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.
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.
reputation for personal and professional integrity, honesty and adherence to high ethical standards;
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| • | | 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 Concert; |
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| • | | demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company; |
strong finance experience; |
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| • | | strong finance experience; |
commitment to understanding Concert and its industry; |
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| • | | commitment to understand the Company and its industry; |
interest and ability to understand the sometimes conflicting interests of the various constituencies of Concert, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all stockholders;diversity of expertise and experience in substantive matters pertaining to our business relative to our other Board members; |
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| • | | interestdiversity of background and perspective, including with respect to age, gender, race, place of residence and specialized experience; and ability to understand the sometimes conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all stockholders; |
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| • | | diversity of expertise and experience in substantive matters pertaining to our business relative to other board members; |
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| • | | diversity of background and perspective, including with respect to age, gender, race, place of residence and specialized experience; and |
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| • | | 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,2022 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 20172020 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 2017,2020, 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 – 2020 Summary Compensation Table.”
Non-employee director compensation is set by our Board of Directors at the recommendation of our compensation committee. In April 2017, the compensation committee retained Radford, an AON Hewitt company, to assist in assessing our non-employee director compensation program and provide recommendations for changes to the program, if any. The 2017 peer group companies disclosed below under the heading “Narrative to the Summary Compensation Table” was used in the analysis, as well as other market data.
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 chairschair 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. Theor a committee.
For 2020, and continuing for 2021, 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 Directors of which the director is a member are as follows:
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| Member Annual Retainer ($) | | Chair Annual Retainer ($) |
Board of Directors | 40,000 | | | 70,000 | |
Audit Committee | 10,000 | | | 20,000 | |
Compensation Committee | 7,500 | | | 15,000 | |
Nominating and Corporate Governance Committee | 5,000 | | | 10,000 | |
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| | Annual Member Fee ($) | | Chairman Annual Fee ($) |
Board of Directors | | 40,000 |
| | 65,000 |
|
Audit Committee | | 7,500 |
| | 15,000 |
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Compensation Committee | | 5,000 |
| | 10,000 |
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Nominating and Corporate Governance Committee | | 3,000 |
| | 7,000 |
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Non-employee directors may elect to receive all or a portion of their cash retainer for the one-year period following each annual meeting of stockholders in the form of a stock option award. The option will be granted on the date of the first Board meeting held after the annual meeting of stockholders that marks the beginning of the one-year period. The number of shares subject to the option will be calculated using the fair value of a share of our common stock on the date of grant. These options will vest in equal quarterly installments over a one-year period measured from the date of the annual meeting of stockholders that marks the beginning of the one-year period, subject to the director’s continued service as a director, and will vest in full on the date that is one business day prior to the date of our next annual meeting of stockholders (if earlier than the first anniversary of the annual meeting of stockholders that marks the beginning of the one-year period).We also reimburse our non-employee directors for reasonable travel and out-of-pocket expenses incurred in connection with attending our Board of Director and committee meetings.
In addition, underon the date of the first Board meeting held after each annual meeting of stockholders, each non-employee director that has served on the Board for at least six months will receive an equity award. For 2020, each non-employee director received an option to purchase 10,000 shares of our common stock. Starting in 2021, each non-employee director will receive an equity award, comprised of an option to purchase shares of our common stock and restricted stock units, that targets the 50th percentile of equity awards made by our peer group companies to their respective directors on an annual basis based on value and percent of company, as determined by Radford, our independent compensation program,consultant. Half of the award will consist of an option, the number of shares underlying which will be based on the average fair value of our common stock over the 30-day period ending on the March 31 preceding the date of grant. The other half of the award will consist of a number of restricted stock units equal to half of the number of shares underlying the option. These options will vest 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. These restricted stock units will vest on the one-year anniversary of the date of grant, subject to the director’s continued service as a director. These options and restricted stock units will also vest in full on the earlier of (i) the date that is one business day prior to the date of our next annual meeting of stockholders (if earlier than the first anniversary of the date of grant) and (ii) a change in control of Concert.
In addition, each new non-employee director elected to ourthe Board will receive an equity award, comprised of Directors receives an option to purchase 25,000 shares of our common stock. Eachstock and restricted stock units, that targets two times the 50th percentile of theseequity awards made by our peer group companies to their respective directors on an annual basis based on value and percent of company, as determined by Radford. Half of the award will consist of an option, the number of shares underlying which will be based on
the average fair value of our common stock over the 30-day period ending on the day before the director was elected to the Board. The other half of the award will consist of a number of restricted stock units equal to half of the number of shares underlying the option. These options will vest 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, anddirector. These restricted stock units will become vested and exercisable in full upon a change in control of our Company. Further, on the date of the first board 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 vest in equal quarterlyannual installments over a one-yearthree-year period measured from the date of grant, subject to the director’s continued service as a director,director. These options and restricted stock units will become vested and exercisablealso vest in full upon a change in control of our Company. Concert.
The exercise price of each option isall options granted to non-employee directors will equal to the fairclosing market value of a shareprice of our common stock on the date of grant.
This program is intended to provide a total compensation package that enables us to attractWe also reimburse our non-employee directors for reasonable travel and retain qualifiedout-of-pocket expenses incurred in connection with attending Board and experienced individuals to serve as our directors and to align our directors’ interests with those of our stockholders.
In accordance with our director compensation program, in June 2017 we granted options to purchase 10,000 shares of our common stock to each non-employee serving on the Board of Directors.
committee meetings.
The following table sets forth information regarding compensation earned by or awarded to our non-employee directors during 2017.2020.
