UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
SCHEDULE 14A
_________________
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
__)
Filed by the Registrant | ☒ | |
Filed by a Party other than the Registrant | ||
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Check the appropriate box:
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| Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to |
SenesTech, Inc.
(Name of Registrant as Specified in its Charter)
_______________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check in the appropriate box):
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Fee paid previously with preliminary materials. | ||
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a- 6(i)(1) | ||
| and 0-11. | ||
SENESTECH, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 24, 2021
23, 2022
Dear Stockholder:
Notice is hereby given that the 2021 annual meeting of stockholders (the “The Annual Meeting”) of Stockholders, or the Annual Meeting, of SenesTech, Inc., a Delaware corporation, (the “Company”), will be held on Thursday, June 24, 202123, 2022 at 12:00 noon, mountain standard time.p.m., Mountain Standard Time. Due to the ongoing public health impact of the novel coronavirus COVID-19COVID-19 outbreak, this year’s Annual Meeting will be a virtual meeting conducted solely via live webcast. You will be able to attend the Annual Meeting, vote your shares electronically and submit questions during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/SNES2021.www.virtualshareholdermeeting.com/SNES2022 and entering the 16-digit control number included on your proxy card or in the instructions that accompanied your proxy materials. You will not be able to attend the Annual Meeting in person. Additional information regarding attending the Annual Meeting, voting your shares and submitting questions can be found in the Proxy Statement.
The Annual Meeting will be held for the following purposes:
The purposes1. To elect K.C. Kavanagh, Kenneth Siegel and Matthew Szot as Class III directors, each to serve for a three-year term until the 2025 annual meeting of stockholders and until their successors are duly elected and qualified;
2. To provide a non-binding advisory vote on the meeting arecompensation of our named executive officers for fiscal 2021 (“say-on-pay”);
3. To provide a non-binding advisory vote on the frequency of future non-binding advisory votes on the compensation of our named executive officers (“say-on-frequency”);
4. To ratify the appointment of M&K CPAS, PLLC as follows:our independent registered public accounting firm for the fiscal year ending December 31, 2022; and
| 5. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice of Annual Meeting of Stockholders.
TheOur board of directors has fixed the close of business on April 27, 202125, 2022 as the record date for the determination of stockholders entitled to vote at this meeting. Only stockholders of record at the close of business on April 27, 202125, 2022 are entitled to receive notice of, and to vote at, the meeting and any adjournment thereof.
It is important that your shares be represented and voted, regardless of whether you plan to virtually attend the Annual Meeting. You may vote in advance of the Annual Meeting on the Internet, by telephone or by completing and mailing a proxy or voting card. Voting in advance by Internet, telephone or mail will ensure your shares are represented at the Annual Meeting. If you virtually attend the meeting, you may choose to revoke your proxy and vote online during the meeting by following the instructions at www.virtualshareholdermeeting.com/SNES2021.SNES2022.
The Company isWe are furnishing proxy materials to itsour stockholders through the Internet as permitted under the rules of the Securities and Exchange Commission. Under these rules, many of the Company’sour stockholders will receive a Notice of Internet Availability of Proxy Materials instead of a paper copy of this Notice of Annual Meeting of Stockholders, the Proxy Statement, our proxy card, and our Annual Report on Form 10-K,10-K, for the fiscal year ended December 31, 2020.2021. We believe this process gives us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and postage. If requested, stockholders will receive a paper copy of the proxy materials by mail.
On behalf of management and our board of directors, we thank you for your continued support and interest in SenesTech, Inc.
Sincerely, | ||
/s/ Kenneth Siegel | ||
Kenneth Siegel | ||
Chief Executive Officer |
Phoenix, Arizona
April 29, 2022
May 4, 2021
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on June 24, 2021: 23, 2022: The proxy statement and annual report to stockholders are available at http://senestech.investorroom.com/.
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PROXY STATEMENT
FOR THE 20212022 ANNUAL MEETING OF STOCKHOLDERS
PROCEDURAL MATTERS
General
The enclosed proxy is being solicited by the board of directors of SenesTech, Inc., a Delaware corporation (the “Company”), for use at the 2021 annual meeting of stockholders (the “our 2022 Annual Meeting”) of Stockholders, or the Annual Meeting, to be held on Thursday, June 24, 202123, 2022 at 12:00 noon, mountain standard time, andp.m., Mountain Standard Time, or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders.
Due to the ongoing public health impact of the novel coronavirus COVID-19COVID-19 outbreak, this year’s Annual Meeting will be a virtual meeting conducted solely via live webcast. You will be able to attend the Annual Meeting, vote your shares electronically and submit questions during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/SNES2021.SNES2022. You will not be able to attend the Annual Meeting in person. See “How Do Ito Attend the Annual Meeting”Meeting; Asking Questions” below for more details.
Our principal executive offices are located at 23460 N. 19thAvenue, Suite 110, Phoenix, AZ 85027, and the telephone number at such principal executive offices is (928) 779-4143.779-4143. As used in this proxy statement, “we,” “us,” “our” and the “Company”“our company” refer to SenesTech, Inc.
, a Delaware corporation.
On or about May 4, 2021,April 29, 2022, we are mailing stockholders entitled to vote at the Annual Meeting a Notice of Internet Availability of Proxy Materials, (the “or the Notice,”) instead of a paper copy of this proxy statement. The Notice contains instructions on how to access those documents over the Internet, which are available at http://senestech.investorroom.com/. The Notice also contains instructions on how to request a paper copy of our proxy materials, including this proxy statement and a form of proxy card or voting instruction card.
The Company isWe were incorporated under Delaware law, which specifically permits electronically transmitted proxies, provided that the transmission set forth or be submitted with information from which it can reasonably be determined that the transmission was authorized by the stockholder. The electronic voting procedures provided for the Annual Meeting are designed to authenticate each stockholder by use of a control number to allow stockholders to vote their shares and to confirm that their instructions have been properly recorded.
Record Date and Outstanding Shares
Only stockholders of record at the close of business on April 27,25, 2021, (the “or the record date,”) are entitled to receive notice of and to vote at the Annual Meeting. Our only outstanding voting securities are shares of common stock, $0.001 par value. As of the record date, 12,164,71312,212,283 shares of our common stock were issued and outstanding, which shares of common stock are held by approximately 703696 stockholders of record.
How Do I Attend the Annual Meeting?
This year’sThe Annual Meeting will be a virtual only meeting conducted solely via live webcast.
To participate in the Annual Meeting, visit www.virtualshareholdermeeting.com/SNES2021SNES2022 and use the sixteen-digitsixteen-digit control number included on your Notice or your proxy card to enter the meeting. The live webcast will begin at 12:00 noon, mountain standard time,p.m., Mountain Standard Time, on June 24,23, 2021. We encourage you to access the virtual meeting platform at least 15 minutes prior to the start time. If you do not have a sixteen-digitsixteen-digit control number, you will still be able to access the webcast as a guest, but you will not be able to vote your shares or ask a question during the meeting.
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and mobile phones) running the most updated version of applicable software and plugins. Participants should ensure they have a strong WiFi connection wherever they intend to participate in the meeting. Further instructions on how to attend and participate in the Annual Meeting, including how to demonstrate proof of stock ownership, will be posted on the virtual meeting website.
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We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. Technical support will be available on the virtual meeting platform beginning at 11:30 a.m., mountain standard time, on the day of the meeting and will remain available until the meeting has finished.
Can I Submit Questions During the Annual Meeting?
If you wish to submit a question during the Annual Meeting, visit www.virtualshareholdermeeting.com/SNES2021,SNES2022, type your question into the “Ask a Question” field, and click “Submit.”
Questions pertinent to meeting matters will be answered during the Annual Meeting, subject to time constraints. Questions regarding personal matters, including those relating to employment, products or services or suggestions for product innovations may not be considered pertinent to meeting matters and therefore may not be answered.
How Do I Vote?
Whether you plan to attend the Annual Meeting or not, we urge you to submit your voting instructions by proxy. Voting by proxy will not affect your right to attend the Annual Meeting. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via the Internet or telephone. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the board of directors’ recommendations as noted below. If you neither submit by proxy nor vote your shares during the Annual Meeting, your shares will not be voted if you are a registered stockholder. If your shares are held in street name, your broker, bank or other holder of record may vote your shares on certain “routine” matters. See “Quorum; Abstentions; Broker Non-Votes;Non-Votes; Results” below for more information.
If your shares are registered directly in your name through our stock transfer agent, Transfer Online, or you have stock certificates registered in your name, you may vote:
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• By mail. If you received a proxy card by mail, you can have your shares voted by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the board of directors’ recommendations as noted below.
• During the Annual Meeting. Log into www.virtualshareholdermeeting.com/SNES2022 and follow the voting instructions. You will need the sixteen-digit control number that is shown on your Notice or on your proxy card. Shares may not be voted after the polls close.
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m. eastern daylight timeEastern Daylight Time on June 23, 2021.
22, 2022.
If your shares are held in “street name” (held in the name of a bank, broker or other holder of record), you will receive instructions from the holder of record. You must follow the instructions of the holder of record in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholders owning shares through certain banks and brokers.
Revocability of Proxies
If you give us your proxy, you may change or revoke it at any time before the Annual Meeting. You may change or revoke your proxy in any one of the following ways:
| • if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as instructed above; | ||
Solicitation• by submitting your proxy by the Internet or by telephone as instructed above;
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• by notifying the Corporate Secretary of our company in writing before the Annual Meeting that you have revoked your proxy; or
The Company has• by logging into www.virtualshareholdermeeting.com/SNES2022 and following the voting instructions during the Annual Meeting.
Solicitation
We have retained Alliance Advisors, LLC, (“Alliance”)or Alliance, to act as a proxy solicitor for the annual meeting.Annual Meeting. We have agreed to pay Alliance $7,000,$7,500, plus reasonable out-of-pocketout-of-pocket expenses, for proxy solicitation services and, if needed, additional fees for telephone solicitation. All related costs will be borne by us. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. Proxies may also be solicited by certain of our directors, officers or administrative employees without the payment of any additional consideration. Solicitation of proxies may be made by mail, by telephone, by email, in person or otherwise.
Stockholders of Record and “Street Name” Holders
Where shares are registered directly in the holder’s name, that holder is the stockholder of record with respect to those shares. If shares are held by an intermediary, meaning in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered the stockholder of record as to those shares. Those shares are said to be held in “street name” on behalf of the beneficial owner of the shares. Street-nameStreet-name holders generally cannot directly vote their shares and must instead instruct the broker or other nominee how to vote their shares using the voting instruction form provided by that broker or other nominee. Many brokers also offer the option of giving voting instructions over the internet or by telephone. Instructions for giving your vote as a street-namestreet-name holder are provided on your voting instruction form.
Quorum; Abstentions; Broker Non-Votes; Results
At the Annual Meeting, an inspector of elections will determine the presence of a quorum and tabulate the results of the voting by stockholders. A quorum exists when holders of a majorityone-third (1/3) of the stock issued and outstanding shares of stockand entitled to vote are present in person by remote communication, if applicable, or represented by proxy. A quorum is necessary for the transaction of business at the Annual Meeting.
Broker non-votesnon-votes can occur as to shares held in street name. Under the current rules that govern brokers and other nominee holders of record, if a street-namestreet-name holder does not give instructions to its broker or other nominee, such broker or other nominee will be able to vote such shares only with respect to proposals for which the broker or other nominee has discretionary voting authority, i.e., “routine” matters under The Nasdaq Stock Market LLC, (“or Nasdaq,”) rules. A “broker non-vote”non-vote” occurs when a broker or other nominee submits a proxy for the Annual Meeting but does not vote on a particular proposal because such broker or other nominee either does not exercise its discretionary voting authority or does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner.
The only “routine” proposal you are being asked to vote on at the Annual Meeting is the ratification of M&K CPAS, PLLC as our independent registered public accounting firm for the fiscal year ending December 31, 20212022 (Proposal No. 3)Four). The other proposals concerning the election of directors (Proposal No. 1)One), say-on-pay (Proposal Two) and the amendment to the Company’s 2018 Equity Incentive Plan (the “2018 Plan”) to increase the available number of sharessay-on-frequency (Proposal No. 2)Three) are considered “non-routine”“non-routine” matters, which means that your bank or broker will not be permitted to vote your shares on any of the other proposals at the Annual Meeting unless you provide proper voting instructions. Accordingly, stockholders are urged to give their bank or broker instructions on voting their shares on all matters.
Abstentions and broker non-votesnon-votes are treated as shares present for the purpose of determining whether there is a quorum for the transaction of business at the Annual Meeting.
We intend to publish final voting results of the Annual Meeting in a Current Report on Form 8-K,8-K, which we expect will be filed within four business days of the Annual Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K8-K within four business days after the Annual Meeting, we intend to file a Current Report on Form 8-K8-K to publish results as to matters for which we have final votes and, within four business days after the final results are known to us, file an additional Current Report on Form 8-K8-K to publish the final results.
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Required Votes and Voting
Each holder of common stock is entitled to one vote for each share held.
Assuming that a quorum is present at the Annual Meeting, the following votes will be required:
Proposal | Voting Options | Vote Required to | Effect of | Effect of Broker | ||||
1. Election of directors | For or withhold on each nominee. | Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election. The three nominees for election to the board of directors who receive the greatest number of votes cast “FOR” the election of the directors by the shares present, in person or by proxy, will be elected to the board of directors. | No effect. | No effect. | ||||
2. Non-binding advisory vote on the compensation of our named executive officers for fiscal 2021 (“say-on-pay”) | ||||||||
For, against, or abstain. | The advisory vote on the compensation of our named executive officers is non-binding, but our board of directors will consider the input of stockholders based on a majority of votes cast for the say-on-pay proposal. | No effect. | No effect. | |||||
3. Non-binding advisory vote on the frequency of future non-binding advisory votes on the compensation of our named executive officers (“say-on-frequency”) | One year, two years, three years abstain. | The advisory vote on the frequency of future of non-binding votes on the compensation of our named executive officers is non-binding, but our board of directors will consider the input of stockholders based on the alternative that receives the most votes cast. | No effect. | No effect. | ||||
4. Ratification of Appointment of M&K CPAS, PLLC as our independent registered public accounting firm for fiscal year 2022 | For, against, or abstain. | “FOR” votes from the holders of a majority of shares present and entitled to vote on this proposal. | Against. | |||||
Brokers have discretion to vote. |
All shares entitled to vote and represented by properly executed, unrevoked proxies received before the Annual Meeting will be voted at the Annual Meeting in accordance with the instructions given on those proxies. If no instructions are given on a properly executed proxy, the shares represented by that proxy will be voted “FOR” each proposal listed above.
of the director nominees, “FOR” the approval of the compensation of our named executive officers for fiscal year 2021, to hold the advisory vote on the compensation of our named executive officers on an annual basis and “FOR” ratification of appointment of M&K CPAS, PLLC as our independent registered accounting firm for fiscal year 2022..
If any other matters are properly presented for consideration at the Annual Meeting, which may include, for example, a motion to adjourn the Annual Meeting to another time or place (including, without limitation, for the purpose of soliciting additional proxies), the persons named in the enclosed proxy and acting thereunder will have discretion to vote on those matters as they deem advisable. We do not currently anticipate that any other matters will be raised at the Annual Meeting.
Deadlines for Receipt of Stockholder Proposals
Stockholder proposals may be included in our proxy statement and form of proxy for an annual meeting so long as they are provided to us on a timely basis and satisfy the other conditions set forth in Rule 14a-814a-8 under the Securities Exchange Act of 1934, as amended, (the “or the Exchange Act,”), regarding the inclusion of stockholder proposals in company-sponsored
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company-sponsored proxy materials. For a stockholder proposal to be considered timely pursuant to Rule 14a-814a-8 for inclusion in our proxy statement and form of proxy for the annual meeting to be held in 2022,2023, we must receive the proposal at our principal executive offices, addressed to our Secretary, no later than December 31, 2021.2022. Any proposals received after such date will be considered untimely. Submitting a stockholder proposal does not guarantee that it will be included in our proxy statement and form of proxy.
In addition, a stockholder proposal that is not intended for inclusion in our proxy statement and form of proxy under Rule 14a-814a-8 (including director nominations) shall be considered “timely” as calculated in accordance with Rule 14a-4(c)14a-4(c) under the Exchange Act, and may be brought before the 20222023 annual meeting of stockholders provided that we receive information and notice of the proposal addressed to our Secretary at our principal executive offices, no earlier than February 14, 202213, 2023 and no later than March 16, 2022.
15, 2023.
Further, our Amended and Restated Bylaws, (the “as amended, or Bylaws,”) provide that only such business shall be conducted at an annual meeting of stockholders as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be brought in accordance with Section 2.4 of our Bylaws.
All notices of stockholder proposals, whether or not intended to be included in our proxy materials, should be in writing and sent to our principal executive offices, located at: SenesTech, Inc., 23460 N. 19thAvenue, Suite 110, Phoenix, AZ 85027, Attention: Secretary.
Paper Copy of Proxy Materials
If you want to receive a paper copy of these proxy materials, including any documents incorporated herein by reference but excluding exhibits to the Annual Report on Form 10-K,10-K, as amended, for the fiscal year ended December 31, 2020 (our “20202021, or our 2021 Annual Report,”), you may request one at no cost to you by writing to: SenesTech, Inc., 23460 N. 19thAvenue, Suite 110, Phoenix, AZ 85027, Attention: Secretary.
Annual Report and Other Matters
Our 2022 Annual Report, which was made available to stockholders with or preceding this proxy statement, contains financial and other information about our company, but is not incorporated into this proxy statement and is not to be considered a part of these proxy materials or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act. The information contained in the “Report of the Audit Committee” shall not be deemed “filed” with the SEC or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act.
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ONE
ELECTION OF DIRECTORS
General
Our Bylaws provide that the authorized number of directors of the Companyour company are fixed by the board of directors from time to time. The board of directors has set the size of the board at nineeight directors. If for any reason directors are not elected at the annual meeting of our stockholders, they may be elected at any special meeting of the stockholders that is duly called and held for that purpose in the manner provided by the Bylaws.
Currently, the board of directors is divided into three classes, and directors in each class are elected to serve a three-yearthree-year term. The term of the current Class II directors expires at the Annual Meeting. The term of the Class III directors expires at our 2022 annual meeting and thethis year’s Annual Meeting. The term of the Class I directors expires at our 2023 annual meeting.meeting of stockholders and the term of the Class II directors expires at the 2024 annual meeting of stockholders. A director serves in office until a successor is duly elected and qualified, unless the director is removed, resigns or, by reason of death or other cause, is unable to serve in the capacity of director. Any additional directorships resulting from an increase in the number of directors would currently be distributed among the three classes so that, as nearly as possible, each class will consist of one third of the total number of directors.
Set forth below is certain information regarding the director nominees and each of the incumbent directors whose terms will continue following the Annual Meeting.
