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
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| ¨ | Definitive Additional Materials | |
| ¨ | Soliciting Material under §240.14a-12 | |
CONCERT PHARMACEUTICALS, INC.
(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)Charter)
(Name of Person(s) Filing Proxy Statement, if other thanOther Than the Registrant)
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1
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholders,
You are cordially invited to attend the 20182020 annual meeting of stockholders (the “Annual Meeting”) of Concert Pharmaceuticals, Inc. (the(“we” or “Companyus”), which will be held on Thursday, June 14, 201811, 2020 at 9:00 AM Eastern Time, at theour offices, of the Company, 9965 Hayden Avenue, Suite 500,3000N, Lexington, MA 02421, to consider and vote upon the following proposals:
1. The election ofTo elect three Class IIII Directors (the “Director Nominees”) to our Board of Directors (the(our “Board”), to serve until the 2021our 2023 annual meeting of stockholders (the “Director Proposal”);stockholders;
2. The ratificationTo hold a non-binding, advisory vote on executive compensation;
3. To hold a non-binding, advisory vote on the frequency of future non-binding, advisory votes on executive compensation;
4. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018 (the “Auditor Proposal”);2020; and
Our Board has fixed the close of business on April 17, 201814, 2020 as the record date for the purpose of determining the stockholders who are entitled to receive notice of, and to vote at, the Annual Meeting. Only stockholders of record at the close of business on the record date are entitled to notice of, and to vote at, the Annual Meeting and at any adjournment of that meeting.
We are pleased to take advantage of Securities and Exchange Commission rules that allow companies to furnish their proxy materials over the Internet. On or about May 3, 2018,April 28, 2020, we are mailing to many of our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) instead of a paper copy of our proxy materials and our 20172019 Annual Report on Form 10-K. The Notice contains instructions on how to access those documents and to cast your vote via the Internet or by telephone. The Notice also contains instructions on how to request a paper copy of our proxy materials and our 20172019 Annual Report on Form 10-K. All stockholders who do not receive a Notice will receive a paper copy of the proxy materials and the 20172019 Annual Report on Form 10-K by mail. This process allows us to provide our stockholders with the information that they need on a more timely basis, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials.
Your vote is very important. Whether or not you plan to attend the Annual Meeting in person, please vote as soon as possible by submitting your proxy via the Internet or by telephone as indicated on the proxy card or by signing, dating and returning the proxy card. If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee.
2
We currently intend to hold the Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19) pandemic and are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold the Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor the “Investors” section of our website, www.concertpharma.com, for updated information. If you are planning to attend the Annual Meeting, please check the website one week prior to the meeting date. As always, we encourage you to vote your shares prior to the Annual Meeting.
By Order of the Board of Directors
Roger D. Tung, Ph.D.
President and Chief Executive Officer
Lexington, Massachusetts
April 28, 2020
3
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
to be held on Thursday, June 11, 2020
| Table of Contents | |||
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND THE PROPOSALS
The following are some questions that you, as a holder of common stock of the Company,Concert Pharmaceuticals, Inc. (“Concert,” “we” or “us”) may have regarding the 2018our 2020 annual meeting of stockholders (the “Annual Meeting”) of Concert Pharmaceuticals, Inc. (the “Company”) and the proposals and brief answers to such questions. We urge you to carefully read this entire proxy statement and the documents referred to in this proxy statement because the information in this section does not provide all the information that may be important to you as a stockholder of the CompanyConcert with respect to the proposals.
Our Board of Directors (the “Board of Directors” or the(our “Board”) has made this proxy statement and related materials available to you on the Internet, or at your request has delivered printed versions to you by mail, in connection with the solicitation of proxies by theour Board of Directors for the Annual Meeting, and any adjournment or postponement of the Annual Meeting. If you requested printed versions of these materials by mail, they will also include a proxy card for the Annual Meeting.
Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we are providing access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders of record and beneficial owners as of the record date identified below.April 14, 2020 (the “Record Date”). The mailing of the Notice to our stockholders is scheduled to begin on or about May 3, 2018.April 28, 2020.
IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL STOCKHOLDERS MEETING TO BE HELD ON JUNE 14, 2018:11, 2020:
This Proxy Statement, the accompanying proxy card or voting instruction card and our 20172019 Annual Report on Form 10-K are available at: http://ir.concertpharma.com/annual-meeting.
When and where will the Annual Meeting take place?
The Annual Meeting will be held on June 14, 201811, 2020 at 9:00 AM Eastern Time, at theour offices, of the Company, 9965 Hayden Avenue, Suite 500,3000N, Lexington, MA 02421.
Will the Annual Meeting be impacted by the coronavirus (COVID-19) pandemic?
We are actively monitoring the coronavirus (COVID-19) pandemic and are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold the Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor the “Investors” section of our website, www.concertpharma.com, for updated information. If you are planning to attend the Annual Meeting, please check the website one week prior to the meeting date. As always, whether or not you plan to attend the Annual Meeting in person, please vote as soon as possible by submitting your proxy via the Internet or by telephone as indicated on the proxy card or by signing, dating and returning the proxy card.
What proposals are the stockholders being asked to consider?
At the Annual Meeting, you will be asked to consider and vote upon:upon the following proposals:
| 1. | ||
| 2. | ||
| 3. | To hold a non-binding, advisory vote on the frequency of future non-binding, advisory votes on executive compensation (the “Say-on-Frequency Proposal”); | |
| 4. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, | |
What are the recommendations of theour Board?
What is the Record Date for the Annual Meeting?
Holders of our common stock as of the close of business on April 17, 2018, the “Record Date” for the Annual Meeting,14, 2020 are entitled to notice of, and to vote at, the Annual Meeting and any postponements or adjournments of the Annual Meeting.
Who can vote at the Annual Meeting?
Stockholders who owned shares of our common stock on the Record Date may attend and vote at the Annual Meeting. There were 23,393,08729,651,595 shares of common stock outstanding on the Record Date. All shares of common stock have one vote per share and vote together as a single class. Information about the stockholdings of our directors and executive officers is contained in the section of this proxy statement entitled “Principal StockholdersStock Ownership and Reporting – Security Ownership of Certain Beneficial Owners and Management.”.
What is the proxy card?
The proxy card enables you to appoint Roger D. Tung and Marc A. Becker and Lynette Herscha as your proxies at the Annual Meeting. By completing and returning or submitting the proxy card as described herein or in the Notice, you are authorizing these people to vote your shares at the Annual Meeting in accordance with your instructions on the proxy card. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, we think that it is a good idea to complete and return or submit your proxy card before the Annual Meeting date just in case your plans change. If a proposal comes up for vote at the Annual Meeting that is not on the proxy card, the proxies will vote your shares, under your proxy, according to their best judgment.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
Most of our stockholders hold their shares in an account at a brokerage firm, bank or other nominee holder, rather than holding share certificates in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficiallybeneficially.
Stockholder of Record
If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, you are a “stockholder of record” who may vote at the Annual Meeting, and we are sending these proxy materials or the Notice directly to you. You can vote by proxy overvia the Internet or by telephone by following the instructions provided in the Notice, or, if you
requested printed copies of the proxy materials by mail, you can vote by mailing your proxy as described in the proxy materials.
Beneficial Owner
If, on the Record Date, your shares were held in an account at a brokerage firm or at a bank or other nominee holder, you are considered the beneficial owner of shares held “in streetin “street name,” and these proxy materials or the Notice are being forwarded to you by your broker or nominee who is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct your broker on how to vote your shares and to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you receive a valid proxy from your brokerage firm, bank or other nominee holder. To obtain a valid proxy, you must make a special request of your brokerage firm, bank or other nominee holder. If you do not make this request, you can still vote by using the voting instruction card enclosed with this proxy statement; however, you will not be able to vote in person at the Annual Meeting.
What is the quorum required for the Annual Meeting?
The representation in person or by proxy of holders of at least a majority of the issued and outstanding shares of our common stock entitled to vote at the Annual Meeting is necessary to constitute a quorum for the transaction of business at the Annual
Meeting. For purposes of determining the presence of a quorum, abstentions and broker non-votes will be counted as present at the Annual Meeting.
Assuming that a quorum is present, what vote is required to approve the proposals to be voted upon at the Annual Meeting?
| • | Director Proposal: The election of each Director Nominee requires Annual Meeting. | |
| • | Say-on-Pay Proposal: The approval of this proposal requires the affirmative vote of a majority of the votes cast at the Annual Meeting. Because the Say-on-Pay Proposal is advisory, it will not be binding on Concert, our Board or any committee of our Board. However, our Board, including our compensation committee, values the opinions of our stockholders and, to the extent there are a substantial number of votes cast against the executive officer compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns and evaluate what actions may be appropriate to address those concerns. | |
| • | Say-on-Frequency Proposal: This proposal provides a choice among three frequency periods (every one, two or three years) for future non-binding, advisory say-on-pay votes. The frequency period that receives the most votes will be deemed to be the recommendation of our stockholders. However, because this vote is advisory and not binding on Concert or our Board, we may decide that it is in the best interests of our stockholders and Concert to hold a say-on-pay vote more or less frequently than the frequency period selected by a plurality of our stockholders. | |
| • | Auditor Proposal: The ratification of the appointment of Ernst & Young LLP requires the affirmative vote of a majority of the | |
How do I vote?
Stockholders have four voting options. You may vote using one of the following methods:
| 1. | Internet or Telephone. To vote | |
| 2. | Mail. If you requested or receive a paper proxy card and voting instructions by mail, simply complete, sign and date the enclosed proxy card and return it before the meeting in the envelope provided. | |
| 3. | In Person. You may come to the Annual Meeting and cast your vote there. | |
The voting deadlines and availability of telephoneInternet and Internettelephone voting for beneficial owners of shares held in “street name”street name will depend on the voting processes of the organization that holds your shares. Therefore, we urge you to carefully review and follow the voting instruction card and any other materials that you receive from that organization.
What are the effects of not voting or abstaining? What are the effects of broker non-votes?
If you do not vote by virtue of not being present in person or by proxy at the Annual Meeting, your shares will not be counted for purposes of determining the existence of a quorum.
Abstentions will be counted for the purpose of determining the existence of a quorum. However, they will not be considered in determining the number of votes cast. Accordingly, an abstention will have no effect on any of the Director Proposal or the Auditor Proposal.
proposals.
Broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. These matters are referred to as “non-routine” matters. Broker non-votes will
be counted for the purpose of determining the existence of a quorum. The Director Proposal, is athe Say-on-Pay Proposal and the Say-on-Frequency Proposal are “non-routine” matter.matters. Thus, in tabulating the voting resultresults for the Director Proposal, the Say-on-Pay Proposal and the Say-on-Frequency Proposal, shares that constitute broker non-votes are not considered votes cast on the Director Proposal.such proposals. The Auditor Proposal is considered a “routine” matter, and a broker or other nominee may generally exercise discretionary authority to vote on the Auditor Proposal.
What does it mean if I received more than one proxy card or Notice?
If your shares are registered differently or in more than one account, you will receive more than one proxy card or Notice. To make certain all of your shares are voted, please follow the instructions included on the Notice on how to access each proxy card and vote each proxy card via the Internet or by telephone or through the Internet.telephone. If you requested or received paper proxy materials by mail, please complete, sign and return each proxy card to ensure that all of your shares are voted.
What happens if I don’t indicate how to vote my proxy?
If you just sign or submit your proxy card without providing further instructions, your shares will be counted as a vote “for”“FOR” each of the Director Nominees, the Say-on-Pay Proposal and the Auditor Proposal, and “ONE YEAR” on the Say-on-Frequency Proposal.
What happens if I sell my shares after the record dateRecord Date but before the Annual Meeting?
If you transfer your shares after the Record Date but before the date of the Annual Meeting, you will retain your right to vote at the Annual Meeting (provided that such shares remain outstanding on the date of the Annual Meeting).
What if I change my mind after I return my proxy?
You may revoke your proxy and change your vote at any time before the polls close at the Annual Meeting. You may do this by:
| • | sending a written notice to | ||
| • | voting again at a later time, but prior to the date of the Annual Meeting, via the Internet or by telephone; | ||
| • | signing or submitting another proxy card with a later date and returning it before the polls close at the Annual Meeting; or | ||
| • | attending the Annual Meeting and voting in person. | ||
Please note, however, that if your shares are held of record by a brokerage firm, bank or other nominee, you must instruct your broker, bank or other nominee that you wish to change your vote by following the procedures on the voting form provided to you by the broker, bank or other nominee. If your shares are held in street name, and you wish to attend and vote at the Annual Meeting, you must bring to the Annual Meeting a legal proxy from the broker, bank or other nominee holding your shares, confirming your beneficial ownership of the shares and giving you the right to vote your shares. Simply attending the Annual Meeting will not constitute a revocation of your proxy.
Who will bear the costs of the proxy solicitation?
We will bear the costs of soliciting proxies. In addition to solicitations by mail, our directors, officers and regular employees, without additional remuneration, may solicit proxies by telephone, facsimile, email, personal interviews and other means.
When will the voting results be announced?
We plan to announce preliminary voting results at the Annual Meeting and will publish final results in a Current Report on Form 8-K to be filed with the SEC within four business days following the Annual Meeting.
PROPOSAL NO. 1—1 – ELECTION OF THREE CLASS IIII DIRECTORS
Our Board is divided into three classes, with one class of our directors standing for election each year for a three-year term. Directors for each class are elected at the annual meeting of stockholders held in the year in which the term for their class expires and hold office until their resignation or removal or their successors are duly elected and qualified. In accordance with our certificate of incorporation and bylaws,by-laws, our directors may fill existing vacancies on theour Board by appointment. The members of the classes are divided as follows:
| • | the Class I Directors are Peter Barton Hutt, Wilfred E. Jaeger and Roger D. Tung, and their term | ||
| • | the Class II Directors are Ronald W. Barrett | ||
| • | the Class III Directors are Richard H. Aldrich, Thomas G. Auchincloss, Jr. and Christine van Heek, and their term will expire at the | ||
Our certificate of incorporation and bylawsby-laws provide that the authorized number of directors may be changed only by resolution of our Board. Our certificate of incorporation and bylawsby-laws also provide that our directors may be removed only for cause by the affirmative vote of the holders of at least 75% of the votes that all our stockholders would be entitled to cast in an annual election of directors, and that any vacancy on our Board, including a vacancy resulting from an enlargement of our Board, may be filled only by vote of a majority of our directors then in office.
Our Board, on the recommendation of our nominating and corporate governance committee, has nominated Peter Barton Hutt, Wilfred E. JaegerRichard H. Aldrich, Thomas G. Auchincloss, Jr. and Roger D. TungChristine van Heek for re-election as Class IIII Directors at the Annual Meeting. Each director that is elected at the Annual Meeting will be elected to serve for a three yearthree-year term that will expire at our 2023 annual meeting of stockholders in 2021.stockholders.
If no contrary indication is made, proxies in the accompanying form are to be voted for Peter Barton Hutt, Wilfred E. JaegerRichard H. Aldrich, Thomas G. Auchincloss, Jr. and Roger D. TungChristine van Heek or, in the event that any of these candidates is not a candidate or is unable to serve as a director at the time of election (which is not currently expected), for any nominee who is designated by our Board to fill the vacancy.
We have no formal policy regarding board diversity. Our priority in selection of board members is identification of members who will further the interests of our stockholders through their established record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members, knowledge of our business, understanding of the competitive landscape and adherence to high ethical standards. Certain individual skills and qualifications of our directors, which we believe contribute to the effectiveness of theour Board as a whole, are described in the paragraphs below.
Information Regarding Directors
The information set forth below as to the directors and the nominees for directordirectors has been furnished to us by the directors and the nominees for director.directors.
Recommendation of theour Board
OUR BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES.NOMINEE.
Nominees for Election to theour Board
For a Three-Year Term Expiring at the
| Name | Age | Present Position with Concert | |||
| Richard H. Aldrich | 65 | Director | |||
| Thomas G. Auchincloss, Jr. | 58 | Director | |||
| Christine van Heek | 63 | Director | |||
Richard H. Aldrich is a co-founder of Concert and has served as a member of our Board and as Chairman of the Board since May 2006. Mr. Aldrich is a co-founder and was a Partner at Longwood Fund Management LLC, a venture capital firm, from December 2010 to December 2019. Mr. Aldrich has been an employee of Longwood Management LLC since August 2015. Mr. Aldrich founded RA Capital Management LLC, a hedge fund, in 2001 and served as a Managing Member from 2001 to 2008 and as a Co-Founding Member from 2008 to 2011. Mr. Aldrich has co-founded and helped to build several biotechnology companies including Sirtris Pharmaceuticals, Inc. (acquired by GlaxoSmithKline in 2008), Alnara Pharmaceuticals, Inc. (acquired by Eli Lilly in 2010), Verastem, Inc., OvaScience, Inc. and Flex Pharma, Inc. Mr. Aldrich was also a founding employee of Vertex Pharmaceuticals Incorporated, a pharmaceutical company, where he held the position of Senior Vice President and Chief Business Officer and managed all commercial and operating functions from 1989 to 2001. Prior to joining Vertex, Mr. Aldrich held several management positions at Biogen Inc. Mr. Aldrich also serves on the board of directors of a number of private biotechnology companies. During the last five years, Mr. Aldrich previously served on the board of directors of PTC Therapeutics, Inc. and OvaScience, Inc. Mr. Aldrich received a B.S. in Management from Boston College and an M.B.A. from the Amos Tuck School at Dartmouth College. We believe that Mr. Aldrich’s broad-based experience in business, including his leadership and board experience at life science companies, and his familiarity with our business as a co-founder of Concert make him a key contributor to our Board.
Thomas G. Auchincloss, Jr. has served as a member of our Board since December 2014. Since September 2013, Mr. Auchincloss has served as Managing Member at Counterpoint Trading Company, LLC, a private investment firm. From August 2007 to September 2013, Mr. Auchincloss was self-employed in private investing. From May 2005 to August 2007, Mr. Auchincloss worked as Chief Financial Officer of Metabolix, Inc., a public biomaterials company. Prior to that, Mr. Auchincloss served as a consultant with Metabolix from April 2002 to May 2005, providing business development, financial and strategic consulting services. From 1994 to 2001, Mr. Auchincloss served in a variety of positions at Vertex Pharmaceuticals Incorporated, a pharmaceutical company, most recently as Vice President, Finance and Treasurer. Mr. Auchincloss received a B.S. in Business Administration from Babson College and an M.B.A. in Finance from the Wharton School. We believe that Mr. Auchincloss’ financial and industry experience, including his experience as the chief financial officer of a publicly traded biomaterials company, make him a key contributor to our Board.
Christine van Heek has served as a member of our Board since April 2016. Ms. van Heek has served as an adviser and consultant to several companies in the biopharmaceutical industry. From 1991 to 2003, Ms. van Heek served in various roles at Genzyme Corporation, a biotechnology company, including as Corporate Officer and President, Therapeutics Division; General Manager, Renal Division; and Vice President, Global Marketing. In addition, she has held various sales and marketing positions at Genentech, Inc. and Caremark/HHCA. Ms. van Heek received a B.S.N. from the University of Iowa and an M.B.A. from Lindenwood University in St. Louis. We believe that Ms. van Heek’s industry experience, including her extensive experience in strategic roles of a publicly traded biotechnology company, make her a key contributor to our Board.
Members of our Board Continuing in Office
Term Expiring at the
2021 Annual Meeting of Stockholders (Class I)
| Name | Age | Present Position with Concert | |||
| Peter Barton Hutt | Director | ||||
| Wilfred E. Jaeger, M.D. | Director | ||||
| Roger D. Tung, Ph.D. | Director, Chief Executive Officer and President | ||||
Peter Barton Hutt has served as a member of our Board of Directors since December 2006. Mr. Hutt has practiced law at Covington & Burling LLP, specializing in food and drug law, since 1960 (except for the period from 1971 to 1975) and currently serves as senior counsel. From 1971 to 1975, he was Chief Counsel for the Food and Drug Administration. Mr. Hutt is a member ofalso serves on the board of directors of Flex Pharma,Immunomedics, Inc. and Q Therapeutics, Inc., each of which is a public biotechnology company, as well as numerous private companies. During the last five years, Mr. Hutt alsopreviously served as a member ofon the board of directors of BIND Therapeutics, Inc., Seres Health, Inc., Xoma Ltd., Celera Corporation, a public biotechnology company that was acquired by Quest Diagnostics, Inc. in 2011, DBV Technologies SA, a public biotechnology company,Flex Pharma, Inc., Moderna, Inc., Rubius Therapeutics, Inc., Seres Therapeutics, Inc. and Momenta Pharmaceuticals, Inc., a public biotechnology company.XOMA Corporation. Mr. Hutt received a B.A. from Yale University, an LL.B. from Harvard Law School and an LL.M. from New York University School of Law. We believe that Mr. Hutt’s extensive knowledge of regulatory and legal issues related to drug development and his service on numerous boards of directors allowmake him to be a key contributor to our Board of Directors.Board.
