Street name holders generally cannot vote their shares directly and must instead instruct the brokerage firm, bank or nominee how to vote their shares.

What constitutes a quorum?

A majority in interest of all stock issued, outstanding and entitled to vote at a meeting must be present or represented by proxy to constitute a quorum at the Annual Meeting. Abstentions and shares represented by “broker non-votes,” as described below, are counted as present and entitled to vote for purposes of determining a quorum. As of the Record Date, 46,094,15047,461,832 shares of Vericel’s common stock were outstanding and entitled to vote.

How many votes are required to approve each proposal?

The following explains how many votes are required to approve each proposal, provided that a majority of our shares is present at the Annual Meeting (present in person or represented by proxy).:

●	The election of each of our seven (7)eight (8) director candidates requires the affirmative vote of a plurality of the total shares of common stock entitled to vote and represented in person or by proxyproxy;
●
●	Approval of the non-binding, advisory resolution to approve the compensation of our named executive officers requires the affirmative vote of a majority of the votes cast on the proposal,proposal; and
●
●	Ratifying PricewaterhouseCoopers LLP as Vericel’s independent registered public accounting firm for the fiscal year ending December 31, 20212023 requires the affirmative vote of a majority of the votes cast on the proposalproposal.

How are votes counted and who are the proxies?

You may either vote “FOR” or “WITHHOLD” authority to vote for each nominee for the Board of Directors. Shares present or represented and not so marked as to withhold authority to vote for a particular nominee will be voted in favor of a particular nominee and will be counted toward such nominee’s achievement of a plurality. Shares present at the meeting or represented by proxy where the shareholder properly withholds authority to vote for such nominee in accordance with the proxy instructions and “broker non-votes” will not be counted toward such nominee’s achievement of a plurality.

You may vote “FOR,” “AGAINST” or “ABSTAIN” on the non-binding, advisory resolution approving the compensation of our named executive officers. If you abstain from voting on the non-binding, advisory resolution approving the compensation of our named executive officers, it will have no effect on the voting of the proposal. “Broker non-votes” do not have discretionary voting power on this matter and, accordingly, “broker non-votes” will have no effect on the ratification. If you just sign and submit your proxy card without marking your voting instructions, your shares will be voted “FOR” the resolution approving the compensation of our named executive officers.

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Additional Information

You may vote “FOR,” “AGAINST” or “ABSTAIN” on the ratification of PricewaterhouseCoopers LLP. If you abstain from voting on the proposal to ratify PricewaterhouseCoopers LLP,PwC, it will have no effect on the voting of the proposal. Brokers, bankers and other nominees have discretionary voting power on this routine matter and, accordingly, “broker non-votes” will have no effect on the ratification. If you just sign and submit your proxy card without marking your voting instructions, your shares will be voted “FOR” the resolution ratifying PricewaterhouseCoopers LLP.PwC.

The persons named as attorneys-in-fact in the proxies, Dominick C. Colangelo and Joseph Mara, were selected by the Board of Directors and are officers of Vericel. All properly executed proxies submitted in time to be counted at the Annual Meeting will be voted by such persons at the Annual Meeting. Where a choice has been specified on the proxy with respect to the foregoing matters, the shares represented by the proxy will be voted in accordance with the specifications.

What is a broker non-vote?

If you hold your shares in street name and do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote (a “broker non-vote”). Shares held by brokers who do not have discretionary authority to vote on a particular matter and who have not received voting instructions from their customers are counted as present for the purpose of determining whether there is a quorum at the Annual Meeting, but are not counted or deemed to be present or represented for the purpose of determining whether shareholders have approved that matter. Pursuant to applicable rules, brokers will have discretionary authority to vote on the proposal to ratify the appointment of PricewaterhouseCoopers LLP.PwC.

How does the Board of Directors recommend that I vote?

Our Board of Directors recommends that you vote your shares:

●	“FOR” the election of each of the nominees to the Board of Directors
●
●	“FOR” the advisory resolution to approve the compensation of our named executive officers
●
●	“FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as Vericel’s independent registered public accounting firm for the fiscal year ending December 31, 20212023

How do I vote my shares without attending the meeting?