Nominees for Director
The board of directors has nominated Jamie Bechtel, Delphine François ChiavariniK.C. Kavanagh, Kenneth Siegel and Phil Grandinetti IIIMatthew Szot as Class IIIII directors. The current Class IIIII directors will stand for re-electionre-election at theour Annual Meeting of Stockholders subject to election for a three-yearthree-year term expiring at our 20242025 annual meeting.
meeting of stockholders.
Unless otherwise instructed, the proxy holders will vote the proxies received by them for the election of Dr. Bechtel, Ms. ChiavariniKavanagh, Mr. Siegel and Mr. GrandinettiSzot to the board of directors. Each of these individuals has indicated that he or she will serve if elected. We do not anticipate that any of these nominees will be unable or unwilling to stand for election, but if that occurs, all proxies received may be voted by the proxy holders for another person nominated by the board of directors. As there are three nominees, proxies may be voted for up to three persons.
Nominees and Continuing Directors
The following table sets forth the names and certain information as of the record date aboutregarding the nominees and each director of our company continuing in office after the Annual Meeting are set forth below.Meeting:
Name of Director | Age | Position | Director | Term Expires | ||||
Marc Dumont | 79 | Director(1)(2) | 2016 | 2023 (Class I) | ||||
Jake Leach | 44 | Director(1) | 2020 | 2023 (Class I) | ||||
Jamie Bechtel, JD, Ph.D. | 49 | Chair of the Board and Director(2)(3) | 2018 | 2024 (Class II) | ||||
Delphine François Chiavarini | 46 | Director(1)(2) | 2018 | 2024 (Class II) | ||||
Phil Grandinetti III | 50 | Director(3) | 2020 | 2024 (Class II) | ||||
K.C. Kavanagh | 52 | Director(2) | 2020 | 2022 (Class III) | ||||
Kenneth Siegel | 66 | Chief Executive Officer and Director | 2019 | 2022 (Class III) | ||||
Matthew Szot | 47 | Director(1)(2)(3) | 2015 | 2022 (Class III) |
____________
(1) Member of the audit committee.
| Name of Director Nominee | Age | Position | Director Since | Term Expires | ||||
| Marc Dumont | 77 | Director | 2016 | 2023 (Class I) | ||||
| Jake Leach | 43 | Director | 2020 | 2023 (Class I) | ||||
| Jamie Bechtel, JD, Ph.D. | 48 | Chair of the Board and Director | 2018 | 2021 (Class II) | ||||
| Delphine François Chiavarini | 45 | Director | 2018 | 2021 (Class II) | ||||
| Phil Grandinetti III | 49 | Director | 2020 | 2021 (Class II) | ||||
| K.C. Kavanagh | 51 | Director | 2020 | 2022 (Class III) | ||||
| Kenneth Siegel | 65 | Chief Executive Officer and Director | 2019 | 2022 (Class III) | ||||
| Matthew Szot | 46 | Director | 2015 | 2022 (Class III) |
(2) Member of the nominations and corporate governance committee.
(3) Member of the compensation committee.
Director Nominees
K.C. Kavanagh has served as a director of our company since November 2020. Ms. Kavanaugh has served as Chief Communications Officer for AT&T Inc. since January 2022. Previously, Ms. Kavanaugh served as Chief Communications Officer for Bacardi Limited from October 2016 to May 2021. Prior to Bacardi Limited,
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Jamie Bechtel, JD, Ph.D.Table of Contents
Ms. Kavanagh served as Senior Vice President of Global Communications for Starwood Hotels & Resorts, a branded lifestyle hospitality company, from September 2010 to September 2016. We believe that Ms. Kavanagh is qualified to serve as a member of our board of directors because of her experience in communications, marketing, branding and public relations as well as her superior leadership skills.
Kenneth Siegel has served as a director of our company since February 2019 and as our Chief Executive Officer since May 2019. From December 2016 to November 2018, Mr. Siegel served in key leadership roles at Diamond Resorts International Inc., a global vacation ownership company, most recently as President from March 2017 to November 2018. Prior to Diamond Resorts, from November 2000 to October 2016, he served in key leadership roles at Starwood Hotels & Resorts, a branded lifestyle hospitality company, most recently as Chief Administrative Officer and General Counsel from May 2006 to October 2016. Prior to joining Starwood in 2000, Mr. Siegel spent four years as the Senior Vice President and General Counsel of Cognizant Corporation and its successor companies, a multinational information technology services and consulting company. Mr. Siegel has a bachelor’s degree from Cornell University and a juris doctorate degree from New York University. We believe that Mr. Siegel is qualified to serve as a member of our board of directors because of his experience and knowledge in all facets of corporate operations and governance, including business, operational, corporate finance, mergers and acquisitions, marketing and branding gained as a senior executive of major public corporations.
Matthew Szot has served as a director of our company since December 2015 and serves as Vice-Chairman of the board and Chairman of our Audit Committee. From March 2010 to November 2021, he served as the Chief Financial Officer of S&W Seed Company, a Nasdaq-listed agricultural seed biotechnology company. Since September 2020, Mr. Szot has served on the board of directors and as Chairman of the Audit and Compensation committees of INVO Bioscience, Inc, a Nasdaq-listed medical device company. From June 2018 to August 2019, Mr. Szot served on the board of directors and as Chairman of the Audit Committee of Eastside Distilling, Inc. a Nasdaq-listed craft spirits company. From February 2007 until October 2011, Mr. Szot served as the Chief Financial Officer for Cardiff Partners, LLC, a strategic consulting company that provided executive financial services to various publicly traded and privately held companies. From 2003 to December 2006, Mr. Szot served as Chief Financial Officer and Secretary of Rip Curl, Inc., a market leader in wetsuit and action sports apparel products. From 1996 to 2003, Mr. Szot was electeda Certified Public Accountant with KPMG and served as an Audit Manager for various publicly traded companies. Mr. Szot has a Bachelor of Science degree in Agricultural Economics/Accountancy from the University of Illinois, Champaign-Urbana and is a Certified Public Accountant in the State of California. We believe that Mr. Szot is qualified to serve as a member of our board of directors because of his experience and knowledge of corporate finance, mergers and acquisitions, corporate governance, as well as other operational, financial and accounting matters gained as a past and present chief financial officer and director of other public and private companies.
Vote Required
If a quorum is present, the nominees for election to the board of directors inreceiving the greatest number of votes cast “FOR” the election of the directors by the shares represented at the Annual Meeting will be elected to our board of directors for a three-year term.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE BOARD’S CLASS III DIRECTOR NOMINEES LISTED ON THE PROXY CARD.
Continuing Directors
Jamie Bechtel, JD, Ph.D. has served as a director of our company since January 2018. Dr. Bechtel is the co-founder and a board member of New Course, an organization focused on women-led conservation initiatives, and founder and chief executive officer of Kito Impact Foundation, a non-profitnon-profit focused on integrating corporate social responsibility into small and medium sized businesses. Before founding Kito Impact Foundationbusinesses, and New Course, Dr. Bechtel worked for seven years at Conservation International, where she worked in over 20 countries including Costa Rica, Fiji, Mexico, and South Africa.has been the chief executive officer since February 2018. In addition, Dr. Bechtel was alsoa co-founder of New Course, an advisor to the Clinton Global Initiative.organization focused on women-led conservation initiatives, and she has been a board member since August 2009. Dr. Bechtel holds a Ph.D. from Boston University, a law degree from Boston College and a bachelor’s degree from Boston University. We believe that Dr. Bechtel is qualified to serve as a member of our board of directors because she is a highly regarded leader in international conservation, and her work has led to strategic advances in the fields of conservation, sustainable finance and biology.
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Delphine François Chiavariniwas elected to the board has served as a director of directors inour company since June 2018. Since June 2017, Ms. Chiavarini ishas served as vice president and general manager of U.S. at Moen, a faucet manufacturing company. She joined Moen in June 2017 andcompany, where she is responsible for developing strategies for profitable growth, increasing Moen’s market share and ensuring winning execution in the U.S. market. Before joining Moen, from August 2014 to June 2017, Ms. Chiavarini was senior vice president and general manager of Food and Beverage North America at Ecolab, a global leader in water, hygiene and energy technologies and services that protect people and vital resources. She also held several executive positions with Newell Brands, where she was responsible for leadership in brand and business transformation through impactful P&L management, strategic planning and change management. Prior to Newell, Ms. Chiavarini spent time in sales and marketing in the luxury goods and retail sectors, spanning B2C and B2B in multiple geographies and categories. Ms. Chiavarini earned both a bachelor’s and a master’s degree from Audencia Business School in Nantes, France, and attended executive programs at The University of Chicago Booth School of Business and the Wharton School of the University of Pennsylvania. We believe that Ms. Chiavarini is qualified to serve as a member of our board of directors because of her experience developing strategies for profitable growth and her experience as an executive at multiple companies.
Phil Grandinetti IIIwas appointed to the board has served as a director of directors onour company since November 5, 2020. In March 2013, Mr. Grandinetti co-foundedco-founded WITHit, after eight yearsa wearable tech accessory company, and he has serves as its Chief Customer Officer. From February 2005 to March 2013, Mr. Grandinetti served as VP of Sales at LightWedge—LightWedge, a global e-book,e-book, e reader and tablet accessories brand. All told,Prior to LightWedge, Mr. Grandinetti has spent the last 18 years in a leadership role for consumer products companies, including servingserved as Sr. VP of Worldwide Sales forof GSM Products, in Oceanside, CA. As co-founder of WITHit, he was instrumental in launching the company’s line of Wearable Tech Accessories in 2014. WITHitan innovative outdoor products are sold through the largest and most influential retailers in the US with retail partners including Walmart, Target, Best Buy, Sam’s Club, QVC, HSN, Kohl’s, and Barnes & Noble. Mr. Grandinetti joined GSM Products as the U.S. Director of Sales and was quickly promotedcompany, from February 2002 to VP of Worldwide Sales, leading the company into Canada, Mexico, U.K., and the Pacific Rim. Within a year, he was promoted again to Sr. VP Worldwide Sales. During his tenure at GSM, the company realized unprecedented growth under Grandinetti’s guidance.February 2005. Mr. Grandinetti has a J.D. from the University of San Diego School of Law and is licensed in the State of California, as well as a B.A. from the University of Iowa in Economics and Political Science. We believe that Mr. Grandinetti is qualified to serve as a member of our board of directors because of his experience with retail sales and marketing and the development and commercialization of new products.
Vote Required
IfJake Leach has served as a quorum is present, the nomineesdirector of our company since November 2020. Since joining DexCom, Inc., a company that develops, manufacturers, and distributes continuous glucose monitoring systems for electiondiabetes management in March 2004, Mr. Leach served as Executive Vice President and Chief Technology Officer from September 2018 to the boardpresent, Senior Vice President of directors receivingR&D from January 2015 to September 2018, and Vice President, R&D from January 2011 to January 2015. Mr. Leach holds a Bachelor of Science degree in Electrical Engineering with a minor in Biomedical Engineering from the greatest numberUniversity of votes cast “FOR” the electionCalifornia, Los Angeles. We believe that Mr. Leach is qualified to serve as a member of the directors by the shares represented at the Annual Meeting will be elected to the board of directors for a three-year term.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE BOARD’S CLASS II DIRECTOR NOMINEES LISTED ON THE PROXY CARD.
Continuing Directors
Marc Dumont was elected to our board of directors inbecause of his R&D and innovative technology experience coupled with his commitment to quality and extensive knowledge of domestic and international regulatory requirements.
Marc Dumont has served as a director of our company since January 2016. Mr. Dumont is owner, chairchairman and chief executive officer of Chateau de Messey Wineries in Burgundy, France, a wine producer, a position he has held since March 1995. Mr. Dumont served as the president of PSA International SA (a PSA Peugeot Citroen Group company) from January 1981 to March 1995. Prior to that, he held various positions for Chrysler Corporation in Detroit, Mexico City and London. He is an international financial consultant and advisor for clients in Europe and Asia,also serving as well as the United States. He has served as the Chairchairman of Sanderling Ventures (a European affiliate of a U.S. venture capital firm) since 1996. In the past, Mr. Dumont has served as director of Finter Bank Zurich, Irvine Sensors Corporation and Novalog Corporation in Costa Mesa, CA, NUKO Information Systems Inc. in San Jose, CA, and Banque Internationale in Luxembourg, all of which were public companies. Mr. Dumont holds a degree in Electrical Engineering and Applied Economics from the University of Louvain, Belgium and an MBA from the University of Chicago. We believe Mr. Dumont is qualified to serve as a member of our board of directors because of his experience and knowledge of corporate finance, international business development and operations, and his experience as a past director of other public and private companies.
K.C. Kavanagh was appointed to the board of directors on November 5, 2020. Ms. Kavanagh is a C-level communications leader. A current member of Bacardi Limited’s Global Leadership Team and formerly a member of the 12-person Senior Leadership Team of Starwood Hotels & Resorts, K.C. has significant experience leading global communications efforts across 150+ countries, including a deep understanding of emerging markets like China, India, and the Middle East. Ms. Kavanagh has led communications teams that have played an outsized role in influencing corporate culture, innovation, brand positioning, unit growth, and financial results. During her time at Starwood, Ms. Kavanagh was a key member of the M&A team and a leader of the Company’s integration team during a high-profile merger with Marriott International, delivering sensitive and transparent communications internally and externally.
An experienced speechwriter and seasoned 24/7 crisis manager, she has managed global-scale crises, beginning with the events of 9/11, when she was tasked by Starwood’s Board to spearhead a new 60-person Crisis Management Team that strengthened protocols, operations, and communications globally. Adept at taking complex strategies and making them understandable and exciting across a diverse and global employee population, Ms. Kavanagh has helped create cultures that embrace change centered on technology, globalization, and lifestyle brands. We believe that Ms. Kavanagh is qualified to serve as a member of our board of directors because of her experience in communications, marketing, branding and public relations as well as her superior leadership skills.
Jake Leach was appointed to the board of directors on November 5, 2020. As the Chief Technology Officer at Dexcom, Mr. Leach is responsible for the leadership of scientific research, engineering, product development, and project management. He oversees the development of next generation products and leads a large organization of people and his teams are responsible for delivering best in class glucose monitoring technology paired with an exceptional user experience. Mr. Leach joined Dexcom in March 2004 to lead the development of sensor electronics which were part of the first generation Dexcom system. He has served in various roles within Dexcom including Senior Vice President of R&D, Senior Director of R&D, and Manager of Engineering. From 1996 to 2004, Mr. Leach held positions in research and development at MiniMed and subsequently Medtronic Diabetes, focusing on the development of glucose sensing systems. Mr. Leach holds a Bachelor of Science degree in Electrical Engineering with a minor in Biomedical Engineering from the University of California, Los Angeles. We believe that Mr. Leach is qualified to serve as a member of our board of directors because of his R&D and innovative technology experience coupled with his commitment to quality and extensive knowledge of domestic and international regulatory requirements.
Kenneth Siegel was appointed to our board of directors in February 2019 and appointed Chief Executive Officer in May 2019. Mr. Siegel has over 25 years of experience as an executive and senior leader of major corporations. From December 2016 to November 2018, Mr. Siegel served in key leadership roles at Diamond Resorts International Inc., a global vacation ownership company, most recently as President since March 2017. Prior to Diamond Resorts, he served as Chief Administrative Officer and General Counsel of Starwood Hotels & Resorts, a branded lifestyle hospitality company. An instrumental member of the Starwood leadership team, Mr. Siegel was intimately involved in Starwood’s emergence as an industry leader before its acquisition by Marriott International in 2016. Part of Mr. Siegel’s role included leading Starwood’s Corporate Social Responsibility Programs. He introduced industry-leading initiatives in sustainability, energy and water conservation and education. He implemented numerous programs to reduce the Company’s impact on the planet and became a passionate advocate for methods that could be both effective and environmentally sustainable. Prior to joining Starwood in 2000, Mr. Siegel spent four years as the Senior Vice President and General Counsel of Cognizant Corporation and its successor companies. Mr. Siegel has a bachelor’s degree from Cornell University and a juris doctorate degree from New York University. We believe that Mr. Siegel is qualified to serve as a member of our board of directors because of his experience and knowledge in all facets of corporate operations and governance, including business, operational, corporate finance, mergers and acquisitions, marketing and branding gained as a senior executive of major public corporations.
Matthew Szot was elected to our board of directors in December 2015 and has served as Chair of our Audit Committee since then. Since March 2010, he has served as the chief financial officer of S&W Seed Company, a Nasdaq-listed agricultural seed technology company. Since September 2020, Mr. Szot has served on the board of directors and as Chair of the Audit and Compensation committees of INVO Bioscience, Inc., a Nasdaq-listed medical device company. From June 2018 to August 2019, Mr. Szot served on the board of directors and as Chair of the Audit Committee of Eastside Distilling, Inc. a Nasdaq-listed craft spirits company. From February 2007 until October 2011, Mr. Szot served as the chief financial officer for Cardiff Partners, LLC, a strategic consulting company that provided executive financial services to various publicly traded and privately held companies. From 2003 to December 2006, Mr. Szot served as chief financial officer and secretary of Rip Curl, Inc., a market leader in wetsuit and action sports apparel products. From 1996 to 2003, Mr. Szot was a Certified Public Accountant with KPMG and served as an Audit Manager for various publicly traded companies. Mr. Szot has a Bachelor of Science degree in Agricultural Economics/Accountancy from the University of Illinois, Champaign-Urbana and is a Certified Public Accountant in the State of California. We believe that Mr. Szot is qualified to serve as a member of our board of directors because of his experience and knowledge of corporate finance, mergers and acquisitions and corporate governance, as well as other operational, financial and accounting matters gained as a past and present chief financial officer and director of other public and private companies.
Executive Officers
The following table sets forth the names and certain information aboutregarding our executive officers as of the record date are set forth below:
date:
Name | Age | Position | ||
Kenneth Siegel | 66 | Chief Executive Officer and Director | ||
Thomas C. Chesterman | 62 | Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary | ||
Nicole Williams | 42 | Chief Strategy Officer | ||
Kim Wolin | 66 | Executive Vice President, Operations and HR and Secretary |
Mr. Siegel’s biographical details are set out under the heading “Continuing Directors”“Director Nominees” above.
Thomas Chesterman joined our company in September 2015 and has served as our Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary since December 2015. He has over 25 years of experience as the chief financial officer of a public company in the life science, technology and telecommunications industries. Most recently, he was the vice president and treasurer of General Communication Inc., a telecommunications company in Alaska, from 2013 to 2015. Previously, he was the chief financial officer of life science companies Bionovo Inc. from 2007 to 2012, Aradigm Corp. from 2002 to 2007 and Bio-RadBio-Rad Laboratories, Inc. from 1996 to 2002. Mr. Chesterman
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is adept at a variety of capital market access techniques and has significant experience in developing the operational and financial infrastructures in companies to help support successful and rapid growth. Mr. Chesterman earned a bachelor’s degree from Harvard University and an M.B.A. from the University of California at Davis.