Wilfred E. Jaeger, M.D. has served as a member of our Board of Directors since May 2006. Dr. Jaeger co-founded Three Arch Partners, a venture capitalhealthcare-focused investment firm, in 1993 and has served as a Partner since that time.Managing Member until December 2019. Prior to co-founding Three Arch Partners, Dr. Jaeger was a general partner at Schroder Ventures. He isDr. Jaeger also a memberserves on the board of directors of Neuronetics, Inc. and Nevro Corp., as well as numerous private companies. During the last five years, Dr. Jaeger previously served on the board of directors of Threshold Pharmaceuticals, Inc., a public pharmaceutical company, and Nevro Corporation, a public medical device company, as well as numerous private companies. Dr. Jaeger received a B.S. in Biology from the University of British Columbia, hisan M.D. from the University of British Columbia School of Medicine and an M.B.A. from Stanford University. We believe that Dr. Jaeger’s financial and medical knowledge and experience allowmake him to be a key contributor to our Board of Directors.Board.
Roger D. Tung, Ph.DPh.D.. is our co-founderscientific founder and has served as our President and Chief Executive Officer and as a member of our Board of Directors since April 2006. He is also a member of the board of directors of Flex Pharma, Inc., a public pharmaceutical company. Before founding Concert, Dr. Tung was a founding scientist at Vertex Pharmaceuticals Incorporated, a pharmaceutical company, where he was employed from 1989 to 2005, most recently as its Vice President of Drug Discovery. Prior to Vertex, he held various positions at Merck, Sharp & Dohme Research Laboratories, a global healthcare provider, and The Squibb Institute for Medicinal Chemistry. During the last five years, Dr. Tung previously served on the board of directors of Flex Pharma, Inc. Dr. Tung received a B.A. in Chemistry from Reed College and a Ph.D. in Medicinal Chemistry from the University of Wisconsin-Madison. We believe that Dr. Tung’s detailed knowledge of our CompanyConcert and his 33-yearlong career in the global pharmaceutical and biotechnology industries, including his roles at Vertex, providemake him a critical contributionkey contributor to our Board of Directors.Board.
Term Expiring at the
| Name | Age | Present Position with Concert | |||
| Ronald W. Barrett, Ph.D. | Director | ||||
| Director | |||||
Ronald W. Barrett, Ph.D. has served as a member of our Board of Directors since December 2007. Dr. Barrett has served at the Chief Executive Officer and Chairman of the board of directors of Medikine, Inc., a biopharmaceutical company, since June 2017, and served as its Executive Chair from December 2016 to June 2017. Dr. Barrett was a founder of XenoPort, Inc., a public biopharmaceutical company, and served as its Chief Executive Officer from 2001 to October 2015, its Chief Scientific Officer from 1999 to 2001 and as a member of its board of directors from 1999 to October 2015. Prior to XenoPort, Dr. Barrett held various positions at Affymax Research Institute, a drug discovery company now owned by GlaxoSmithKline plc, and Abbott Laboratories, a healthcare company. During the last five years, Dr. Barrett also served as a member of the board of directors of XenoPort. Dr. Barrett received a B.S. from Bucknell University and a Ph.D. in Pharmacology from Rutgers University. We believe that Dr. Barrett’s industry and board experience, including his experience as the chief executive officer of a publicly traded biopharmaceutical company, makesmake him a key contributor to our Board of Directors.Board.
CORPORATE GOVERNANCE
General
We believe that good corporate governance is important to ensure that the CompanyConcert is managed for the long-term benefit of our stockholders. This section describes key corporate governance practices that we have adopted. We have adopted a code of business conduct and ethics, which applies to all of our employees, officers directors and employees, anddirectors, corporate governance guidelines and charters for our audit committee, our compensation committee and our nominating and governance committee. We have posted copies of our code of business conduct and ethics and corporate governance guidelines, as well as each of our committee charters, on the “Corporate Governance” page of the “Investors” section of our website, www.concertpharma.com, which you can access free of charge. Information contained on theour website is not incorporated by reference in, or considered part of, this proxy statement. We intend to disclose on our website any amendments to, or waivers from, our code of business conduct and ethics that are required to be disclosed by law or NASDAQ listing standards.the Nasdaq Listing Rules. We will also provide copies of these documents as well as our other corporate governance documents, free of charge, to any stockholder upon written request to Concert Pharmaceuticals, Inc., 9965 Hayden Avenue, Suite 500,3000N, Lexington, MA 02421, Attention: Investor Relations.
Director Independence
Rule 5605 of the NASDAQNasdaq Listing Rules requires a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing. In addition, the NASDAQNasdaq Listing Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent, that audit committee members also satisfy heightened independence criteria set forthrequirements contained in Rule 10A-3 underof the Securities Exchange Act of 1934 (as amended, the “Exchange Act”“Exchange Act”) and that compensation committee members also satisfy heightened independence requirements contained in the NASDAQNasdaq Listing Rules, as well as Rule 10C-1 underof the Exchange Act.
Under Rule 5605(a)(2), a director will only qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the Board,board of director or any other board committee, accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries.
When determining the independence of the members of our compensation committee under the heightened independence requirements contained in the NASDAQNasdaq Listing Rules and Rule 10C-1, our Board is required to consider all factors specifically relevant to determining whether a director has a relationship with us that is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: (1) the source of compensation of that director, including any consulting, advisory or other compensatory fee paid by us to that director; and (2) whether that director is affiliated with the Company,Concert, a subsidiary of the CompanyConcert or an affiliate of a subsidiary of the Company.Concert.
Our Board has reviewed the composition of our Board and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our Board has determined that each of our directors, with the exception of Dr. Tung, is an “independent director” as defined under Rule 5605(a)(2) of the NASDAQNasdaq Listing Rules. Our Board also determined that Mr. Auchincloss, Dr. Jaeger and Ms. van Heek, who comprise our audit committee, and Mr. Aldrich, Dr. Barrett, Mr. Høiland and Ms. FitzGerald,Mr. Hutt, who comprise our compensation committee, satisfy the independence standards for such committees established by the SEC and the NASDAQNasdaq Listing Rules, as applicable. In making such determinations, our Board considered the relationships that each such non-employee director has with the CompanyConcert and all other facts and circumstances our Board deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director.
Board Leadership Structure
Our Board is currently chaired by Mr. Aldrich, an independent director, who possesses an in-depth knowledge of our business, opportunities and challenges. We believe he is the person best positioned to ensure that our Board’s time and attention is focused on the most critical matters.
Our Board has responsibility for the oversight of the company’sConcert’s risk management processes and, either as a whole or through its committees, regularly discusses with management our major risk exposures, the potential impact of these risks on our business and the steps we take to manage them. The risk oversight process includes receiving regular reports from boardBoard committees and members of senior management to enable our boardBoard to understand the company’sConcert’s risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk, including operations, finance, legal, regulatory, strategic and reputational risk.
The audit committee reviews information regarding liquidity and operations and oversees our management of financial risks. Periodically, the audit committee reviews our policies with respect to risk assessment, risk management, loss prevention and regulatory compliance. Oversight by the audit committee includes direct communication with our external auditors and discussions with management regarding significant risk exposures and the actions management has taken to limit, monitor or control such exposures. The compensation committee is responsible for assessing whether any of our compensation policies or programs have the potential to encourage excessive risk-taking. The nominating and corporate governance committee manages risks associated with the independence of theour Board, corporate disclosure practices and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire boardBoard is regularly informed through committee reports about such risks. Matters of significant strategic risk are considered by our boardBoard as a whole.
Board Meetings
Our Board met sixfour times during our fiscal year 2017,2019, including telephonic meetings.meetings, and took action by written consent twice. During the year, each of our directors attended 75% or more of the combined total number of meetings of theour Board and the committees on which he or she served.
Committees of theour Board
We have three standing committees: the audit committee, the compensation committee and the nominating and corporate governance committee. Each of these committees has a written charter approved by our Board. A copy of each charter can be found on the “Corporate Governance” page of the “Investors” section of our website, at www.concertpharma.com.
Audit Committee
The members of our audit committee are Mr. Auchincloss, Dr. Jaeger and Ms. van Heek. Mr. Auchincloss is the chair of the audit committee. Our Board has determined that each of Mr. Auchincloss and Dr. Jaeger qualifies as an audit committee financial expert within the meaning of SEC regulations and the NASDAQNasdaq Listing Rules.
In making this determination, our boardBoard has considered the formal education and nature and scope of each such director’s previous experience, coupled with past and present service on various audit committees. Our audit committee assists our Board in its oversight of our accounting and financial reporting process and the audits of our financial statements. The audit committee met nineeight times during fiscal year 2017,2019, including telephonic meetings. The audit committee’s responsibilities include:
| • | appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm; | ||
| • | overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of reports from such firm; | ||
| • | reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures; | ||
| • | monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics; | ||
| • | overseeing our internal audit function, if any; | ||
| • | discussing our risk management policies; | ||
| • | establishing policies regarding hiring employees from the independent registered public accounting firm and procedures for the receipt, retention and treatment of accounting related complaints and concerns; | ||
| • | meeting independently with our internal auditing staff, independent registered public accounting firm and management; | ||
| • | reviewing and approving or ratifying any related person transactions; and | ||
| • | preparing the audit committee report required by SEC rules. | ||
We believe that the composition of our audit committee meets the requirements for independence under current NASDAQ listing standardsthe Nasdaq Listing Rules and SEC rules and regulations. Our Board has determined that each of Mr. Auchincloss, Dr. Jaeger and Ms. van Heek is independent as independence is currently defined in applicable NASDAQ listing standards.the Nasdaq Listing Rules and Rule 10A-3 of the Exchange Act.