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Name | Fees earned or paid in cash ($) | | Option awards ($) (1) | | Total ($) |
Richard H. Aldrich | 80,000 | (2) | | 56,819 | | | 136,819 | |
Thomas G. Auchincloss, Jr. | 60,000 | | | 56,819 | | | 116,819 | |
Ronald W. Barrett | 55,000 | | | 56,819 | | | 111,819 | |
Jesper Høiland | 47,500 | | | 56,819 | | | 104,319 | |
Peter Barton Hutt | 52,072 | | | 56,819 | | | 108,891 | |
Wilfred E. Jaeger | 50,448 | | | 56,819 | | | 107,267 | |
Christine van Heek | 50,000 | (3) | | 56,819 | | | 106,819 | |
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Name | | Fees earned or paid in cash ($) | | Option awards ($)(1) | | Total ($) |
Richard H. Aldrich | | 77,000 | | 90,720 | | 167,720 |
Thomas G. Auchincloss, Jr. | | 52,720 | | 90,720 | | 143,440 |
Ronald W. Barrett, Ph.D. | | 47,720 | | 90,720 | | 138,440 |
Meghan FitzGerald, Ph.D. | | 42,720 | | 90,720 | | 133,440 |
Christine van Heek | | 45,220 | | 90,720 | | 135,940 |
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 |
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(1) | The amounts included in the “Option awards” column reflect the aggregate grant date fair value of optionsoption awards granted during 20172020, calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. Such aggregate grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. The amounts reported in this column reflect the accounting cost for these stock options,option awards and do not correspond to the actual economic value that may be received by the director upon exercise of the options. Assumptions used in the calculation of these amounts are included in Note 8 to the consolidated financial statements appearing elsewhereincluded in thisour 2020 Annual Report on Form 10-K. As of December 31, 2017. As2020, the aggregate number of December 31, 2017, the non-employee membersshares of our Board of Directors held the followingcommon stock subject to each non-employee director’s outstanding equity awards:option awards was as follows: Mr. Aldrich, 79,200; Mr. Auchincloss, 85,000; Dr. Barrett, 60,000; Mr. Høiland, 35,000; Mr. Hutt, 67,078; Dr. Jaeger, 60,000; and Ms. van Heek, 69,144. |
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| • | (2) | Mr. Aldrich heldelected to receive all of his cash retainer for the period from our 2020 annual meeting of stockholders to our 2021 annual meeting of stockholders in the form of a stock optionsoption award. As such, Mr. Aldrich was granted an option to purchase 51,23613,260 shares of our common stock on June 11, 2020 based on the fair value of our common stock on such date. The amount included in the aggregate,“Fees earned or paid in cash” column for Mr. Aldrich includes the fees that he would have otherwise received in cash in 2020 had he not elected to receive such fees in the form of which 46,236 shares were vested, with the remaining shares scheduled to vest through and includingan option that was granted on June 15, 2018;11, 2020. |
| • | | Mr. Auchincloss held stock options to purchase 55,000 shares of common stock in the aggregate, of which 50,000 shares were vested, with the remaining shares scheduled to vest through and including June 15, 2018; |
| • | | Dr. Barrett held stock options to purchase 30,000 shares of common stock in the aggregate, of which 25,000 shares were vested, with the remaining shares scheduled to vest through and including June 15, 2018; |
| • | | Dr. FitzGerald held stock options to purchase 35,000 shares of common stock in the aggregate, of which 19,583 shares were vested, with the remaining shares scheduled to vest through and including March 22, 2019; |
| • | (3) | Ms. van Heek held stock optionselected to purchase 35,000 sharesreceive 50% of common stockher cash retainer for the period from our 2020 annual meeting of stockholders to our 2021 annual meeting of stockholders in the aggregate,form of which 17,500 shares were vested, with the remaining shares scheduled to vest through and including June 9, 2019; |
| • | | Mr. Hutt held stock options to purchase 44,156 shares of common stock in the aggregate, of which 39,156 shares were vested, with the remaining shares scheduled to vest through and including June 15, 2018; |
| • | | Dr. Jaeger held a stock option to purchase 30,000 shares of common stock, of which 25,000 shares were vested, with the remaining shares scheduled to vest through and including June 15, 2018; |
| • | | Dr. Wierenga held a stockaward. As such, Ms. van Heek was granted an option to purchase 58,5384,144 shares of our common stock on June 11, 2020 based on the fair value of which 53,538 shares were vested, withour common stock on such date. The amount included in the remaining shares scheduled“Fees earned or paid in cash” column for Ms. van Heek includes the fees that she would have otherwise received in cash in 2020 had she not elected to vest through and includingreceive such fees in the form of an option that was granted on June 15, 2018.11, 2020. |
Audit Committee Interlocks and Insider Participation
During 2017, the members of our compensation committee were Dr. Barrett, Mr. Aldrich and Dr. FitzGerald. None of our executive officers serves, or in the past has served, as a member of the Board or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of our Board or our compensation committee. None of the members of our compensation committee is an officer or employee of the Company, nor have they ever been an officer or employee of the Company.
Compensation Committee Report
The compensation committee reviewed and discussed the disclosure included in the section of this proxy statement entitled “Executive Compensation” with management. Based on the review and discussions, the compensation committee recommended to the Board that the section of this proxy statement entitled “Executive Compensation” be included in this proxy statement.
THE COMPENSATION COMMITTEE OF THE BOARD OF CONCERT PHARMACEUTICALS, INC.
Ronald R. Barrett, Ph.D., Chairman
Richard H. Aldrich
Meghan FitzGerald
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF CONCERT PHARMACEUTICALS, INC.
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, 2017.2020. 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, 20172020 that was filed with the SEC.
THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS OF CONCERT
PHARMACEUTICALS, INC.By the audit committee of the board of directors of Concert Pharmaceuticals, Inc.
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.
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Name | | Age | | Position(s) |
Executive Officers | | | | |
Roger D. Tung, Ph. D.Ph.D. | | 58 | 61 | President, and Chief Executive Officer and Director |
Marc A. Becker | | 46 | 49 | Chief Financial Officer |
James V. Cassella, Ph.D. | | 63 | 66 | Chief Development Officer |
LynetteJeffrey A. HerschaMunsie | 43 | 46 | | General CounselChief Legal Officer and Secretary |
Nancy Stuart | | 59 | 63 | Chief Operating Officer |
Executive Officers
The biography of Dr. Tung can be found under “Proposal“Proposal No. 1:1 – Election of Three Class I Directors -– Nominees for Election to theour Board -– For a Three-Year Term Expiring at the 20182024 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.
Lynette Herscha Jeffrey A. Munsiehas served as our General CounselChief Legal Officer and Corporate Secretary since June 1, 2017. Previously, Ms. Herscha served as our Vice President and Associate General Counsel and Assistant Secretary since July 2014.September 2019. Prior to joining Concert, Ms. Herscha held senior legal positionsMr. Munsie served as General Counsel, Head of Corporate Operations and Secretary at MomentaMerrimack Pharmaceuticals, Inc., a biotechnologybiopharmaceutical company, until July 2019. Mr. Munsie joined Merrimack in February 2011 and Phase Forward Incorporated, a technology company. Prior to that, Ms. Herscha workedbecame Secretary in August 2011, General Counsel in January 2013 and Head of Corporate Operations in March 2017. Previously, Mr. Munsie was Counsel in the corporate department at Wilmer Cutler Pickering Hale and Dorr LLP, a law offices of Fulbright & Jaworksi. Ms. Herscha earned her Juris Doctorfirm, where he practiced from 2002 to January 2011. Mr. Munsie received an A.B from Dartmouth College and B.A. in Englisha J.D. from Boston University.Harvard Law School.
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
20172020 Summary Compensation Table
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, 20172020 and our two most highly-compensated executive officers (other than our chief executive officer) who were serving as executive officers as of December 31, 20172020 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.”