Steven Krause, Ph.D. joinedNicole Williams has served as Chief Strategy Officer of our company since May 2021 and has assumed leadership of the commercialization activities as of the end of 2021. Prior to joining our company, she was the National Director of Sales and Business Development in February 2020the orthopedic robotics division of Smith+Nephew, driving the adoption and commercialization of new technology with healthcare facilities across the country, from July 2018 to May 2021. From July 2017 to July 2018, Mrs. Williams served as ExecutiveFacility Administrator at DaVita Kidney Care. Previously, from September 2011 to July 2017, she was Assistant Vice President Salesof Marketing and Marketing. Mr. Krause has over 25 yearsPublic Relations for an HCA Level 1 Trauma Center driving service line growth, expansion of beds and services, and overall facility operations. Nicole’s 20-years of experience in the agricultureinclude sales and public health pest management markets worldwide. He has held a variety of positions in sales,business development, operations, marketing and business management at Paramount Pest, Abbott Labs and Valent BioSciences Corporation, most recently serving from January 2014 until February 2020 as Director, Global Public Health and Forest Business Unit at Valent BioSciences Corporation, a provider of technologies and products for the agricultural, public health, forestry and household markets. Mr. Krause has significant experience integrating new biorational-based product solutions into operational programs. As a specialist in integrated pest management, he spearheaded a program with the World Health Organization to launch a new class of pesticide to the global B2B and B2G vector control markets. He is a recipient of Abbott’s Summit Award for sales excellence, and his team was recognized for halting transmission of the Zika virus in Miami with a Chicago Innovation Award 2017. Mr. Krausecrisis communications. Nicole earned a BS from James Madisonbachelor’s degree at Boston University and an MSM.B.A. from the University of Delaware, a Ph.D. from the University of Wisconsin and an MBA from Loyola University Chicago.Denver.
Kim Wolin joined our company as a marketing technologist in May 2013 and inhas served as our Executive Vice President, Operations and HR and Secretary since May 2014 was appointed executive vice president of operations.2014. From January 2009 to May 2013, she was a vice president, branch sales and service manager of Sunwest Bank, a community bank located in Flagstaff, Arizona. From November 1996 to December 2009, Ms. Wolin held the positions of assistant vice president, branch manager and Licensed Financial Advisor at Wells Fargo Bank. She has owned and operated Creative Net Solutions, a website design and hosting business, since 1994. From 1984 to 1992, Ms. Wolin owned and operated Kodas Produce Market, a health food and organic produce store in Oakland, California. Ms. Wolin earned a bachelor’s degree in Psychology from the State University of New York at Buffalo in 1977.
There are no family relationships among any of our directors and executive officers.
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Board of Directors Leadership Structure
Our Corporate Governance Principles provide our board of directors with flexibility in determining the appropriate leadership structure for the Company.our company. Our board of directors has elected to separate the roles of Chief Executive Officer and Chair of the Board. These positions are currently held by Kenneth Siegel, our Chief Executive Officer, and Jamie Bechtel, our Chair of the Board. The board of directors believes that a leadership structure that separates these roles is appropriate for the Companyour company due to the differences between the two roles. The Chief Executive Officer is responsible for setting our strategic direction, providing day-to-dayday-to-day leadership and managing our business, while the Chair of the Board provides guidance to the Chief Executive Officer, sets the agendas for and chairs board meetings, presides over executive sessions of the independent directors, establishes priorities and procedures for the work of the full board of directors and provides information to the members of our board of directors in advance of such meetings.
Board of Directors Role in Risk Oversight
One of the key functions of our board of directors is informed oversight of our risk management process. Our board of directors does not have a standing risk management committee, but rather administers this oversight function directly through our board of directors as a whole, as well as through various standing committees that address risks inherent in their respective areas of oversight. In particular, our board of directors is responsible for monitoring and assessing strategic risk exposure, and our audit committee has the responsibility to consideris responsible for considering and discussdiscussing our major financial risk exposures and the steps our management has taken to monitor and control these exposures. The audit committee also has the responsibility to issue guidelines and policies to govern the process by which risk assessment and management is undertaken and to monitor compliance with legal and regulatory requirements. Our compensation committee assesses and monitors whether any of our compensation policies and programs have the potential to encourage excessive risk-taking.risk-taking.
Director Independence
Generally, under the continued listing requirements and rules of Nasdaq, independent directors must comprise a majority of a listed company’s board of directors. Our board of directors has undertaken a review of its composition, the composition of its committees and the independence of each director. Our board of directors has determined that Dr. Bechtel, Ms. Chiavarini and Ms. Kavanagh, and Messrs. Dumont, Leach, Grandinetti and Szot are independent within the meaning of Nasdaq listing standards and that none of such directors has any relationship with the Companyour company that would interfere with the exercise of their independent business judgment. The board also determined that Kenneth Siegel, our current Chief Executive Officer, is not independent. Accordingly, a majority of our directors are independent, as required under applicable Nasdaq rules. In making this determination, our board of directors considered the current and prior relationships that each non-employeenon-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employeenon-employee director.
Additionally, in determining the independence of Dr. Bechtel, the board of directors considered her position as the chief executive officer of Kito Impact Foundation, which has provided consulting services for the past four years to the Company. Kito Impact Foundation received $50,400 from the Company in fiscalper year 2020 for consultingsuch services. These consulting services include partnership development and positioning services, with a focus on the Company’sour company’s strategic agenda.
There are no arrangements or understandings between any director or nominee and any other person or entity other than the Companyour company pursuant to which the director or nominee receives compensation in connection with that person’s candidacy or service as a director.
Standing Committees and Attendance
The board of directors held a total of eightsix meetings during 2020.2021. All directors attended more than 75% of the aggregate of the meetings of theour board of directors and committees thereof, if any, upon which such director served during the period for which the director has been a director or committee member during 2020.2021. The independent directors meet in executive session from time to time.
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Our board of directors utilizes an audit committee, a compensation committee, and a nominating and corporate governance committee as standing committees comprised solely of independent board members. In 2020,2021, the audit committee held four meetings, the compensation committee held fivefour meetings and the nominating and corporate governance committee held sevensix meetings. Information about these standing committees is set forth below.
Our board of directors forms ad hoc committees from time-to-timetime-to-time to assist the board in fulfilling its responsibilities with respect to matters that are the subject of the ad hoc committee’s mandate.
Audit Committee
OurThe audit committee currently consists of Matthew Szot, who is the chair, Delphine François Chiavarini, Marc Dumont and Jake Leach. The members of the audit committee in 2020 were Matthew Szot, Delphine François Chiavarini and Marc Dumont. The board of directors has determined that, after consideration of all relevant factors, each of the current audit committee members qualifies as an “independent” director under applicable Securities and Exchange Commission (“SEC”) and Nasdaq rules. Each member of the audit committee is able to read and understand fundamental financial statements, including our consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows. Further, no member of the audit committee has participated in the preparation of our consolidated financial statements, or those of any of our current subsidiaries, at any time during the past three years. The board of directors has designated Mr. Szot as an “audit committee financial expert” as defined under applicable SEC rules and has determined that Mr. Szot possesses the requisite “financial sophistication” under applicable Nasdaq rules. The audit committee operates under a written charter setting forth the functions and responsibilities of the audit committee, which is periodically reviewed by the audit committee and by the board of directors as appropriate. A current copy of the audit committee charter is available on our website at http://senestech.investorroom.com on the “Documents and Policies” page under the heading “Corporate Governance.” The functions of the audit committee include:
• overseeing the engagement of our independent public accountants, including pre-approval of services and review of independence and quality control procedures of the independent public accountants;
• reviewing our accounting policies, judgments and assumptions used in the preparation of our financial statements;
• reviewing our audited financial statements and discussing them with the independent public accountants and our management;
• meeting separately with the independent public accountants and our management to consider the adequacy of our internal controls;
• reviewing our investment policy and financial plans, reporting recommendations to our full board of directors for approval and authorizing actions; and • discussing with our |
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Both our independent registered accounting firm and internal financial personnel regularly meet with our audit committee and have unrestricted access to the audit committee.
Compensation Committee
Our compensation committee currently consists of Jamie Bechtel, who is the chair, Phil Grandinetti III and Matthew Szot. The members of the compensation committee in 2020 were Julia Williams, M.D. (who retired from the Board effective November 5, 2020), Jamie Bechtel and Matthew Szot. Each of the current compensation committee members has been determined by our board of directors to be independent in accordance with Nasdaq standards. Each member of our compensation committee is also a non-employeenon-employee director, as defined pursuant to Rule 16b-316b-3 promulgated under the Exchange Act. The compensation committee operates under a written charter, which is periodically reviewed by the compensation committee and by the
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board of directors as appropriate. A current copy of the compensation committee charter is available on our website at http://senestech.investorroom.com on the “Documents and Policies” page under the heading “Corporate Governance.” The functions of the compensation committee include:
• reviewing, at least annually, our compensation philosophy;
• reviewing and recommending to the board of directors for approval the corporate goals and objectives relevant to the CEO and other executive officers;
• reviewing and approving any employment agreements, severance agreements or special compensation or change-in-control arrangements with executive officers;
• determining or recommending to the board of directors the compensation of our executive officers; • advising and consulting with our officers regarding managerial personnel and development; • overseeing our compliance with the Nasdaq requirement that, with limited exceptions, stockholders approve equity compensation plans; and • monitoring our compliance with applicable legal requirements of the Sarbanes Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to employee compensation and benefits. |
As part of its process to determine the compensation level of each executive officer, the compensation committee evaluates, among other things, the Chief Executive Officer’s assessment of the other executive officers and recommendations regarding their compensation in light of the goals and objectives of our executive compensation program. The compensation committee may delegate certain of its responsibilities, as it deems appropriate, to compensation subcommittees or to our officers, but it has not elected to do so to date.
Pursuant to its charter, the compensation committee has sole authority to retain and/or replace, as needed, any independent legal counsel, compensation and benefits consultants and other experts or advisors as the compensation committee believes to be necessary or appropriate. The compensation committee consulted with FW Cook, an independent consultant, to assist the compensation committee in fulfilling its responsibilities. The compensation committee analyzed any relationships that FW Cook had with the Company, members of the compensation committee, executive officers and management, and concluded that, after consideration of the specific factors identified by the SEC and Nasdaq that may affect the independence of compensation advisors, there were no independence or conflict-of-interest concerns related to FW Cook.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee currently consists of Delphine François Chiavarini, who is the chair, Jamie Bechtel, Marc Dumont, K.C. Kavanagh and Matthew Szot. The members of the nominating and corporate governance committee in 2020 were Delphine François Chiavarini, Marc Dumont and Matthew Szot. Each of the current nominating and corporate governance committee members has been determined by ourthe board of directors to be independent in accordance with Nasdaq standards. The nominating and corporate governance committee operates under a written charter, which is periodically reviewed by the nominating and corporate governance committee and by theour board of directors as appropriate. A current copy of the nominating and corporate governance committee charter is available on our website at http://senestech.investorroom.com/ on the “Documents and Policies” page under the heading “Corporate Governance.” The functions of the nominating and corporate governance committee include:
• evaluating the composition, compensation, size and governance of our board of directors and its committees and make recommendations regarding future planning and the appointment of directors to our committees;
• evaluating and recommending candidates for election to our board of directors;
• establishing a policy for considering stockholder nominees for election to our board of directors;
• reviewing our corporate governance principles and providing recommendations to the board regarding possible changes; and
• evaluating the performance of the Chief Executive Officer.
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Director Nomination Process
The board of directors has determined that director nomination responsibilities should be overseen by the nominating and corporate governance committee (the “Committee”).committee. One of the Committee’snominating and corporate governance committee’s goals is to assemble a board that brings to us a variety of perspectives and skills derived from high quality business and professional experience. Factors considered by the Committeenominating and corporate governance committee include character, judgment, knowledge, skill, integrity, diversity, (in the broadest sense), integrity,including with respect to race, gender, ethnicity and similar characteristics, age, expertise, length of service, independence, experience with businesses and other organizations of comparable size, including experience in animal and health sciences, business, finance, administration or public service, the relevance of a candidate’s experience to our needs and experience of other board members, familiarity with national and international business matters, experience with accounting rules and practices, the desire to balance the considerable benefit of continuity with the periodic injection of the fresh perspective provided by new members, and the extent to which a candidate would be a desirable addition to the board of directors and any committees of the board of directors. In addition, directors are expected to be able to exercise their best business judgment when acting on behalf of the Companyour company and our stockholders, act ethically at all times and adhere to the applicable provisions of our Code of Business Conduct and Ethics. Other than consideration of the foregoing and applicable SEC and Nasdaq requirements, unless determined otherwise by the Committee,nominating and corporate governance committee, there are no stated minimum criteria, qualities or skills for director nominees. However, the Committeenominating and corporate governance committee may also consider such other factors as it may deem are in the best interests of the Companyour company and our stockholders. In addition, at least one member of the board of directors serving on the audit committee should meet the criteria for an “audit committee financial expert” having the requisite “financial sophistication” under applicable Nasdaq and SEC rules, and a majority of the members of theour board of directors should meet the definition of “independent director” under applicable Nasdaq rules.
The board of directors is committed to actively seeking highly qualified women and individuals from underrepresented groups. The nominating and corporate governance committee and any search firm that it engages are directed to include women and candidates from underrepresented groups in each search pool form which the nominating and corporate governance committee selects director candidates.
The Committeenominating and corporate governance committee identifies director 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,re-nomination, balancing the value of continuity of service by existing members of the board of directors with that of obtaining a new perspective. The Committeenominating and corporate governance committee also takes into account an incumbent director’s performance as a board member. If any member of the board of directors does not wish to continue in service, if the Committeenominating and corporate governance committee decides not to re-nominatere-nominate a member for reelection, if the board decided to fill a director position that is currently vacant or if the board of directors decides to recommend that the size of the board of directors be increased, the Committeenominating and corporate governance committee identifies the desired skills and experience of a new nominee in light of the criteria described above. Current members of the board of directors and management are polled for suggestions as to individuals meeting the Committee’snominating and corporate governance committee’s criteria. Research may also be performed to identify qualified individuals.
It is the policy of the Committeenominating and corporate governance committee to consider suggestions for persons to be nominated for director that are submitted by stockholders. The Committeenominating and corporate governance committee will evaluate stockholder suggestions for director nominees in the same manner as it evaluates suggestions for director nominees made by management, then-currentthen-current directors or other appropriate sources. Stockholders suggesting persons as director nominees should send information about a proposed nominee to our Secretary at our principal executive offices as referenced above by no later than 120 days before the anniversary of the release date of the prior year’s proxy statement, which date is identified in the section titled “Deadlines for Receipt of Stockholder Proposals.” This information should be in writing and should include a signed statement by the proposed nominee that the nominee is willing to serve as a director of SenesTech,our company, a description of the proposed nominee’s relationship to the stockholder and any information that the stockholder feels will fully inform the Committeenominating and corporate governance committee about the proposed nominee and the nominee’s qualifications. The Committeenominating and corporate governance committee may request further information from the proposed nominee and the stockholder making the recommendation. In addition, a stockholder may nominate one or more persons for election as a director at our annual meeting of stockholders if the stockholder complies with the notice, information, consent and other provisions relating to stockholder nominees contained in our Bylaws.bylaws. Please see the section above titled “Deadlines for Receipt of Stockholder Proposals” for important information regarding stockholder proposals, including director nominations.
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Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics in compliance with applicable rules of the SEC that applies to all of our directors, officers and other employees and consultants. A copy of this policy is available on our website at http://senestech.investorroom.com/ on the “Documents and Policies” page under the heading “Corporate��Corporate Governance,” or free of charge upon written request to the attention of our Secretary, by regular mail at our principal executive offices, email to inquiries@senestech.com or fax at 928-526-0243.928-526-0243. We will disclose, on our website, any amendment to, or a waiver from, a provision of our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and that relates to any element of the Code of Business Conduct and Ethics enumerated in applicable rules of the SEC. In addition, we have adopted a policy for research misconduct, which also applies to all officers, directors and employees.
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20202021 DIRECTOR COMPENSATION
The following table sets forth information regarding compensation earned by or paid to our non-employeenon-employee directors during the year ended December 31, 2020.2021.
Name | Fees Earned or | Option | Total | ||||||
Jamie Bechtel, JD, Ph.D(4) | $ | 114,900 | $ | 70,194 | $ | 185,094 | |||
Delphine François Chiavarini | $ | 42,000 | $ | 43,737 | $ | 85,737 | |||
Marc Dumont | $ | 27,500 | $ | 33,571 | $ | 60,571 | |||
Matthew K. Szot | $ | 49,500 | $ | 64,090 | $ | 113,590 | |||
Phil Grandinetti III(3) | $ | — | $ | 83,847 | $ | 83,847 | |||
K.C. Kavanagh(3) | $ | 21,000 | $ | 44,789 | $ | 65,789 | |||
Jake Leach(3) | $ | — | $ | 70,194 | $ | 70,194 | |||
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| Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | Option Awards ($) (3) | Total ($) | ||||||||||||
| Jamie Bechtel, JD, Ph.D (6) | $ | 112,588 | $ | - | $ | 59,001 | $ | 171,589 | ||||||||
| Delphine François Chiavarini | $ | 43,438 | $ | - | $ | 59,001 | $ | 102,439 | ||||||||
| Marc Dumont | $ | 27,500 | $ | - | $ | 33,000 | $ | 60,500 | ||||||||
| Matthew K. Szot | $ | 43,750 | $ | - | $ | 43,001 | $ | 86,751 | ||||||||
| Julia Williams, M.D. (5) | $ | 20,625 | $ | - | $ | 29,000 | $ | 49,625 | ||||||||
| Phil Grandinetti III (4) | $ | - | $ | - | $ | 27,387 | $ | 27,387 | ||||||||
| K.C. Kavanagh (4) | $ | - | $ | - | $ | 16,302 | $ | 16,302 | ||||||||
| Jake Leach (4) | $ | - | $ | - | $ | 27,387 | $ | 27,387 | ||||||||
(1) These cash awards represent the amounts paid in calendar year 2021, representing the second half of 2020-2021 compensation and the first half of 2021-2022 cash compensation for board service from Annual Meeting to Annual Meeting. An annual award is paid in four equal payments on July 1, 2021, October 1, 2021, January 2, 2022 and April 1, 2022. Only two of these quarterly payments were made in calendar year 2021. This includes any additional cash compensation for service on ad hoc committees.
(2) The amounts in this column reflect the aggregate grant date fair value of option awards granted in 2021, determined in accordance with ASC 718. As of December 31, 2021, the total number of shares subject to outstanding stock options held by each non-employee director was as follows: Dr. Bechtel, 120,030; Ms. Chiavarini, 76,444; Mr. Dumont, 62,029; Mr. Szot, 101,790; Dr. Williams, 23,981; Mr. Leach, 99,846; Mr. Grandinetti, 113,918; and Ms. Kavanagh, 62,537. This includes any additional equity compensation for service on ad hoc committees.
(3) Mr. Grandinetti and Mr. Leach did not receive any cash compensation in 2020 or 2021. Mr. Grandinetti and Mr. Leach both elected to receive their full compensation in option awards.
(4) Included in the $114,900 cash compensation paid to Dr. Bechtel is $50,400 paid to Kito Impact Foundation, of which Dr. Bechtel serves as chief executive officer, in fiscal year 2021 for consulting services.
