Internet proxy voting may be provided to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.
On each matter to be voted upon, you have one vote for each share of common stock you own as of March 20, 2019.the record date.
What happens if I do not vote?
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record and do not vote by completing your proxy card by telephone, through the internet, or in person at the Annual Meeting, your shares will not be voted.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the particular proposal is a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of various national and regional securities exchanges, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation), and certain corporate governance proposals, even if management-supported. Accordingly, your broker or nominee may not vote your shares on Proposal 1 without your instructions, but may vote your shares on Proposal 2 even in the absence of your instruction.
What if I return a proxy card or otherwise vote by proxy but do not make specific choices?
If you return a signed and datedvoted by proxy card or otherwise vote without marking any voting selections, your shares will be voted, as applicable, “For”then the election of all nominees for director and “For” the ratification of selection by the Audit Committee of the Board of Directors of Ernst & Young LLP as independent registered public accounting firm of the Company for the year ending December 31, 2019. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card)holders will vote your shares using his or her best judgment.as recommended by the Board on all matters presented in this proxy statement, and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Special Meeting.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication.communication. Directors and employees will not be paid any additional compensation for soliciting proxies. In addition, we have engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and informational support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $20,000 in total. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one Notice?proxy card?
If you receive more than one Notice,proxy card, your shares may beare registered in more than one name or are registered in different accounts. Please follow the voting instructions on the Noticeswith respect toeach proxy card to ensure that all of your shares are voted.
Can I change my vote after submitting my proxy?
Stockholder of Record: Shares Registered in Your Name
Yes. You can revoke your proxy at any time before the final vote at the meeting.Special Meeting. If you are thea stockholder of record, holder of your shares, you may revoke your proxy in any one of the following ways:
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You may attend the AnnualSpecial Meeting and vote in person. Simply attending the meetingSpecial Meeting will not, by itself, revoke your proxy.
Your most current proxy, whether submitted by proxy card, or telephone or internet, proxy is the one that is counted.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
When are stockholder proposals and director nominations due for next year’s annual meeting?
To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by December 5, 2019, to Aptevo’s Corporate Secretary at 2401 4th Ave. Suite 1050, Seattle, Washington 98121. A proposal must satisfy the rules and regulations of the SEC and the additional requirements of our bylaws to be eligible for inclusion in the proxy statement for that meeting. A stockholder may present a proposal that is a proper subject for consideration at an annual meeting, even if the proposal is not submitted by the deadline for inclusion in the proxy statement. To do so, the stockholder must comply with the procedures set forth in the company’s bylaws. The bylaws require that a stockholder who intends to present a proposal at an annual meeting of stockholders submit the proposal to the Corporate Secretary not fewer than 90 and not more than 120 days before the anniversary of the date of the previous year’s annual meeting. Therefore, to be eligible for consideration at the 2019 annual meeting, such a proposal and any nominations for director must be received by the Corporate Secretary between January 16, 2020 and February 15, 2020; provided however, that if our 2020 Annual Meeting of Stockholders is held before April 15, 2020 or after June 14, 2020, then the proposal must be received no earlier than the close of business of the 120th day prior to such meeting and not later than the close of business on the later of the 90th day prior to such meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. This advance notice period is intended to allow stockholders an opportunity to consider all business and nominees expected to be considered at the meeting. Any such proposal received after this date may be considered untimely and may be excluded.
Votes will be counted by the inspector of election appointed for the meeting, who will separately count for the proposal to elect directors, votes “For,” “Withhold” and broker non-votes and with respect to the other proposal, votes “For” and “Against,”“Against” votes, abstentions and if applicable, brokernon-votes.Abstentions will be counted towards the vote total for Proposal 2each proposal and will have the same effect as “Against” votes. Brokernon-votesBroker non-votes will also have nothe same effect andas “Against” votes for Proposal 1 but will not be counted towards the vote total for any proposal.Proposal 2.
What are “brokernon-votes”?
As discussed above,Brokernon-votes occur when a beneficial owner of shares held in “street name”street name does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed“non-routine.” Generally, if shares are held in street name (shares are held by your broker as your nominee), the beneficial owner of the shares is entitled to be “non-routine,”give voting instructions to the broker or nominee cannot voteholding the shares. These unvotedIf you do not give instructions to your broker, your broker can vote your shares with respect to matters that are counted as “broker non-votes.considered to be “routine,” but not with respect to“non-routine” matters. Under the rules and interpretations of various national and regional securities exchanges,“non-routine” matters are matters that may substantially affect the rights or privileges of stockholders. We believe Reverse Split Proposal and the Adjournment Proposal are routine matters. However, it is possible that brokers will not have discretionary authority with respect to the Reverse Split Proposal, in which case, if you do not instruct your broker how to vote with respect to the Reverse Stock Split Proposal, your broker may not vote with respect to such proposal.
How many votes are needed to approve each proposal?the Reverse Stock Split?
ForA majority of the election of directors, the three nominees receiving the most “For” votes from the holders of shares present in person or represented by proxy and entitled to voteoutstanding on the election of directors will be elected. Only votes “For” or “Withheld” will affect the outcome. Broker non-votes will have no effect.
To be approved, Proposal No. 2, ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019,record date must receive “For” votes from the holders of a majority of shares present in person or represented by proxyvote “FOR” approval. Abstentions and entitled to vote on the matter.brokernon-votes If you “Abstain” from voting, it will have the same effect as an “Against” vote.“AGAINST” votes.
How many votes are needed to approve the Adjournment Proposal?
Approval of the Adjournment Proposal requires the affirmative vote of a majority of the shares of our common stock present or represented by proxy at the Special Meeting and entitled to vote on such matter. Abstentions will have the same effect as “AGAINST” votes. Brokernon-votes will have no effect. effect on this proposal.
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting.Special Meeting. A quorum will be present if stockholders holding at least a majority of the outstanding shares entitled to vote are represented by stockholders present at the meeting in personSpecial Meeting or represented by proxy. On the record date, there were 42,940,219 shares outstanding and entitled to vote.Thus, the holders of 21,470,110 shares must be present in person or represented by proxystockholders present at the meetingSpecial Meeting or by proxy to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the meeting.Special Meeting. Abstentions and brokernon-votes will be counted towards the quorum requirement. If there is no quorum, the holderschairman of the Special Meeting or a majority of sharesthe votes present at the meeting in person or represented by proxySpecial Meeting may adjourn the meeting to another date.
How can I find out the results of the voting at the AnnualSpecial Meeting?
Preliminary voting results will be announced at the AnnualSpecial Meeting. In addition, finalFinal voting results will be published in a current report on Form8-K that we expect to file withinno later than four business days after the Annualconclusion of the Special Meeting. If final voting results are not available to us in time to file a Form8-K within four on or before the fourth business daysday after the meeting,Special Meeting, we intend to file a Form 8‑K8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form8-K to publish the final results.
When are stockholder proposals due for the next annual meeting?
To be considered for inclusion in Aptevo’s proxy materials for Aptevo’s next annual meeting, your proposal must have been submitted in writing to Aptevo by December 5, 2019. If you wish to submit a proposal that is not to be included in Aptevo’s proxy materials or nominate a director, you must do so not later than February 15, 2020. You are also advised to review our bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.
Whom should I contact with other questions?
If you have additional questions about this proxy statement or the Special Meeting, or if you would like additional copies of this proxy statement, please contact: Aptevo Therapeutics Inc., Attn: Shawnte Mitchell, Secretary, Senior Vice President, General Counsel and Corporate Affairs, 2401 4th Avenue, Suite 1050, Seattle, Washington 98121.
PROPOSAL 1
APPROVAL OF REVERSE STOCK SPLIT OF OUR COMMON STOCK
Background
Our Board has unanimously approved a series of alternate amendments to our Amended and Restated Certificate of Incorporation, which would effect a reverse stock split, or Reverse Stock Split, of all issued and outstanding shares of our common stock, at a ratio ranging from1-for-2 to1-for-20, inclusive.