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Name and principal position | | Year | | Salary ($) | | Bonus ($) | | Option awards ($) (1) | | Stock awards ($) (2) | | Non-equity incentive plan compensation ($) (3) | | All other compensation ($) (4) | | Total ($) |
Roger D. Tung | | 2020 | | 581,967 | | — | | 1,011,657 | | 1,098,957 | | 320,082 | | 12,114 | | 3,024,777 | |
President and Chief Executive Officer | | 2019 | | 562,287 | | — | | 1,889,500 | | — | | 309,258 | | 11,304 | | 2,772,349 | |
James V. Cassella | | 2020 | | 450,633 | | — | | 283,144 | | 306,708 | | 225,317 | | 15,408 | | 1,281,210 | |
Chief Development Officer | | 2019 | | 435,394 | | — | | 708,563 | | 319,397 | | 217,697 | | 13,988 | | 1,695,039 | |
Nancy Stuart (5) | | 2020 | | 444,530 | | — | | 455,212 | | 493,096 | | 177,812 | | 12,114 | | 1,582,764 | |
Chief Operating Officer | | | | | | | | | | | | | | | | |
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Name | | Year | | Salary ($) | | 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 |
|
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| (1) | The amounts included in the “Option awards” column reflect the aggregate grant date fair value of option awards granted induring the years indicated, calculated in accordance with FASB ASC Topic 718. Such aggregate grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. The amounts reported in this column reflect the accounting cost for these stock options awards and do not correspond to the actual economic value that may be received by the named executive officer upon exercise of the options. Assumptions used in the calculation of these amounts are included in Note 8 to the consolidated financial statements included in theour 2020 Annual Report on Form 10-K, filed with the SEC on March 1, 2018.10-K. |
| (2) | The amount reported reflects the aggregate grant date fair value of performance stock units issued to Dr. Tung during fiscal year 2017, calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of this amount are included in Note 8 to the consolidated financial statementsamounts included in the Annual Report on Form 10-K, filed with the SEC on March 1, 2018. |
(3) | The amounts reported“Stock awards” column reflect the aggregate grant date fair value of restricted stock units and performance stock units issued to Dr. Cassella and Ms. Stuartgranted during fiscal year 2017,the years indicated, calculated in accordance with FASB ASC Topic 718. Such aggregate grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. The amounts reported in this column reflect the accounting cost for these stock awards and do not correspond to the actual economic value that may be received by the named executive officer upon vesting of the stock awards. Assumptions used in the calculation of these amounts are included in Note 8 to the consolidated financial statements included in theour 2020 Annual Report on Form 10-K, filed with the SEC on March 1, 2018.10-K. |
(4) | Consists of(3) | The amounts included in the “Non-equity incentive plan compensation” column represent cash bonuses earned under our 2017 and 2016 executive bonus programs with respect tofor the years indicated. See the “Narrative to Summary Compensation Table” below for a description of the 2017 executive bonus program. |
(5) | Amounts disclosed under(4) | The amounts included in the “All other compensation” column “All Other Compensation” for 2017 represent Company matching contributions to 401(k) accounts and Concert-paid life insurance premiums. |
| (5) | Ms. Stuart was not a named executive officer for the fiscal year ended December 31, 2019, but is a named executive officer for the fiscal year ended December 31, 2020. |
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 2017,2020, 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 compensation committee in conducting a competitive compensation assessment for our executive officers for the fiscal year ended December 31, 2017.2020. 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.
Using information provided by Radford, the compensation committee established a peer group of publicly traded companies in the biopharmaceutical and biotechnology industries that is selected based on a balance of the following criteria:
companies whose number of employees, stage of development and market capitalization are similar, though not necessarily identical, to ours;
companies with similar executive positions to ours;
companies against which we believe we compete for executive talent; and
public companies based in the United States whose compensation and financial data are available in proxy statements or through widely available compensation surveys.
Based on these criteria, our peer group for 2017 was comprised of the following 21 publicly traded companies:
|
| | | | |
Achillion Pharmaceuticals, Inc. | | Genocea Biosciences, Inc. | | Paratek Pharmaceuticals, Inc. |
| | |
Agenus, Inc. | | Geron Corporation | | Sangamo Biosciences, Inc. |
| | |
Akebia Therapeutics, Inc. | | GlycoMimetics, Inc. | | Selecta Biosciences, Inc. |
| | |
Ardelyx, Inc. | | Ignyta, Inc. | | Trevena, Inc. |
| | |
Cytokinetics, Inc. | | Inovio Pharmaceuticals, Inc. | | Xencor, Inc. |
| | |
Edge Therapeutics, Inc. | | Karyopharm Therapeutics, Inc. | | Ziopharm Oncology, Inc. |
| | | | |
Epyzime, Inc. | | Mirati Therapeutics, Inc. | | Zogenix, Inc. |
Base salary. In 2017, the base salaries for Dr. Tung, Dr. Cassella, and Ms. Stuart were $517,402, $406,445 and $398,247, respectively. We use base salaries to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers. None of our named executive officers is currently party to an employment agreement or other agreement or arrangement that provides for automatic or scheduled increases in base salary. In December 2020, our compensation committee, and our Board with respect to our chief executive officer, reviewed the base salaries for our named executive officers and approved a 3% increase for 2021 for each named executive officer based on their overall performance in 2020 and their increased level of experience, and to ensure that their salaries remained competitive with those of similarly situated executives in our peer group. The 2020 and 2021 base salaries for our named executive officers are set forth in the following table.
| | | | | | | | | | | | | | |
Name | | 2020 Base Salary ($) |
| 2021 Base Salary ($) |
Roger D. Tung | | 581,967 |
| 599,426 |
James V. Cassella | | 450,633 |
| 464,152 |
Nancy Stuart | | 444,530 |
| 457,866 |
Annual bonus. Pursuant to our executive bonus program for 2017,2020, 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. OurFor 2020, our corporate goals are typicallywere generally focused on the achievement of specific clinical, research and financial goals, including initiating and conducting clinical regulatory, financialtrials, expanding our intellectual property portfolio, conducting research on development candidates and strategic goals.raising additional capital. We considerconsidered 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, the2021, our compensation committee and Board conducted a review to determine and approve the attainment of such corporate goals and to assess the individual performance of each of our named executive officers. Based uponon such review and assessment and the recommendation of our compensation committee, our Board determined that we had met our corporate goals at the 100% level, that Dr. Tung’s and Ms. Stuart’s individual performance had been at target levels and that Dr. Cassella’s individual performance had exceeded target levels due to his success in progressing our clinical trials during the coronavirus (COVID-19) pandemic. As such, our Board approved cash incentive bonus payments for each of our named executive officers for 2020, which are set forth in the following table together with the target bonus amounts (as a percentage of base salary) and the actual bonuses (as a percentage of $297,506 to Dr. Tung, $186,965 to Dr. Cassella and $183,194 to Ms. Stuart for 2017.target bonus).
| | | | | | | | | | | | | | | | | | | | |
Name | | 2020 Target Bonus (% of base salary) | | 2020 Actual Bonus (% of target bonus) |
| 2020 Actual Bonus ($) |
Roger D. Tung | | 55 | | 100 |
| 320,082 |
James V. Cassella | | 40 | | 125 |
| 225,317 |
Nancy Stuart | | 40 | | 100 |
| 177,812 |
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. We typically grant equity awards with a time-based vesting feature. We believe that such awards are inherently performance-based because the value realized by our executive officers, if any, is directly tied to the appreciation of our stock. In addition, we believe that equity grantsawards 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
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 stockStock 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 quarterin equal quarterly installments thereafter through the fourth anniversary of the vesting commencementinitial employment date. Other stock option grants generallytypically vest 6.25% per quarterin equal quarterly installments through the fourth anniversary of the vesting commencement date.date of grant.