Compensation Committee
The members of our compensation committee are Mr. Aldrich, Dr. Barrett, Mr. Høiland and Ms. FitzGerald.Mr. Hutt. Dr. Barrett is the chair of the compensation committee. Our compensation committee assists our Board in the discharge of its responsibilities relating to the compensation of our executive officers. The compensation committee met six times during fiscal year 2017.2019, including telephonic meetings, and took action by written consent once. The compensation committee’s responsibilities include:
| • | reviewing and making recommendations to our Board with respect to the compensation of our chief executive officer, and reviewing and approving, or making recommendations to our Board with respect to, the compensation of our | ||
| • | overseeing and administering our cash and equity incentive plans; | ||
| • | reviewing and making recommendations to our Board with respect to director compensation; | ||
| • | appointing, compensating and overseeing the work of any compensation consultant, legal counsel or other adviser retained by the compensation committee; | ||
| • | conducting an independence assessment with respect to any compensation consultant, legal counsel or other adviser retained by the compensation committee; | ||
| • | reviewing and discussing with management our director and executive compensation disclosure required to be included in our | ||
| • | preparing the compensation committee report required by SEC rules, if applicable. | ||
The compensation committee may delegate to one or more executive officers the power to grant options or other stock awards pursuant to our equity incentive plans to employees who are not directors or executive officers, subject to certain limitations. The compensation committee may also form and delegate its responsibilities to one or more subcommittees of theour Board.
We believe that the composition of our compensation committee meets the requirements for independence under current NASDAQ listing standardsthe Nasdaq Listing Rules and SEC rules and regulations. Our Board has determined that each of Mr. Aldrich, Dr. Barrett, Mr. Høiland and Ms. FitzGeraldMr. Hutt is independent as independence is currently defined in applicable NASDAQ listing standards.the Nasdaq Listing Rules and Rule 10C-1 of the Exchange Act.
Nominating and Corporate Governance Committee
The members of our nominating and corporate governance committee are Mr. Aldrich and Mr. Hutt and Dr. Wierenga.Hutt. Mr. Aldrich is the chair of the nominating and corporate governance committee. The nominating and corporate governance committee met one timedid not meet during fiscal year 2017.2019. The nominating and corporate governance committee’s responsibilities include:
| • | identifying individuals qualified to become | ||
| • | recommending to our | ||
| • | reviewing and making recommendations to our | ||
| • | developing and recommending corporate governance principles to | ||
| • | overseeing periodic evaluations of | ||
We believe that the composition of our nominating and corporate governance committee meets the requirements for independence under current NASDAQ listing standardsthe Nasdaq Listing Rules and SEC rules and regulations. Our Board has determined that each of Mr. Aldrich and Mr. Hutt and Dr. Wierenga is independent as independence is currently defined in applicable NASDAQ listing standards.the Nasdaq Listing Rules.
Code of Business Conduct and Ethics
Related Person Transactions
Our Board has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which Concert is a participant, the amount involved exceeds $120,000 and one of our executive officers, directors, director nominees or 5% stockholders, or their immediate family members, each of whom we refer to as a “related person,” has a direct or indirect material interest. Since January 1, 2019, we have not engaged in any related person transactions.
Director Nomination Process
Our nominating and corporate governance committee is responsible for identifying individuals qualified to serve as directors, consistent with criteria approved by our Board, and recommending the persons to be nominated for election as directors.
Director Qualifications
In evaluating director nominees, the nominating and corporate governance committee will consider, among other things, the following factors:
| • | reputation for personal and professional integrity, honesty and adherence to high ethical standards; | ||
| • | demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate to the current and long-term objectives of | ||
| • | strong finance experience; | ||
| • | commitment to | ||
| • | interest and ability to understand the sometimes conflicting interests of the various constituencies of | ||
| • | diversity of expertise and experience in substantive matters pertaining to our business relative to our other | ||
| • | diversity of background and perspective, including with respect to age, gender, race, place of residence and specialized experience; and | ||
| • | practical and mature business judgment, including the ability to make independent analytical inquiries. | ||
The nominating and corporate governance committee’s goal is to assemble a Board that brings to the CompanyConcert a variety of perspectives and skills derived from high quality business and professional experience. Moreover, the nominating and corporate governance committee believes that the background and qualifications of theour Board, considered as a group, should provide a significant mix of experience, knowledge and abilities that will allow theour Board to fulfill its responsibilities. Nominees are not discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability or any other basis proscribed by law.
The nominating and corporate governance committee has not adopted a formal policy with respect to a fixed set of specific minimum qualifications for its candidates for membership on theour Board. The nominating and corporate governance committee may consider such other facts, including, without limitation, diversity, as it may deem are in the best interests of the CompanyConcert and its stockholders. The nominating and corporate governance committee further believes it is appropriate for at least one member of our Board to meet the criteria for an “audit committee financial expert” as that phrase is defined under the regulations promulgated by the SEC, and that a majority of the members of our Board be independent as required under the NASDAQ qualification standards.Nasdaq Listing Rules. The nominating and corporate governance committee believes it is appropriate for our chief executive officer to serve as a member of our Board. Our directors’ performance and qualification criteria are reviewed periodically by the nominating and corporate governance committee.
Identification and Evaluation of Nominees for Directors
The nominating and corporate governance committee identifies nominees for director by first evaluating the current members of our Board willing to continue in service. Current members with qualifications and skills that are consistent with the nominating and corporate governance committee’s criteria for Board service and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of our Board with that of obtaining a new perspective or expertise.
If any member of our Board does not wish to continue in service or if our Board decides not to re-nominate a member for re-election, the nominating and corporate governance committee identifies a new nominee that meets the criteria above. The nominating and corporate governance committee generally inquires of our Board and members of management for their recommendations. The nominating and corporate governance committee may also review the composition and qualification of the boards of directors of our competitors, and may seek input from industry experts or analysts. The nominating and corporate governance committee reviews the qualifications, experience and background of suggested candidates. Final candidates, if other than our current directors, would be interviewed by the members of the nominating and corporate governance committee and by certain of our other independent directors and executive management. In making its determinations, the nominating and corporate governance committee evaluates each individual in the context of our Board as a whole, with the objective of assembling a group that can best contribute to the success of the CompanyConcert and represent stockholder interests through the exercise of sound judgment. After review and deliberation of all feedback and data, the nominating and corporate governance committee makes its recommendation to our Board.
We have not received director candidate recommendations from our stockholders and do not have a formal policy regarding consideration of such recommendations. However, any recommendations received from stockholders will be evaluated in the same manner that potential nominees suggested by Board members, management or other parties are evaluated. We do not intend to treat stockholder recommendations in any manner differentdifferently from other recommendations.
Under our bylaws,by-laws, stockholders wishing to nominate a candidate for director should write to our corporate secretary. In order to give the nominating and corporate governance committee sufficient time to evaluate a recommended candidate and/or include the candidate in our proxy statement for the 2019 Annual Meeting,2021 annual meeting of stockholders, the recommendation should be received by our corporate secretary at our principal executive offices in accordance with our procedures detailed in the section below entitled “Other Matters – Stockholder Proposals.”. Such submissions must state the nominee’s name, together with appropriate biographical information and background materials, and information with respect to the stockholder or
group of stockholders making the recommendation, including the number of shares of common stock owned by such stockholder or group of stockholders, as well as other information required by our bylaws.by-laws. We may require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such proposed nominee.
Director Attendance at Annual Meetings
Although the CompanyConcert does not have a formal policy regarding attendance by members of our Board at ourthe Annual Meeting, we encourage all of our directors to attend. Seven of our eight directors attended our 20172019 annual meeting of stockholders.
Communications with Our Board
Stockholders seeking to communicate with our Board should submit their written comments to Concert Pharmaceuticals, Inc., 9965 Hayden Avenue, Suite 500,3000N, Lexington, MA 02421, Attention: Corporate Secretary. The corporate secretary will forward such communications to each member of our Board;Board, provided that, if in the opinion of our corporate secretary it would be inappropriate to send a particular stockholder communication to a specific director, such communication will only be sent to the remaining directors (subject to the remaining directors concurring with such opinion).
Director Compensation
During 2017,2019, we did not provide any compensation to Dr. Tung, our President and Chief Executive Officer, for his service as a member of our Board. Dr. Tung’s compensation as an executive officer is set forth abovebelow under “Executive Compensation-2017Compensation – 2019 Summary Compensation Table.”
Under our director compensation program, we pay our non-employee directors a cash retainer for their service on theour Board of Directors and for their service on each committee of which the director is a member. The Chairman of the Board of Directors and the chairs of each committee receive higher retainers for such service. These fees are payable quarterly in arrears, in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment is prorated for any portion of such quarter that the director is not serving on our Board of Directors. TheBoard.
From January 1, 2019 to June 12, 2019, the fees paid to non-employee directors for their service on theour Board of Directors and for their service on each committee of theour Board of Directorswhich the director was a member were as follows:
| Member Annual Fee ($) | Chairman Annual Fee ($) | |||||
| Board of Directors | 40,000 | 70,000 | ||||
| Audit Committee | 7,500 | 15,000 | ||||
| Compensation Committee | 6,250 | 12,250 | ||||
| Nominating and Corporate Governance Committee | 4,000 | 8,000 | ||||
Beginning June 13, 2019 (the date of our 2019 annual meeting of stockholders), the fees paid to non-employee directors for their service on our Board and for their service on each committee of our Board of which the director is a member are as follows:
| Annual Member Fee ($) | Chairman Annual Fee ($) | Member Annual Fee ($) | Chairman Annual Fee ($) | |||||||||
| Board of Directors | 40,000 | 65,000 | 40,000 | 70,000 | ||||||||
| Audit Committee | 7,500 | 15,000 | 10,000 | 20,000 | ||||||||
| Compensation Committee | 5,000 | 10,000 | 7,500 | 15,000 | ||||||||
| Nominating and Corporate Governance Committee | 3,000 | 7,000 | 5,000 | 10,000 | ||||||||
grant. Each of these options vests in connection with attendingequal quarterly installments over a one-year period measured from the date of grant, or, if earlier, vests in full on the date of our Boardannual meeting of Director and committee meetings.stockholders held in the year following the date of grant, subject to the director’s continued service as a director.