Accordingly, effecting a Reverse Stock Split would reduce the number of outstanding shares of our common stock. The effectiveness of any one of these amendments and the abandonment of the other amendments, or the abandonment of all of these amendments, will be determined by our Board following the Special Meeting and prior to the date of our 2020 Annual Meeting of Stockholders. Our Board has recommended that these proposed amendments be presented to our stockholders for approval.
Our stockholders are being asked to approve these proposed amendments pursuant to Proposal 1, and to grant authorization to our Board to determine, at its option, whether to implement a Reverse Stock Split, including its specific timing and ratio.
Should we receive the required stockholder approvals for Proposal 1, our Board will have the sole authority to elect, at any time on or prior toone-year anniversary of the Special Meeting, or March 11, 2021, and without the need for any further action on the part of our stockholders, whether to effect a Reverse Stock Split and the number of whole shares of our common stock, between and including two and 20, that will be combined into one share of our common stock.
Notwithstanding approval of Proposal 1 by our stockholders, our Board may, at its sole option, abandon the proposed amendments and determine prior to the effectiveness of any filing with the Secretary of State of the State of Delaware not to effect any Reverse Stock Split, as permitted under Section 242(c) of the General Corporation Law of the State of Delaware. If our Board does not implement a Reverse Stock Split on or prior to theone-year anniversary of the Special Meeting, or March 11, 2021, stockholder approval would again be required prior to implementing any Reverse Stock Split.
By approving Proposal 1, our stockholders will: (a) approve a series of alternate amendments to our Amended and Restated Certificate of Incorporation pursuant to which any whole number of outstanding shares of common stock between and including two (2) and twenty (20) could be combined into one share of common stock; and (b) authorize our Board to file only one such amendment, as determined by the Board at its sole option, and to abandon each amendment not selected by the Board. Our Board may also elect not to undertake any Reverse Stock Split and therefore abandon all amendments.
APPROVAL OF REVERSE STOCK SPLIT OF OUR COMMON STOCK (PROPOSAL 1)
Our Board has adopted and is recommending that our stockholders approve a series of alternate amendments to our Amended and Restated Certificate of Incorporation to effect a Reverse Stock Split. The text of the proposed form of Certificate of Amendment to our Amended and Restated Certificate of Incorporation, which we refer to as the Certificate of Amendment, is attached hereto as Appendix A.
We are proposing that our Board have the discretion to select the Reverse Stock Split ratio from within a range between and including1-for-2 and1-for-20, rather than proposing that stockholders approve a specific ratio at this time, in order to give our Board the flexibility to implement a Reverse Stock Split at a ratio that reflects the Board’s then-current assessment of the factors described below under “Criteria to be Used for Determining Whether to Implement the Reverse Stock Split.” If the Board decides to implement a Reverse Stock Split, we will file the Certificate of Amendment with the Secretary of State of the State of Delaware and the Reverse Stock Split will be effective at 5:01 p.m., Eastern time, on the date of filing of a Certificate of Amendment with the office of the Secretary of State of the State of Delaware, or such later date as is chosen by the Board and set forth in the Certificate of Amendment. Except for adjustments that may result from the treatment of fractional shares as described below, each of our stockholders will hold the same percentage of our outstanding common stock immediately following the Reverse Stock Split as such stockholder holds immediately prior to the Reverse Stock Split.
To maintain our listing on The Nasdaq Capital Market. By potentially increasing our stock price, the Reverse Stock Split would reduce the risk that our common stock could be delisted from The Nasdaq Capital Market. To continue our listing on The Nasdaq Capital Market, we must comply with Nasdaq Marketplace Rules, which requirements include a minimum bid price of $1.00 per share. On April 18, 2019, we were notified by the Nasdaq Listing Qualifications Department that we do not comply with the $1.00 minimum bid price requirement as our common stock had traded below the $1.00 minimum bid price for 30 consecutive business days. We were automatically provided with a 180 calendar day period, ending on October 15, 2019, within which to regain compliance. On October 11, 2019, we submitted to the Listing Qualifications Department of Nasdaq an application to transfer the listing of our common stock from The Nasdaq Global Market to The Nasdaq Capital Market. On October 16, 2019, we received notice from Nasdaq that our application to transfer listing of our common stock had been approved. The transfer was effective at the opening of business on October 18, 2019. This, among other things, allowed us to qualify for an additional 180–day period (through April 13, 2020) to regain compliance with the minimum bid price. We qualified for the additional180-day period by meeting, by October 15, 2019, the continued listing requirement for market value of publicly held shares and all other applicable standards for initial listing on The Nasdaq Capital Market, with the exception of the bid price requirement, and provided written notice of our intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary. If we do not regain compliance by April 13, 2020, Nasdaq will notify us that our common stock will be subject to delisting. In that event, we may appeal the decision to a Nasdaq Listing Qualifications Panel (the “Panel”). In the event of an appeal, our common stock would remain listed on The Nasdaq Capital Market pending a written decision by the Panel following a hearing. In the event that the Nasdaq Listing Qualifications Panel determines not to continue our listing and we are delisted from The Nasdaq Capital Market, our common stock may be delisted and trade on the OTC Bulletin Board or other small trading markets, such as the pink sheets.
The Board has considered the potential harm to us and our stockholders should Nasdaq delist our common stock from The Nasdaq Capital Market. Delisting could adversely affect the liquidity of our common stock since alternatives, such as the OTC Bulletin Board and the pink sheets, are generally considered to be less efficient markets. An investor likely would find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our common stock on anover-the-counter market. Many investors likely would not buy or sell our common stock due to difficulty in accessingover-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or for other reasons. In addition, the delisting of our common stock from The Nasdaq Capital Market would constitute an event of default under our Credit and Security Agreement dated August 4, 2016, as amended to date, by and among the Company, certain our subsidiaries as borrowers, MidCap Financial Trust, as agent, and the lenders from time to time party thereto. In addition, the delisting of our common stock from the Nasdaq Capital Market would restrict our ability to sell shares of our common stock under our Equity Distribution Agreement dated November 9, 2017 with Piper Jaffray & Co. and the Purchase Agreement with Lincoln Park Capital Fund, LLC dated December 20, 2018.
The Board believes that the proposed Reverse Stock Split is a potentially effective means for us to maintain compliance with the $1.00 minimum bid requirement and to avoid, or at least mitigate, the likely adverse consequences of our common stock being delisted from The Nasdaq Capital Market by producing the immediate effect of increasing the bid price of our common stock.
To potentially improve the marketability and liquidity of our common stock. Our Board believes that the increased market price of our common stock expected as a result of implementing a Reverse Stock Split could improve the marketability and liquidity of our common stock and encourage interest and trading in our common stock.
Stock Price Requirements: We understand that many brokerage houses, institutional investors and funds have internal policies and practices that either prohibit them from investing inlow-priced stocks or tend to discourage individual brokers from recommendinglow-priced stocks to their customers or by restricting or limiting the ability to purchase such stocks on margin. Additionally, a Reverse Stock Split could help increase analyst and broker interest in our common stock as their internal policies might discourage them from following or recommending companies with low stock prices.
Stock Price Volatility: Because of the trading volatility often associated withProposlow-priced stocks, many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing inal 1low-priced stocks or tend to discourage individual brokers from recommendinglow-priced stocks to their customers. Some of those policies and practices may make the processing of trades inlow-priced stocks economically unattractive to brokers.
Transaction Costs: Investors may be dissuaded from purchasing stocks below certain prices because brokers’ commissions, as a percentage of the total transaction value, can be higher forlow-priced stocks.