If you are a shareholder of record, you may vote by granting a proxy. For shares held in street name, you may vote by submitting voting instructions to your broker or nominee. In any circumstance, you may vote:

●	By Internet or Telephone—You may vote by Internet or telephone by following the voting instructions on the proxy card and on www. proxyvote.comwww.proxyvote.com or as directed by your broker or other nominee. In order to vote via the Internet or by telephone, you must have the shareholder identification number which is provided in your Notice.
●
●	By Mail—Mail—If you requested a proxy card by mail, you may vote by signing, voting and returning your proxy card in the envelope provided. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), you should indicate your name and title or capacity. If you vote by Internet or telephone, please do not mail the proxy card. Your proxy card must be received prior to the Annual Meeting.

Internet and telephone voting facilities will close at 11:59 p.m., Eastern Time, on April 27, 2021.May 2, 2023.

How do I attend the Annual Meeting?

We will be hosting the Annual Meeting live via the internet. You will not be able to attend the Annual Meeting in person. Any shareholder can listen to and participate in the Annual Meeting live via the internet at www.virtualshareholdermeeting.com/VCEL2021.VCEL2023. Our Board annually considers the appropriate format of our annual meeting and this year has decided to again hold a virtual annual meeting due to the COVID-19 global pandemic. In addition, wemeeting. We intend the virtual meeting format to provide shareholders with a similar level of transparency to the traditional in-person meeting format and we will take steps to ensure such an experience. Our shareholders will be afforded the same opportunities to participate at the Annual Meeting as they would at an in-person annual meeting of shareholders. Our Annual Meeting will allow shareholders to submit questions and comments during the meeting. After the meeting, we will spend 15 minutes answering shareholder questions that comply with the meeting rules of conduct, which will be posted on the virtual meeting web portal. If we receive substantially similar questions, we will group such questions together and provide a single response to avoid repetition.

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Additional Information

The Annual Meeting webcast will begin promptly at 9:00 a.m. (Eastern Time), Eastern Time, on April 28, 2021.May 3, 2023. We encourage you to access the Annual Meeting webcast prior to the start time. Online check-in will begin, and shareholders may begin submitting written questions, at 8:45 a.m. (Eastern Time), Eastern Time, and you should allow ample time for check-in procedures.

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Additional Information

You will need the 16-digit control number included on your Notice of Internet Availability or your proxy card or voting instruction form (if you received a printed copy of the proxy materials) or included in the email to you if you received the proxy materials by email in order to be able to vote your shares or submit questions during the Annual Meeting. Instructions on how to connect to the Annual Meeting and participate via the Internet, including how to demonstrate proof of stock ownership, will be posted at www.virtualshareholdermeeting.com/VCEL2021VCEL2023 two weeks prior to the date of the Annual Meeting. If you do not have your 16-digit control number, you will be able to access and listen to the Annual MeetingAnnual Meeting as a guest, but you will not be able to vote your shares or submit questions during the Annual Meeting.

We have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting or submitting questions. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual meeting web portal.

What does it mean if I receive more than one proxy card?

It generally means that you hold shares registered in more than one account. To ensure that all of your shares are voted, vote according to the instructions for each proxy card you receive.

May I change my vote?

Yes. Whether you have voted by Internet, telephone or mail, if you are a shareholder of record, you may revoke your proxy or change your vote before the proposal is voted on at the Annual Meeting by:

●	Sending a written statement to that effect to the attention of the Senior Vice President, General Counsel and Secretary of Vericel at 64 Sidney Street, Cambridge, Massachusetts 02139, provided such statement is received no later than April 27, 2021;May 2, 2023;
●
●	Voting again by Internet or telephone at a later time before the closing of those voting facilities at 11:59 p.m. (Eastern Time), Eastern Time, on April 27, 2021;May 2, 2023;
●
●	Submitting a properly signed proxy card with a later date that is received no later than April 27, 2021;May 2, 2023; or
●
●	Attending the Annual Meeting and revoking your proxy and voting during the Annual Meeting.

What are the costs associated with the solicitation of proxies?

The cost of soliciting proxies will be borne by us. Voting results will be tabulated and certified by Broadridge Financial Solutions. Vericel may solicit shareholders by mail through its regular employees, and will request banks and brokers, and other custodians, nominees and fiduciaries, to solicit their customers who have our stock registered in the names of such persons and will reimburse them for their reasonable, out-of-pocket costs. Vericel may use the services of its officers, directors, and others to solicit proxies, personally or by telephone, without additional compensation.