20202021 Non-Employee Director Compensation Program
On July 10, 2020,2021, the board adopted a revised non-employeenon-employee director compensation program, (the “or the Director Compensation Program,”) for providing cash and equity compensation to its non-employeeour non-employee directors for their service on the board and committees of the board. The Director Compensation Program is in effect until the Annual Meeting, when we anticipate a renewed program. The components of the Director Compensation Program are as follows:
Cash Compensation: | Amount | ||
Annual general retainer for service on the board | $ | 17,000 | |
Additional Annual general retainer for service on the board – Chair | $ | 20,000 | |
Additional Annual general retainer for service on the board – Vice Chair | $ | 15,000 | |
| |||
Incremental annual retainers for chair of committees: |
| ||
Audit | $ | 15,000 | |
Compensation | $ | 15,000 | |
Nominating and Corporate Governance | $ | 15,000 | |
| |||
Incremental annual retainers for members of committees: |
| ||
Audit | $ | 5,000 | |
Compensation | $ | 5,000 | |
Nominating and Corporate Governance | $ | 5,000 | |
15
| Cash Compensation: | Amount | |||
| Annual general retainer for service on the Board | $ | 17,000 | ||
| Annual general retainer for service on the Board- Lead Director or Chair | $ | 20,000 | ||
| Incremental annual retainers for chair of committees: | $ | 15,000 | ||
| Incremental annual retainers for members of committees: | $ | 5,000 | ||
| Equity Compensation: | Grant details (value of grant in $) | |||
| Annual stock option grant for serving on the board | $ | 25,000 | ||
| Annual stock option grant for serving on the board- Lead Director or Chair | $ | 20,000 | ||
| Annual equity grants for serving as chair of committees(1): | $ | 10,000 (Stock option) | ||
| Annual equity grants for serving as member of committees: | $ | 4,000 (Stock option) | ||
Equity Compensation: | Grant details (value of | ||
Annual stock option grant for serving on the board | $ | 25,000 | |
Additional Annual stock option grant for serving on the board – Chair | $ | 20,000 | |
Additional Annual stock option grant for serving on the board – Vice Chair | $ | 20,000 | |
| |||
Annual stock option grant for serving as chair of committees: |
| ||
Audit | $ | 10,000 | |
Compensation | $ | 10,000 | |
Nominating and Corporate Governance | $ | 10,000 | |
| |||
Annual stock option grant for serving as member of committees: |
| ||
Audit | $ | 4,000 | |
Compensation | $ | 4,000 | |
Nominating and Corporate Governance | $ | 4,000 | |
The options granted to non-employeenon-employee directors pursuant to the Director Compensation Program will have an exercise price equal to the closing market price of the Company’s Common Stockour common stock on the date of grant. The options will vest in equal quarterly installments over a one-yearone-year period, and the options will expire on the fifth anniversary of the date of the grant.
Our board of directors forms ad hoc committees from time-to-time to assist the board in fulfilling its responsibilities with respect to matters that are the subject of the ad hoc committee’s mandate. The directors serving on such ad hoc committees are compensated as appropriate, though not to exceed the compensation for participation in standing committees.
In addition, we reimburse non-employeenon-employee directors for reasonable travel expenses for participation in board meetings and for travel conducted on behalf of our business.
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EXECUTIVE OFFICER COMPENSATION
As a smaller reporting company, we are not required to provide a separately-captioned “Compensation Discussion and Analysis” section. However, in order to provide a greater understanding to our stockholders regarding our compensation policies and decisions with respect to our “named executive officers” identified in the 20202021 Summary Compensation Table below, we are including the following narrative disclosure to highlight salient portions of our 2020 executive compensation program. This narrative disclosure should be read in conjunction with the 2020 Summary Compensation Table below and the related tables that follow it.
As a result of the challenges presented the impact of the coronavirus (or COVID-19) on the global economy and our business and financial results, salaries to certain of our executive officers were voluntarily reduced by 25% for part of calendar year 2020 as described below. A similar voluntary reduction was made to the cash retainers for non-employee directors as described under “2020 Director Compensation.”
Compensation Philosophy and Processes
Compensation for our executives and key employees is designed to attract and retain people who share our vision and values and who can consistently perform in such a manner that enables us to achieve our strategic goals. The compensation committee believes that the total compensation package for each of our executive officers is competitive with the market, thereby allowing us to retain executive talent capable of leveraging the skills of our employees and our unique assets in order to increase stockholder value.
Our executive compensation programs are designed to (1) motivate and reward our executive officers, (2) retain our executive officers and encourage quality service, (3) incentivize our executive officers to appropriately manage risks while improving our financial results, and (4) align executive officers’ interests with those of our stockholders. Under these programs, our executive officers are rewarded for the achievement of Company objectives and the realization of increased stockholder value.
The program seeks to remain competitive with the market while also aligning the executive compensation program with stockholder interests through the following types of compensation: (i) base salary; (ii) annual cash-based incentive bonuses; and (iii) equity-based incentive awards.
Key Executive Compensation Objectives
The compensation policies developed by the compensation committee are based on the philosophy that compensation should reflect both Company-wide performance, financial and operational performance, and the individual performance of the executive, including management of personnel under his or her supervision. The compensation committee’s objectives when setting compensation for our executive officers include:
Our compensation program is designed to reward superior performance of both the Company and of each individual executive and seeks to encourage actions that drive our business strategy. Our compensation strategy is to provide a competitive opportunity for senior executives, taking into account their total compensation packages.
Oversight of Executive Compensation
The Role of the Compensation Committee in Setting Compensation. Our compensation committee determines the compensation of our executive officers other than that of our Chief Executive Officer (which is described below). The compensation committee also approves or makes recommendations to our board of directors regarding equity compensation under our 2018 Plan. The compensation committee reviews base salary levels for executive officers of our Company and approves raises and bonuses based upon the Company’s achievements, individual performance and competitive and market conditions. The compensation of the Chief Executive Officer is evaluated and recommended to the board of directors by the compensation committee. For completeness, our nominating and corporate governance committee also reviews the performance of our Chief Executive Officer, which review is taken into consideration by our compensation committee. The board of directors has final authority to determine the compensation of the Chief Executive Officer.
The Role of Executives in Setting Compensation. While the compensation committee does not delegate any of its functions to others in setting the compensation of senior management, it includes members of senior management in the compensation committee’s executive compensation process. We have asked each of our senior executives to annually provide us with input with regard to their goals for the coming year. These proposals include suggested Company-wide and individual performance goals. The individual goals include not only the goals of such executive but also goals of the employees for whom the executive is responsible. The compensation committee reviews these proposals with the executives and provides the committee’s perspective on them.
The Role of Consultants in Setting Compensation. As the compensation committee deems necessary or helpful, it may retain the services of compensation consultants in connection with the establishment and development of our compensation philosophy and programs in the future. In fiscal year 2020, the compensation committee consulted with FW Cook, an independent compensation consultant, to assist it in its review of executive compensation.
Compensation Risk Assessment
As part of its risk assessment process, the compensation committee reviewed material elements of executive and non-executive employee compensation. The compensation committee concluded that these policies and practices do not create risk that is reasonably likely to have a material adverse effect on us.
We believe the structure of our compensation program for our executive officers does not incentivize unnecessary or excessive risk taking. The base salary component of compensation does not encourage risk taking because it is a fixed amount. The incentive plan awards have risk-limiting characteristics:
Elements of Compensation
The material elements of the compensation program for our named executive officers include: (i) base salary; (ii) cash-based incentive bonuses; and (iii) equity-based incentive awards.
Base Salaries. We provide each of our named executive officers with a base salary to compensate them for services rendered during the fiscal year and sustained performance. The purpose of the base salary is to reflect job responsibilities, value to the Company and competitiveness of the market. Salaries for our named executive officers are determined by the compensation committee, and for the CEO, recommended by the compensation committee to the board of directors, based on the following factors: nature and responsibility of the position and, to the extent available, salary norms for comparable positions; the expertise of the individual executive; and the competitiveness of the market for the executive’s services.
Performance Cash-Based Incentive Bonuses. Our practice is to award cash-based incentive bonuses, based in part on the achievement of performance objectives or significant accomplishments as established by the compensation committee from time-to-time in its discretion. These performance objectives and significant accomplishments are, in part, developed in partnership with the executive and are discussed on an ongoing basis throughout the year.
Equity-Based Incentive Awards. Our equity-based incentive awards are designed to align the interests of our employees and consultants, including our named executive officers, with those of our stockholders. Our compensation committee is responsible for approving equity grants. Vesting of the stock option and restricted stock unit awards is tied to continuous service with the Company and serves as an additional retention measure and long-term incentive.
Key Compensation Decisions and Developments for Fiscal Year 2020
| Kenneth Siegel Chief Executive Officer | $ | 275,000 | ||
| Thomas C. Chesterman, Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary | $ | 250,000 | ||
| Kim Wolin Executive Vice President, Operations and Secretary | $ | 75,000 | ||
| Steven Krause, Ph.D. Executive Vice President, Sales and Marketing | $ | 200,000 |
2020 Summary Compensation Table
The following table sets forth the compensation earned during the past two fiscal years by (i) the person who served as our principal executive officer at the end of 2020;2021; and (ii) the threetwo most highly compensated executive officers other than the principal executive officer who were serving as executive officers at the end of 2021, or the named executive officers.
Name and Position | Fiscal Year | Salary | Cash Bonus | Stock | Option | All Other | Total | |||||||||||||
Kenneth Siegel | 2021 | $ | 275,000 | $ | 50,000 | $ | — | $ | 123,204 | $ | 4,944 | $ | 453,148 | |||||||
Chief Executive | 2020 | $ | 257,813 | $ | — | $ | — | $ | 111,720 | $ | 4,896 | $ | 374,429 | |||||||
Thomas Chesterman | 2021 | $ | 250,000 | $ | 25,000 | $ | — | $ | — | $ | 4,284 | $ | 279,284 | |||||||
Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary | 2020 | $ | 234,375 | $ | — | $ | — | $ | 27,392 | $ | 4,236 | $ | 266,003 | |||||||
Steven Krause, Ph.D.(5) | 2021 | $ | 200,000 | $ | 12,500 | $ | — | $ | — | $ | — | $ | 212,500 | |||||||
Executive Vice President, Sales and Marketing | 2020 | $ | 162,500 | $ | 85,000 | $ | 41,325 | $ | — | $ | — | $ | 288,825 | |||||||
____________
(1) The amounts in this column reflect the aggregate grant date fair value of stock awards granted in 2021 and 2020, determined in accordance with ASC 718 for stock-based compensation. Assumptions used in the calculation of these award amounts are set forth in Note 11 (Stock-based Compensation) to the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
(2) The amounts in this column reflect the aggregate grant date fair value of stock options granted in 2021 and 2020, determined in accordance with ASC 718 for stock-based compensation. Assumptions used in the calculation of these award amounts are set forth in Note 11 (Stock-based Compensation) to the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
(3) The amounts in this column reflect the payment by our company of life insurance and disability insurance premiums pursuant to respective employment agreements.
(4) The amounts in this column for 2020 salary reflects a 25% voluntary reduction in the quarterly cash compensation paid between April 1, 2020 and whose totalJune 30, 2020, due to the COVID-19 pandemic.
(5) Mr Krause was hired on February 17, 2020 and his pro-rated salary for calendar year 2020 was $175,000. The $162,500 salary listed, as noted in (4) above, reflects a 25% voluntary reduction in the quarterly cash compensation forpaid between April 1, 2020 exceeded $100,000.and June 30, 2020, due to the COVID-19 pandemic.
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| Name and Position | Fiscal Year | Salary ($)(5) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||||||
| Kenneth Siegel (4) | 2020 | $ | 241,356 | $ | 50,000 | $ | - | $ | 127,477 | $ | - | $ | 4,896 | $ | 373,729 | |||||||||||||||
| Chief Executive Officer | 2019 | $ | 182,573 | $ | - | $ | 5,350 | $ | 808,198 | $ | - | $ | 355 | $ | 996,476 | |||||||||||||||
| Thomas Chesterman | 2020 | $ | 217,083 | $ | 25,000 | $ | - | $ | 31,255 | $ | - | $ | 4,236 | $ | 252,574 | |||||||||||||||
| Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary | 2019 | $ | 250,000 | $ | - | $ | - | $ | 31,080 | $ | - | $ | 10,981 | $ | 292,061 | |||||||||||||||
| Kim Wolin | 2020 | $ | 76,910 | $ | 10,000 | $ | 60,554 | $ | - | $ | - | $ | 3,931 | $ | 141,395 | |||||||||||||||
| Executive Vice President, Operations and Secretary | 2019 | $ | 145,000 | $ | - | $ | - | $ | 24,864 | $ | - | $ | 3,575 | $ | 173,439 | |||||||||||||||
| Steven Krause, Ph.D. | 2020 | $ | 142,831 | $ | 97,500 | (6) | $ | - | $ | 41,325 | $ | - | $ | - | $ | 269,156 | ||||||||||||||
| Executive Vice President, Sales and Marketing | 2019 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
Outstanding Equity Awards at December 31, 2020
2021
The following table sets forth all outstanding equity awards held by each of our named executive officers as of December 31, 2020.2021.
Option Awards | Stock Awards | ||||||||||||
Name | Number of | Number of | Option | Option | Number of | Market | |||||||
Kenneth Siegel | 415 | — |
| 17.08 | 2/14/2024 | ||||||||
17,500 | 17,500 | (2) | 28.40 | 6/18/2024 | |||||||||
16,994 | 84,971 | (6) | 1.80 | 7/31/2025 | |||||||||
30,000 | 90,000 | (4) | 1.59 | 5/3/2026 | |||||||||
Thomas C. Chesterman | 6,000 | — |
| 10.00 | 12/01/2025 | ||||||||
1,875 | 625 | (3) | 19.96 | 9/20/2024 | |||||||||
10,418 | 14,583 | (6) | 1.80 | 7/31/2025 | |||||||||
Steven Krause, Ph.D. | 13,889 | 11,111 | (7) | 2.44 | 4/28/2025 | ||||||||
____________
| Option Awards |
Stock Awards | |||||||||||||||||||||
| Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($)(1) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | ||||||||||||||||
| Kenneth Siegel | 415 | - | 17.08 | 2/14/2024 | ||||||||||||||||||
| 17,500 | 17,500 | (2) | 28.40 | 6/18/2024 | ||||||||||||||||||
| 16,994 | 84,971 | (5) | 1.80 | 7/31/2025 | ||||||||||||||||||
| Thomas C. Chesterman | 6,000 | - | 10.00 | 12/01/2025 | ||||||||||||||||||
| 1,042 | 1,458 | (3) | 19.96 | 9/20/2024 | ||||||||||||||||||
| 4,167 | 20,833 | (5) | 1.80 | 7/31/2025 | ||||||||||||||||||
| Kim Wolin | 1,000 | - | 10.00 | 7/3/2025 | ||||||||||||||||||
| 5,250 | - | 10.00 | 11/16/2025 | |||||||||||||||||||
| 833 | 1,167 | (3) | 19.96 | 9/20/2024 | ||||||||||||||||||
| - | - | - | - | 30,738(6) | $ | 53,023 | ||||||||||||||||
| Steven Krause, Ph.D. | 5,556 | 19,444 | (4) | 1.97 | 4/28/2025 | |||||||||||||||||
(1) The option exercise price is the closing price of our common stock on the grant date, as adjusted for reverse stock splits where applicable.
(6) 1/12th of the option vested on September 30, 2020, and the remainder vests in equal 1/12th quarterly installments thereafter.
(7) 1/36th of the option vested on May 28, 2020, and the remainder vests in equal 1/36th monthly installments thereafter.
Employment Agreements
We have entered into agreements with our named executive officers, which include provisions regarding post-terminationpost-termination compensation. We do not have a formal severance policy or plan applicable to our executive officers as a group.
Agreement with Kenneth Siegel. Siegel. We entered into an employment letter agreement with Mr. Siegel on May 15, 2019, to serve as the Company’sour company’s Chief Executive Officer, effective May 16, 2019. Under the terms of the employment letter agreement, Mr. Siegel received an annual base salary of $275,000 and a one-timeone-time signing bonus of a stock option representing 35,000 shares of Common Stock,our common stock, which vests quarterly over a three-yearthree-year period and is subject to the terms and conditions of the Company’s 2018 Plan and standard form of option agreement. Mr. Siegel is also eligible to receive an annual incentive bonus with a target value equal to 50% of his annual base salary, payable in cash, subject to his achievement of performance objectives to be determined by the compensation committee or board of directors. In addition, after each full year of employment with the Company,our company, subject to board approval, Mr. Siegel will receive an annual option grant, (each, an “or Additional Option,”) valued at 35% of his then base salary, subject to such vesting terms as determined by the board in its discretion. The initial option and Additional Options that are granted to Mr. Siegel will remain exercisable for five years following the end of his continuous service with the Company or, if earlier, the expiration date of the option.our company. Mr. Siegel will also be eligible to participate in the standard benefits, vacation and expense reimbursement plans offered to similarly situated employees. Mr. Siegel entered into the Company’sour company’s standard form of indemnification agreement applicable to its directors and officers.
In the event of Mr. Siegel’s termination by the Company without Cause (as defined in the employment letter agreement) or if Mr. Siegel resigns for Good Reason (as defined in the employment letter agreement), Mr. Siegel will be entitled to severance benefits equal to 12 months’ continuation of his then base salary. In addition, the Company will reimburse Mr. Siegel for COBRA premiums in effect on the date of termination for coverage in effect for him and, if applicable, his spouse and dependent children on such date under the Company’s group health plan(s). Finally, the vesting of Mr. Siegel’s initial option and Additional Options will be accelerated such that he will be deemed vested in those shares subject to the options that would have vested in the 12-month12-month period following his separation date had his employment not ended.
18
Agreement with Mr.Chesterman. We entered into an employment offer letter with Mr. Chesterman dated November 20, 2015 to serve as our Chief Financial Officer. Pursuant to this agreement, we pay Mr. Chesterman a salary of $250,000 per year, and in accordance with the employment offer letter, Mr. Chesterman’s salary may be paid up to 50% in stock options until we are in the financial position to pay the salary entirely in cash, to be determined by the Chief Executive Officer.year. In addition, Mr. Chesterman is eligible for a performance bonus, which amounts will be determined at least annually by mutual agreement based on achievement of personal and Companycompany goals, and which will be targeted to be no less than $200,000 per year.
Mr. Chesterman is entitled to accrue four weeks paid vacation and ten days of sick leave per calendar year and may participate in our standard benefits plans.
Per the employment offer letter, on November 20, 2015, we granted Mr. Chesterman a stock option to purchase 6,000 shares of our Common Stockcommon stock at an exercise price equal to $10.00 per share, which option vests over a four-yearfour-year vesting schedule, with 1⁄48th48th of the option vesting monthly beginning on January 1, 2016, until such option is vested in full or Mr. Chesterman’s employment is terminated.