Election Of Directors
Criteria to be Used for Determining Whether to Implement Reverse Stock Split
Aptevo’sIn determining whether to implement the Reverse Stock Split and which Reverse Stock Split ratio to implement, if any, following receipt of stockholder approval of Proposal 1, our Board may consider, among other things, various factors, such as:
the historical trading price and trading volume of Directorsour common stock;
the then-prevailing trading price and trading volume of our common stock and the expected impact of the Reverse Stock Split on the trading market for our common stock in the short- and long-term;
our ability to maintain our listing on The Nasdaq Capital Market;
which Reverse Stock Split ratio would result in the least administrative cost to us;
prevailing general market and economic conditions; and
whether and when our Board desires to have the additional authorized but unissued shares of common stock that will result from the implementation of a Reverse Stock Split available to provide the flexibility to use our common stock for business and/or financial purposes, as well as to accommodate the shares of our common stock to be authorized and reserved for future equity awards.
Certain Risks and Potential Disadvantages Associated with Reverse Stock Split
We cannot assure you that the proposed Reverse Stock Split will increase our stock priceand have the desired effect of maintaining compliance with Nasdaq Marketplace Rules. We expect that the Reverse Stock Split will increase the market price of our common stock so that we may be able to regain and maintain compliance with the Nasdaq $1.00 minimum bid price requirement. However, the effect of the Reverse Stock Split upon the market price of our common stock cannot be predicted with any certainty, and the history of similar reverse stock splits for companies in like circumstances is dividedvaried, particularly since some investors may view a reverse stock split negatively. It is possible that the per share price of our common stock after the Reverse Stock Split will not rise in proportion to the reduction in the number of shares of our common stock outstanding resulting from the Reverse Stock Split, and the market price per post-Reverse Stock Split share may not exceed or remain in excess of the $1.00 minimum bid price for a sustained period of time, and the Reverse Stock Split may not result in a per share price that would attract brokers and investors who do not trade in lower priced stocks. In addition, although we believe the Reverse Stock Split may enhance the desirability of our common stock to certain potential investors, we cannot assure you that, if implemented, our common stock will be more attractive to institutional and other long-term investors. Even if we implement the Reverse Stock Split, the market price of our common stock may decrease due to factors unrelated to the Reverse Stock Split. In any case, the market price of our common stock may also be based on other factors which may be unrelated to the number of shares outstanding, including our future performance. If the Reverse Stock Split is consummated and the trading price of the common stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of the Reverse Stock Split. Even if the market price per post-Reverse Stock Split share of our common stock remains in excess of $1.00 per share, we may be delisted due to a failure to meet other continued listing requirements, including Nasdaq requirements related to the minimum number of shares that must be in the public float, the minimum market value of the public float and the minimum number of “round lot” holders.
The proposed Reverse Stock Split may decrease the liquidity of our common stock and result in higher transaction costs. The liquidity of our common stock may be negatively impacted by a Reverse Stock Split, given the reduced number of shares that would be outstanding after the Reverse Stock Split, particularly if the stock price does not increase as a result of the Reverse Stock Split. In addition, if a Reverse Stock Split is implemented, it will increase the number of our stockholders who own “odd lots” of fewer than 100 shares of common stock. Brokerage commission and other costs of transactions in odd lots are generally higher than the costs of transactions of more than 100 shares of common stock. Accordingly, a Reverse Stock Split may not achieve the desired results of increasing marketability and liquidity of our common stock described above.
Effects of Reverse Stock Split
After the effective date of any Reverse Stock Split that our Board elects to implement, each stockholder will own a reduced number of shares of common stock. However, any Reverse Stock Split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership interests in Aptevo, except to the extent that the Reverse Stock Split results in any of our stockholders owning a fractional share as described below. Voting rights and other rights and preferences of the holders of our common stock will not be affected by a Reverse Stock Split (other than as a result of the payment of cash in lieu of fractional shares). For example, a holder of 2% of the voting power of the outstanding shares of our common stock immediately prior to a Reverse Stock Split would continue to hold 2% (assuming there is no impact as a result of the payment of cash in lieu of issuing fractional shares) of the voting power of the outstanding shares of our common stock immediately after such Reverse Stock Split. The number of stockholders of record will not be affected by a Reverse Stock Split (except to the extent that any stockholder holds only a fractional share interest and receives cash for such interest after such Reverse Stock Split).
The principal effects of a Reverse Stock Split will be that:
depending on the Reverse Stock Split ratio selected by the Board, each two to 20 shares of our common stock owned by a stockholder will be combined into three classes. Each class consists,one new share of our common stock;
no fractional shares of common stock will be issued in connection with any Reverse Stock Split; instead, holders of common stock who would otherwise receive a fractional share of common stock pursuant to the Reverse Stock Split will receive cash in lieu of the fractional share as nearly as possible, of one-third of explained more fully below;
the total number of directors, and each class has a three-year term. Vacancies onauthorized shares of our common stock will remain at 500,000,000, resulting in an effective increase in the Board may be filled only by persons elected by a majorityauthorized number of shares of our common stock;
the remaining directors. A director electedtotal number of authorized shares of our preferred stock will remain at 15,000,000;
based upon the Reverse Stock Split ratio selected by the Board, proportionate adjustments will be made to fill a vacancythe per share exercise price and/or the number of shares issuable upon the exercise or vesting of all then outstanding stock options, restricted stock units and warrants, which will result in a class, including vacancies created by an increaseproportional decrease in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified.
The Board presently has seven members. There are three directors in the class whose term of office expires in 2019. Each of the nominees listed below is currently a director of the Company. If elected at the Annual Meeting, each of these nominees would serve until the 2022 annual meeting and until his successor has been duly elected and qualified, or, if sooner, until the director’s death, resignation or removal. It is the Company’s practice that directors and nominees for director attend our annual stockholder meetings. Sixshares of our directors attended our 2018 Annual Meetingcommon stock reserved for issuance upon exercise or vesting of Stockholders.
Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxysuch stock options, restricted stock units and entitled to vote on the election of directors. Accordingly, the three nominees receiving the highest number of affirmative votes will be elected.
The following is a brief biography of each nominee and each director whose term will continue after the Annual Meeting, as of May 15, 2019.
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Nominees for Election for a Three-year Term Expiring at the 2022 Annual Meeting
Fuad El-Hibri Mr. El-Hibri has served as the Chairman of our Board since August 2016. Mr. El-Hibri is the founder and Executive Chairman of the board of directors of Emergent. Mr. El-Hibri has served as the executive chairman of Emergent’s board of directors since April 2012. From June 2004 to March 2012, Mr. El-Hibri served as chief executive officer and chairman of Emergent’s board of directors. Mr. El-Hibri also served as president of Emergent from March 2006 to April 2007. Mr. El-Hibri served as chief executive officer and chairman of the board of directors of BioPort Corporation, or BioPort, from May 1998 until June 2004, when, as a result of Emergent’s corporate reorganization, BioPort became a wholly-owned subsidiary of Emergent and was subsequently renamed Emergent BioDefense Operations Lansing Inc. Mr. El-Hibri is chairman of East West Resources Corporation, a venture capital and business consulting firm, a position he has held since June 1990. He served as president of East West Resources from September 1990 to January 2004. Mr. El-Hibri earned a bachelor degree with honors in economics from Stanford University and a masters degree in public and private management from Yale University. Mr. El-Hibri brings an important perspective to Aptevo and the Board believes Mr. El-Hibri is qualified to serve on Aptevo’s Board due to his experience in the biotechnology industry, his familiarity with the Aptevo technology and his overall business acumen.