Shareholder Proposals To Beto be Presented at Next Annual Meeting

Under Vericel’s Bylaws, in order for business and director nominations to be properly brought before a meeting by a shareholder, such shareholder must have given timely notice thereof in writing to the Senior Vice President, General Counsel and Secretary of Vericel. To be timely, such notice must be received at Vericel’s principal executive offices not less than 120 calendar days in advance of the one year anniversary of the date Vericel’s proxy statement was released to shareholders in connection with the previous year’s annual meeting, except that (i) if no annual meeting was held in the previous year, (ii) if the date of the Annual Meeting has been changed by more than thirty calendar days from the date contemplated at the time of the previous year’s proxy statement, or (iii) in the event of a special meeting, then notice must be received not later than the close of business on the tenth day following the day on which notice of the date of the meeting was mailed or public disclosure of the meeting date was made.

If none of the events described in (i) through (iii) above occur, then the deadline for submitting shareholder proposals or nominations for directors for inclusion in our proxy statement and form of proxy pursuant to Rule 14a-8 of the SEC’s proxy rules or other business or director nominations for the next annual meeting of shareholders will be November 19, 2021 and shareholder proposals submitted outside the processes of Rule 14a-8 received after November 19, 2021 will be considered untimely under Vericel’s Bylaws. 24, 2023.

In order to be brought before the next annual meeting, any such proposal or nomination must include the relevant information as required under our Bylaws and must otherwise meet applicable requirements of the SEC’s proxy rules, if such proposal or nomination isincluding Rule 14a-19(b) to be included in our proxy statement for the next annual meeting.extent applicable.

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Additional Information

Shareholder proposals and director nominations should be delivered to: Vericel Corporation, 64 Sidney St., Cambridge, Massachusetts 02139, Attention: General Counsel and Secretary. Vericel recommends that such proposals be sent by certified mail, return receipt requested.

Shareholder Communications with Directors

The Board of Directors has adopted a Shareholder Communications with Directors Policy, which was most recently updated in July 2020. The Shareholder Communications with Directors Policy is available on the Investor Relations page of our website, www.vcel.com, and by following the Corporate Governance link.www.vcel.com.

Where You Can Find More Information

The Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 20202022 is available at www.proxyvote.com.

www.proxyvote. com. The SEC allows us to “incorporate by reference” information into this Definitive Proxy Statement, which means that we can disclose important information to you by referring you to other documents that we filed separately with the SEC. You should consider the incorporated information as if we reproduced it in this Definitive Proxy Statement, except for any information directly superseded by information contained in this Definitive Proxy Statement.

We incorporate by reference into this Definitive Proxy Statement the following financial statements and other information, which contain important information about us and our business and financial results:

●	●	the financial statements, quarterly data, management’s discussion and analysis of financial condition and results of operations, changes in and disagreements with accountants on accounting and financial disclosure and market risk disclosures contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020; and
●	the information relating to our executive officers contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as set forth under the caption “Executive Officers.”2022.

We may file additional documents with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this Definitive Proxy Statement and before the Annual Meeting. The SEC allows us to incorporate by reference into the Proxy Statement such documents. You should consider any statement contained in this Definitive Proxy Statement (or in a document incorporated into this Proxy Statement) to be modified or superseded to the extent that a statement in a subsequently filed document modifies or supersedes such statement.

Shareholders may obtain a copy of the Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 20202022 by writing to Vericel at the following address: Vericel Corporation, 64 Sidney St., Cambridge, Massachusetts 02139, Attention: General Counsel and Secretary. Copies of our SEC filings are also available to the public fromon the SEC’s web site at www.sec.gov.

HouseholdingOur 2021 ESG Report, committee charters, compliance documents and policies, including our Code of Business Conduct and Ethics can be found at the Investor Relations page of our website, www.vcel.com. The reports and information contained in, or that can be accessed from, our website, are not incorporated by reference and are not part of this proxy statement.

Householding

The SEC permits a single Proxy Statement to be sent to any household at which two or more shareholders reside if they appear to be members of the same family. Each shareholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information shareholders receive and reduces mailing and printing expenses. A number of brokerage firms have instituted householding.

As a result, if you hold your shares through a broker and you reside at an address at which two or more shareholders reside, you will likely be receiving only one Proxy Statement unless any shareholder at that address has given the broker contrary instructions. However, if any such beneficial shareholder residing at such an address wishes to receive a separate Proxy Statement in the future, or if any such beneficial shareholder that elected to continue to receive a separate Proxy Statement wishes to receive a single Proxy Statement in the future, that shareholder should contact their broker or send a request to us care of the General Counsel and Secretary at Vericel Corporation, 64 Sidney St., Cambridge, Massachusetts 02139. Telephone requests may be directed to (617) 588-5555. We will deliver, promptly upon written or oral request, a separate copy of this Proxy Statement to a beneficial shareholder at a shared address to which a single copy of the documents was delivered.