In addition, under our director compensation program, each new non-employee director elected to our Board of Directors receives an option to purchase 25,000 shares of our common stock. Each of these options vestvests in equal quarterly installments over a three-year period measured from the date of grant, subject to the director’s continued service as a director, and will become vested andbecomes exercisable in full upon a change inof control of our Company.Concert. Further, on the date of the first boardBoard meeting held after each annual meeting of stockholders, each non-employee director that has served on our Board of Directors for at least six months receives an option to purchase 10,000 shares of our common stock. Each of these options vestvests in equal quarterly installments over a one-year period measured from the date of grant, subject to the director’s continued service as a director, and will become vested andbecomes exercisable in full upon a change inof control of our Company. Concert.
The exercise price of each option is equalall options granted to non-employee directors equals the fairclosing market value of a shareprice of our common stock on the date of grant.
committee meetings.
The following table sets forth information regarding compensation earned by or awarded to our non-employee directors during 2017.2019.
| Name | Fees earned or paid in cash ($) | Option awards ($)(1) | Total ($) | Fees earned or paid in cash ($) | Option awards ($) (1) | Total ($) | ||||||||||
| Richard H. Aldrich | 77,000 | 90,720 | 167,720 | 83,518 | (2) | 74,074 | 157,592 | |||||||||
| Thomas G. Auchincloss, Jr. | 52,720 | 90,720 | 143,440 | 57,733 | 74,074 | 131,807 | ||||||||||
| Ronald W. Barrett, Ph.D. | 47,720 | 90,720 | 138,440 | |||||||||||||
| Meghan FitzGerald, Ph.D. | 42,720 | 90,720 | 133,440 | |||||||||||||
| Ronald W. Barrett | 53,753 | 74,074 | 127,827 | |||||||||||||
Jesper Høiland (3) | 31,777 | 185,185 | 216,962 | |||||||||||||
| Peter Barton Hutt | 51,480 | 74,074 | 125,554 | |||||||||||||
| Wilfred E. Jaeger | 48,867 | 74,074 | 122,941 | |||||||||||||
| Christine van Heek | 45,220 | 90,720 | 135,940 | 48,867 | 74,074 | 122,941 | ||||||||||
| Peter Barton Hutt | 29,970 | 90,720 | 120,690 | |||||||||||||
| Wilfred E. Jaeger, M.D. | 50,220 | 90,720 | 140,940 | |||||||||||||
| Wendell Wierenga, Ph.D. | 40,720 | 90,720 | 131,440 | |||||||||||||
Wendell Wierenga (4) | 19,945 | — | 19,945 | |||||||||||||
| (1) | The amounts included in the “Option awards” column reflect the aggregate grant date fair value of |
| (2) | Mr. Aldrich elected to receive all of his cash retainer for the period from our 2018 annual meeting of stockholders to our 2019 annual meeting of stockholders in the form of a stock option award. As such, Mr. Aldrich was granted an option to purchase 5,940 shares of our common stock on June 14, 2018 based on the fair value of our common stock on such date. The amount included in the “Fees earned or paid in cash” column for Mr. Aldrich includes the fees that he would have otherwise received in cash in 2019 had he not elected to receive such fees in the form of an option that was granted on June 14, 2018. |
| (3) | Mr. Høiland joined our Board on April 25, 2019. |
| (4) | Dr. Wierenga’s term as a member of our Board expired as of our 2019 annual meeting of stockholders held on June 13, 2019. He did not hold any outstanding options as of December 31, |
The audit committee is appointed by theour Board to assist theour Board in fulfilling its oversight responsibilities with respect to (1) the integrity of our financial statements and financial reporting process and systems of internal controls regarding finance, accounting, and compliance with legal and regulatory requirements, (2) the qualifications, independence and performance of our independent registered public accounting firm, (3) the performance of our internal audit function, if any, and (4) other matters as set forth in the charter of the audit committee approved by theour Board.
Management is responsible for the preparation of the Company’sConcert’s financial statements and the financial reporting process, including its system of internal control over financial reporting and its disclosure controls and procedures. The independent registered public accounting firm is responsible for performing an audit of the Company’sConcert’s financial statements in accordance with the standards of the Public Company Accounting Oversight Board or (“PCAOB”) and issuing a report thereon. The audit committee’s responsibility is to monitor and oversee these processes.
In connection with these responsibilities, the audit committee reviewed and discussed with management and the independent registered public accounting firm the audited consolidated financial statements of the CompanyConcert for the fiscal year ended December 31, 2017.2019. The audit committee also discussed with the independent registered public accounting firm the matters required to be discussed by the PCAOB’s Auditing Standard 1301, Communication with Audit Committees.applicable requirements of the PCAOB and SEC. In addition, the audit committee received written communications from the independent registered public accounting firm confirming theirits independence as required by the applicable requirements of the PCAOB and has discussed with the independent registered public accounting firm theirits independence.
Based on the reviews and discussions referred to above, the audit committee recommended to theour Board that the audited consolidated financial statements of the CompanyConcert be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 20172019 that was filed with the SEC.
Thomas G. Auchincloss, ChairmanChair
Wilfred E. Jaeger
Christine van Heek
EXECUTIVE OFFICERS
The following table sets forth the name, age and positions of each of our executive officers and directors as of February 26, 2018.March 31, 2020.
| Name | Age | Position(s) | ||
| Roger D. Tung, | President, | |||
| Marc A. Becker | Chief Financial Officer | |||
| James V. Cassella, Ph.D. | Chief Development Officer | |||
| Nancy Stuart | Chief Operating Officer | |||
The biography of Dr. Tung can be found under “Proposal“Proposal No. 1:1 – Election of Three Class IIII Directors - Nominees for Election to the– Members of our Board -Continuing in Office – Term Expiring at the 20182021 Annual Meeting of Stockholders (Class I).”
Marc A.Becker has served as our Chief Financial Officer and principal financial officer since January 2018. Prior to joining Concert, Mr. Becker served as the Chief Financial Officer of CRISPR Therapeutics AG, a publicly traded biotechnology company, from February 2016 to September 2017. From January 2012 to February 2016, Mr. Becker wasserved as the Chief Financial Officer of rEVO Biologics, Inc., a biotechnology company. Prior to rEVO Biologics, Mr. Becker held increasing roles of increasing responsibility at Genzyme Corporation, a biotechnology company subsequently acquired by Sanofi S.A., from August 2001 to October 2011, culminating in Vice President, Finance. Mr. Becker received an M.B.A. from Babson College and a B.S. in Business Administration from the University of Massachusetts and an M.B.A. from Babson College and was licensed as a certified public accountant.
James V. Cassella, Ph.D. has served as our Chief Development Officer since February 2015. Prior to joining Concert, Dr. Cassella served as Executive Vice President, Research and Development and Chief Scientific Officer of Alexza Pharmaceuticals, Inc., a biotechnology company, from July 2012 to January 2015 and served as its Senior Vice President, Research and Development from June 2004 to July 2012. From April 1989 to April 2004, Dr. Cassella held various management positions at Neurogen Corporation, a publicly traded biotechnology company. Prior to Neurogen, Dr. Cassella was Assistant Professor of Neuroscience at Oberlin College. Dr. Cassella received a B.A. in Psychology from the University of New Haven and a Ph.D. in Physiological Psychology from Dartmouth College and completed a postdoctoral fellowship in the Department of Psychiatry at the Yale University School of Medicine and received a B.A. in Psychology from the University of New Haven.Medicine.
Nancy Stuart has served as our Chief Operating Officer since October 2007 and was our Senior Vice President, Corporate Strategy and Operations from July 2006 to October 2007. Prior to joining Concert, Ms. Stuart held various business operations and business development positions at Amgen Inc., a biopharmaceutical company, Kinetix Pharmaceuticals, Inc., a pharmaceutical company subsequently acquired by Amgen, Scion Pharmaceuticals, Inc., a pharmaceutical company, Vertex Pharmaceuticals Incorporated, a pharmaceutical company, and Genzyme Corporation, a biotechnology company subsequently acquired by Sanofi S.A.company. Ms. Stuart holdsreceived a B.S. from the University of Michigan and an M.B.A. from the Simmons College Graduate School of Management.
EXECUTIVE COMPENSATION
The following table sets forth information regarding total compensation awarded to, earned by and paid to each individual who served as our chief executive officer during the year ended December 31, 20172019 and our two most highly-compensated executive officers (other than our chief executive officer) who were serving as executive officers as of December 31, 20172019 for services rendered in all capacities to the CompanyConcert for the years indicated below. We refer to these individuals as our “named executive officers”.officers.”
| Name | Year | Salary ($) | Bonus ($) | Option awards ($) (1) | Stock awards ($) | Non-equity incentive plan compensation ($) (4) | All other compensation ($) (5) | Total ($) | |||||||||||||||
| Roger D. Tung, Ph.D. | 2017 | 517,402 | — | 1,496,440 | 1,109,600 (2) | 297,506 | 9,906 | 3,430,854 | |||||||||||||||
| President and Chief Executive Officer | 2016 | 499,905 | — | 1,937,609 | — | 199,962 | 9,756 | 2,647,232 | |||||||||||||||
| James V. Cassella, Ph.D. | 2017 | 406,445 | — | 523,754 | 832,200 (3) | 186,965 | 10,872 | 1,960,236 | |||||||||||||||
| Senior Vice President and Chief Development Officer | 2016 | 392,700 | — | 569,885 | — | 125,664 | 10,722 | 1,098,971 | |||||||||||||||
| Nancy Stuart | 2017 | 398,247 | — | 523,754 | 832,200 (3) | 183,194 | 9,906 | 1,947,301 | |||||||||||||||
| Chief Operating Officer | 2016 | 384,780 | — | 911,816 | — | 123,130 | 9,756 | 1,429,482 | |||||||||||||||
| Name | Year | Salary ($) | Bonus ($) | Option awards ($) (1) | Stock awards ($) (2) | Non-equity incentive plan compensation ($) (3) | All other compensation ($) (4) | Total ($) | |||||||||||||||
| Roger D. Tung | 2019 | 562,287 | — | 1,889,500 | — | 309,258 | 11,304 | 2,772,349 | |||||||||||||||
| President and Chief Executive Officer | 2018 | 535,511 | — | 3,761,860 | — | 300,421 | 10,056 | 4,607,848 | |||||||||||||||
Marc A. Becker (5) | 2019 | 393,300 | — | 1,039,225 | 288,515 | 157,320 | 9,060 | 1,887,420 | |||||||||||||||
| Chief Financial Officer | 2018 | 375,682 | 30,000 (6) | 1,880,930 | — | 155,040 | 8,880 | 2,450,532 | |||||||||||||||
James V. Cassella (7) | 2019 | 435,394 | — | 708,563 | 319,397 | 217,697 | 13,988 | 1,695,039 | |||||||||||||||
| Chief Development Officer | |||||||||||||||||||||||
| (1) | The amounts included in the “Option awards” column reflect the aggregate grant date fair value of option awards granted | |||||||||||||||||||||||||||||||||||||||||||
| (2) | The | |||||||||||||||||||||||||||||||||||||||||||
| (3) | The amounts included in the “Non-equity incentive plan compensation” column represent cash bonuses earned under our | |||||||||||||||||||||||||||||||||||||||||||
| (4) | The amounts included in the “All other compensation” column | |||||||||||||||||||||||||||||||||||||||||||
| (5) | Mr. Becker joined us as our Chief Financial Officer effective January 4, 2018. | |||||||||||||||||||||||||||||||||||||||||||
| (6) | Consists of a cash signing bonus earned upon the effective date of Mr. Becker’s hire. | |||||||||||||||||||||||||||||||||||||||||||
| (7) | Dr. Cassella was not a named executive officer for the fiscal year ended December 31, 2018, but is a named executive officer for the fiscal year ended December 31, 2019. | |||||||||||||||||||||||||||||||||||||||||||
Narrative to Summary Compensation Table
We review compensation annually for all employees, including our executives.executive officers. In setting executive officer base salaries and target incentive bonus levels, determining actual incentive bonus amounts and granting equity incentive awards, we consider compensation for comparable positions in the market, the historical compensation levels of our executives,executive officers, individual performance as compared to our expectations and objectives, our desire to motivate our employees to achieve short- and long-term results that are in the best interests of our stockholders, and a long-term commitment to our Company.Concert. We do not target a specific competitive position or a specific mix of compensation among base salary, bonus or long-term incentives.