Marvin L. White Mr. White has served as our President, Chief Executive Officer and as a member of our Board since August 2016. Mr. White served as a director of Emergent from June 2010, until his resignation from the Emergent board of directors in May 2016. From 2008 to March 2014, Mr. White served as the Chief Financial Officer of St. Vincent Health, and was responsible for finance, materials management, accounting, patient financial services and managed care for all 19 hospitals and 36 joint ventures. Prior to joining St. Vincent Health in 2008, Mr. White was the Chief Financial Officer of Lilly USA, a subsidiary of Eli Lilly and Company, where he also held
leadership positions in Treasury and Corporate Finance and Investment Banking in the Corporate Strategy Group. He serves on the board of OneAmerica Financial Insurance Partners, Inc., a mutual insurance and financial services company based in Indianapolis, Indiana. From June 2014 until August 2016, Mr. White served on the board of Washington Prime Group, a NYSE REIT that invests in shopping centers. From July 2015 until March 2017, Mr. White served on the board of CoLucid Pharmaecuticals, Inc., a public pharmaceutical company. Mr. White earned a bachelor of science degree from Wilberforce University in Accounting and his MBA degree in Finance from Indiana University. Mr. White’s tenure as chief executive officer of Aptevo and previous director of Emergent provides valuable management and leadership experience. In addition, Mr. White provides crucial insight to the Board on company strategic planning and operations. For these reasons, the Board believes Mr. White is qualified to serve on Aptevo’s Board.
John E. Niederhuber, M.D. Dr. Niederhuber has served on our Board and as our lead independent director since August 2016. Dr. Niederhuber is the Executive Vice President of the Inova Health System, Founder of the Inova Translational Medicine Institute and President and CEO of Genomics and Bioinformatics Research Institute (GBR), a joint venture between Inova and the University of Virginia. Dr. Niederhuber served as a director of Emergent from August 2010, until his resignation from the Emergent board of directors in May 2016. He previously served as the director of the National Cancer Institute (NCI), the National Institutes of Health from 2006 to 2010. Dr. Niederhuber joined the Inova Health System in August 2010 as Executive Vice President of the Health System and CEO of the Inova Translational Medicine Institute. Dr. Niederhuber is also an adjunct professor of surgery and oncology at the Johns Hopkins University School of Medicine. Prior to joining NCI, Dr. Niederhuber was Director of the University of Wisconsin Comprehensive Cancer Center and professor of surgery and oncology (member of the McArdle Laboratory) at the University of Wisconsin School of Medicine from 1997 to 2005. He chaired the Department of Surgery at Stanford University School of Medicine from 1991 to 1997 and held professorships at the Johns Hopkins University School of Medicine from 1987 to 1991 and at the University of Michigan from 1973 to 1987. Mr. Niederhuber earned a bachelor of science from Bethany College and his M.D. from The Ohio State University School of Medicine. The Board believes that Dr. Niederhuber is qualified to serve on Aptevo’s Board because he provides valuable insights to the Board through his experience in the field of oncologywarrants, and, in the businesscase of healthcare.
The Board Of Directors Recommends
A Vote In Favor Of Each Named Nominee
Directors Continuingstock options and warrants, a proportional increase in Office Until the 2020 Annual Meeting
Zsolt Harsanyi, Ph.D. Mr. Harsanyi has served as a memberexercise price of all such stock options and warrants; and
the number of shares then reserved for issuance under our Board since August 2016. Mr. Harsanyi has served onequity compensation plans will be reduced proportionately based upon the board of directors of Emergent since August 2004 and as chairman of the board of N-Gene Research Laboratories, Inc., a privately-held biotechnology company, since March 2011. Prior to that, Mr. Harsanyi served as chief executive officer and chairman of the board of directors of Exponential Biotherapies Inc., a private biotechnology company, from December 2004 to February 2011. Mr. Harsanyi served as president of Porton International Inc., or Porton International, a pharmaceutical and vaccine company, from January 1983 to December 2004. Mr. Harsanyi was a founder of Dynport Vaccine Company LLC in September 1996. Prior to joining Porton International, Mr. Harsanyi was vice president of corporate finance at E.F. Hutton, Inc. Previously, Mr. Harsanyi directed the first assessment of biotechnology for the U.S. Congress’ Office of Technology Assessment, served as a consultant to the President’s Commission for the Study of Ethical Problems in Medicine and Biomedical and Behavioral Research and was on the faculties of Microbiology and Genetics at Cornell Medical College. Mr. Harsanyi received his bachelor degree from Amherst College and his Ph.D. in genetics from Albert Einstein College of Medicine. The Board believes Mr. Harsanyi is qualified to serve on Aptevo’s Board because of his industry experience, including his senior executive and financial positions and his experience as audit committee chair of various public company board of directors.
Barbara Lopez Kunz Ms. Kunz has served as a member of our Board since August 2016. Ms. Kunz is currently the Global Chief Executive of the Drug Information Association, a private health care products company. Ms. Kunz serves as chair of the Children’s National Health System Research Institute. From January 2007 to March 2013, she worked as President of Health and Life Sciences at Battelle Memorial Institute, a private nonprofit applied science and technology development company. From August 2003 to December 2007, she worked as Senior VP/GM for Thermo Fisher Scientific’s Fisher Biosciences and led the Latin America regional business from January 2000 to July 2003 at Uniqema, a private company acquired by Croda International plc in 2006. Ms. Kunz earned bachelor
degrees in both biology and chemistry from Thiel College, MBA coursework at Cleveland State University, an MS in polymer science from the University of Akron and is certified in INSEAD’s international executive program. The Board believes that Ms. Kunz is qualified to serve on Aptevo's Board because of her leadership experience, her business acumen and knowledge of the healthcare industry.
Directors Continuing in Office Until the 2021 Annual Meeting
Daniel J. Abdun-Nabi Mr. Abdun-Nabi has served as a member of our Board since August 2016. Mr. Abdun-Nabi has served as a member of the board of directors of REGENXBIO since 2016. Mr. Abdun-Nabi served as the president, chief executive officer of Emergent from April 2010, until his retirement from the Emergent in April 2019. He also served as a director of Emergent from May 2009 to April 2019. From May 2007 to March 2012, Mr. Abdun-Nabi served as Emergent's president and chief operating officer. Mr. Abdun-Nabi previously served as Emergent's corporate secretary from December 2004 to January 2008, Emergent's senior vice president, corporate affairs and general counsel from December 2004 to April 2007 and Emergent's vice president and general counsel from May 2004 to December 2004. Mr. Abdun-Nabi served as general counsel for IGEN International, Inc., a biotechnology company, and its successor BioVeris Corporation, from September 1999 to May 2004. Prior to joining IGEN, Mr. Abdun-Nabi served as senior vice president, legal affairs, general counsel and secretary of North American Vaccine, Inc., a private vaccine company acquired by Baxter International Inc. in 2000. Mr. Abdun-Nabi earned a bachelor degree in political science from the University of Massachusetts Amherst, a J.D. from the University of San Diego School of Law and an LLM from Georgetown University Law Center. The Board believes that Mr. Abdun-Nabi is qualified to serve on Aptevo's Board because of his extensive experience and knowledge of the biotechnology industry and Aptevo products.
Grady Grant, III Mr. Grant has served as a member of our Board since August 2016. Mr. Grant is currently the Vice President of Sales for Tissue Tech Limited. From December 2011 to August 2018, he worked as Vice President of Medical Sales for Mead Johnson Nutrition, a public company focused on pediatric nutrition. He has held this position since December 2011, preceded by 30 years of service at Eli Lilly and Company which includes his service as Vice President of Sales Neuroscience from January 2006 to December 2011. Mr. Grant earned a bachelor degree in pharmaceutical science from Temple University. The Board believes that Mr. Grant is qualified to serve on Aptevo's Board because of his knowledge of the pharmaceutical industry and marketed products.
information regarding the board of directors and corporate governance
Independence of The Board of Directors
As required under the NasdaqReverse Stock Market (“Nasdaq”) listing standards, a majority of the members of a listed company’s Board of Directors must qualify as “independent,” as affirmatively determinedSplit ratio selected by the Board of Directors. The Board consults with the Company’s counsel to ensure that the Board’s determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time.Board.
Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and the Company, its senior management and its independent auditors, the Board has affirmatively determined that the following four directors, representing a majority of the members of the Board, are independent directors within the meaning of the applicable Nasdaq listing standards: Mr. Grant, Mr. Harsanyi, Ms. Kunz and Dr. Niederhuber. In making this determination, the Board found that none of these directors had a material or other disqualifying relationship with the Company.
Our corporate governance guidelines provide the Board flexibility in determining its leadership structure. The Board has decided to keep separate the positions of chief executive officer and chairman of the Board. The Board believes this separate governance structure is optimal because it enables Mr. White to focus his entire energy on running the company while affording us the benefits of additional leadership and other contributions from Mr. El-Hibri.
Our corporate governance guidelines provide that in the event the chairman of the Board is not an independent director, a majority of the Board’s independent directors may appoint an independent director, who has been nominated by a majority of our independent directors, to serve as lead director. Because Mr. El-Hibri is not an independent director, our independent directors appointed Dr. Niederhuber as lead director in August 2016. The lead director serves as the presiding director at all executive sessions of the non-management or independent directors, facilitates communications between Mr. El-Hibri and other members of the Board, determines the need for special meetings of the Board and consults with Mr. El-Hibri on matters relating to corporate governance and Board performance.
Role of the Board in Risk Oversight
Our Board is actively engaged in oversight of risks Aptevo faces and consideration of the appropriate responses to those risks. The Board is responsible for oversight of Aptevo’s risk management programs and, in performing this function, will receive periodic risk assessment and mitigation initiatives for information and approval as necessary. The Audit Committee periodically discusses with senior management the company’s cybersecurity risk profile, product risk and risk management, including guidelines and policies to govern the process by which Aptevo’s exposure to risk is handled. The Audit Committee also reviews and comments on a periodic risk assessment performed by management. After the Audit Committee performs its review and comment function, it reports any significant findings to the Board. The Compensation Committee strives to create incentives that encourage a reasonable and appropriate level of risk-taking consistent with our business strategy. The Nominating and Corporate Governance Committee is responsible for reviewing our corporate governance and developing and maintaining corporate governance policies and procedures that are appropriate in light of the risks we face.
Meetings of The Board of Directors
Our corporate governance guidelines provide that the directors are responsible for attending Board meetings and meetings of committees on which they serve. The Board of Directors met eight times during 2018. Each Board member attended 100% of the aggregate number of meetings of the Board and of the committees on which she or he served, held during the portion of 2018 for which she or he was a director or committee member.
Information Regarding Committees of the Board of Directors
The Board has three committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The following table provides membership and meetingcontains approximate information, for 2018 for eachbased on share information as of December 31, 2019, relating to our outstanding common stock based on the proposed Reverse Stock Split ratios (without giving effect to the treatment of fractional shares):
Status | Number of Shares of Common Stock Authorized | Number of Shares of Common Stock Issued and Outstanding | Number of Shares of Common Stock Reserved for Future Issuance | Number of Shares of Common Stock Authorized but Unissued and Unreserved | ||||||||||||
Pre-Reverse Stock Split | 500,000,000 | 45,279,244 | 28,339,407 | 426,381,349 | ||||||||||||
Post-Reverse Stock Split 1:2 | 500,000,000 | 22,639,622 | 14,169,703 | 463,190,675 | ||||||||||||
Post-Reverse Stock Split 1:3 | 500,000,000 | 15,093,081 | 9,446,469 | 475,460,450 | ||||||||||||
Post-Reverse Stock Split 1:4 | 500,000,000 | 11,319,811 | 7,084,851 | 481,595,338 | ||||||||||||
Post-Reverse Stock Split 1:5 | 500,000,000 | 9,055,848 | 5,667,881 | 485,276,271 | ||||||||||||
Post-Reverse Stock Split 1:6 | 500,000,000 | 7,546,540 | 4,723,234 | 487,730,226 | ||||||||||||
Post-Reverse Stock Split 1:7 | 500,000,000 | 6,468,463 | 4,048,486 | 489,483,051 | ||||||||||||
Post-Reverse Stock Split 1:8 | 500,000,000 | 5,659,905 | 3,542,425 | 490,797,670 | ||||||||||||
Post-Reverse Stock Split 1:9 | 500,000,000 | 5,031,027 | 3,148,823 | 491,820,150 | ||||||||||||
Post-Reverse Stock Split 1:10 | 500,000,000 | 4,527,924 | 2,833,940 | 492,638,136 | ||||||||||||
Post-Reverse Stock Split 1:11 | 500,000,000 | 4,116,294 | 2,576,309 | 493,307,397 | ||||||||||||
Post-Reverse Stock Split 1:12 | 500,000,000 | 3,773,270 | 2,361,617 | 493,865,113 | ||||||||||||
Post-Reverse Stock Split 1:13 | 500,000,000 | 3,483,018 | 2,179,954 | 494,337,028 | ||||||||||||
Post-Reverse Stock Split 1:14 | 500,000,000 | 3,234,231 | 2,024,243 | 494,741,526 | ||||||||||||
Post-Reverse Stock Split 1:15 | 500,000,000 | 3,018,616 | 1,889,293 | 495,092,091 | ||||||||||||
Post-Reverse Stock Split 1:16 | 500,000,000 | 2,829,952 | 1,771,212 | 495,398,836 | ||||||||||||
Post-Reverse Stock Split 1:17 | 500,000,000 | 2,663,484 | 1,667,023 | 495,669,493 | ||||||||||||
Post-Reverse Stock Split 1:18 | 500,000,000 | 2,515,513 | 1,574,411 | 495,910,076 | ||||||||||||
Post-Reverse Stock Split 1:19 | 500,000,000 | 2,383,118 | 1,491,547 | 496,125,335 | ||||||||||||
Post-Reverse Stock Split 1:20 | 500,000,000 | �� | 2,263,962 | 1,416,970 | 496,319,068 | |||||||||||
After the effective date of any Reverse Stock Split that our Board elects to implement, our common stock would have a new committee on uniform securities identification procedures, or CUSIP number, a number used to identify our common stock.
Our common stock is currently registered under Section 12(b) of the Board committees:
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Below is a description of each committee of the Board of Directors.
Each of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities. The Board of Directors has determined that each member of each committee meets the applicable Nasdaq rulesSecurities Exchange Act, and regulations regarding “independence” and each member is free of any relationship that would impair his or her individual exercise of independent judgment with regardwe are subject to the Company.
The Audit Committee of the Board of Directors was established by the Board in accordance with Section 3(a)(58)(A)periodic reporting and other requirements of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), to overseeor the Company’s corporate accounting and financial reporting processes and auditsExchange Act. The implementation of its financial statements. For this purpose,any proposed Reverse Stock Split will not affect the Audit Committee performs several functions, including (1) appointing, approving the compensation of and assessing the independenceregistration of our independent registered public accounting firm; (2) overseeingcommon stock under the workExchange Act. Our common stock would continue to be listed on The Nasdaq Capital Market under the symbol “APVO” immediately following the Reverse Stock Split, although it is likely that Nasdaq would add the letter “D” to the end of our independent registered public accounting firm; (3) reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures; (4) monitoring our internal control over financial reporting, disclosure controls and procedures and codetrading symbol for a period of business conduct and ethics; (5) overseeing our internal audit function; (6) assistingtwenty trading days after the board in overseeing our compliance with legal and regulatory requirements; (7) periodically discussing our risk management policies, and reviewing and commenting on a periodic risk assessment by management; (8) establishing policies regarding hiring employees from our independent registered public accounting firm and procedures foreffective date of the receipt and retention of accounting related complaints and concerns; (9) meeting independently with our internal auditing staff, independent registered public accounting firm and management; (10) reviewing and approving or ratifying any related party transactions; and (11) preparing audit committee reports required by SEC rules.Reverse Stock Split to indicate that the Reverse Stock Split had occurred.