Transaction of Other Business

AtAs of the date of this Proxy Statement, the only business which the Board of Directors intends to present or knows that others will present at the meeting is as set forth above. If any other matter or matters are properly brought before the meeting, or any adjournment thereof, it is the intention of the persons named in the accompanying form of proxy to vote the proxy on such matters in accordance with their best judgment.

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Additional Information

GAAP versus Non-GAAP Measures

Vericel’s reported earnings, net revenue and other indicators of financial performance, as presented in this Proxy Statement, are generally prepared in accordance with generally accepted accounting principles in the United States, or GAAP, and represent earnings as reported to the Securities and Exchange Commission.SEC. In this Proxy Statement, Vericel has provided certain financial information that has not been prepared in accordance with GAAP. Vericel’s management believes that the non-GAAP adjusted EBITDA and adjusted EBITDA margin described in this Proxy Statement, which includes adjustments for specific items that are generally not indicative of our core operations, provides additional information that is useful to investors in understanding Vericel’s underlying performance, business and performance trends, and helps facilitate period-to-period comparisons and comparisons of its financial measures with other companies in Vericel’s industry. However, the non-GAAP financial measures that Vericel uses may differ from measures that other companies may use. Non-GAAP financial measures are not required to be uniformly applied, are not audited and should not be considered in isolation or as substitutes for results prepared in accordance with GAAP.

Reconciliation of Reported Annual Net (Loss) Income (GAAP) to Adjusted EBITDA (Non-GAAP Measure) – Unaudited

		Year Ended December 31,
Annual Adjusted EBITDA (In Thousands)		2017				2018				2019				2020
Net (Loss) Income (GAAP)		$	(17,286	)		$	(8,137	)		$	(9,665	)		$	2,864
Upfront license agreement payment			—				—				17,500				—
Revenue reserve related to a dispute between pharmacy
provider and payer			1,418				—				—				—
Change in fair value of warrants			257				2,524				—				—
Stock compensation expense			2,680				7,223				13,179				13,843
Depreciation and amortization			1,612				1,426				1,744				2,383
Loss on extinguishment of debt			860				838				—				—
Net interest expense (income)			1,093				835				(1,606	)			(685	)
Income tax expense			—				—				—				180
Adjusted EBITDA (Non-GAAP)		$	(9,366	)		$	4,709			$	21,152			$	18,585
Adjusted EBITDA margin			15%				5%				18%				15%

Annual Adjusted EBITDA (In Thousands)		2020 ($)				2021 ($)				2022 ($)
Net income (loss) (GAAP)			2,864				(7,471	)			(16,709	)
Stock-based compensation expense			13,843				34,322				37,183
Depreciation and amortization			2,383				2,965				3,981
Net interest income			(685	)			(220	)			(975	)
Income tax expense (benefit)			180				(111	)			721
Adjusted EBITDA (Non-GAAP)			18,585				29,485				24,201
Adjusted EBITDA margin			15%				19%				15%

Special Note Regarding Forward-Looking Statements

This Proxy Statement and other materials we are sending you or that are available on our website in connection with the Annual Meeting (the Other Materials) contain “forward-looking statements” as defined under federal securities laws.Theselaws. These statements are often, but are not always, made through the use of words or phrases such as “anticipates,” “intends,” “estimates,” “plans,” “expects,” “continues,” “believe,” “guidance,” “outlook,” “target,” “future,” “potential,” “goals” and similar words or phrases, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. These forward-looking statements are based on our current expectations and assumptions, and are subject to risk and uncertainties that could cause our actual results or experience and the timing of events to differ significantly from the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in Vericel’s Annual Report on Form 10-K for the year-ended December 31, 2020,2022, as filed with the SEC on February 24, 202123, 2023 under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition” and “Results of Operations” and elsewhere in the Annual Report. You should carefully consider that information before voting.

These forward-looking statements reflect our views as of the date hereof and Vericel does not assume and specifically disclaims any obligation to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date of this release except as required by law.

APPROVALApproval

The contents of this Proxy Statement and the sending thereof to shareholders have been authorized by the Board.

By Order of the Board of Directors:

 

Sean C. Flynn

Senior Vice President, General Counsel and Secretary

March 19, 202123, 2023

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64 Sidney Street

Cambridge, MA 02139

www.vcel.com

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