Agreement with Ms. Wolin. We entered into an employment letter agreement with Ms. Wolin on January 28, 2020 to serve as our Executive Vice President, of Operations and HR and Secretary, effective January 31, 2020. Pursuant to this agreement, Ms. Wolin iswas eligible to receive an annual salary of $75,000 per year. Ms. Wolin was also eligible to receive a restricted stock unit award having a value of $75,000, which has been granted.subject to approval by the compensation committee. The award will vest over one year, subject to accelerated vesting upon a termination of employment. Mr.On January 31, 2021, Ms. Wolin’s salary was increased to $125,000 per annum, with no RSU component. Ms. Wolin remains subject to the terms of the Company’sour company’s confidential information and inventions assignment agreement.
Agreement with Mr. Krause. We entered into an employment offer letter with Mr. Krause dated January 9, 2020 to serve as our Executive Vice President of Sales and Marketing. Pursuant to this agreement, we pay Mr. Krause a salary of $200,000 per year. In addition, Mr. Krause is eligible for a performance bonus, which amounts will be determined at least annually by mutual agreement based on achievement of personal and Company goals, and which is targeted at 25% of his base salary and stock option incentives as determined by performance against targets.
Mr. Krause was also granted a one-time signing bonus in the amount of $25,000 that was paid in April of 2020 and a “foregone compensation bonus” of $60,000 that was paid in May 2020.
Mr. Krause is entitled to accrue four weeks paid vacation and five days of sick leave per calendar year and may participate in our standard benefits plans.
Per the employment offer letter, on April 28, 2020, we granted Mr. Krause a stock option to purchase 25,000 shares of our Common Stock at an exercise price equal to $2.44 per share, which option vests over a three-year vesting schedule, with 1⁄36th of the option vesting monthly beginning on May 28, 2020, until such option is vested in full or Mr. Krause’s employment is terminated.
Insurance Premiums
We pay 75% of premiums for medical insurance and dental insurance for all full-timefull-time employees, including our named executive officers. We also offer high deductible plan options that include a healthcare flexible spending account component for all full-timefull-time employees, including our named executive officers. These benefits are available to all full-timefull-time employees, subject to applicable laws.
Equity Compensation Plan Information
The following table presents certain information regarding our Common Stockcommon stock that may be issued under our equity plans, including upon the exercise of options and vesting of RSUs granted to employees, consultants or directors as of December 31, 2020:2021:
Plan category | Number of | Weighted- | Number of | |||||
Equity compensation plans approved by security holders | 1,088,487 | (1) | $ | 4.08 | 2,838,100 | |||
Equity compensation plans not approved by security holders | — |
| $ | — | — | |||
Total | 1,088,487 | (1) | $ | 4.08 | 2,838,100 | |||
____________
(1) Amount includes 667 RSUs granted and unvested as of December 31, 2021.
| Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||||||
| Plan category | (a) | (b) | (c) | |||||||||
| Equity compensation plans approved by security holders | 528,543 | (1) | $ | 8.11 | 430,622 | |||||||
| Equity compensation plans not approved by security holders | - | $ | - | - | ||||||||
| Total | 528,543 | (1) | 8.11 | 430,622 | ||||||||
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Options to purchase Common Stockour common stock and RSUs are outstanding under our 2018 Plan and options are outstanding under our 2015 Equity Incentive Plan, (the “or the 2015 Plan”).Plan. The 2018 Plan was approved by our stockholders at our 2018 Annual Meeting of Stockholders and replaces ourthe 2015 Equity Incentive Plan for purposes of new equity grants. The 2018 Plan enables us to grant options, restricted stock, RSUs and certain other equity-basedequity-based compensation to our officers, directors, employees and consultants. On July 8, 2020, our stockholders approved an amendment to the 2018 Plan to increase the number of shares of our common stock available for issuance under the 2018 Plan by 800,000 shares. On June 26, 2021. our stockholders approved an additional amendment to the 2018 Plan to increase the number of shares of common stock available for issuance under the 2018 Plan by 3,000,000 shares.
20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 27, 2021,25, 2022, information regarding beneficial ownership of our Common Stockcommon stock by:
• each person, or group of affiliated persons, known by us to beneficially own more than 5% of the outstanding shares of common stock;
• each of our named executive officers;
• each of our directors; and
| • all of our current executive officers and directors as a group. |
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power.
The number of shares listed below under the heading “Total Shares Beneficially Owned” is the aggregate beneficial ownership for each stockholder and includes:
• common stock beneficially owned;
• common stock warrants exercisable;
• currently vested and exercisable options and RSUs; and
• stock options and RSUs that are not currently vested and exercisable but will become so within 60 days of April 25, 2021. |
Of this total amount, the number of shares of Common Stockcommon stock underlying options and RSUs that are currently vested and stock options and RSUs that are not currently vested but will become vested within 60 days after May 1, 2020April 25, 2022 are deemed outstanding for the purpose of computing the percentage ownership of Common Stockcommon stock outstanding beneficially owned by a stockholder, director or executive officer, (the “Deemedor the Deemed Outstanding Shares”)Shares, and are also separately listed below under the heading “Number of Shares Issuable Upon Exercise of Warrants, Options and Vesting of RSUs Exercisable or Vested” but the Deemed Outstanding Shares are not treated as outstanding for the purpose of computing the percentage ownership of Common Stockour common stock outstanding beneficially owned by any other person. This table is based on information supplied by officers, directors, principal stockholders and filings made with the SEC. Percentage ownership is based on 12,164,71312,212,283 shares of Common Stockcommon stock outstanding as of April 27, 2021.
25, 2022.
Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and dispositive power with respect to their shares of common stock, except to the extent authority is shared by spouses under community property laws.
21
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o SenesTech, Inc., 23460 N. 19thAvenue, Suite 110, Phoenix, AZ 85027.
Name of Beneficial Owner | Number of | Number of Shares |
| ||||||
Shares | Percent | ||||||||
5% Owners: |
| ||||||||
Sandpiper Capital, LLC(2) | — | — | 740,504 | 6.1 | % | ||||
| |||||||||
Directors and Named Executive Officers: |
| ||||||||
Kenneth Siegel | 35,129 | 155,724 | 190,853 | 1.6 | % | ||||
Thomas C. Chesterman | 494 | 31,208 | 31,702 | * |
| ||||
Steven Krause, Ph.D. | — | 18,750 | 18,750 | * |
| ||||
Jamie Bechtel, JD, Ph.D. | 2,812 | 120,030 | 122,842 | 1.0 | % | ||||
Delphine François Chiavarini | 1,314 | 76,444 | 77,758 | * |
| ||||
Marc Dumont(1) | 7,420 | 62,029 | 69,449 | * |
| ||||
Phil Grandinetti III | — | 113,918 | 113,918 | * |
| ||||
K.C. Kavanagh | — | 62,537 | 62,537 | * |
| ||||
Jake Leach | 150,000 | 99,846 | 249,846 | 2.1 | % | ||||
Matthew K. Szot | 4,657 | 101,790 | 106,447 | * |
| ||||
| |||||||||
All current executive officers and directors as a group (12 persons) | 227,973 | 868,414 | 1,096,387 | 9.0 | % | ||||
| Number of Shares | Number of Shares Issuable Upon Exercise of Warrants, Options and Vesting of RSUs Exercisable or Vested as of | Total Shares | ||||||||||||||
| Beneficially | April 27, | Beneficially Owned | ||||||||||||||
| Name of Beneficial Owner | Held | 2021 | Shares | Percent | ||||||||||||
| 5% Owners: | ||||||||||||||||
| None | ||||||||||||||||
| Directors, Named Executive Officers and Executive Officers: | ||||||||||||||||
| Thomas C. Chesterman | 494 | 13,708 | 14,202 | * | ||||||||||||
| Jamie Bechtel, JD, Ph.D. | 2,812 | 47,230 | 50,042 | * | ||||||||||||
| Delphine François Chiavarini | 1,314 | 31,076 | 32,390 | * | ||||||||||||
| Marc Dumont (1) | 7,420 | 28,212 | 35,632 | * | ||||||||||||
| Kenneth Siegel | 35,129 | 49,236 | 84,365 | * | ||||||||||||
| Matthew K. Szot | 4,659 | 36,320 | 40,979 | * | ||||||||||||
| Julia Williams, M.D. (2) | 10,003 | 24,982 | 34,985 | * | ||||||||||||
| Steven Krause, Ph.D. | - | 9,722 | 9,722 | * | ||||||||||||
| Kim Patrice Wolin | 5,863 | 38,155 | 44,018 | * | ||||||||||||
| Phil Grandinetti III | - | 33,732 | 33,732 | * | ||||||||||||
| K.C. Kavanagh | - | 17,169 | 17,169 | * | ||||||||||||
| Jake Leach | - | 27,046 | 27,046 | * | ||||||||||||
| All current executive officers and directors as a group (12 persons) (5) | 67,694 | 356,588 | 424,282 | 3.5 | % | |||||||||||
____________
* Represents beneficial ownership of less than one percent (1%).
(1) Includes shares of common stock held by Marc Dumont and Patrick Dumont, JTWROS, an affiliate of Mr. Dumont.
(2) Based on the statement on Amendment to Schedule 13G filed with the SEC on January 31, 2022, Sandpiper Capital, LLC has sole voting power over 138,000 shares and sole dispositive power over 740,504 shares. The address of Sandpiper Capital, LLC is 500 E. Plume St., Suite 109, Norfolk, VA 23510.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC reports of ownership on Form 3 and changes in ownership on Form 4 and Form 5. Officers, directors and greater-than-10%greater-than-10% stockholders are required by Commission regulations to furnish to us copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms received by us, forms filed electronically by the reporting person or written representations from certain reporting persons, we believe that all Section 16(a) filing requirements during the fiscal year ended December 31, 20202021 were met in a timely manner by our officers, directors and greater-than-10%greater-than-10% beneficial owners, except for the following: one late Form 34 report was filed in 2020 by Mr. Krause, two late Forms 4 reports were filed disclosing two transactions in 2020 by Mr. Dumont, one late Form 4 report disclosing one transaction in 2020 was filedMarch 2021 by each of Dr. Bechtel, Ms. Chiavarini,Kavanaugh and Mr. Szot, and Ms. Williams. Grandinetti.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the fiscal years ended December 31, 20202021 and December 31, 2019,2020, we were not a party to any transactions that require disclosure under Item 404 of Regulation S-K.S-K.
Indemnification Agreements
We have entered into indemnification agreements with each of our directors and executive officers. These agreements provide for the indemnification of such persons for all reasonable expenses and liabilities incurred in connection with any action or proceeding brought against them by reason of the fact they are or were serving in such capacity. We believe that these charter provisions and indemnification agreements are necessary to attract and retain qualified persons as directors, officers and employees. Furthermore, we have obtained director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to us.
Policies and Procedures for Transactions with Related Persons
We have adopted a policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our common stock and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related person transaction with us without the prior consent of our audit committee. Any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of any class of our voting securities or any member of the immediate family of any of the foregoing persons, in which the amount involved requires disclosure under Item 404 of Regulation S-KS-K and such person would have a direct or indirect interest, must first be presented to our audit committee for review, consideration and approval. In approving or rejecting any such proposal, our audit committee is to consider the material facts of the transaction, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
In addition, if a related person transaction will compromise the independence of one of our directors, our audit committee may recommend that our board of directors reject the transaction if it could affect our ability to comply with securities laws and regulations or Nasdaq listing requirements.
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PROPOSAL NO. 2TWO
ADVISORY VOTE ON EXECUTIVE COMPENSATION (“SAY-ON-PAY”)
AMENDMENT TO THE 2018 EQUITY INCENTIVE PLAN
General
We are seeking stockholder approval of an amendment to our 2018 Plan (the “Plan Amendment”) to increase the number of shares of common stock available for issuance under the 2018 Plan by 3,000,000 shares.
Following the recommendation by our compensation committee, our board of directors unanimously approved the Plan Amendment on April 20, 2021, subject to stockholder approval.
Purpose and Background
The 2018 Plan isDodd-Frank Act enables our stockholders to vote to approve, on an advisory (non-binding) basis, the sole available plan for granting equity compensation toof our employees,named executive officers directors and consultants. The 2018 Plan’s current authorized share reserve is 850,000 shares plus shares that have or may become available for issuance under the 2018 Plan from the 2015 Plan since the 2018 Plan's inception of up to an aggregate maximum of 122,279 shares. As of April 27, 2021, there are only 419,061 shares remaining available for future grant under the 2018 Plan, an insufficient amount to recruit and retain our employees and directors, particularlyas disclosed in this challenging business environment.
As of April 27, 2021, the closing sales price of a share of our common stock as reported on the Nasdaq Capital Market was $1.64 per share. The weighted average exercise price of our 506,852 stock options outstanding at April 27, 2021 was $8.15 per share. As of April 27, 2021, the number of shares to be issued upon vesting of RSUs under our equity plans totaled 31,405 shares.
In order to continue to have an appropriate supply of shares for equity incentives to recruit, hire and retain the talent required to successfully execute our business plans, our board of directors believes that we will need the additional 3,000,000 new shares to be available under the 2018 Plan. Although the additional shares will increase the potential dilution to stockholders, the board of directors, in consultation with the compensation committee and the Company’s compensation consultant, believes our equity compensation program is well-managed, reasonable and within market norms with the addition of the new shares.
In determining the number of additional new shares to allocate to the 2018 Plan, our board of directors analyzed various factors, including potential dilution, industry plan cost standards, historical grant practices and anticipated equity compensation needs. As of April 27, 2021, 12,164,713 shares of our common stock are outstanding and 17,256,703 shares of our common stock are outstanding on a fully diluted basis (assuming exercise of all outstanding warrants, options and settlement of outstanding restricted stock units). The potential dilution to current stockholders that could result from the additional 3,000,000 shares requested plus the sum of the remaining 419,061 shares available for issuance under the 2018 Plan and the 506,852 shares subject to outstanding awards under the 2018 Plan and the 2015 Plan as of April 27, 2021 would be approximately 19% of our fully diluted shares outstanding. We believe this amount is less than the median of similarly situated companies based on information provided to our compensation committee by FW Cook, our compensation consultant. In addition, our approximate annual “burn rate” grants for fiscal years 2018 to 2020 was on average 4.2% per year, based on the average number of shares subject to all equity awards made under the 2018 Plan during each of the three fiscal year periods divided by the average number of shares of Common Stock outstanding as reported in the Form 10-Ks for each of the three fiscal year end periods. We believe this amount is below typical annual usage for companies of similar size and character.
Practically, equity grants will only be effective if the grants represent sufficient value, and we believe that management will be most aligned with stockholders if the grants represent meaningful equity-based compensation.
Under applicable Nasdaq rules, we are required to obtain stockholder approval of the Plan Amendment. If this Proposal No. 2 is approved, the Plan Amendment will become effective as of the date of the Annual Meeting. If this Proposal No. 2 is not approved, the Company may continue to grant awards under the 2018 Planproxy statement in accordance with the current terms and the current limited share reserve remaining available and, thereafter, we will be unableSEC’s rules.
Summary
We are asking our stockholders to grant equity compensation. As a result, we may need to consider other compensation alternatives, such as cash compensation. Replacing equity with cash would increase cash compensation expense and divert cash that could otherwise be used for our business operations or reinvested in the business. As such, the board recommends that stockholders approve the Plan Amendment.
The principal featuresprovide advisory approval of the 2018 Plan, taking into account the effectcompensation of the Plan Amendment, are summarized below. This summary does not contain all information about the 2018 Plan, as amended by the Plan Amendment, and is qualified in its entirety by reference to the text of the 2018 Plan, as amended by the Plan Amendment, which is attached as Appendix A. Additions are indicated by underlining, and deletions are indicated by strike-outs.
Executive officers and directors have a financial interest in this proposal because they are eligible to participate in the 2018 Plan.
Description of the 2018 Equity Incentive Plan, As Amended
Purpose. The purpose of the 2018 Plan is to help the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and provide a means by which the eligible recipient may benefit from increases in value of the Company’s common stock.
Eligibility. Our 2018 Plan allows for the grant of incentive stock options to our employees and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and other stock awards to our employees, officers, directors and consultants. As of April 27, 2021, approximately 37 employees, including four executive officers and seven non-employee directors, were eligible to participate in the 2018 Plan.
Authorized Shares. The maximum number of shares of our common stock authorized for issuance under our 2018 Plan is 3,850,000, which includes the requested 3,000,000 shares. In addition, the 2018 Plan authorizes for issuance (i) shares that remained available for new grants under the 2015 Plan on the date the board of directors originally approved the 2018 Plan (which amount was 52,155 shares) and (ii) shares subject to outstanding awards under the 2015 Plan on that date that subsequently cease to be subject to such awards. As of April 27, 2021, 63,084 shares remain subject to outstanding awards under the 2015 Plan. To the extent such outstanding awards under the 2015 Plan are exercised for or settled in shares, those shares will not become available for issuance under the 2018 Plan.
To the extent that stock awards granted under our 2018 Plan expire or terminate without being exercised in full or are settled in cash, then any such expiration, termination or settlement will not reduce the number of shares available for issuance under our 2018 Plan. Additionally, shares issued pursuant to stock awards under our 2018 Plan that we repurchase or that are forfeited, as well as shares used to pay the exercise price of a stock award or to satisfy the tax withholding obligations related to a stock award, become available for future grant under our 2018 Plan.
Subject to the 2018 Plan’s share reserve, incentive stock options can be granted under the 2018 Plan in an amount not to exceed three times the total authorized share reserve of the 2018 Plan (under the tax rules for incentive stock options, certain shares that are subsequently repurchased by us or forfeited under the 2018 Plan cannot be used again for future grants of incentive stock options).
Plan Administration. Our board of directors and/or compensation committee of our board of directors administers our 2018 Plan and the stock awards granted under it (references to “board” below generally refer to both our board and the compensation committee). Subject to the terms of the 2018 Plan, the board of directors has the authority to select the individuals to receive awards, determine the terms and conditions of all awards and interpret the provisions of the 2018 Plan and any awards, notices or agreements executed or entered into under the 2018 Plan. The board may amend the 2018 Plan or any awards granted under the 2018 Plan in these and other respects with the written consent of any adversely affected participant, although certain material amendments to the 2018 Plan require stockholder approval. Our board is also authorized to delegate to officers the authority to make grants to non-officer employees, within limits prescribed by the board, the 2018 Plan and applicable law.
Corporate Transactions. Our 2018 Plan provides that the board of directors will determine how each outstanding award will be treated in the event of certain specified significant corporate transactions, including: (1) a sale or other disposition of all or substantially all of our assets, (2) the sale or disposition of at least 90% of our outstanding securities, (3) the consummation of a merger or consolidation where we do not survive the transaction and (4) the consummation of a merger or consolidation where we do survive the transaction but the shares of common stock outstanding prior to such transaction are converted or exchanged into other property by virtue of the transaction. The board of directors may, with respect to time-based and performance-based awards, (1) arrange for the assumption, continuation or substitution of a stock award by a successor corporation, (2) arrange for the assignment of any reacquisition or repurchase rights held by us to a successor corporation, (3) accelerate the vesting, in whole or in part, of the stock award and provide for its termination prior to the transaction, (4) arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by us, (5) cancel or arrange for the cancellation of the stock award prior to the transaction in exchange for a cash payment, if any, determined by the board or (6) make a payment, in the form determined by the board, equal to the excess, if any, of the value of the property the participant would have received upon exercise of the stock award prior to the transaction over any exercise price payable by the participant in connection with the exercise. The board of directors is not obligated to treat all stock awards, even those that are of the same type, or all participants in the same manner.