Restricted stock units typically vest in equal annual installments through the third anniversary of the date of grant.
In January 2017, weFebruary 2020, our Board 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. In July 2017, we awarded each of Dr. Tung, Dr. Cassella,as set forth in the following table and Ms. Stuart restricted stock units that vest subject to the achievement of certain performance conditionsas set forth in the amount of 80,000, 30,000, 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 to the "Outstanding Equity Awards at 2017 Fiscal Year End Table" below.following table.
| | | | | | | | | | | | | | |
Name | | Number of Shares Subject to Option (#) |
| Number of Restricted Stock Units (#) |
Roger D. Tung | | 151,600 |
| 101,100 |
James V. Cassella | | 42,430 |
| 28,216 |
Nancy Stuart | | 68,215 |
| 45,363 |
Outstanding Equity Awards at 20172020 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, 2017.2020.
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| | | | | | | | | | | | | | | | | | | |
| 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 | | 39,822 | — | | 3.50 | 12/15/2021 | | | | |
| | 203,300 | — | | 8.40 | 6/10/2024 | | | | |
| | 170,000 | — | | 16.85 | 1/7/2026 | | | | |
| | 187,500 | 12,500 | (2) | 10.97 | 1/4/2027 | | | | |
| | 137,500 | 62,500 | (3) | 27.59 | 1/4/2028 | | | | |
| | 87,500 | 112,500 | (4) | 13.93 | 1/4/2029 | | | | |
| | 28,425 | 123,175 | (5) | 10.87 | 2/13/2030 | | | | |
| | | |
| | | | 101,100 | (6) | 1,277,904 |
James V. Cassella | | 140,000 | — | | 14.46 | 3/5/2025 | | | | |
| | 50,000 | — | | 16.85 | 1/7/2026 | | | | |
| | 65,625 | 4,375 | (2) | 10.97 | 1/4/2027 | | | | |
| | 34,031 | 15,469 | (3) | 27.59 | 1/4/2028 | | | | |
| | 32,812 | 42,188 | (4) | 13.93 | 1/4/2029 | | | | |
| | 7,956 | 34,474 | (5) | 10.87 | 2/13/2030 | | | | |
| | | | | | | | 20,215 | (7) | 255,518 |
| | | | | | | | 28,216 | (6) | 356,650 |
Nancy Stuart | | 22,122 | — | | 3.50 | 12/15/2021 | | | | |
| | 100,000 | — | | 8.40 | 6/10/2024 | | | | |
| | 80,000 | — | | 16.85 | 1/7/2026 | | | | |
| | 65,625 | 4,375 | (2) | 10.97 | 1/4/2027 | | | | |
| | 48,125 | 21,875 | (3) | 27.59 | 1/4/2028 | | | | |
| | 32,812 | 42,188 | (4) | 13.93 | 1/4/2029 | | | | |
| | 12,790 | 55,425 | (5) | 10.87 | 2/13/2030 | | | | |
| | | | | | | | 45,363 | (6) | 573,388 |
|
| | | | |
(1) | This stock option was granted under our 2006 Stock Option and Grant Plan and was subject to vesting in equal quarterly installments over four years from the vesting start date and fully vested in accordance with its terms on December 19, 2012. |
(2) | This stock option was granted under our 2006 Stock Option and Grant Plan and was subject to vesting in equal quarterly installments over four years from the vesting start date and fully vested in accordance with its terms on December 10, 2013. |
(3) | This stock option was granted under our 2006 Stock Option and Grant Plan and was subject to vesting in equal quarterly installments over four years from the vesting start date and fully vested in accordance with its terms on December 14, 2014. |
(4) | This stock option was granted under our 2006 Stock Option and Grant Plan and was subject to vesting in equal quarterly installments over four years from the vesting start date and fully vested in accordance with its terms on December 15, 2015. |
(5) | This option was granted under our 2014 Stock Incentive Plan and vested as to 25% of the shares underlying such option on June 10, 2015 and vests as to an additional 6.25% of the shares at the end of each successive quarter thereafter, through and including June 10, 2018. |
(6) | This option was granted under our 2014 Stock Incentive Plan and vests as to 6.25% of the shares underlying such option at the end of each quarter, through and including January 7, 2020. |
(7) | This option was granted under our 2014 Stock Incentive Plan and vests as to 6.25% of the shares underlying such option at the end of each quarter, through and including January 4, 2021. |
(8) | This option was granted under our 2014 Stock Incentive Plan and vested as to 25% of the shares underlying such option on March 5, 2016 and vests as to an additional 6.25% of the shares at the end of each successive quarter thereafter, through and including March 5, 2019. |
(9) | Based on the closinga price of $25.87,$12.64, which was the closing market price on NASDAQ of our common stock on the Nasdaq Global Market on December 29, 2017, the last trading day of 2017.31, 2020. |
(10)(2) | The unvested shares under this option are scheduled to vest in equal quarterly installments through January 4, 2021. |
(3) | The unvested shares under this option are scheduled to vest in equal quarterly installments through January 4, 2022. |
(4) | The unvested shares under this option are scheduled to vest in equal quarterly installments through January 4, 2023. |
(5) | The unvested shares under this option are scheduled to vest in equal quarterly installments through February 14, 2024. |
(6) | These performancerestricted stock units were granted on July 6, 2017, with 50% of the award vesting on March 31, 2018 and the remaining 50% eligibleare scheduled to vest in equal annual installments through February 14, 2023. |
(7) | These restricted stock units are scheduled to vest on March 31, 2019, subject to the achievement of the closing of the Asset Purchase Agreement with Vertex Pharmaceuticals prior to March 31, 2018 (considered achieved and further discussed in detail at Note 14 of the consolidated financial statements in the Annual Report on Form 10-K), provided that Dr. Tung remains employed by the Company through the applicable vesting date. |
(11) | These performance stock units were granted on July 6, 2017, with 50% of the award eligible to vest on March 31, 2018 and the remaining 50% eligible to vest on March 31, 2019, in each case subject to the institution by the Patent Trial and Appeal Board of a Post Grant Review petition filed by the Company against Incyte Corporation prior to March 31, 2018, provided that Dr. Tung remains employed by the Company through the applicable vesting date. |
(12) | Consists of restricted stock units granted on July 6, 2017, which vest in full on March 31, 2019 assuming the executive officer remains employed with the Company through such date, and performance stock units granted on July 6, 2017, which vest in full on March 31, 2018 subject to the achievement of the closing of the Asset Purchase Agreement with Vertex Pharmaceuticals prior to March 31, 2018 (considered achieved and further discussed in detail at Note 14 of the consolidated financial statements in the Annual Report on Form 10-K), provided that the executive officer remains employed by the Company through the vesting date. |
(13) | Consists of performance stock units granted on July 6, 2017, which vest in full on March 31, 2018 subject to the achievement of the institution by the Patent Trial and Appeal Board of a Post Grant Review petition filed by the Company against Incyte Corporation prior to March 31, 2018, provided that the executive officer remains employed by the Company through the vesting date.August 15, 2021. |
Employment Agreements Severance and Change in Control Arrangements
Employment agreements
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.