The Audit Committee is composed of three directors: Mr. Grant, Ms. Kunz and Mr. Harsanyi. The Audit Committee met six times during 2018. The Board has adopted a written Audit Committee charter that is available to stockholders proposed Reverse Stock Split would become effective at 5:01 p.m., Eastern time, on the Company’s website at:http://ir.aptevotherapeutics.com/corporate-governance/overview.
The Boarddate of Directors reviewsfiling of a Certificate of Amendment with the Nasdaq listing standards definition of independence for Audit Committee members on an annual basis and has determined that all membersoffice of the Company’s Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A)(i) and (ii)Secretary of State of the Nasdaq listing standards).
The BoardState of Directors has also determined that Mr. Harsanyi qualifiesDelaware, or such later date as an “audit committee financial expert,” as defined in applicable SEC rules. The Board made a qualitative assessment of Mr. Harsanyi’s level of knowledge and experience based on a number of factors, including serving as vice president of corporate finance of E.F. Hutton, serving as chief executive officer and chairman of the board of directors of Exponential Biotherapies Inc. and
serving as chair of the audit committee of other public company board of directors. The Board of Directors has determined that this simultaneous service does not impair Mr. Harsanyi’s ability to effectively serve on the Company’s Audit Committee.
The Compensation Committee is composed of three directors: Mr. Grant, Ms. Kunz and Dr. Niederhuber. All members of the Company’s Compensation Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). The Compensation Committee met five times during 2018. The Board has adopted a written Compensation Committee charter that is available to stockholders on the Company’s website at http://ir.aptevotherapeutics.com/corporate-governance/overview.
The Compensation Committee of the Board of Directors acts on behalf of the Board to review, recommend for adoption and oversee the Company’s compensation strategy, policies, plans and programs, including (1) annually reviewing and approving corporate goals and objectives relevant to the compensation of our executive officers; (2) determining the compensation of our chief executive officer; (3) reviewing and approving the compensation of our other named executive officers; (4) overseeing the evaluation of our senior executives; (5) overseeing and administering our cash and equity incentive plans; and (6) preparing the compensation committee report, if required by SEC rules.
Compensation Committee Processes and Procedures
The Compensation Committee meets as often as it deems necessary in order to perform its responsibilities. The agenda for each meeting is usually developed by the Chair of the Compensation Committee, in consultation with the Chief Executive Officer, the General Counsel and head of Human Resources and Willis Towers Watson, our compensation consultant. The Compensation Committee meets regularly in executive session. From time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. The Compensation Committee shall review and approve, or recommend for approvalchosen by the Board and set forth in the compensationCertificate of Amendment, which date we refer to in this Proposal 1 as the Effective Date. Except as explained below with respect to fractional shares, effective as of 5:01 p.m., Eastern time, on the Effective Date, shares of common stock issued and outstanding immediately prior thereto will be combined, automatically and without any action on the part of us or our stockholders, into a lesser number of new shares of our common stock in accordance with the Reverse Stock Split ratio determined by our Board within the limits set forth in this Proposal 1.
Cash Payment In Lieu of Fractional Shares
No fractional shares of common stock will be issued as a result of any Reverse Stock Split. Instead, in lieu of any fractional shares to which a stockholder of record would otherwise be entitled as a result of the Company’s Chief Executive OfficerReverse Stock Split, Aptevo will pay cash (without interest) equal to such fraction multiplied by the average of the closing sales prices of the common stock on
The Nasdaq Capital Market during regular trading hours for the five consecutive trading days immediately preceding the Effective Date (with such average closing sales prices being adjusted to give effect to the Reverse Stock Split). After the Reverse Stock Split, a stockholder otherwise entitled to a fractional interest will not have any voting, dividend or other rights with respect to such fractional interest except to receive payment as described above.
As of December 31, 2019, there were 163 stockholders of record of our common stock. Upon stockholder approval of this Proposal 1, if our Board elects to implement the proposed Reverse Stock Split, stockholders owning, prior to the Reverse Stock Split, less than the number of whole shares of common stock that will be combined into one share of common stock in the Reverse Stock Split would no longer be stockholders. For example, if a stockholder held five shares of common stock immediately prior to the Reverse Stock Split and the Company’sReverse Stock Split ratio selected by the Board was1-for-20, then such stockholder would cease to be a stockholder of Aptevo following the Reverse Stock Split and would not have any voting, dividend or other executive officers, including salary, bonusrights except to receive payment for the fractional share as described above. Based on our stockholders of record as of December 31, 2019, and incentive compensation levels; deferred compensation; executive perquisites; equity compensation (including awardsassuming a Reverse Stock Split ratio of1-for-20, we expect that cashing out fractional stockholders would not reduce the number of stockholders of record. In addition, we do not intend for this transaction to induce employment); severance arrangements; change-in-control benefits and other formsbe the first step in a series of executive officer compensation. The Chief Executive Officer may not participate in,plans or be present during, any deliberations or determinationsproposals of a “going private transaction” within the meaning of Rule13e-3 of the Compensation Committee regarding Exchange Act.
Record and Beneficial Stockholders
If this Proposal 1 is approved by our stockholders and our Board elects to implement a Reverse Stock Split, stockholders of record holding all of their shares of our common stock electronically in book-entry form under the direct registration system for securities will be automatically exchanged by the exchange agent and will receive a transaction statement at their address of record indicating the number of new post-split shares of our common stock they hold after the Reverse Stock Split along with payment in lieu of any fractional shares.his Non-registeredcompensation stockholders holding common stock through a bank, broker or individual performance objectives. Underother nominee should note that such banks, brokers or other nominees may have different procedures for processing the charter,Reverse Stock Split and making payment for fractional shares than those that would be put in place by us for registered stockholders. If you hold your shares with such a bank, broker or other nominee and if you have questions in this regard, you are encouraged to contact your nominee.
If this Proposal 1 is approved by our stockholders and our Board elects to implement a Reverse Stock Split, stockholders of record holding some or all of their shares in certificate form will receive a letter of transmittal from Aptevo or its exchange agent, as soon as practicable after the Compensation Committee has the authority to obtain, at the expenseeffective date of the Company, advice and assistance from compensation consultants and internal and external legal, accounting or other advisors and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties and the authorityReverse Stock Split. Our transfer agent is expected to conduct or authorize investigations into any matters within the scope of its responsibilitiesact as it shall deem appropriate, including the authority to request any officer, employee or advisor of the Company to meet with the Compensation Committee. The Compensation Committee has direct responsibility for the oversight of the work of any consultants or advisers engaged“exchange agent” for the purpose of advisingimplementing the Committee. In particular, the Compensation Committee has the sole authorityexchange of stock certificates. Holders ofpre-Reverse Stock Split shares will be asked to retain, in its sole discretion, compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. Under the charter, the Compensation Committee may select, or receive advice from, a compensation consultant, legal counsel or other advisersurrender to the compensation committee,exchange agent certificates representingpre-Reverse Stock Split shares in exchange for post-Reverse Stock Split shares and payment in lieu of fractional shares (if any) in accordance with the procedures to be set forth in the letter of transmittal. No new post-Reverse Stock Split share certificates will be issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange agent.
STOCKHOLDERS SHOULD NOT DESTROY ANYPRE-SPLIT STOCK CERTIFICATE AND SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL THEY ARE REQUESTED TO DO SO.