In the event of a change in control, awards granted under the 2018 Plan will not receive automatic acceleration of vesting and exercisability, unless an award agreement provides otherwise. Under the 2018 Plan, a change in control is defined to include (1) the acquisition by any person of more than 50% of the combined voting power of our then outstanding stock, (2) a merger, consolidation or similar transaction in which our stockholders immediately prior to the transaction do not own, directly or indirectly, more than 50% of the combined voting power of the surviving entity (or the parent of the surviving entity), (3) our stockholders approve or our board of directors approves a plan of complete dissolution or liquidation or a complete dissolution or liquidation of us otherwise occurs except for a liquidation into a parent corporation, (4) a sale, lease, exclusive license or other disposition of all or substantially all of the assets to an entity that did not previously hold more than 50% of the voting power of our stock and (5) individuals who constitute our incumbent board of directors ceasing to constitute at least a majority of our board of directors.
Types of Awards. The 2018 Plan permits the grant of any or all of the following types of awards.
Stock Options. Incentive stock options and nonstatutory stock options are granted pursuant to stock option agreements adopted by the board of directors. The board of directors determines the exercise price for stock options, provided that the exercise price cannot be less than 100% of the fair market value of our common stock on the date of grant, except for awards we assume or substitute in acquisition transactions. Options granted under the 2018 Plan vest at the rate specified in the stock option agreement as determined by the board of directors.
Restricted Stock Unit Awards. Restricted stock unit awards are granted pursuant to restricted stock unit award agreements adopted by the board of directors. Restricted stock unit awards may be granted in consideration for any form of legal consideration that may be acceptable to our board of directors and permissible under applicable law. A restricted stock unit award may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the board of directors or in any other form of consideration set forth in the restricted stock unit award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a restricted stock unit award and will be subject to the terms of the underlying award to which they relate. Except as otherwise provided in the applicable award agreement, restricted stock units that have not vested will be forfeited upon the participant’s cessation of continuous service for any reason.
Restricted Stock Awards. Restricted stock awards are granted pursuant to restricted stock award agreements adopted by the board of directors. A restricted stock award may be awarded in consideration for cash, check, bank draft or money order, past services to us or any other form of legal consideration that may be acceptable to our board of directors and permissible under applicable law. The board of directors determines the terms and conditions of restricted stock awards, including vesting and forfeiture terms. If a participant’s service relationship with us ceases for any reason, we may receive through a forfeiture condition or a repurchase right any or all of the shares of common stock held by the participant that have not vested as of the date the participant terminates service with us.
Stock Appreciation Rights. Stock appreciation rights are granted pursuant to stock appreciation grant agreements adopted by the board of directors. The board of directors determines the purchase price or strike price for a stock appreciation right, which generally cannot be less than 100% of the fair market value of our common stock on the date of grant. A stock appreciation right granted under the 2018 Plan vests at the rate specified in the stock appreciation right agreement as determined by the board of directors.
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Other Stock Awards. The board of directors may grant other awards based in whole or in part by reference to our common stock. The board of directors will set the number of shares under the stock award and all other terms and conditions of such awards.
Repricing. The 2018 Plan prohibits the board of directors, without stockholder approval, from (i) lowering the exercise or grant price of an option after it is granted, except in connection with capitalization adjustments provided under the 2018 Plan, (ii) taking any other action that is treated as a repricing under generally accepted accounting principles, (iii) canceling an option at a time when its exercise or grant price exceeds the fair market value of the underlying stock, in exchange for cash, another option or stock appreciation right, restricted stock, or other equity award, or (iv) issuing an option or stock appreciation right or amending an outstanding option or stock appreciation right to provide for the grant or issuance of a new option or stock appreciation right on exercise of the original option or stock appreciation right.
Changes to Capital Structure. In the event of specified changes in our capital structure, such as a stock split, reverse stock split or recapitalization, appropriate adjustments will be made to (i) the class and maximum number of shares reserved for issuance under the 2018 Plan, (ii) the class and maximum number of shares that may be issued upon the exercise of incentive stock options and (iii) the class and number of shares and exercise price, strike price or purchase price, if applicable, of all outstanding stock awards.
Transferability. Under our 2018 Plan, the board of directors may provide for limitations on the transferability of awards. Option awards are generally not transferable other than by will or the laws of descent and distribution, unless otherwise permitted by the board.
Plan Amendment or Termination. Our board of directors has the authority to amend, suspend or terminate our 2018 Plan, although certain material amendments require the approval of our stockholders, and amendments that would impair the rights of any participant require the consent of that participant.
U.S. Federal Income Tax Information
The following is a general summary of the material U.S. federal income tax consequences of the 2018 Plan to us and to participants in the 2018 Plan who are subject to U.S. federal taxes. The summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), the U.S. Treasury regulations promulgated thereunder, rulings and other guidance issued by the Internal Revenue Service and judicial decisions as in effect as of the date of this proxy statement, all of which are subject to change, possibly with retroactive effect. The summary is not intended to be a complete analysis or discussion of all potential tax consequences that may be relevant or important to participants in the 2018 Plan, including U.S. gift or estate tax consequences or foreign, state or local tax consequences.
Incentive Stock Options. Generally, for U.S. federal income tax purposes, a participant will not recognize any income upon the grant or vesting of an incentive stock option under the 2018 Plan. If a participant exercises an incentive stock option during the participant’s employment as an employee or within three months after the participant’s employment as an employee ends (12 months in the case of permanent and total disability), the participant generally will not recognize income at the time of exercise for regular U.S. federal income tax purposes (although the participant generally will recognize income for alternative minimum tax purposes at that time as if the option were a nonqualified stock option). If a participant sells or exchanges the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date of exercise and (b) two years from the grant date of the option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the sale or exchange and the option exercise price. If a participant disposes of the shares that the participant receives upon exercise of an incentive stock option before the end of these holding periods, the disposition will constitute a disqualifying disposition, and the participant generally will recognize compensation taxable as ordinary income in the year of the disposition equal to the excess, on the date of exercise of the option, of the fair market value of the shares received over the option exercise price (or generally, if less, the excess of the amount realized on the sale of the shares over the option exercise price), and the participant will recognize capital gain or loss, long-term or short-term, as the case may be, equal to the difference between (i) the amount the participant received and (ii) the option exercise price increased by the amount of compensation income, if any, the participant recognized. Special rules apply if a participant uses already owned shares of our common stock to pay the option exercise price or if the shares of common stock that the participant receives upon exercise are subject to a substantial risk of forfeiture.
Nonqualified Stock Options. Generally, for U.S. federal income tax purposes, a participant will not recognize any income upon the grant or vesting of a nonqualified stock option under the 2018 Plan with an exercise price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon exercise of a nonqualified stock option, the participant generally will recognize compensation taxable as ordinary income in an amount equal to the excess of the fair market value of the stock underlying the nonqualified stock option on the date of exercise over the option exercise price. Upon a sale of the shares acquired upon exercise of the nonqualified stock option, the participant generally will recognize short-term or long-term capital gain or loss, depending on how long the participant held the shares, equal to the difference between the amount received from the sale and the fair market value of the shares at the time of exercise of the nonqualified stock option. If a participant pays the option exercise price entirely in cash, the tax basis of the shares that the participant receives upon exercise generally will be equal to their fair market value on the exercise date (but not less than the option exercise price), and the shares’ holding period will begin on the day after the exercise date. Special rules apply if a participant uses already owned shares of our common stock to pay the option exercise price or if the shares of our common stock that the participant receives upon exercise are subject to a substantial risk of forfeiture. The same tax consequences described in this paragraph also apply to an incentive stock option that a participant exercises more than three months after the participant’s termination of employment as an employee (or more than 12 months after termination in the case of permanent and total disability).
Stock Appreciation Rights. A participant generally will not recognize taxable income upon the grant or vesting of a stock appreciation right with a grant price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon exercise of a stock appreciation right, a participant will recognize compensation taxable as ordinary income equal to the difference between the fair market value of the underlying shares on the date of exercise and the grant price of the stock appreciation right.
Unrestricted Stock Awards. If a participant receives shares of stock under the 2018 Plan that are not subject to restrictions, the participant generally will recognize compensation taxable as ordinary income at the time of receipt of the shares in an amount equal to the fair market value of the shares at the time of grant minus the amount, if any, paid for the shares. The participant’s holding period for the shares will begin on the date that the participant receives the shares, and the participant’s tax basis in the shares will be the amount of ordinary income the participant recognizes plus the amount, if any, paid for the shares.
Restricted Stock Awards. Upon receipt of a restricted stock award, a participant generally will recognize compensation taxable as ordinary income when the shares cease to be subject to restrictions in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for the shares. Instead of postponing the federal income tax consequences of a restricted stock award until the restrictions lapse, a participant may elect to recognize compensation taxable as ordinary income in the year of the award in an amount equal to the fair market value of the shares at the time of receipt. This election is made under Section 83(b) of the Code. In general, a Section 83(b) election is made by filing a written notice with the Internal Revenue Service within 30 days of the date of grant of the restricted stock award for which the election is made and must meet certain technical requirements.
The tax treatment of a subsequent disposition of restricted stock will depend upon whether a participant has made a timely and proper Section 83(b) election. If a participant makes a timely and proper Section 83(b) election, when the participant sells the restricted shares, the participant generally will recognize short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant receives from the sale and the tax basis of the shares sold. If no Section 83(b) election is made, any disposition after the restriction lapses generally will result in short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the amount, if any, the participant paid for the shares plus the amount of taxable ordinary income recognized either at the time the restrictions lapsed or at the time of the 83(b) election, if an election was made. If a participant has to forfeit the shares to us (e.g., upon the participant’s termination prior to expiration of the restriction period), the participant may not claim a deduction for the amount of compensation income recognized as a result of making the Section 83(b) election, and the participant generally will have a capital loss equal to the amount, if any, paid for the shares.
Restricted Stock Units. A participant generally will not recognize income at the time a stock unit is granted. When any part of a stock unit is issued or paid, the participant generally will recognize compensation taxable as ordinary income at the time of such issuance or payment in an amount equal to the then fair market value of any shares, cash or property the participant receives.
U.S. Federal Income Tax Consequences to Us. In the foregoing cases, we generally will be entitled to a deduction at the same time and in an amount equal to the ordinary income recognized by the participant, subject to certain limitations on deductions for compensation contained in the Code.
Code Section 409A. We intend that awards granted under the 2018 Plan comply with, or otherwise be exempt from, Section 409A of the Code.
New Plan Benefits
All awards to employees, officers, directors and consultants under the 2018 Plan are generally made at the discretion of our compensation committee and/or board of directors. Therefore, the benefits and amounts that will be received or allocated under the 2018 Plan are not generally determinable at this time. However, please refer to the description of grants made to our named executive officers in the last fiscal year(which consist of our Chief Executive Officer, our Chief Financial Officer and one additional executive officer as such compensation is described in the “Executive Officer Compensation” section, above. Grants madethe tabular disclosure regarding such compensation, and the accompanying narrative disclosure set forth in this proxy statement. Our philosophy with respect to compensation for our executives and key employees is designed to attract and retain people who share our vision and values and who can consistently perform in such a manner that enables us to achieve our strategic goals. Our executive compensation programs are designed to (1) motivate and reward our executive officers, (2) retain our executive officers and encourage quality service, (3) incentivize our executive officers to appropriately manage risks while improving our financial results and (4) align executive officers’ interests with those of our stockholders. Under these programs, our executive officers are rewarded for the achievement of company objectives and the realization of increased stockholder value. The compensation policies developed by the compensation committee are based on the philosophy that compensation should reflect both company-wide performance, financial and operational performance, and the individual performance of the executive, including management of personnel under his or her supervision. The compensation committee’s objectives when setting compensation for our executive officers include:
• setting compensation levels that are sufficiently competitive such that they will motivate and reward the highest quality individuals to contribute to our non-employee directorsgoals, objectives and overall financial success. This is done in part through reviewing and comparing the lastcompensation of other companies in our peer group;
• retaining executives and encouraging their continued quality service, thereby encouraging and maintaining continuity of the management team. Our competitive base salaries combined with cash and equity incentive bonuses, retirement plan benefits and the vesting requirements of our equity-based incentive awards, encourage high-performing executives to remain with our company;
• incentivizing executives to appropriately manage risks while attempting to improve our financial results, performance and condition; and
• aligning executive and stockholder interests. The compensation committee believes the use of equity compensation as a key component of executive compensation is a valuable tool for aligning the interests of our executive officers with those of our stockholders.
Our compensation program is designed to reward superior performance of both our company and of each individual executive and seeks to encourage actions that drive our business strategy. Our compensation strategy is to provide a competitive opportunity for senior executives, taking into account their total compensation packages. The following is a summary of some of the material elements of our compensation for our executive officers. We urge our stockholders to review the executive compensation tables for more information.
Base Salaries. We provide each of our named executive officers with a base salary to compensate them for services rendered during the fiscal year are described in the “2020 Director Compensation” table.
No grants have been made under the 2018 Plan subject to stockholder approvaland sustained performance. The purpose of the Plan Amendment.
Since inceptionbase salary is to reflect job responsibilities, value to our company and competitiveness of the 2018 Plan in June 2018,market. Salaries for our named executive officers are determined by the compensation committee, and for the CEO, recommended by the nominating and corporate governance committee to our board of directors, based on the following personsfactors: nature and groups have been granted optionsresponsibility of the position and, to purchase the extent available, salary norms for comparable positions; the expertise of the individual executive; and the competitiveness of the market for the executive’s services.
Performance Cash-Based Incentive Bonuses. Our practice is to award cash-based incentive bonuses, based in part on the achievement of performance objectives or significant accomplishments as established by the compensation committee from time-to-time in its discretion. These performance objectives and significant accomplishments are, in part, developed in partnership with the executive and are discussed on an ongoing basis throughout the year.
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Equity-Based Incentive Awards. Our equity-based incentive awards are designed to align the interests of our employees and consultants, including our named executive officers, with those of our stockholders. Our compensation committee is responsible for approving equity grants. Vesting of the stock option and restricted stock unit awards is tied to continuous service with our company and serves as an additional retention measure and long-term incentive.
Board Recommendation
The board of directors believes that the information provided above and within the “Executive Compensation” section of this proxy statement demonstrates that our executive compensation program is designed appropriately and is working to ensure that management’s interests are aligned with our stockholders’ interests to support long-term value creation.
The following numberresolution is submitted for a stockholder vote at the meeting:
RESOLVED, that the stockholders of sharesour company approve, on an advisory basis, the compensation of Company common stock as of April 27, 2021: Kenneth Siegel, Chief Executive Officer, 137,376 shares; Thomas Chesterman, Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary, 27,500 shares; Kim Wolin, Executive Vice President, Operations and Secretary, 32,738 shares; and Steven Krause, Ph.D., Executive Vice President, Sales and Marketing, 25,000 shares; all currentthe Company’s named executive officers, as a group, 222,614 shares; all current directors who are notdisclosed in the executive officers as a group, 239,432 shares; each nominee for election as a director, 111,704 shares; each associate of any such directors, executive officers or nominees, 0 shares; each other person who received or is to receive 5% of such options, 0 shares;compensation tables and all employees, including all current officers who are not executive officers, as a group, 12,460 shares.
Vote Required
narrative discussion set forth in this Proxy Statement.
The approvalsay-on-pay vote is advisory, and therefore not binding on our company, the board of directors, or the amendmentcompensation committee. Although non-binding, the vote will provide information to the 2018 Plan requires that a majoritycompensation committee and our board of sharesdirectors regarding investor sentiment about our executive compensation philosophy, policies and practices, which the compensation committee and our board of common stock present and entitleddirectors will be able to vote onconsider when determining executive compensation for the matter vote “FOR” this proposal.years to come.
THEOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL“FOR” ADOPTION OF
THE AMENDMENT TORESOLUTION APPROVING THE 2018 PLAN.COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THE EXECUTIVE OFFICER COMPENSATION SECTION AND THE RELATED TABULAR AND NARRATIVE DISCLOSURE SET FORTH IN THIS PROXY STATEMENT.
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PROPOSAL NO. 3THREE
ADVISORY VOTE ON DETERMINING THE FREQUENCY OF SAY-ON-PAY (“SAY-ON-FREQUENCY”)
Background
The Dodd-Frank Act enables our stockholders to indicate how frequently they believe we should seek an advisory vote on the compensation of our named executive officers. Stockholders have the option of recommending a frequency vote every year, every two years, every three years or abstaining from making a recommendation.
RATIFYSummary
The board of directors has considered the advantages and disadvantages of the frequency of the say-on-pay vote. Based on its analysis, the board of directors believes that an annual advisory vote on executive compensation would be the most meaningful for the board of directors and the compensation committee and best serve the interests of our company and its stockholders. The board of directors believes an annual advisory vote will provide the most timely feedback on executive compensation arrangements, plans, programs and policies as executive compensation disclosures are made annually.
Stockholders should recognize, however, it may not be appropriate or feasible to change compensation programs already in place for the year in which the vote occurs since the advisory vote on executive compensation will take place after the beginning of the compensation year. Stockholders also should recognize that their recommendation may be modified in the future if an annual frequency vote becomes burdensome or otherwise proves to be less helpful than originally expected.
We will consider stockholders to have expressed a preference for the frequency that receives the largest number of favorable votes. The board of directors also may from time to time decide that it is in the best interests of our company and its stockholders to hold the frequency vote more or less frequently than the non-binding option preferred by our stockholders.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “ONE YEAR” ON THE PROPOSAL TO DETERMINE THE FREQUENCY OF SAY-ON-PAY.
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PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The independent registered public accounting firm of M&K CPAS, PLLC (“M&K”) has acted as our auditor since December 22, 2014 and has audited our financial statements for each of our 2014 to 20202021 fiscal years. M&K CPAS, PLLC is responsible for performing an independent audit of our consolidated financial statements in accordance with auditing standards generally accepted in the United States and issuing a report on its audit.
The audit committeeAudit Committee has appointed, and the board of directors has ratified the audit committee’sAudit Committee’s appointment of, M&K CPAS, PLLC as our independent registered public accounting firm for the fiscal year ending December 31, 2021.2022. Stockholder ratification of the appointment of M&K CPAS, PLLC as our independent registered public accounting firm is not required by the Bylaws or otherwise. In the event that theour stockholders fail to ratify the appointment, the audit committeeAudit Committee may reconsider its appointment of M&K.&K CPAS, PLLC. Even if the appointment is ratified, the audit committee,Audit Committee, in its sole discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the audit committeeAudit Committee determines that such a change would be in the best interests of the Companyour company and our stockholders. A representative of M&K CPAS, PLLC is expected to be present at theour Annual Meeting, where the representative will have the opportunity to make a statement and to respond to appropriate questions.