Payments and benefits provided upon a qualifying termination not in connection with a change of control
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. |
for a period of 12 months, or 15 months in the case of Dr. Tung, and (2) continued Company 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 following termination, or 15 months following termination in the case of Dr. Tung, and the date the named executive officer’s COBRA continuation coverage expires, subject to certain legal restrictions.
Payments and benefits provided upon a qualifying termination in connection with a change of control
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 of control under Section 409A of the Internal Revenue Code and otherwise will be paid in the form of salary continuation;
An amount equal to one times (or 1.5 times in the case of Dr. Tung) the greater of the named executive officer’s current target bonus or the actual bonus paid to the named executive officer for the immediately preceding calendar year; and
|
| | | |
| • | | 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 in control under Section 409A of the Internal Revenue Code. |
Continued Concert-paid medical and dental benefits to the named executive officer to the extent that he or she was receiving them at the time of termination until the earlier of 12 months (or 18 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. |
| | | |
| • | | An amount equal his or her current target bonus (or 1.5 times his target bonus in the case of Dr. Tung). |
|
| | | |
| • | | Continued Company paid medical and dental benefits to the executive to the extent that he or she was receiving them at the time of termination until the earlier of 12 months (or 18 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. |
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.
The following table summarizes the severance payments and benefits our named executive officers would be entitled to receive, assuming a qualifying termination occurred on December 31, 2017.
|
| | | | | | | | | | | | | | | |
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 |
|
|
| |
(1) | For a termination by us other than for cause or due to death or disability or by the executive for good reason, in each case not during the change of control period, this amount represents, in the case of Dr. Tung, 15 months of base salary, and in the case of Ms. Stuart and Dr. Cassella, 12 months of base salary, each at the rate in effect on December 31, 2017.
In the event of a termination by us other than for cause or by the executive for good reason, in each case within 12 months of a change of control, this amount represents, in the case of Dr. Tung, 18 months base salary, and in the case of Ms. Stuart and Dr. Cassella, 12 months of base salary, each at the rate in effect on December 31, 2017.
|
(2) | In the event of a termination by us other than for cause or by the executive for good reason, in each case within 12 months of a change of control, amounts represent in the case of Dr. Tung, 150% of his target bonus for 2017, and in the case of Ms. Stuart and Dr. Cassella, 100% of the applicable executive’s target bonus for 2017. |
(3) | This amount represents the Company-paid health and dental coverage. In the case of Dr. Tung, the amounts represent 15 months payable following a termination by us other than for cause or due to death or disability or by him for good reason, in each case not during the change of control period, and represents 18 months payable following a termination by us other than for cause or by him for good reason, in each case within 12 months of a change of control. With respect to Ms. Stuart and Dr. Cassella, amounts represent 12 months of Company-paid health and dental coverage. |
(4) | In the event of a termination by us other than for cause, termination due to death or disability or a termination by the executive for good reason, in each case within 12 months of a change of control, all unvested stock options held by the executive at such time will immediately vest in full. The values for the accelerated vesting of stock options included in the table above are based on the intrinsic values of such unvested awards on December 31, 2017 (i.e., the difference between the closing price of the Company’s common stock on the NASDAQ Global Market on that date and the applicable exercise price, multiplied by the number of shares for which vesting would have been accelerated). |
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$19,500 in 2017, 2020,
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$6,500 in 2017.2020. 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$8,550 in 2017.2020. 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, 2017.2020.
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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)) | |
| | (a) | | (b) | | (c) | |
Equity compensation plans approved by security holders | | 5,313,903 | (1) | $ | 14.48 | | 1,159,069 | (2) |
Equity compensation plans not approved by security holders | | — | | — | | — | |
Total | | 5,313,903 | | $ | 14.48 | | 1,159,069 | |
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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)) | |
| | (a) | | (b) | | (c) | |
Equity compensation plans approved by security holders | | 2,953,961 |
| (1) | 8.10 |
| | 1,701,451 |
| (2) |
Equity compensation plans not approved by security holders | | — |
| | — |
| | — |
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Total | | 2,953,961 |
| | 8.10 |
| | 1,701,451 |
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(1) | Consists of stock options and restricted stock units outstanding as of December 31, 20172020 under our Amended and Restated 2006 Stock Option and Grant Plan (the “2006 Plan”) and our 2014 Stock Incentive Plan which we refer to as the 2006 Plan and the (the “2014 Plan respectively.”). |
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(2) | Consists of shares of common stock authorized under the 2014 Plan that remained available for grant under future awards as of December 31, 2016.2020. This amount does not include an additional 925,6151,274,487 shares that became available for issuance under the 2014 Plan on January 1, 20182021 in accordance with the terms of the 2014 Plan. The number of shares available under the 2014 Plan is subject to further increase by (i) the number of shares of our common stock subject to outstanding awards under the 2006 Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased and (ii) further annual increases, to be added on January 1 of each year, through 2024, in each case equal to the lowest of (a) 2,000,000 shares of our common stock, (b) 4% of the number of our outstanding shares on January 1 of each such fiscal year and (c) an amount determined by our Board of Directors. Board. |
PRINCIPAL STOCKHOLDERS
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, 20182021 by:each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock;
each of our named executive officers;
each of our directors and director nominees; and |
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| • | each of our directors and our director nominees; |
all of our executive officers and directors as a group. |
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| • | each of our named executive officers; |
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| • | all of our directors, our director nominees and executive officers as a group; and |
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| • | each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock. |
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, 2018.2021 and restricted stock units that are scheduled to vest within 60 days after March 31, 2021. 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 23,226,70232,173,778 shares of common stock outstanding as of JanuaryMarch 31, 2018.2021. 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. We2021 and restricted stock units held by that person that are scheduled to vest within 60 days after March 31, 2021. However, we did not deem these shares outstanding however, for the purposepurposes of computing the percentage ownership of any other person.