Accounting Consequences
The par value per share of our common stock would remain unchanged at $0.001 per share after any Reverse Stock Split. As a result, on the Effective Date, the stated capital on our balance sheet attributable to the common stock would be reduced proportionally, based on the actual Reverse Stock Split ratio, from its present amount, and the additionalpaid-in capital account would be credited with the amount by which the stated capital would be reduced. The net income or loss per share of common stock would be increased because there would be fewer shares of common stock outstanding. The Reverse Stock Split would be reflected retroactively in certain of our consolidated financial statements. We do not anticipate that any other than in-house legal counsel and certain other types of advisers, only after taking into consideration six factors, prescribed by the SEC and Nasdaq, that bear upon the adviser’s independence.
During 2018,after taking into consideration the six factors prescribed by the SEC and Nasdaq, the Compensation Committee engaged Willis Towers Watsonaccounting consequences would arise as a compensation consultant. Willis Towers Watson formerly provided executive compensation advisory support for Emergent and given their historical consulting relationship with Emergent as well as experience with spin-offs and IPOs, they were uniquely qualifiedresult of any Reverse Stock Split.
No Appraisal Rights
Our stockholders are not entitled to support us.The Compensation Committee requested that Willis Towers Watson:
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assist in refiningdissenters’ or appraisal rights under the Company’s compensation strategy and in developing and implementing an executive compensation program to execute that strategy.
As part of its engagement, Willis Towers Watson was requested by the Compensation Committee to develop a comparative group of companies and to perform analyses of competitive performance and compensation levels for that group. The scope of services provided included to provide recommendations for Aptevo’s 2018 peer group, review compensation philosophy and guiding principles in support of executive pay program design considerations, conduct competitive assessment for Aptevo’s top executives, review the Board compensation and provide recommendations for 2018 and review and confirm long-term incentive grant guideline recommendations for 2018.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance CommitteeGeneral Corporation Law of the BoardState of Directors acts on behalf of the Board to (1) develop and recommend corporate governance guidelines for review, (2) identify individuals qualified to become board members, (3) recommend persons to be nominated for election as directors, (4) oversee the evaluation of the board and (5) provide board education recommendations.
The Nominating and Corporate Governance Committee is composed of three directors: Dr. Niederhuber, Ms. Kunz and Mr. Harsanyi. All members of the Company’s Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). The Nominating and Corporate Governance Committee met four times during 2018. The Board adopted the Nominating and Corporate Governance Committee charter on May 31, 2017 and amended it on March 12, 2018. It is available to stockholders on the Company’s website at http://ir.aptevotherapeutics.com/corporate-governance/overview.
The Nominating and Corporate Governance Committee exercises general oversight with regard to the Board and identifies individuals qualified to become board members and recommends director nominees for the annual meeting of stockholders. The process followed by the Nominating and Corporate Governance Committee to identify and evaluate director candidates includes identifying qualified individuals consistent with guidelines approved by the Board and recommending to the Board the candidate for election as director.
In considering whether to recommend any particular candidate for inclusion in the Board’s slate of director nominees, the Nominating and Corporate Governance Committee considers the candidate’s integrity, character, demonstrated track record, education and time dedication. The Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements, being over 21 years of age and having the highest personal integrity and ethics. The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is a prerequisite for a prospective nominee. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. The Nominating and Corporate Governance committee does not have a formal policyDelaware with respect to diversity, but believesthe proposed alternate amendments to our Amended and Restated Certificate of Incorporation to allow for a Reverse Stock Split.
Material Federal Income Tax Consequences
The following is a summary of the material U.S. federal income tax consequences of a Reverse Stock Split to our stockholders. The summary is based on the Internal Revenue Code of 1986, as amended, or the Code, applicable Treasury Regulations promulgated thereunder, judicial authority and current administrative rulings and practices as in effect on the date of this proxy statement. Changes to the laws could alter the tax consequences described below, possibly with retroactive effect. We have not sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service regarding the federal income tax consequences of a Reverse Stock Split. This discussion is for general information only and does not discuss the tax consequences which may apply to special classes of taxpayers (e.g.,non-resident aliens, broker/dealers or insurance companies). The state and local tax consequences of a Reverse Stock Split may vary significantly as to each stockholder, depending upon the jurisdiction in which such stockholder resides. Stockholders are urged to consult their own tax advisors to determine the particular consequences to them.
In general, the federal income tax consequences of a Reverse Stock Split will vary among stockholders depending upon whether they receive cash for fractional shares or solely a reduced number of shares of common stock in exchange for their old shares of common stock. We believe that because the backgroundsReverse Stock Split is not part of a plan to increase periodically a stockholder’s proportionate interest in our assets or earnings and qualificationsprofits, the Reverse Stock Split should have the following federal income tax effects. A stockholder who receives solely a reduced number of shares of common stock will not recognize gain or loss. In the aggregate, such a stockholder’s basis in the reduced number of shares of common stock will equal the stockholder’s basis in its directors, consideredold shares of common stock and such stockholder’s holding period in the reduced number of shares will include the holding period in its old shares exchanged. A stockholder who receives cash in lieu of a fractional share as a group,result of the Reverse Stock Split should providegenerally be treated as having received the payment as a composite mixdistribution in redemption of experience, knowledgethe fractional share, as provided in Section 302(a) of the Code. Generally, if redemption of the fractional shares of all stockholders reduces the percentage of the total voting power held by a particular redeemed stockholder (determined by including the voting power held by certain related persons), the particular stockholder should recognize gain or loss equal to the difference, if any, between the amount of cash received and abilities thatthe stockholder’s basis in the fractional share. In the aggregate, such a stockholder’s basis in the reduced number of shares of common stock will allow itequal the stockholder’s basis in its old shares of common stock decreased by the basis allocated to fulfill its responsibilities. Additionally, our corporate governance guidelines state thatthe fractional share for which such stockholder is entitled to receive cash, and the holding period of the reduced number of shares received will include the holding period of the old shares exchanged. If the redemption of the fractional shares of all stockholders leaves the particular redeemed stockholder with no reduction in the stockholder’s percentage of total voting power (determined by including the voting power held by certain related persons), it is likely that cash received in lieu of a goalfractional share would be treated as a distribution under Section 301 of the Code. Stockholders should consult their own tax advisors regarding the tax consequences to them of a payment for fractional shares.
We will not recognize any gain or loss as a result of the proposed Reverse Stock Split.
Required Vote
Stockholder approval of this Proposal 1 requires a “FOR” vote from at least a majority of the outstanding shares of our common stock on the record date.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR”
THE APPROVAL OF A REVERSE STOCK SPLIT AS SET FORTH IN PROPOSAL 1.
PROPOSAL 2
AUTHORIZATION TO ADJOURN THE SPECIAL MEETING
General
If the Special Meeting is convened and a quorum is present, but there are not sufficient votes to approve Proposal 1, our proxy holders may move to adjourn the Special Meeting at that time in order to enable our Board to strive for diversitysolicit additional proxies.
In this proposal, we are asking our stockholders to authorize the holder of any proxy solicited by our Board, and each of them individually, to vote to adjourn the Special Meeting to another time and place, if necessary, to solicit additional proxies in the compositionevent there are not sufficient votes to approve Proposal 1. If our stockholders approve this proposal, we could adjourn the Special Meeting and any adjourned session of the membershipSpecial Meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from our stockholders that have previously voted. Among other things, approval of this proposal could mean that, even if we had received proxies representing a sufficient number of votes to defeat Proposal 1, we could adjourn the Special Meeting without a vote on such proposal and seek to convince our stockholders to change their votes in favor of such proposal.
If it is necessary to adjourn the Special Meeting, no notice of the Board.
Inadjourned meeting is required to be given to our stockholders, other than an announcement at the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair the directors’ independence. The Nominating and Corporate Governance Committee
also takes into account the results of the Board’s self-evaluation, conducted annually on a group and individual basis. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq purposes, which determination is based upon applicable Nasdaqlisting standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote.