Principal Accountant Fees and Services
The aggregate fees billed by M&K CPAS, PLLC for the years ended December 31, 20202021 and 20192020 for professional services described below are as follows:
Year Ended | ||||||
2021 | 2020 | |||||
Audit fees(1) | $ | 57,500 | $ | 50,330 | ||
Audit-related fees(2) | $ | 7,500 | $ | 26,500 | ||
Tax fees | $ | — | $ | — | ||
All other fees | $ | — | $ | — | ||
Total fees | $ | 65,000 | $ | 76,830 | ||
____________
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| Audit fees (1) | $ | 50,330 | $ | 57,983 | ||||
| Audit-related fees (2) | $ | 26,500 | $ | 7,900 | ||||
| Tax fees | $ | — | $ | — | ||||
| All other fees | $ | — | $ | — | ||||
| Total fees | $ | 76,830 | $ | 65,883 | ||||
(1) Includes audit fees related to professional services rendered in connection with the audit of our annual consolidated financial statements, the reviews of the consolidated financial statements included in each of our quarterly reports on Form 10-Q, and accounting services that relate to the audited consolidated financial statements and are necessary to comply with generally accepted auditing standards.
Pre-Approval Policies and Procedures
We have implemented pre-approvalpre-approval policies and procedures related to the provision of audit and non-auditnon-audit services. Under these procedures, our audit committee pre-approvespre-approves all services to be provided by M&K CPAS, PLLC and the estimated fees related to these services.
All audit, audit-related,audit-related, and tax services were pre-approvedpre-approved by the audit committee, which concluded that the provision of such services by M&K CPAS, PLLC was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. Our pre-approvalpre-approval policies and procedures provide for the audit committee’s pre-approvalpre-approval of specifically described audit, audit-related,audit-related, and tax services on an annual basis, but individual engagements anticipated to exceed pre-establishedpre-established thresholds must be separately approved. The policies and procedures also require specific approval by the audit committee if total fees for audit-relatedaudit-related and tax services would exceed total fees for audit services in any fiscal year. The policies and procedures authorize the audit committee to delegate to one or more of its members pre-approvalpre-approval authority with respect to permitted services.
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In connection with our financial statements for the fiscal year ended December 31, 2020,2021, the audit committee has:
• reviewed and discussed the audited financial statements with management;
• discussed with our independent registered public accounting firm, M&K CPAS PLLC, the matters required to be discussed by applicable auditing standards, including Auditing Standard No. 1301, Communications with Audit Committees; and
Based upon these reviews and discussions, the audit committee approved and recommended to the board of directors that our audited financial statements be included in our 20202021 Annual Report filed with the SEC.
Submitted by the Audit Committee:
Matthew K. Szot (Chair)
Delphine François Chiavarini
Marc Dumont
Jake Leach
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Vote Required
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATIONOF THE APPOINTMENT OF M&K CPAS, PLLC AS OUR INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021.
Contents
Stockholder Communications with the Board of Directors and Board Attendance at Annual Stockholder Meetings
Our stockholders may, at any time, communicate in writing with any member or group of members of theour board of directors by sending such written communication to the attention of our Secretary by regular mail to our principal executive offices.
Copies of written communications received by our Secretary will be provided to the relevant director(s) unless such communications are considered, in the reasonable judgment of our Secretary, to be improper for submission to the intended recipient(s). Examples of stockholder communications that would be considered improper for submission include, without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to us or our business, or communications that relate to improper or irrelevant topics.
The chair of the board of directors is expected to make all reasonable efforts to attend our annual stockholder meeting.meeting of stockholders. If theour board chair is unable to attend an annual stockholder meeting of stockholders for any reason, at least one other member of the board of directors is expected to attend. Other members of the board of directors are expected to attend our annual stockholder meeting of stockholders if reasonably possible. All of our directors attended our 20202021 annual meeting of stockholders.
Proxy Materials Delivered to a Shared Address
Stockholders who have the same mailing address and last name may have received a notice that your household will receive only one Notice. This practice, commonly referred to as “householding,” is designed to reduce the volume of duplicate information and reduce printing and postage costs. A single Notice will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice, from the Company or from your bank, broker or other registered holder, that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. A number of banks, brokers and other registered holders with account holders who are our stockholders household our proxy materials. If you hold your shares in street name, and no longer wish to participate in householding and would prefer to receive separate proxy materials in the future, or currently receive multiple copies of the proxy materials and would like to request householding, please notify your bank, broker or other registered holder. If you are a holder of record, and no longer wish to participate in householding and would prefer to receive separate proxy materials in the future, or currently receive multiple copies of the proxy materials and would like to request householding, please notify us in writing at SenesTech, Inc., 23460 N. 19th19th Avenue, Suite 110, Phoenix, AZ 85027, Attention: Secretary, or by telephone at (928) 779-4143.779-4143. Any stockholder residing at a shared address to which a single copy of the proxy materials was delivered who wishes to receive a separate copy of our proxy statement may obtain a copy by written request addressed to SenesTech, Inc., 23460 N. 19th19th Avenue, Suite 110, Phoenix, AZ 85027, Attention: Secretary. We will deliver a separate copy of our proxy statement to any stockholder who so requests in writing promptly following our receipt of such request.
Transaction of Other Business
Our board of directors knows of no other matters to be submitted at the Annual Meeting. If any other business is properly brought before the Annual Meeting, proxies will be voted in respect thereof as the proxy holders deem advisable.
Form 10-K
We will provide, without charge upon the written request of any beneficial owner of shares of our common stock entitled to vote at the Annual Meeting, a copy of our 20202021 Annual Report, as filed with the SEC, but excluding exhibits. Written requests should be mailed to our principal executive offices, located at: SenesTech, Inc., 23460 N. 19th19th Avenue, Suite 110, Phoenix, AZ 85027, Attention: Secretary.
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AppendixSENESTECH, INC. C/O TRANSFER ONLINE, INC. 512 SE SALMON STREET PORTLAND, OR 97214 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 1 OF 2 1 1 SCAN TO VIEW MATERIALS & VOTE VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Before The Meeting – Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 06/22/2022. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting – Go to www.virtualshareholdermeeting.com/SNES2022 You may attend the meeting via the internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on 06/22/2022. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. CONTROL # NAME THE COMPANY NAME INC. - COMMON SHARES 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS A 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS B 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS C 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS D 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS E 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS F 123,456,789,012.12345 THE COMPANY NAME INC. - 401 K 123,456,789,012.12345 PAGE 1 OF 2 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS ETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS The Board of Directors recommends you vote FOR the following: For Withhold For All All All Except To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. 1. To elect the nominees listed below as Class III directors, each to serve for a three-year term until 2025; Nominees 01 K.C. Kavanagh 02 Kenneth Siegel 03 Matthew Szot The Board of Directors recommends you vote FOR the following proposal: For Against Abstain 2 To provide a non-binding advisory vote on the compensation of our named executive officers for fiscal 2021 (“say-on-pay”). The Board of Directors recommends you vote 1 YEAR on the following proposal: 1 year 2 years 3 years Abstain 3 To provide a non-binding advisory vote on the frequency of future non-binding advisory votes on the compensation of our named executive officers (“say-on-frequency”). The Board of Directors recommends you vote FOR the following proposal: For Against Abstain 4 To ratify the appointment of M&K CPAS, PLLC as our independent registered public accounting firm for the fiscal year ending December 31, 2022. NOTE: To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date JOB # Signature (Joint Owners) Date SHARES CUSIP # SEQUENCE # 0000569226_1 R1.0.0.24 02 0000000000
PROPOSED FORM OF2018 EQUITY INCENTIVE PLAN,Table of Contents
AS AMENDED BY THE PLAN AMENDMENT
NOTE: AdditionsThis communication presents only an overview of the more complete proxy materials that are indicated by underlining,available on the internet. We encourage you to access and deletions are indicated by strike-outs.
SENESTECH, INC.
2018 EQUITY INCENTIVE PLAN
(a) Eligible Stock Award Recipients. Employees, Directors and Consultants are eligible to receive Stock Awards.
(b) Available Stock Awards. The Plan providesreview all of the important information contained in the proxy materials before voting. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Form 10-K are available at www.proxyvote.com SENESTECH, INC. Annual Meeting of Stockholders Thursday, June 23, 2022 12:00 P.M. MST This proxy is solicited by the board of directors This proxy will be voted at the annual meeting of stockholders of SenesTech, Inc. (the “Company”) by Kenneth Siegel and Thomas C. Chesterman (the “Proxy Holders”), as directed. By signing on the reverse side of this ballot, you hereby grant to the Proxy Holders your revocable proxy to vote all of your shares of Company common stock as directed. If no direction is indicated, it will be voted “FOR”the election of the following typesnominee directors; “FOR” the say-on-pay proposal; “1 YEAR” on the say-on-frequency proposal; “FOR” the ratification of Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards and (vi) Other Stock Awards.
(c) Purpose. The Plan, through the grantingappointment of Stock Awards, is intended to helpM&K CPAS, PLLC as the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the successindependent registered public accountant of the Company, and any Affiliate and provide a means by which the eligible recipients may benefit from increases in value of the Common Stock.
(a) Administration by Board. The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee or Committees, as provided in Section 2(c).
(b) Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i) To determine (A) who will be granted Stock Awards; (B) when and how each Stock Award will be granted; (C) what type of Stock Award will be granted; (D) the provisions of each Stock Award (which need not be identical), including when a person will be permitted to exercise or otherwise receive cash or Common Stock under the Stock Award; (E) the number of shares of Common Stock subject to a Stock Award; and (F) the Fair Market Value applicable to a Stock Award.
(ii) To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for administration of the Plan and Stock Awards. The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it will deem necessary or expedient to make the Plan or Stock Award fully effective.
(iii) To settle all controversies regarding the Plan and Stock Awards granted under it.
(iv) To accelerate, in whole or in part, the time at which a Stock Award may be exercised or vest (or at which cash or shares of Common Stock may be issued).
(v) To suspend or terminate the Plan at any time. Except as otherwise provided in the Plan or a Stock Award Agreement, suspension or termination of the Plan will not impair a Participant’s rights under his or her then-outstanding Stock Award without his or her written consent except as provided in subsection (viii) below.
(vi) To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to make the Plan or Stock Awards granted under the Plan compliant with the requirements for Incentive Stock Options or exempt from or compliant with the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any, of applicable law. However, if required by applicable law, and except as provided in Section 9(a) relating to Capitalization Adjustments, the Company will seek stockholder approval of any amendment of the Plan that (A) materially increases the number of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Stock Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (E) materially extends the term of the Plan, or (F) materially expands the types of Stock Awards available for issuance under the Plan. Except as provided in the Plan (including subsection (viii) below) or a Stock Award Agreement, no amendment of the Plan will impair a Participant’s rights under an outstanding Stock Award unless (1) the Company requests the consent of the affected Participant, and (2) such Participant consents in writing.
(vii) To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 422 of the Code regarding Incentive Stock Options.
(viii) To approve forms of Stock Award Agreements for use under the Plan and to amend the terms of any one or more Stock Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Stock Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that a Participant’s rights under any Stock Award will not be impaired by any such amendment unless (A) the Company requests the consent of the affected Participant, and (B) such Participant consents in writing. Notwithstanding the foregoing, (1) a Participant’s rights will not be deemed to have been impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant’s rights, and (2) subject to the limitations of applicable law, if any, the Board may amend the terms of any one or more Stock Awards without the affected Participant’s consent (A) to maintain the qualified status of the Stock Award as an Incentive Stock Option under Section 422 of the Code; (B) to change the terms of an Incentive Stock Option, if such change results in impairment of the Award solely because it impairs the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (C) to clarify the manner of exemption from, or to bring the Stock Award into compliance with, Section 409A of the Code; or (D) to comply with other applicable laws.
(ix) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Stock Awards.
(x) To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Stock Award Agreement that are required for compliance with the laws of the relevant foreign jurisdiction).
(xi) To effect, with the consent of any adversely affected Participant, (A) the modification of the exercise, purchase or strike price of any outstanding Stock Award; (B) the cancellation of any outstanding Stock Award and the grant in substitution therefor of a new (1) Option or SAR, (2) Restricted Stock Award, (3) Restricted Stock Unit Award, (4) Other Stock Award, (5) cash and/or (6) other valuable consideration determined by the Board, in its sole discretion, with any such substituted award (x) covering the same or a different number of shares of Common Stock as the cancelled Stock Award and (y) granted under the Plan or another equity or compensatory plan of the Company. In no event, however, shall the Board have the right, without stockholder approval, to (i) lower the exercise or grant price of an Option or SAR after it is granted, except in connection with Capitalization Adjustments provided in Section 9; (ii) cancel an Option or SAR at a time when its exercise or grant price exceeds the Fair Market Value of the underlying stock, in exchange for cash, another option or stock appreciation right, restricted stock, or other equity award; (iii) take any other action that is treated as a repricing under generally accepted accounting principles, or (iv) issue an Option or SAR or amend an outstanding Option or SAR to provide for the grant or issuance of a new Option or SAR on exercise of the original Option or SAR.
(c) Delegation to Committee. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee). Any delegation of administrative powers will be reflected in resolutions, not inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable). The Committee may, at any time, abolish the subcommittee and/or revest in the Committee any powers delegated to the subcommittee. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.
(d) Delegation to an Officer. The Board may delegate to one (1) or more Officers the authority to do one or both of the following: (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by applicable law, other Stock Awards) and, to the extent permitted by applicable law, the terms of such Stock Awards, and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Employees; provided, however, that the Board resolutions regarding such delegation will specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to himself or herself. Any such Stock Awards will be granted on the form of Stock Award Agreement most recently approved for use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation authority. The Board may not delegate authority to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) to determine the Fair Market Value pursuant to Section 13(t) below.
(e) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.
(a) Share Reserve.
(i) Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Stock Awards from and after the Effective Date will not exceed 850,0003,850,000 shares, plus the following additional shares: (A) any authorized shares of Common Stock available for issuance, and not issued or subject to outstanding Stock Awards, under the Company’s 2015 Incentive Plan (the “Prior Plan”) on the Effective Date shall cease to be set aside or reserved for issuance pursuant to the Prior Plan, effective on the Effective Date, and shall instead be set aside and reserved for issuance pursuant to the Plan; and (B) any shares of Common Stock subject to outstanding Stock Awards under the Prior Plan on the Effective Date that cease to be subject to such awards following the Effective Date (other than by reason of exercise or settlement of the awards to the extent they are exercised for or settled in vested and nonforfeitable shares), shall cease to be set aside or reserved for issuance pursuant to the Prior Plan, effective on the date upon which they cease to be so subject to such awards, and shall instead be set aside and reserved for issuance pursuant to the Plan, up to an aggregate maximum of 122,279 shares pursuant to clauses (A) and (B) of this paragraph (i) (taken all together, the “Share Reserve”).
(ii) For clarity, the Share Reserve in this Section 3(a) is a limitation on the number of shares of Common Stock that may be issued pursuant to the Plan. Accordingly, this Section 3(a) does not limit the granting of Stock Awards except as provided in Section 7(a).
(b) Reversion of Shares to the Share Reserve. If a Stock Award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such Stock Award having been issued or (ii) is settled in cash (i.e., the Participant receives cash rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of Common Stock that may be available for issuance under the Plan. If any shares of Common Stock issued pursuant to a Stock Award are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares that are forfeited or repurchased will revert to and again become available for issuance under the Plan. Any shares reacquired by the Company in satisfaction of tax withholding obligations on a Stock Award or as consideration for the exercise or purchase price of a Stock Award will again become available for issuance under the Plan.
(c) Incentive Stock Option Limit. Subject to the Share Reserve and Section 9(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options will be a number of shares of Common Stock equal to three (3) multiplied by the Share Reserve.
(d) Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.
(a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code). Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants; provided, however, that Stock Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent” of the Company, as such term is defined in Rule 405, unless (i) the stock underlying such Stock Awards is treated as “service recipient stock” under Section 409A of the Code (for example, because the Stock Awards are granted pursuant to a corporate transaction such as a spin off transaction), or (ii) the Company, in consultation with its legal counsel, has determined that such Stock Awards are otherwise exempt from or alternatively comply with the distribution requirements of Section 409A of the Code.
(b) Ten Percent Stockholders. A Ten Percent Stockholder will not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.
(c) Consultants. A Consultant will not be eligible for the grant of a Stock Award if, at the time of grant, either the offer or sale of the Company’s securities to such Consultant is not exempt under Rule 701 because of the nature of the services that the Consultant is providing to the Company, because the Consultant is not a natural person, or because of any other provision of Rule 701, unless the Company determines that such grant need not comply with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions.
Each Option or SAR will be in such form and will contain such terms and conditions as the Board deems appropriate. All Options will be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. If an Option is not specifically designated as an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some portion or all of the Option fails to qualify as an Incentive Stock Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Stock Option. The provisions of separate Options or SARs need not be identical; provided, however, that each Stock Award Agreement will conform to (through incorporation of provisions hereof by reference in the applicable Stock Award Agreement or otherwise) the substance of each of the following provisions:
(a) Term. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the expiration of ten (10) years from the date of its grant or such shorter period specified in the Stock Award Agreement.
(b) Exercise Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option or SAR will be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option or SAR on the date the Stock Award is granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Stock Award if such Stock Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Section 409A of the Code and, if applicable, Section 424(a) of the Code. Each SAR will be denominated in shares of Common Stock equivalents.
(c) Purchase Price for Options. The purchase price of Common Stock acquired pursuant to the exercise of an Option may be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board will have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use a particular method of payment. The permitted methods of payment are as follows:
(i) by cash, check, bank draft or money order payable to the Company;
(ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;
(iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;
(iv) if an Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that the Company will accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued. Shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations;
(v) according to a deferred payment or similar arrangement with the Optionholder; provided, however, that interest will compound at least annually and will be charged at the minimum rate of interest necessary to avoid (A) the imputation of interest income to the Company and compensation income to the Optionholder under any applicable provisions of the Code, and (B) the classification of the Option as a liability for financial accounting purposes; or
(vi) in any other form of legal consideration that may be acceptable to the Board and specified in the applicable Stock Award Agreement.
(d) Exercise and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Stock Award Agreement evidencing such SAR. The appreciation distribution payable on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the strike price. The appreciation distribution may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Stock Award Agreement evidencing such SAR.
(e) Transferability of Options and SARs. The Board may, in its sole discretion, impose such limitations on the transferability of Options and SARs as the Board will determine. In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options and SARs will apply:
(i) Restrictions on Transfer. An Option or SAR will not be transferable except by will or by the laws of descent and distribution (and pursuant to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the Participant. The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable tax and securities laws. Except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration.
(ii) Domestic Relations Orders. Subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2). If an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.
(iii) Beneficiary Designation. Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering written notice to the Company, in a form approved by the Company (or the designated broker), designate a third party who, upon the death of the Participant, will thereafter be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, the executor or administrator of the Participant’s estate will be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent with the provisions of applicable laws.