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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 | % |
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Executive Officers and Directors | | | | |
Roger D. Tung, Ph.D.(5) | | 1,151,061 |
| | 5.0 | % |
James V. Cassella, Ph.D.(6) | | 147,500 |
| | * |
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Nancy Stuart (7) | | 309,916 |
| | 1.3 | % |
Richard H. Aldrich (8) | | 358,826 |
| | 1.5 | % |
Thomas G. Auchincloss (9) | | 54,500 |
| | * |
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Ronald W. Barrett, Ph.D.(10) | | 27,500 |
| | * |
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Meghan FitzGerald, Ph.D. (11) | | 24,167 |
| | * |
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Christine van Heek (12) | | 22,083 |
| | * |
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Peter Barton Hutt, LL.M (13) | | 46,080 |
| | * |
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Wilfred E. Jaeger, M.D.(14) | | 27,500 |
| | * |
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Wendell Wierenga, Ph.D.(15) | | 67,677 |
| | * |
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All current executive officers and directors as a group (13 persons) (16) | | 2,294,185 |
| | 9.4 | % |
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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 | | 11.6 | % |
Entities affiliated with BlackRock, Inc. (2) | | 2,204,509 | | 6.9 | % |
Entities affiliated with Bank of America Corporation (3) | | 1,878,218 | | 5.8 | % |
Entities affiliated with RA Capital Management, L.P. (4) | | 1,823,520 | | 5.7 | % |
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Named Executive Officers and Directors | | | | |
Roger D. Tung (5) | | 1,767,724 | | 5.3 | % |
James V. Cassella (6) | | 392,780 | | 1.2 | % |
Nancy Stuart (7) | | 517,081 | | 1.6 | % |
Richard H. Aldrich (8) | | 454,711 | | 1.4 | % |
Thomas G. Auchincloss, Jr. (9) | | 89,000 | | * |
Ronald W. Barrett (10) | | 57,500 | | * |
Jesper Høiland (11) | | 22,083 | | * |
Peter Barton Hutt (12) | | 72,541 | | * |
Wilfred E. Jaeger (13) | | 57,500 | | * |
Christine van Heek (14) | | 75,608 | | * |
All executive officers and directors as a group (12 persons) (15) | | 3,738,397 | | 10.8 | % |
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* | Represents beneficial ownership of less than 1% of our outstanding stock.common stock as of March 31, 2021. |
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(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, 2021. Based on information set forth in a Schedule 13G13G/A filed with the Securities and Exchange CommissionSEC on February 14, 2018 by the following entities and individual. Consists of (i) 951,30016, 2021. Perceptive Life Sciences Master Fund, Ltd. (the “Master Fund”) directly holds 2,150,641 shares of common stock beneficially owned by Biotechnology Value Fund, L.P.stock. Perceptive Advisors LLC (“BVF”), (ii) 632,642 shares of common stock beneficially owned by Biotechnology Value Fund II, L.P (“BVF2”Perceptive Advisors”) and (iii) 122,496 shares of common stock beneficially owned by Biotechnology Value Trading Fund OS LP (“Trading Fund OS”). BVF Partners OS Ltd. (“Partners OS”)serves as the general partner of Tradinginvestment manager to the Master Fund OSand may be deemed to beneficially own the 122,496 shares of Common Stock beneficially ownedsecurities directly held by Trading Fund OS. BVF Partners L.P.the Master Fund. Joseph Edelman (“Partners”Mr. Edelman”), as is the general partner of BVF, BVF2, the investment manager of Trading Fund OS, and the solemanaging member of Partners OS,Perceptive Advisors and may be deemed to beneficially own the 1,969,789 shares of Common Stock beneficially owned insecurities directly held by the aggregate by BVF, BVF2, Trading Fund OS, and certain Partners management accounts (the “Partners Management Accounts”), including 263,351 shares of Common Stock held in the Partners Managed Accounts. BVF Inc., as the investment adviser and general partner of Partners, may be deemed to beneficially own the 1,706,438 shares of Common Stock beneficially owned by Partners. Mr. Lampert, as a director and officer of BVF Inc., may be deemed to beneficially own the 1,706,438 shares of Common Stock beneficially owned by BVF Inc. Partners OS disclaims beneficial ownership of the shares of Common Stock beneficially owned by Trading Fund OS. Each of Partners, BVF Inc. and Mr. Lampert disclaims beneficial ownership of the shares of Common Stock beneficially owned by BVF, BVF2, Trading Fund OS, and the Partners Management Accounts.Master Fund. The address for Tradingthe Master Fund, OSPerceptive Advisors and Partners OSMr. Edelman is PO Box 309 Ugland House, Grand Cayman, KY1-1104 Cayman Islands and the address for each of the other entities and for Mr. Lampert is 1 Sansome Street, 30th51 Astor Place, 10th Floor, San Francisco, CA 94104.New York, NY 10003. |
(2) | Based on information set forth in a Schedule 13G filed with the Securities and Exchange CommissionSEC on February 1, 2018 by2, 2021. BlackRock, Inc. Consistsfiled the Schedule 13G on behalf of 1,786,223 shares of common stock beneficially owned byitself and its subsidiaries BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association and BlackRock Investment Management, LLC. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
(3) | Based on information set forth in a Schedule 13G13G/A filed with the Securities and Exchange CommissionSEC on February 9, 2018 by Ingalls & Snyder LLC. Consists8, 2021. Bank of 1,322,662 sharesAmerica Corporation filed the Schedule 13G/A on behalf of common stock beneficiallyitself and its wholly owned by Ingalls & Snyder LLC.subsidiaries Bank of America N.A. and BofA Securities, Inc. The address for Ingalls & Snyder LLCBank of America Corporation is 1325 Avenue of the Americas, New York, NY, 10019.100 N Tryon Street, Charlotte, NC 28255. |
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(4) | Based on information set forth in a Schedule 13G filed with the Securities and Exchange CommissionSEC on February 13, 2018 by GlaxoSmithKline plc. Consists16, 2021. RA Capital Healthcare Fund, L.P. (the “Fund”) directly holds 1,636,300 shares of 1,179,941common stock, and a separately managed account (the “Account”) holds 187,220 shares of common stock. RA Capital Healthcare Fund GP, LLC is the general partner of the Fund. The general partner of RA Capital Management, L.P. (“RA Capital”) is RA Capital Management GP, LLC, of which Peter Kolchinsky (“Dr. Kolchinsky”) and Rajeev Shah (“Mr. Shah”) are the controlling persons. RA Capital serves as investment adviser for the Fund and the Account and may be deemed a beneficial owner, for purposes of Section 13(d) of the Exchange Act, of any shares of common stock held by Glaxo Group Limited, a whollythe Fund and the Account. The Fund has delegated to RA Capital the sole power to vote and the sole power to dispose of all securities held in the Fund’s portfolio, including the reported shares of common stock. Because the Fund has divested voting and investment power over the reported shares of common stock it holds and may not revoke that delegation on less than 61 days’ notice, the Fund disclaims beneficial ownership of the shares of common stock it holds for purposes of Section 13(d) of the Exchange Act. As managers of RA Capital, Dr. Kolchinsky and Mr. Shah may be deemed beneficial owners, for purposes of Section 13(d) of the Exchange Act, of any reported shares of common stock beneficially owned subsidiaryby RA Capital. RA Capital, Dr. Kolchinsky and Mr. Shah disclaim ownership of GlaxoSmithKline plc.the reported shares of common stock other than for the purpose of determining their obligations under Section 13(d) of the Exchange Act, and the filing of the Schedule 13G shall not be deemed an admission that either RA Capital, Dr. Kolchinsky or Mr. Shah is the beneficial owner of the reported shares of common stock for any other purpose. The address of these entitiesfor RA Capital, Dr. Kolchinsky, Mr. Shah and the Fund is 980 Great West Road, Brentford, Middlesex, United Kingdom TW8 9GS.200 Berkeley Street, 18th Floor, Boston MA 02116. |