Our compensation committee has primary responsibility for determining the compensation of our executive officers.officers other than our chief executive officer. Our Board has primary responsibility for determining the compensation of our chief executive officer based on the recommendation of our compensation committee. Our compensation committee typically reviews and discusses proposed compensation with theour chief executive officer for all executivesexecutive officers other than for the chief executive officer. The compensation committee, without the applicable members of management present, discusses recommendations for management and ultimately approves the compensation of our executive officers.himself. During 2017,2019, our compensation committee engaged Radford as its independent compensation consultant to review our executive compensation peer group and program design and to assist with assessing our executives’executive officers’ compensation relative to those at comparable companies. Our compensation committee considered the relationship that Radford has with us, the members of our Board of Directors and our executive officers. Based on the committee’s evaluation, the compensation committee has determined that Radford is independent and that theirits work has not raised any conflicts of interest.
Radford assisted the committee in conducting a competitive compensation assessment for our executive officers for the fiscal year ended December 31, 2017.2019. In evaluating the total compensation of our executive officers, the compensation committee, with the assistance of Radford, reviewed compensation information from our peer group companies. Radford then supplemented the peer group proxy information with published survey data, which provided a broader market representation of companies and deeper position reporting.
Base salary. In 2017, the base salaries for Dr. Tung, Dr. Cassella, and Ms. Stuart were $517,402, $406,445 and $398,247, respectively. We use base salaries to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers. None of our named executive officers is currently party to an employment agreement or other agreement or arrangement that provides for automatic or scheduled increases in base salary. The 2019 base salaries for our named executive officers are set forth in the following table.
| Name | 2019 Base Salary ($) | ||
| Roger D. Tung | 562,287 | ||
| Marc A. Becker | 393,300 | ||
| James V. Cassella | 435,394 | ||
Annual bonus. Pursuant to our executive bonus program for 2017,2019, our Board of Directors established and approved annual bonus targets based on the achievement of specified corporate goals. The target bonus amounts for the named executive officers were 50% of base salary for Dr. Tung and 40% of base salary for each of Dr. Cassella and Ms. Stuart. Our corporate goals are typically focused on the achievement of specific research, clinical, regulatory,research, financial and strategic goals. We consider these to be difficult to attain, conducive to the creation of stockholder value and designed to contribute to our current and future financial success. The corporate goals for 2017 were to identify new candidate compounds, partner our CTP-656 program, advance our CTP-543 program, and raise capital.
In January 2018, the2020, our compensation committee, and our Board with respect to our chief executive officer, conducted a review to determine and approve the attainment of such goals and to assess the individual performance of each of our named executive officers. Based uponon such review and assessment, theour compensation committee, and our Board with respect to our chief executive officer, approved cash incentive bonus payments for each of our named executive officers. The target bonus amounts for the named executive officers, as a percentage of base salary, and the actual bonuses for our named executive officers approved by our compensation committee or Board, as a percentage of $297,506 to Dr. Tung, $186,965 to Dr. Cassella and $183,194 to Ms. Stuart for 2017.target bonus, are set forth in the following table.
| Name | 2019 Target Bonus (% of base salary) | 2019 Actual Bonus (% of target bonus) | |||
| Roger D. Tung | 55 | 100 | |||
| Marc A. Becker | 40 | 100 | |||
| James V. Cassella | 40 | 125 | |||
Equity incentives. Although we do not have a formal policy with respect to the grant of equity incentive awards to our executive officers, or any formal equity ownership guidelines applicable to them, we believe that equity grants provide our executivesexecutive officers with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executivesexecutive officers and our stockholders. In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentivizes our executive officers to remain in our employment during the vesting period. Accordingly, we typically grant stock option awards at the start of employment to each executive officer and our other employees, and our compensation committee and Board of Directors periodically review the equity incentive compensation of our named executive officers and other employees, and from time to time, may grant equity incentive awards to them in the form of stock options.them.
For stock options, the option exercise price is equal toequals the fairclosing market valueprice of our common stock on the date of grant. Time vested stock option grants made in connection with the commencement of employment with us typically vest 25% on the first anniversary of the date of grant or, if earlier, the initial employment date (the "vesting commencement date"), and 6.25% vest per quarter thereafter, through the fourth anniversary of the vesting commencementinitial employment date. Other stock option grants generallytypically vest 6.25% per quarter through the fourth anniversary of the vesting commencement date.
date of grant. In January 2017, 2019,
we granted each of Dr. Tung, Dr. Cassella, and Ms. Stuartour named executive officers an option to purchase 200,000, 70,000 and 70,000the number of shares of our common stock respectively. set forth in the following table.
| Name | Number of Shares Subject to Option (#) | ||
| Roger D. Tung | 200,000 | ||
| Marc A. Becker | 110,000 | ||
| James V. Cassella | 75,000 | ||
In July 2017,August 2019, we awarded each of Dr. Tung,also granted Mr. Becker and Dr. Cassella and Ms. Stuartawards of restricted stock units that vest subject to the achievement of certain performance conditionsas set forth in the amountfollowing table, which vest 35% on the first anniversary of 80,000, 30,000,the date of grant and 30,000 stock units, respectively. In addition, Dr. Cassella and Ms. Stuart were each granted 30,000 restricted stock units that are subject to time based vesting. The vesting conditions applicable to such restricted stock units are described in the footnotes toremaining 65% on the "Outstanding Equity Awards at 2017 Fiscal Year End Table" below.second anniversary of the date of grant.
| Name | Number of Restricted Stock Units (#) | ||
| Marc A. Becker | 28,093 | ||
| James V. Cassella | 31,100 | ||
Outstanding Equity Awards at 20172019 Fiscal Year End Table
The following table sets forth information regarding outstanding stock optionsequity awards held by our named executive officers as of December 31, 2017.2019.
| Options Awards | Stock Awards | ||||||||||||||||||
| Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of units of stock that have not vested (#) | Market value of units of stock that have not vested ($) (9) | Equity incentive plan awards: Number of unearned units that have not vested (#) | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) | |||||||||||
| Roger D. Tung, Ph.D. | 27,757 | — | (1) | 4.58 | 12/19/2018 | ||||||||||||||
| 38,052 | — | (2) | 4.41 | 12/10/2019 | |||||||||||||||
| 29,202 | — | (3) | 3.79 | 12/14/2020 | |||||||||||||||
| 39,822 | — | (4) | 3.50 | 12/15/2021 | |||||||||||||||
| 177,888 | 25,412 | (5) | 8.40 | 6/10/2024 | |||||||||||||||
| 74,375 | 95,625 | (6) | 16.85 | 1/7/2026 | |||||||||||||||
| 37,500 | 162,500 | (7) | 10.97 | 1/4/2027 | |||||||||||||||
| 40,000 | (10) | 1,034,800 | 40,000 | (11) | 1,034,800 | ||||||||||||||
| James V. Cassella, Ph.D. | 96,250 | 43,750 | (8) | 14.46 | 3/5/2025 | ||||||||||||||
| 21,875 | 28,125 | (6) | 16.85 | 1/7/2026 | |||||||||||||||
| 13,125 | 56,875 | (7) | 10.97 | 1/4/2027 | |||||||||||||||
| 45,000 | (12) | 1,164,150 | 15,000 | (13) | 388,050 | ||||||||||||||
| Nancy Stuart | 48,882 | — | (1) | 4.58 | 12/19/2018 | ||||||||||||||
| 34,512 | — | (2) | 4.41 | 12/10/2019 | |||||||||||||||
| 21,238 | — | (3) | 3.79 | 12/14/2020 | |||||||||||||||
| 22,122 | — | (4) | 3.50 | 12/15/2021 | |||||||||||||||
| 87,500 | 12,500 | (5) | 8.40 | 06/10/2024 | |||||||||||||||
| 35,000 | 45,000 | (6) | 16.85 | 01/07/2026 | |||||||||||||||
| 13,125 | 56,875 | (7) | 10.97 | 01/04/2027 | |||||||||||||||
| 45,000 | (12) | 1,164,150 | 15,000 | (13) | 388,050 | ||||||||||||||
| Options awards | Stock awards | ||||||||||
| Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) (1) | |||||
| Roger D. Tung | 14,601 | — | 3.79 | 12/14/2020 | |||||||
| 39,822 | — | 3.50 | 12/15/2021 | ||||||||
| 203,300 | — | 8.40 | 6/10/2024 | ||||||||
| 159,375 | 10,625 | (2) | 16.85 | 1/7/2026 | |||||||
| 137,500 | 62,500 | (3) | 10.97 | 1/4/2027 | |||||||
| 87,500 | 112,500 | (4) | 27.59 | 1/4/2028 | |||||||
| 37,500 | 162,500 | (5) | 13.93 | 1/4/2029 | |||||||
| Marc A. Becker | 43,750 | 56,250 | (4) | 27.59 | 1/4/2028 | ||||||
| 20,625 | 89,375 | (5) | 13.93 | 1/4/2029 | |||||||
| 28,093 | (6) | 259,298 | |||||||||
| James V. Cassella | 140,000 | — | 14.46 | 3/5/2025 | |||||||
| 46,875 | 3,125 | (2) | 16.85 | 1/7/2026 | |||||||
| 48,125 | 21,875 | (3) | 10.97 | 1/4/2027 | |||||||
| 21,656 | 27,844 | (4) | 27.59 | 1/4/2028 | |||||||
| 14,063 | 60,937 | (5) | 13.93 | 1/4/2029 | |||||||
| 31,100 | (6) | 287,053 | |||||||||
| (1) | |
| (2) | This |
| This option | |
| This option | |
| Consists of restricted stock units, | |
Employment Agreements Severance and Change in Control Arrangements
We have entered into employment agreements with each of our named executive officers. The employment agreements confirm the named executive officers’ titles, compensation arrangements and eligibility for benefits made available to employees generally and also provide for certain benefits upon a termination of employment under specified conditions. Each named executive officer’s employment is at will.