(f) Vesting Generally. The total number of shares of Common Stock subject to an Option or SAR may vest and therefore become exercisable in periodic installments that may or may not be equal. The Option or SAR may be subject to such other terms and conditions onmatters as may properly come before the time or times when it may or may not be exercised (which may be based on the satisfaction of performance goals or other criteria)meeting as the Board mayProxy Holders deem appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this Section 5(f) are subject to any Option or SAR provisions governing the minimum number of shares of Common Stock as to which an Option or SAR may be exercised.
(g) Termination of Continuous Service. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participantadvisable. Continued and the Company, if a Participant’s Continuous Service terminates (other than for Cause and other than upon the Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Stock Award as of the date of termination of Continuous Service) within the period of time ending on the earlier of (i) the date three (3) months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the applicable Stock Award Agreement, which period will not be less than thirty (30) days if necessary to comply with applicable laws unless such termination is for Cause) and (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.
(h) Extension of Termination Date. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if the exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause and other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option or SAR will terminate on the earlier of (i) the expiration of a total period of three (3) months (that need not be consecutive) after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would not be in violation of such registration requirements, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Stock Award Agreement. In addition, unless otherwise provided in a Participant’s Stock Award Agreement, if the sale of any Common Stock received upon exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause) would violate the Company’s insider trading policy, then the Option or SAR will terminate on the earlier of (i) the expiration of a period of time (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the sale of the Common Stock received upon exercise of the Option or SAR would not be in violation of the Company’s insider trading policy, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Stock Award Agreement.
(i) Disability of Participant. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination of Continuous Service (or such longer or shorter period specified in the Stock Award Agreement, which period will not be less than six (6) months if necessary to comply with applicable laws), and (ii) the expiration of the term of the Option or SAR as set forth in the Stock Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.
(j) Death of Participant. Except as otherwise provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the Participant dies within the period (if any) specified in the Stock Award Agreement for exercisability after the termination of the Participant’s Continuous Service (for a reason other than death), then the Option or SAR may be exercised (to the extent the Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise the Option or SAR by bequest or inheritance or by a person designated to exercise the Option or SAR upon the Participant’s death, but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Stock Award Agreement, which period will not be less than six (6) months if necessary to comply with applicable laws), and (ii) the expiration of the term of such Option or SAR as set forth in the Stock Award Agreement. If, after the Participant’s death, the Option or SAR is not exercised within the applicable time frame, the Option or SAR (as applicable) will terminate.
(k) Termination for Cause. Except as explicitly provided otherwise in a Participant’s Stock Award Agreement or other individual written agreement between the Company or any Affiliate and the Participant, if a Participant’s Continuous Service is terminated for Cause, the Option or SAR will terminate immediately upon such Participant’s termination of Continuous Service, and the Participant will be prohibited from exercising his or her Option or SAR from and after the time of such termination of Continuous Service.
(l) Non-Exempt Employees. If an Option or SAR is granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, the Option or SAR will not be first exercisable for any shares of Common Stock until at least six (6) months following the date of grant of the Option or SAR (although the Stock Award may vest prior to such date). Consistent with the provisions of the Worker Economic Opportunity Act, (i) if such non-exempt Employee dies or suffers a Disability, (ii) upon a Corporate Transaction in which such Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s retirement (as such term may be defined in the Participant’s Stock Award Agreement, in another agreement between the Participant and the Company, or, if no such definition, in accordance with the Company’s then current employment policies and guidelines), the vested portion of any Options and SARs may be exercised earlier than six (6) months following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Stock Award will be exempt from the employee’s regular rate of pay, the provisions of this Section 5(l) will apply to all Stock Awards and are hereby incorporated by reference into such Stock Award Agreements.
(m) Early Exercise of Options. An Option may, but need not, include a provision whereby the Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Subject to the “Repurchase Limitation” in Section 8(m), any unvested shares of Common Stock so purchased may be subject to a repurchase right in favor of the Company or to any other restriction the Board determines to be appropriate. Provided that the “Repurchase Limitation” in Section 8(m) is not violated, the Company will not be required to exercise its repurchase right until at least six (6) months (or such longer or shorter period of time required to avoid classification of the Option as a liability for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option Agreement.
(n) Right of Repurchase. Subject to the “Repurchase Limitation” in Section 8(m), the Option or SAR may include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the Participant pursuant to the exercise of the Option or SAR.
(o) Right of First Refusal. The Option or SAR may include a provision whereby the Company may elect to exercise a right of first refusal following receipt of notice from the Participant of the intent to transfer all or any part of the shares of Common Stock received upon the exercise of the Option or SAR. Such right of first refusal will be subject to the “Repurchase Limitation” in Section 8(m). Except as expressly provided in this Section 5(o) or in the Stock Award Agreement, such right of first refusal will otherwise comply with any applicable provisions of the bylaws of the Company.
(a) Restricted Stock Awards. Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate. To the extent consistent with the Company’s bylaws, at the Board’s election, shares of Common Stock may be (i) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse; or (ii) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. The terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical. Each Restricted Stock Award Agreement will conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:
(i) Consideration. A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to the Company, (B) past services to the Company or an Affiliate, or (C) any other form of legal consideration (including future services) that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii) Vesting. Subject to the “Repurchase Limitation” in Section 8(m), shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board.
(iii) Termination of Participant’s Continuous Service. If a Participant’s Continuous Service terminates, the Company may receive through a forfeiture condition or a repurchase right, any or all of the shares of Common Stock held by the Participant that have not vested as of the date of termination of Continuous Service under the terms of the Restricted Stock Award Agreement.
(iv) Transferability. Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement will be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted Stock Award Agreement.
(v) Dividends. A Restricted Stock Award Agreement may provide that any dividends paidsigned on Restricted Stock will be subject to the same vesting and forfeiture restrictions as apply to the shares subject to the Restricted Stock Award to which they relate.
(b) Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical. Each Restricted Stock Unit Award Agreement will conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:
(i) Consideration. At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to be paid (if any) by the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii) Vesting. At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions to the vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.
(iii) Payment. A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.
(iv) Additional Restrictions. At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.
(v) Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock Unit Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such manner as determined by the Board. Any additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate.
(vi) Termination of Participant’s Continuous Service. Except as otherwise provided in the applicable Restricted Stock Unit Award Agreement, such portion of the Restricted Stock Unit Award that has not vested will be forfeited upon the Participant’s termination of Continuous Service.
(vii) Compliance with Section 409A of the Code. Notwithstanding anything to the contrary set forth herein, any Restricted Stock Unit Award granted under the Plan that is not exempt from the requirements of Section 409A of the Code shall contain such provisions so that such Restricted Stock Unit Award will comply with the requirements of Section 409A of the Code. Such restrictions, if any, shall be determined by the Board and contained in the Restricted Stock Unit Award Agreement evidencing such Restricted Stock Unit Award. For example, such restrictions may include, without limitation, a requirement that any Common Stock that is to be issued in a year following the year in which the Restricted Stock Unit Award vests must be issued in accordance with a fixed pre-determined schedule.
(c) Other Stock Awards. Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than one hundred percent (100%) of the Fair Market Value of the Common Stock at the time of grant) may be granted either alone or in addition to Stock Awards provided for under Section 5 and the preceding provisions of this Section 6. Subject to the provisions of the Plan, the Board will have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock Awards.
(a) Availability of Shares. The Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy then-outstanding Stock Awards.
(b) Securities Law Compliance. The Company will seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking will not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained. A Participant will not be eligible for the grant of a Stock Award or the subsequent issuance of cash or Common Stock pursuant to the Stock Award if such grant or issuance would be in violation of any applicable securities law.
(c) No Obligation to Notify or Minimize Taxes. The Company will have no duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Stock Award. Furthermore, the Company will have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of a Stock Award or a possible period in which the Stock Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of a Stock Award to the holder of such Stock Award.
(a) Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Stock Awards will constitute general funds of the Company.
(b) Corporate Action Constituting Grant of Stock Awards. Corporate action constituting a grant by the Company of a Stock Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Stock Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Stock Award Agreement as a result of a clerical error in the papering of the Stock Award Agreement, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Stock Award Agreement.
(c) Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to a Stock Award unless and until (i) such Participant has satisfied all requirements for exercise of, or the issuance of shares of Common Stock under, the Stock Award pursuant to its terms, and (ii) the issuance of the Common Stock subject to the Stock Award has been entered into the books and records of the Company.
(d) No Employment or Other Service Rights. Nothing in the Plan, any Stock Award Agreement or any other instrument executed thereunder or in connection with any Stock Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or will affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.
(e) Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee) after the date of grant of any Stock Award to the Participant, the Board has the right in its sole discretion to (x) make a corresponding reduction in the number of shares subject to any portion of such Stock Award that is scheduled to vest or become payable after the date of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Stock Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Stock Award that is so reduced or extended.
(f) Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000) (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).
(g) Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.
(h) Withholding Obligations. Unless prohibited by the terms of a Stock Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to a Stock Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock Award; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid classification of the Stock Award as a liability for financial accounting purposes); (iii) withholding cash from a Stock Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Stock Award Agreement.
(i) Electronic Delivery. Any reference herein to a “written” agreement or document will include any agreement or document delivered electronically or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access).
(j) Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Stock Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee or otherwise providing services to the Company. The Board is authorized to make deferrals of Stock Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.
(k) Compliance with Section 409A of the Code. To the extent that the Board determines that any Stock Award granted hereunder is subject to Section 409A of the Code, the Stock Award Agreement evidencing such Stock Award shall incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code. To the extent applicable, the Plan and Stock Award Agreements shall be interpreted in accordance with Section 409A of the Code.
(l) Compliance with Exemption Provided by Rule 12h-1(f). If at the end of the Company’s most recently completed fiscal year: (i) the aggregate of the number of persons who hold outstanding compensatory employee stock options to purchase shares of Common Stock granted pursuant to the Plan or otherwise (such persons, “Holders of Options”) equals or exceeds five hundred (500), and (ii) the Company’s assets exceed $10 million, then the following restrictions will apply during any period during which the Company does not have a class of its securities registered under Section 12 of the Exchange Act and is not required to file reports under Section 15(d) of the Exchange Act: (A) the Options and, prior to exercise, the shares of Common Stock to be issued on exercise of the Options may not be transferred until the Company is no longer relying on the exemption provided by Rule 12h-1(f) promulgated under the Exchange Act (“Rule 12h-1(f)”), except: (1) as permitted by Rule 701(c) promulgated under the Securities Act, (2) to a guardian upon the disability of the Holder of Options, or (3) to an executor upon the death of the Holder of Options (collectively, the “Permitted Transferees”); provided, however, the following transfers are permitted: (i) transfers by Holders of Options to the Company, and (ii) transfers in connection with a change of control or other acquisition involving the Company, if following such transaction, the Options no longer remain outstanding and the Company is no longer relying on the exemption provided by Rule 12h-1(f); provided further, that any Permitted Transferees may not further transfer the Options; (B) except as otherwise provided in (A) above, the Options and shares of Common Stock issuable on exercise of the Options are restricted as to any pledge, hypothecation, or other transfer, including any short position, any “put equivalent position” as defined by Rule 16a-1(h) promulgated under the Exchange Act, or any “call equivalent position” as defined by Rule 16a-1(b) promulgated under the Exchange Act by Holders of Options prior to exercise of an Option until the Company is no longer relying on the exemption provided by Rule 12h-1(f); and (C) at any time that the Company is relying on the exemption provided by Rule 12h-1(f), the Company will deliver to Holders of Options (whether by physical or electronic delivery or written notice of the availability of the information on an internet site) the information required by Rule 701(e)(3), (4), and (5) promulgated under the Securities Act every six (6) months, including financial statements that are not more than one hundred eighty (180) days old; provided, however, that the Company may condition the delivery of such information upon the Holder of Options’ agreement to maintain its confidentiality.
(m) Repurchase Limitation. The terms of any repurchase right will be specified in the Stock Award Agreement. The repurchase price for vested shares of Common Stock will be the Fair Market Value of the shares of Common Stock on the date of repurchase. The repurchase price for unvested shares of Common Stock will be the lower of (i) the Fair Market Value of the shares of Common Stock on the date of repurchase or (ii) their original purchase price. However, the Company will not exercise its repurchase right until at least six (6) months (or such longer or shorter period of time necessary to avoid classification of the Stock Award as a liability for financial accounting purposes) have elapsed following delivery of shares of Common Stock subject to the Stock Award, unless otherwise specifically provided by the Board.
(a) Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c), and (iii) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards. The Board will make such adjustments, and its determination will be final, binding and conclusive.
(b) Dissolution or Liquidation. Except as otherwise provided in the Stock Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service, provided, however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion.
(c) Corporate Transaction. The following provisions will apply to Stock Awards in the event of a Corporate Transaction unless otherwise provided in the instrument evidencing the Stock Award or any other written agreement between the Company or any Affiliate and the Participant or unless otherwise expressly provided by the Board at the time of grant of a Stock Award. In the event of a Corporate Transaction, then, notwithstanding any other provision of the Plan, the Board may take one or more of the following actions with respect to Stock Awards, contingent upon the closing or completion of the Corporate Transaction:
(i) arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) to assume or continue the Stock Award or to substitute a similar stock award for the Stock Award (including, but not limited to, an award to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction);
(ii) arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to the Stock Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company);
(iii) accelerate the vesting, in whole or in part, of the Stock Award (and, if applicable, the time at which the Stock Award may be exercised) to a date prior to the effective time of such Corporate Transaction as the Board determines (or, if the Board does not determine such a date, to the date that is five (5) days prior to the effective date of the Corporate Transaction), with such Stock Award terminating if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction; provided, however, that the Board may require Participants to complete and deliver to the Company a notice of exercise before the effective date of a Corporate Transaction, which exercise is contingent upon the effectiveness of such Corporate Transaction;
(iv) arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Stock Award;
(v) cancel or arrange for the cancellation of the Stock Award, to the extent not vested or not exercised prior to the effective time of the Corporate Transaction, in exchange for such cash consideration, if any, as the Board, in its sole discretion, may consider appropriate; and
(vi) make a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the value of the property the Participant would have received upon the exercise of the Stock Award immediately prior to the effective time of the Corporate Transaction, over (B) any exercise price payable by such holder in connection with such exercise. For clarity, this payment may be zero ($0) if the value of the property is equal to or less than the exercise price. Payments under this provision may be delayed to the same extent that payment of consideration to the holders of the Company’s Common Stock in connection with the Corporate Transaction is delayed as a result of escrows, earn outs, holdbacks or any other contingencies.
The Board need not take the same action or actions with respect to all Stock Awards or portions thereof or with respect to all Participants. The Board may take different actions with respect to the vested and unvested portions of a Stock Award.
(d) Change in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration will occur.
(a) Plan Term. The Board may suspend or terminate the Plan at any time. Unless terminated sooner by the Board, the Plan will automatically terminate on the day before the tenth (10th) anniversary of the earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the stockholders of the Company. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
(b) No Impairment of Rights. Suspension or termination of the Plan will not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant or as otherwise permitted in the Plan.
This Plan will become effective on the Effective Date.
The laws of the State of Delaware will govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state’s conflict of laws rules.
(a) “Affiliate” means, at the time of determination, any “parent” or “majority-owned subsidiary” of the Company, as such terms are defined in Rule 405. The Board will have the authority to determine the time or times at which “parent” or “majority-owned subsidiary” status is determined within the foregoing definition.
(b) “Board” means the Board of Directors of the Company.
(c) “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure, or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
(d) “Cause” will have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i) such Participant’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof; (ii) such Participant’s attempted commission of, or participation in, a fraud or act of dishonesty against the Company; (iii) such Participant’s intentional, material violation of any contract or agreement between the Participant and the Company or of any statutory duty owed to the Company; (iv) such Participant’s unauthorized use or disclosure of the Company’s confidential information or trade secrets; or (v) such Participant’s gross misconduct. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Company, in its sole discretion. Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Stock Awards held by such Participant will have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.
(e) “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:
(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed to occur;
(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction;
(iii) the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company will otherwise occur, except for a liquidation into a parent corporation;
(iv) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or
(v) individuals who, on the date the Plan is adopted by the Board, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board.
Notwithstanding the foregoing definition or any other provision of this Plan, (A) the term Change in Control will not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, and (B) the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant will supersede the foregoing definition with respect to Stock Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition will apply.
(f) “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.
(g) “Committee” means a committee of one or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).
(h) “Common Stock” means the common stock of the Company.
(i) “Company” means Senestech, Inc., a Nevada corporation.
(j) “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan.
(k) “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.
(l) “Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events:
(i) a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;
(ii) a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the Company;
(iii) a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
(iv) a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.
(m) “Director” means a member of the Board.
(n) “Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve (12) months as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.
(o) “Effective Date” means the effective date of this Plan, which is the earlier of (i) the date that this Plan is first approved by the Company’s stockholders, and (ii) the date this Plan is adopted by the Board.
(p) “Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.
(q) “Entity” means a corporation, partnership, limited liability company or other entity.
(r) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(s) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities.
(t) “Fair Market Value” means, as of any date, the value of the Common Stock determined by the Board in compliance with Section 409A of the Code or, in the case of an Incentive Stock Option, in compliance with Section 422 of the Code.
(u) “Incentive Stock Option” means an option granted pursuant to Section 5 of the Plan that is intended to be, and that qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.
(v) “Nonstatutory Stock Option” means any option granted pursuant to Section 5 of the Plan that does not qualify as an Incentive Stock Option.
(w) “Officer” means any person designated by the Company as an officer.
(x) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.
(y) “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement will be subject to the terms and conditions of the Plan.
(z) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.
(aa) “Other Stock Award” means an award based in whole or in part by reference to the Common Stock which is granted pursuant to the terms and conditions of Section 6(c).
(bb) “Other Stock Award Agreement” means a written agreement between the Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement will be subject to the terms and conditions of the Plan.
(cc) “Own,” “Owned,” “Owner,” “Ownership” A person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.
(dd) “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.
(ee) “Plan” means this Senestech, Inc. 2018 Equity Incentive Plan.
(ff) “Restricted Stock Award” means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(a).
(gg) “Restricted Stock Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement will be subject to the terms and conditions of the Plan.
(hh) “Restricted Stock Unit Award” means a right to receive shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(b).
(ii) “Restricted Stock Unit Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement will be subject to the terms and conditions of the Plan.
(jj) “Rule 405” means Rule 405 promulgated under the Securities Act.
(kk) “Rule 701” means Rule 701 promulgated under the Securities Act.
(ll) “Securities Act” means the Securities Act of 1933, as amended.
(mm) “Stock Appreciation Right” or “SAR” means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 5.
(nn) “Stock Appreciation Right Agreement” means a written agreement between the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement will be subject to the terms and conditions of the Plan.
(oo) “Stock Award” means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right or any Other Stock Award.
(pp) “Stock Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement will be subject to the terms and conditions of the Plan.
(qq) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%) .
(rr) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate.
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