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(5) | In addition toConsists of (i) 671,878 shares of common stock held directly, includesby Dr. Tung, (ii) 121,873 shares of common stock held by the Roger D. Tung 2011 GRAT, forof which Dr. Tung is the sole trustee, (iii) 12,389 shares of common stock held by the RD Tung Irrevocable Trust, forof which Dr. Tung’s wife is a co-trustee, and(iv) 13,274 shares of common stock held by the Tung Family Investment Trust, forof which Dr. Tung is a co-trustee. Includes 460,427co-trustee, and (v) 948,310 shares of common stock issuable upon the exerciseunderlying options that are exercisable as of optionsMarch 31, 2021 or will become exercisable within 60 days after January 31, 2018.such date. |
(6) | Consists of 147,500(i) 33,339 shares of common stock issuable upon exerciseand (ii) 359,441 shares of common stock underlying options that are exercisable as of March 31, 2021 or will become exercisable within 60 days after January 31, 2018.such date. |
(7) | In addition toConsists of (i) 121,338 shares of common stock and (ii) 395,743 shares of common stock underlying options that are exercisable as of March 31, 2021 or will become exercisable within 60 days after such date. |
(8) | Consists of (i) 336,975 shares of common stock held directly, includes 229,122 shares of common stock issuable upon the exercise of options exercisable within 60 days after January 31, 2018. |
(8) | In addition to shares of common stock held directly, includesby Mr. Aldrich, (ii) 44,351 shares of common stock held by the Little Eagles, LLC, of which the owners of Little Eagles, LLC are the Richard H. Aldrich Irrevocable Trust of 2011 and trusts established for the benefit of the Mr. Aldrich'sAldrich’s minor children.children, and (iii) 73,385 shares of common stock underlying options that are exercisable as of March 31, 2021 or will become exercisable within 60 days after such date. The trustees of the Richard H. Aldrich Irrevocable Trust of 2011 are Mr. Aldrich's spouse, Nichole A. Aldrich,Aldrich’s wife and Mr. Aldrich's brother, Caleb F. Aldrich.Aldrich’s brother. The beneficiaries of the Richard H. Aldrich Irrevocable Trust of 2011 are Mr. Aldrich'sAldrich’s minor children. Mr. Aldrich disclaims beneficial ownership of suchthe shares held by the Richard H. Aldrich Irrevocable Trust of 2011, except to the extent of any pecuniary interest therein. Includes 27,500 |
(9) | Consists of (i) 6,500 shares of common stock issuable upon the exerciseand (ii) 82,500 shares of common stock underlying options that are exercisable as of March 31, 2021 or will become exercisable within 60 days after January 31, 2018.such date. |
(9)(10) | In addition toConsists of 57,500 shares of common stock held directly, includes 52,500 sharesunderlying options that are exercisable as of common stock issuable upon the exercise of optionsMarch 31, 2021 or will become exercisable within 60 days after January 31, 2018. |
(10) | Consists of 27,500 shares of common stock issuable upon the exercise of options exercisable within 60 days after January 31, 2018.such date. |
(11) | Consists of 24,167 shares of common stock issuable upon the exercise of options exercisable within 60 days after January 31, 2018. |
(12) | Consists of 22,083 shares of common stock issuable upon the exerciseunderlying options that are exercisable as of optionsMarch 31, 2021 or will become exercisable within 60 days after January 31, 2018.such date. |
(13)(12) | In addition to shares held directly, includes 41,656Consists of (i) 7,963 shares of common stock issuable upon the exerciseand (ii) 64,578 shares of common stock underlying options that are exercisable as of March 31, 2021 or will become exercisable within 60 days after Januarysuch date. |
(13) | Consists of 57,500 shares of common stock underlying options that are exercisable as of March 31, 2018.2021 or will become exercisable within 60 days after such date. |
(14) | Consists of 27,500(i) 10,000 shares of common stock issuable upon the exerciseand (ii) 65,608 shares of common stock underlying options that are exercisable as of March 31, 2021 or will become exercisable within 60 days after January 31, 2018.such date. |
(15) | In addition to shares held directly, includes 56,038Consists of (i) 1,398,124 shares of common stock issuable upon the exerciseand (ii) 2,340,273 shares of common stock underlying options that are exercisable as of March 31, 2021 or will become exercisable within 60 days after January 31, 2018. |
(16) | Includes 1,173,368 shares of common stock issuable upon the exercise of options exercisable within 60 days after January 31, 2018.such date. |
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Policies and Procedures for Related Person Transactions
Our Board has adopted a written related person transaction policy that sets forth policies and procedures for the review and approval or ratification of related person transactions. This policy covers any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, the amount involved exceeds $120,000, and a related person had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person.
Our related person transaction policy contains exceptions for any transaction or interest that is not considered a related person transaction under SEC rules as in effect from time to time. In addition, the policy provides that an interest arising solely from a related person’s position as an executive officer of another entity that is a participant in a transaction with us will not be subject to the policy if each of the following conditions is met:
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| • | | the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity; |
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| • | | the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction with us and do not receive any special benefits as a result of the transaction; and |
PROPOSAL NO. 2 – NON-BINDING, ADVISORY VOTE ON EXECUTIVE COMPENSATION |
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| • | | the amount involved in the transaction equals less than the greater of $200,000 or 5% of the annual gross revenue of the company receiving payment under the transaction. |
The policy provides that any related person transaction proposedWe are providing our stockholders the opportunity to be entered into by us must be reportedvote to approve, on a non-binding, advisory basis, the compensation of our general counsel and will be reviewed and approved by our audit committeenamed executive officers as disclosed in this proxy statement in accordance with the termsSEC’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 policy, prior to effectiveness or consummation ofExchange Act. Consistent with the transaction whenever practicable. The policy provides that ifpreference expressed by our chief financial officer determines that advance approval of a related person transaction is not practicable under the circumstances,stockholders at our audit committee will review and, in its discretion, may ratify the related person transaction at the next2020 annual meeting of the audit committee. The policy also provides that alternatively,stockholders, we have determined to hold a non-binding, advisory vote on executive compensation annually.
Our executive compensation program is designed to attract, motivate and retain our chief financial officer may present a related person transaction arising in the time period between meetings of the audit committee to the chair of the audit committee, who will review and may approve the related person transaction, subject to ratification by the audit committee at the next meeting of the audit committee.
In addition, the policy provides that any related person transaction previously approved by the audit committee or otherwise already existing that is ongoing in nature will be reviewed by the audit committee annually to ensure that such related person transaction has been conducted in accordance with the previous approval granted by the audit committee, if any, and that all required disclosures regarding the related person transaction are made.