Under the terms of the employment agreements we have entered into with each of theour named executive officers, if anthe executive’s employment is terminated by us other than for "cause"“cause” and other than as a result of death or disability or by such executive officer for "good reason",“good reason,” each as defined in such employment agreement, in each case not within the "change“change of control period",period,” as defined below, and subject to the executive’s execution of an effective general release of potential claims against us, each named executive officer will be entitled to (1) an amount equal to his or her then-current monthly base salaryto:
| • | An amount equal to 12 months (or 15 months in the case of Dr. Tung) of the named executive officer’s base salary, which will be paid in the form of salary continuation; and | ||
| • | Continued Concert-paid medical and dental benefits to the extent that the named executive officer was receiving them at the time of termination until the earlier of 12 months (or 15 months in the case of Dr. Tung) following termination and the date the named executive officer’s COBRA continuation coverage expires, subject to certain legal restrictions. | ||
Under the terms of the employment agreements we have entered into with each of theour named executive officers, if the executive’s employment is terminated by us or ourany successor other than for cause or by such executive officer for good reason, in each case within one year following a "change“change of control",control,” as defined in such employment agreement (the "change(such one-year period, the “change of control period"period”), and subject to the executive’s execution of an effective general release of potential claims against us, in lieu of the severance benefits described above, each named executive officer will be entitled to:
| • | An amount equal to 12 months (or 18 months in the case of Dr. Tung) of the named executive officer’s base salary, which will be paid as a lump sum if the change of control constitutes a change | ||
| • | An amount equal | ||
| • | Continued | ||
In addition, if a change of control occurs and within one year following such change of control we or ourany successor terminate the executive’snamed executive officer’s employment other than for cause, or the executive’snamed executive officer’s employment ends due to the executive'snamed executive officer’s death or disability, or the named executive officer terminates his or her employment for good reason, then all stock options held by the named executive officer will immediately vest in full.
If the payments or benefits payable to eachany named executive officer in connection with a change of control would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code, then those payments or benefits will be reduced to the extent necessary to avoid the imposition of such excise tax, but only if such reduction would result in a higher net after-tax benefit to the named executive officer.
| Name | Cash Severance ($) (1) | Bonus ($) (2) | COBRA Continuation ($) (3) | Value of Accelerated Vesting of Stock Options ($) (4) | Total ($) | ||||||||||
| Roger D. Tung, Ph.D. | |||||||||||||||
| Qualifying termination not in connection with a change of control | 646,753 | — | 36,223 | — | 682,976 | ||||||||||
| Qualifying termination in connection with a change of control | 776,103 | 388,052 | 43,468 | 3,727,735 | 4,935,358 | ||||||||||
| James V. Cassella, Ph.D. | |||||||||||||||
| Qualifying termination not in connection with a change of control | 406,445 | — | 29,202 | — | 435,647 | ||||||||||
| Qualifying termination in connection with a change of control | 406,445 | 162,578 | 29,202 | 1,600,313 | 2,198,538 | ||||||||||
| Nancy Stuart | |||||||||||||||
| Qualifying termination not in connection with a change of control | 398,247 | — | 27,163 | — | 425,410 | ||||||||||
| Qualifying termination in connection with a change of control | 398,247 | 159,299 | 27,163 | 1,471,713 | 2,056,422 | ||||||||||
Other agreementsAgreements
We have also entered into employee confidentiality, non-competition and proprietary information agreements with each of our named executive officers. Under the employee confidentiality, non-competition and proprietary information agreements, each named executive officer has agreed (1) not to compete with us during his or her employment and for a period of one year after the termination of his or her employment, (2) not to solicit our employees during his or her employment and for a period of
one year after the termination of his or her employment, (3) to protect our confidential and proprietary information and (4) to assign to us related intellectual property developed during the course of his or her employment.
401(k) retirement planRetirement Plan
We maintain a 401(k) retirement plan that is intended to be a tax-qualified defined contribution plan under Section 401(k) of the Internal Revenue Code. In general, all of our employees are eligible to participate, beginning on the first day of the month following commencement of their employment. The 401(k) plan includes a salary deferral arrangement pursuant to which participants may elect to reduce their current compensation by up to the statutorily prescribed limit, equal to $18,000$19,000 in 2017,2019, and have the amount of the reduction contributed to the 401(k) plan. Participants over the age of 50 are entitled to an additional catch-up contribution up to the statutorily prescribed limit, equal to $6,000 in 2017.2019. Currently, we match 50% of employee contributions up to 6% of the employee’s salary, subject to the statutorily prescribed limit, equal to $8,100$8,400 in 2017.2019. The match immediately vests in full.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information about the securities authorized for issuance under our equity compensation plans as of December 31, 2017.
2019.
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | 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)) | ||||||||||||||||
| (a) | (b) | (c) | (a) | (b) | (c) | |||||||||||||||||
| Equity compensation plans approved by security holders | 2,953,961 | (1) | 8.10 | 1,701,451 | (2) | 4,506,238 | (1) | $ | 15.01 | 1,265,774 | (2) | |||||||||||
| Equity compensation plans not approved by security holders | — | — | — | — | — | — | ||||||||||||||||
| Total | 2,953,961 | 8.10 | 1,701,451 | 4,506,238 | $ | 15.01 | 1,265,774 | |||||||||||||||
| (1) | Consists of stock options and restricted stock units outstanding as of December 31, |
| (2) | Consists of shares of common stock authorized under the 2014 Plan that remained available for grant under future awards as of December 31, Board. |
STOCK OWNERSHIP AND REPORTING
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, to the extent known by us or ascertainable from public filings, with respect to the beneficial ownership of our common stock as of JanuaryMarch 31, 20182020 by:
| • | each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our | |
| • | each of our named executive officers; | |
| • | ||
| • | ||
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include shares of common stock issuable upon the exercise of stock options that are immediately exercisable or exercisable within 60 days after JanuaryMarch 31, 2018.2020 and restricted stock units that are scheduled to vest within 60 days after March 31, 2020. Except as otherwise indicated, to our knowledge, all of the shares reflected in the table are shares of common stock and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to community property laws, where applicable. The information is not necessarily indicative of beneficial ownership for any other purpose.
The percentage ownership calculations for beneficial ownership are based on 23,226,70229,651,595 shares of common stock outstanding as of JanuaryMarch 31, 2018.2020. Except as otherwise indicated in the table below, addressesthe address of namedeach beneficial owners are in care ofis c/o Concert Pharmaceuticals, Inc., 9965 Hayden Avenue, Suite 500,3000N, Lexington, MassachusettsMA 02421.
In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding any shares of common stock subject to options held by that person that are currently exercisable or are exercisable within 60 days after JanuaryMarch 31, 2018. We2020 and restricted stock units held by that person that are scheduled to vest within 60 days after March 31, 2020. However, we did not deem these shares outstanding however, for the purpose of computing the percentage ownership of any other person.