The policy provides that transactions involving compensation ofnamed executive officers, will be reviewedwho are critical to our success. Under this program, our named executive officers are rewarded for the achievement of our short- and approvedlong-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 inand our Board with respect to the manner to be specified inyear ended December 31, 2020. Our executive compensation program embodies a pay-for-performance philosophy that supports our business strategy and aligns the charterinterests of our named executive officers with our stockholders. Our Board believes that this link between compensation and the compensation committee.
A related person transaction reviewed under this policy will be considered approved or ratified if it is authorizedachievement 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 the audit committee in accordance with the standards set forth in the policy after full disclosure of the related person’s interests in the transaction. As appropriate for the circumstances, the policy provides that the audit committee will review and consider:
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| • | | the related person’s interest in the related person transaction; |
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| • | | the approximate dollar value of the amount involved in the related person transaction; |
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| • | | the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss; |
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| • | | whether the transaction was undertaken in the ordinary course of business of the Company; |
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| • | | whether the transaction with the related person is proposed to be, or was, entered into on terms no less favorable to us than the terms that could have been reached with an unrelated third party; |
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| • | | the purpose of, and the potential benefits to us of, the transaction; and |
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| • | | any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction. |
The policy provides that the audit committee will review all relevant information available to it about the related person transaction. The policy provides that the audit committee may approve or ratify the related person transaction only if the audit committee determines that, under all of the circumstances, the transaction is in, ormanagement. This vote is not inconsistent with,intended to address any specific item of compensation, but rather the overall compensation of our best interests. The policy provides that the audit committee may, in its sole discretion, impose such conditions as it deems appropriate on us or the related person in connection with approval of the related person transaction.
No related person transactions were brought to the attention of the audit committee for consideration in 2017.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors,named executive officers and persons holding more than 10%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 Company’s common stock to report their initial ownership ofSecurities and Exchange Commission, the common stock and other equity securitiescompensation tables 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 identifyrelated material disclosed in this proxy statement, those persons who did not file these reports when due.
Based solelyis hereby approved on a reviewnon-binding, advisory basis.
As an advisory vote, this proposal is not binding. The outcome of reports furnished tothis advisory vote does not overrule any decision by us or written representations from reporting persons, we believe all directors,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, and 10% owners timely filed all reports regarding transactions in the Company’s securities required to be filed for 2017 by Section 16(a) under the Exchange Act.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. 2—3 – RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
AS THE COMPANY’SOUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE
FISCAL YEAR ENDING DECEMBER 31, 20182021
StockholdersWe are being askedasking stockholders to ratify the appointment by the audit committee of theour Board of Ernst &Young LLP as our independent registered public accounting firm.firm for the fiscal year ending December 31, 2021. Ernst & Young LLP has served as the company’sour independent registered public accounting firm since 2007.
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.
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Fee Category | | 2017 | | 2016 |
Audit Fees (1) | | $ | 569,713 |
| | $ | 423,535 |
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Audit-Related Fees | | — |
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Tax Fees (2) | | 48,450 |
| | 37,960 |
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All Other Fees (3) | | 2,000 |
| | 2,000 |
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Total Fees | | $ | 620,163 |
| | $ | 463,495 |
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Fee Category | | 2020 | | 2019 |
Audit Fees (1) | | $ | 665,000 | | $ | 960,224 |
Tax Fees (2) | | 68,910 | | 22,660 |
All Other Fees (3) | | 5,175 | | 4,970 |
Total Fees | | $ | 739,085 | | $ | 987,854 |
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(1) | Audit fees for 2017 and 2016Fees consist of fees for the audit of our consolidated financial statements, and the review of our interim financial statements.statements, consultations on accounting matters directly related to the audit and for comfort letter procedures in connection with financing activities. In addition, Audit Fees for 2019 include fees for the audit of the effectiveness of our internal control over financial reporting. |
(2) | Tax fees consistsFees consist of fees incurred for tax compliance and tax return preparation.Tax fees for 2017 and 2016 also include fees incurred in connection with preparation of an ownership analysis pursuant to Section 382 of the Internal Revenue Code to quantify any limitations on the availability of net operating loss carryforwards to offset taxable income. |
(3) | All Other Fees represents paymentconsist of payments for access to the Ernst & Young LLP online accounting research database. |
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 purposepurposes 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 20172020 and 20162019 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.
HOUSEHOLDING
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our documents, including the annual report to stockholders and proxy statement or the Notice, may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of either document to you upon written or oral request to the Company. Concert Pharmaceuticals, Inc. 99 Hayden Avenue, Suite 500, Lexington, MA 02421 Attention: Investor Relations, telephone: 781-860-0045. If you want to receive separate copies of the Notice, proxy statement or annual report to stockholders in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address and phone number.
STOCKHOLDER PROPOSALS
A stockholder who would like to have a proposal considered for inclusion in our 2019 proxy statement must submit the proposal in accordance with the procedures outlined in Rule 14a-8 of the Exchange Act so that it is received by us no later than January 3, 2019, which is 120 days prior to the first anniversary of the mailing date of the Notice. However, if the date of the 2019 annual meeting of stockholders is changed by more than 30 days from the date of this year’s Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy statement for the 2019 annual meeting of stockholders. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement.
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 amended and restated bylaws 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 the 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.FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021.
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 the 2019 annual meeting of stockholders, the required notice must be received by our corporate secretary at our principal executive offices no earlier than February 14, 2019 and no later than March 16, 2019.
Stockholder proposals should be addressed to Concert Pharmaceuticals, Inc. 99 Hayden Avenue, Suite 500, Lexington, MA 02421 Attention: Corporate Secretary.
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
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our proxy statement or annual report may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of either document to you upon written or oral request to Concert Pharmaceuticals, Inc., 65 Hayden Avenue, Suite 3000N, Lexington, MA 02421, Attention: Investor Relations, telephone: 781-860-0045. If you want to receive separate copies of our proxy statement or annual report in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address and phone number.
Stockholder Proposals
A stockholder who would like to have a proposal considered for inclusion in our 2022 proxy statement must submit the proposal in accordance with the procedures outlined in Rule 14a-8 of the Exchange Act so that it is received by us no later than December 28, 2021, which is 120 days prior to the first anniversary of the mailing date of the Notice. However, if the date of our 2022 annual meeting of stockholders is changed by more than 30 days from the date of this year’s Annual Meeting, then the deadline is a reasonable time before we begin to print and send our proxy statement for our 2022 annual meeting of stockholders. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement.
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 2022 annual meeting of stockholders, the required notice must be received by our corporate secretary at our principal executive offices no earlier than February 10, 2022 and no later than March 12, 2022.
Stockholder proposals should be addressed to Concert Pharmaceuticals, Inc., 65 Hayden Avenue, Suite 3000N, Lexington, MA 02421, Attention: Corporate Secretary.