| Name of beneficial owner | Number of shares beneficially owned | Percentage of shares beneficially owned | ||||
| 5% Stockholders | ||||||
Entities affiliated with BVF, Inc.(1) | 1,969,789 | 8.5 | % | |||
Entities affiliated with BlackRock Inc.(2) | 1,786,223 | 7.7 | % | |||
Ingalls & Snyder LLC (3) | 1,332,662 | 5.7 | % | |||
Entities affiliated with GlaxoSmithKline (4) | 1,179,941 | 5.1 | % | |||
| Executive Officers and Directors | ||||||
Roger D. Tung, Ph.D.(5) | 1,151,061 | 5.0 | % | |||
James V. Cassella, Ph.D.(6) | 147,500 | * | ||||
Nancy Stuart (7) | 309,916 | 1.3 | % | |||
Richard H. Aldrich (8) | 358,826 | 1.5 | % | |||
Thomas G. Auchincloss (9) | 54,500 | * | ||||
Ronald W. Barrett, Ph.D.(10) | 27,500 | * | ||||
Meghan FitzGerald, Ph.D. (11) | 24,167 | * | ||||
Christine van Heek (12) | 22,083 | * | ||||
Peter Barton Hutt, LL.M (13) | 46,080 | * | ||||
Wilfred E. Jaeger, M.D.(14) | 27,500 | * | ||||
Wendell Wierenga, Ph.D.(15) | 67,677 | * | ||||
All current executive officers and directors as a group (13 persons) (16) | 2,294,185 | 9.4 | % | |||
| Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | |||
| 5% Stockholders | |||||
Entities affiliated with Perceptive Advisors LLC (1) | 3,950,641 | 12.6 | % | ||
Bank of America Corporation (2) | 1,811,206 | 6.1 | % | ||
Moshe Arkin (3) | 1,572,394 | 5.3 | % | ||
| Named Executive Officers and Directors | |||||
Roger D. Tung (4) | 1,559,291 | 5.1 | % | ||
Marc A. Becker (5) | 93,277 | * | |||
James V. Cassella (6) | 321,974 | 1.1 | % | ||
Richard H. Aldrich (7) | 434,766 | 1.5 | % | ||
Thomas G. Auchincloss, Jr. (8) | 79,000 | * | |||
Ronald W. Barrett (9) | 47,500 | * | |||
Jesper Høiland (10) | 6,250 | * | |||
Peter Barton Hutt (11) | 62,541 | * | |||
Wilfred E. Jaeger (12) | 47,500 | * | |||
Christine van Heek (13) | 62,500 | * | |||
All executive officers and directors as a group (12 persons) (14) | 3,165,884 | 10.1 | % | ||
| * | Represents beneficial ownership of less than 1% of our outstanding |
| (1) | Consists of (i) 2,150,641 shares of common stock and (ii) 1,800,000 shares of common stock underlying a warrant that is exercisable as of March 31, 2020. Based on information set forth in a Schedule New York, NY 10003. |
| (2) | Based on information set forth in a Schedule 13G filed with the |
| (3) | |
Based on information set forth in a Schedule 13G filed with the | |
| (4) | Consists of |
| (5) | Consists of 93,277 shares of common stock underlying options that are exercisable as of March 31, |
| (6) | Consists of |
| (7) | |
| (8) | Consists of (i) 6,500 shares of common stock |
| (9) | |
| (10) | Consists of 6,250 shares of common stock underlying options that are exercisable as of March 31, 2020 or will become exercisable within 60 days after such date. |
| (11) | Consists of (i) 4,424 shares of common stock and (ii) 58,117 shares of common stock underlying options that are exercisable as of March 31, 2020 or will become exercisable within 60 days after such date. |
| (12) | Consists of 47,500 shares of common stock underlying options that are exercisable as of March 31, 2020 or will become exercisable within 60 days after such date. |
| (13) | Consists of (i) 10,000 shares of common stock and (ii) 52,500 shares of common stock |
| Consists of | |
Delinquent Section 16(a) of the Exchange Act requires our directors, executive officers, and persons holding more than 10% of the Company’s common stock to report their initial ownership of the common stock and other equity securities and any changes in that ownership in reports that must be filed with the SEC. The SEC has designated specific deadlines for these reports, and we must identify in this proxy statement those persons who did not file these reports when due.Reports
Based solely on a review of reports furnished to us orand written representations from reportingthe persons required to file reports pursuant to Section 16(a) of the Exchange Act, we believe allthat, during the year ended December 31, 2019, our directors, executive officers and holders of more than 10% owners timely filedof our common stock complied with all reports regarding transactions in the Company’s securities required to be filed for 2017 by Section 16(a) under the Exchange Act.filing requirements applicable to them, except that a Form 4 to report a purchase of our common stock by Christine van Heek on August 2, 2019 was not filed until October 10, 2019.
PROPOSAL NO. 2—2 – NON-BINDING, ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are providing our stockholders the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as “say-on-pay,” is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Exchange Act. Section 14A of the Exchange Act also requires that stockholders have the opportunity to cast a non-binding, advisory vote with respect to whether future executive compensation advisory votes will be held every one, two or three years, which is commonly referred to as “say-on-frequency” and is the subject of Proposal No. 3.
Our executive compensation program is designed to attract, motivate and retain our named executive officers, who are critical to our success. Under this program, our named executive officers are rewarded for the achievement of our short- and long-term financial and strategic goals and for driving corporate financial performance and stability. The program contains elements of cash and equity-based compensation and is designed to align the interests of our named executive officers with those of our stockholders. We believe that our compensation program strikes an appropriate balance between the implementation of responsible, measured compensation practices and the effective provision of incentives for our named executive officers to exert their best efforts for our success.
The “Executive Compensation” section of this proxy statement describes our executive compensation program and the decisions made by our compensation committee and our Board with respect to the year ended December 31, 2019. Our executive compensation program embodies a pay-for-performance philosophy that supports our business strategy and aligns the interests of our named executive officers with our stockholders. Our Board believes that this link between compensation and the achievement of our short- and long-term business objectives has helped drive our performance over time. At the same time, we believe that our program does not encourage excessive risk-taking by management. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the policies and practices described in this proxy statement.
Our Board is asking stockholders to approve a non-binding, advisory vote on the following resolution:
RESOLVED, that the compensation paid to Concert’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, the compensation tables and any related material disclosed in this proxy statement, is hereby approved on a non-binding, advisory basis.
As an advisory vote, this proposal is not binding. The outcome of this advisory vote does not overrule any decision by us or our Board (or any committee thereof), create or imply any change to the fiduciary duties of us or our Board (or any committee thereof), or create or imply any additional fiduciary duties for us or our Board (or any committee thereof). However, our compensation committee and our Board value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our named executive officers.
Recommendation of our Board
OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL, ON A NON-BINDING, ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
PROPOSAL NO. 3 – NON-BINDING, ADVISORY VOTE ON THE FREQUENCY OF FUTURE NON-BINDING, ADVISORY VOTES ON EXECUTIVE COMPENSATION
We are asking stockholders to cast a non-binding, advisory vote regarding the frequency of future non-binding, advisory votes on executive compensation. Stockholders may vote for a frequency of every one, two or three years, or may abstain.
Our Board believes that an annual executive compensation advisory vote will facilitate more direct stockholder input about executive compensation and is consistent with our policy of reviewing our compensation program annually and with us being accountable to our stockholders on corporate governance and executive compensation matters. This feedback may then be considered by our Board in its annual decision-making process. For these reasons, we believe that an annual vote would be the best governance practice for us at this time.
Our Board values the opinions of our stockholders and will take into consideration the outcome of this vote in deciding on the frequency of future non-binding, advisory votes on executive compensation. However, because this vote is non-binding and advisory, our Board may decide that it is in the best interests of our stockholders and Concert to hold the advisory vote to approve executive compensation more or less frequently than the option selected by a plurality of our stockholders.
Recommendation of our Board
OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE TO HOLD FUTURE NON-BINDING, ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY ONE YEAR.
PROPOSAL NO. 4 – RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
AS THE COMPANY’SOUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE
FISCAL YEAR ENDING DECEMBER 31, 20182020
The audit committee is solely responsible for selecting the Company’sour independent registered public accounting firm for the fiscal year ending December 31, 2018.firm. Stockholder approval is not required to appoint Ernst & Young LLP as our independent registered public accounting firm. However, theour Board believes that submitting the appointment of Ernst & Young LLP to the Stockholdersstockholders for ratification is good corporate governance. If stockholders do not ratify this appointment, the audit committee will reconsider whether to retain Ernst & Young LLP. If the selection of Ernst & Young LLP is ratified, the audit committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time it decides that such a change would be in the best interestinterests of the CompanyConcert and itsour stockholders.
A representative of Ernst & Young LLP is expected to be present at the Annual Meeting and will have an opportunity to make a statement if he or she desires to do so and to respond to appropriate questions from our stockholders.
The following table summarizes the fees Ernst & Young LLP, our independent registered public accounting firm, billed to us for each of the last two fiscal years.
| Fee Category | 2017 | 2016 | 2019 | 2018 | ||||||||||||
Audit Fees (1) | $ | 569,713 | $ | 423,535 | $ | 960,224 | $ | 533,920 | ||||||||
| Audit-Related Fees | — | — | ||||||||||||||
Tax Fees (2) | 48,450 | 37,960 | 22,660 | 22,660 | ||||||||||||
All Other Fees (3) | 2,000 | 2,000 | 4,970 | 5,055 | ||||||||||||
| Total Fees | $ | 620,163 | $ | 463,495 | $ | 987,854 | $ | 561,635 | ||||||||
| (1) | Audit |
| (2) | Tax |
| (3) | All Other Fees |
Pre-approval Policy and Procedures
The audit committee of our Board has adopted policies and procedures for the pre-approval of audit and non-audit services for the purpose of maintaining the independence of our independent auditor. We may not engage our independent auditor to render any audit or non-audit service unless either the service is approved in advance by the audit committee, or the engagement to render the service is entered into pursuant to the audit committee’s pre-approval policies and procedures. Notwithstanding the foregoing, pre-approval is not required with respect to the provision of services, other than audit, review or attest services, by the independent auditor if the aggregate amount of all such services is no more than 5% of the total amount paid by us to the independent auditor during the fiscal year in which the services are provided, such services were not recognized by us at the time of the engagement to be non-audit services and such services are promptly brought to the attention of the audit committee and approved prior to completion of the audit by the audit committee.
From time to time, our audit committee may pre-approve services that are expected to be provided to us by the independent auditor during the following 12 months. At the time such pre-approval is granted, the audit committee must identify the particular pre-approved services in a sufficient level of detail so that our management will not be called upon to make a judgment as to whether a proposed service fits within the pre-approved services and, at each regularly
scheduled meeting of the audit committee following such approval, management or the independent auditor shall report to the audit committee
regarding each service actually provided to us pursuant to such pre-approval.
During our 20172019 and 20162018 fiscal years, no services were provided to us by Ernst & Young LLP or any other accounting firm other than in accordance with the pre-approval policies and procedures described above.
Recommendation of theour Board
OUR BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020.
OTHER MATTERS
Our Board does not know of any other matters to be brought before the Annual Meeting. If any other matters not mentioned in this proxy statement are properly brought before the meeting, the individuals named in this proxy statement intend to use their discretionary voting authority under the proxy to vote the proxy in accordance with their best judgment on those matters.
Householding
Stockholder Proposals
If a stockholder wishes to propose a nomination of persons for election to our Board or present a proposal at an annual meeting but does not wish to have the proposal considered for inclusion in our proxy statement and proxy card, our by-laws establish an advance notice procedure for such nominations and proposals. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of our Board or by a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has delivered timely notice in proper form to our corporate secretary of the stockholder’s intention to bring such business before the meeting.
The required notice must be in writing and received by our corporate secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. However, in the event that the date of the annual meeting is advanced by more than 20 days, or delayed by more than 60 days, from the first anniversary of the preceding year’s annual meeting, a stockholder’s notice must be so received no earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of (A) the 90th day prior to such annual meeting and (B) the tenth day following the day on which notice of the date of such annual meeting was mailed or public disclosure of the date of such annual meeting was made, whichever first occurs. For stockholder proposals to be brought before our 2021 annual meeting of stockholders, the required notice must be received by our corporate secretary at our principal executive offices no earlier than February 11, 2021 and no later than March 13, 2021.
Stockholder proposals should be addressed to Concert Pharmaceuticals, Inc., 65 Hayden Avenue, Suite 3000N, Lexington, MA 02421, Attention: Corporate Secretary.
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