In making such recommendations, the Nominating and Corporate Governance Committee shall consider candidates proposed by stockholders, consistent with requirements of our bylaws. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. The Nominating and Corporate Governance Committee shall review and evaluate information available to it regarding candidates proposed by stockholders and shall apply the same guidelines, and shall follow substantially the same process in considering them, as it does in considering other candidates. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board at an AnnualSpecial Meeting of the Stockholders may dotime and place to which the Special Meeting is adjourned, so by delivering a written recommendation to the Nominating and Corporate Governance Committee at our principal executive not earlier than the 120th day prior to such Annual Meeting of the Stockholders and not later than the close of business on the later of (A) the 90th day prior to such Annual Meeting of the Stockholders and (B) the tenth day following the day on which notice of the date of such Annual Meeting of the Stockholders was mailed or made public. Submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation that the nominating stockholder is a beneficial or record holder of our stock and has been a holder for at least one year. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
Stockholder Communications With The Board Of Directors
Our Board will give appropriate attention to written communications that are submitted by stockholders and other interested parties and will respond if and as appropriate. The lead director, with the assistance of Aptevo’s Corporate Secretary, will be primarily responsible for monitoring communications from stockholders and other interested parties and for providing copies or summaries to the other directorslong as the lead director considers appropriate.
Communications will be forwarded to all directors if they relate to important substantive mattersmeeting is adjourned for 30 days or less and include suggestions or comments that the lead director considers to be importantno new record date is fixed for the directors to know. In general, communications relating to corporate governance and corporate strategy are more likely to be forwarded than communications relating to ordinaryadjourned meeting. At the adjourned meeting, we may transact any business affairs, personal grievances and matters as to which Aptevo receives repetitive or duplicative communications.
Stockholders and other interested parties who wish to send communications on any topic to the Board, lead director or independent directors as a group should address such communications to the Board, Lead Director or Independent Directors, as applicable, c/o Corporate Secretary, Aptevo Therapeutics Inc., 2401 4th Ave., Suite 1050, Seattle, Washington 98121. The Corporate Secretary will review all such correspondence and forward to the Board, lead director or independent directors a summary and/or copies of any such correspondence that deals with the functions of the Board or its committees or that he otherwise determines requires their attention.
The Company has adopted the Aptevo Therapeutics Inc. Code of Conduct and Business Ethics that applies to all officers, directors and employees. The Code of Conduct and Business Ethics is available on the Company’s website at http://ir.aptevotherapeutics.com/corporate-governance/overview. If the Company makes any substantive amendments to the Code of Conduct and Business Ethics or grants any waiver from a provision of the Code to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website.
Ratification of Selection of Independent Registered Public Accounting Firm
Ernst & Young LLP currently serves as the Company’s independent registered public accounting firm. After consideration of the firm’s qualifications and past performance, the Audit Committee of the Board of Directors has selected Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019 and has further directed that management submit the selection of its independent registered public accounting firm for ratification by the stockholdersmight have been transacted at the Annual Meeting. Ernst & Young LLP has auditedoriginal meeting.
Required Vote
Approval of this proposal requires the Company’s financial statements since 2015. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither the Company’s Bylaws nor other governing documents or law require stockholder ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm. However, the Audit Committee of the Board is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board in its discretion may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares of our common stock present in person or represented by proxy at the Special Meeting and entitled to vote on the matter at the Annual Meeting will be required to ratify the selection of Ernst & Young LLP.such matter.
Principal Accountant Fees and ServicesTHE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR”
The following table summarizes the fees of Ernst & Young LLP, our Independent Registered Public Accounting Firm, billed to us for audit and other services for the years ended December 31, 2017 and 2018. The audit fees include an estimate of amounts not yet billed.THE AUTHORIZATION TO ADJOURN THE SPECIAL MEETING AS SET FORTH IN
PROPOSAL 2.
|
| Year Ended December 31, |
| |||||
|
| 2018 |
|
| 2017 |
| ||
|
| (in thousands) |
| |||||
Audit Fees |
| $ | 567,000 |
|
| $ | 639,150 |
|
Audit-related Fees |
|
| — |
|
|
| — |
|
Tax Fees |
|
| — |
|
|
| — |
|
All Other Fees |
|
| — |
|
|
| — |
|
Total Fees |
| $ | 567,000 |
|
| $ | 639,150 |
|
Audit Fees. Audit fees consist of fees for the audit of our consolidated financial statements and reviews of interim financial statements, as well as other professional services provided in connection with our registration statements, including services related to comfort letters and consents.
Pre-Approval Policies and Procedures.
The Audit Committee has policies and procedures that require the pre-approval by the Audit Committee (or one of its members) of all services performed by the Company’s independent registered public accounting firm and related fee arrangements. In the early part of each year, the Audit Committee approves the proposed services, including the nature, type and scope of services contemplated, and the related fees, to be rendered by these firms during the year. In accordance with this policy, the Audit Committee or one of its members pre-approved all services to be performed by the Company’s independent registered accounting firm.
The Board Of Directors Recommends A Vote In Favor Of Proposal 2.
Report of the Audit Committee of the Board of Directors
The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2018 with management of the Company. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the audit committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
Grady Grant, III
Zsolt Harsanyi, Ph.D.
Barbara Lopez Kunz
The material in this report is not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Certain Beneficial Owners and ManagementSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our common stock as of December 31, 2019 by:
each person, entity or group known to the Company to be the beneficial owner of more than 5% of the Company’s common stock asstock;
each of March 20, 2019 by: (i) our directors;
each directorof our named executive officers; and nominee for director; (ii)
| • | �� | all current executive officers and directors of the Company as a group. |
Unless otherwise indicated in the footnotes to the table below and subject to community property laws where applicable, we believe that each of the executive officersstockholders named in the Summary Compensation Table; (iii) all executive officerstable has sole voting and directorsinvestment power with respect to the shares indicated as beneficially owned.
Applicable percentages are based on 45,279,244 shares of common stock outstanding as of December 31, 2019, adjusted as required by rules promulgated by 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. In addition, the rules include shares of common stock issuable pursuant to the exercise of stock options or warrants that are exercisable within 60 days following December 31, 2019. These shares are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Certain of the Company asoptions in this table are exercisable at any time but, if exercised, are subject to a group; and (iv) all those known bylapsing right of repurchase until the Company to be beneficial owners of more than five percent of its common stock.options are fully vested. Unless otherwise indicated, the address offor each person or entity listed in the individuals and entitiestable below is c/o Aptevo, 2401 4th Ave.Avenue, Suite 1050, Seattle, Washington 98121.
|
| Beneficial Ownership(1) | |||||||
|
| Number of Shares |
|
| Percent of Total | ||||
Stonepine Capital Management, LLC(2) |
|
| 4,273,862 |
|
|
| 9.95 | % |
|
Point72 Asset Management(3) |
|
| 3,200,100 |
|
|
| 7.45 | % |
|
Fuad El-Hibri (Director) (4) |
|
| 2,778,448 |
|
|
| 6.47 | % |
|
Intervac, L.L.C. (5) |
|
| 2,172,125 |
|
|
| 5.06 | % |
|
Renaissance Technologies LLC(6) |
|
| 1,493,526 |
|
|
| 3.48 | % |
|
Dimensional Fund Advisors LP(8) |
|
| 1,442,049 |
|
|
| 3.36 | % |
|
Sessa Capital IM LP (7) |
|
| 1,021,836 |
|
|
| 2.38 | % |
|
Marvin White (Officer & Director) (9) |
|
| 507,097 |
|
|
| 1.17 | % |
|
Scott C. Stromatt (Officer) (10) |
|
| 493,144 |
|
|
| 1.14 | % |
|
Jeffrey G. Lamothe (Officer) (11) |
|
| 269,921 |
|
| * |
|
| |
Daniel J. Abdun-Nabi (Director) (12) |
|
| 109,350 |
|
| * |
|
| |
John E. Niederhuber, M.D. (Director)(13) |
|
| 27,899 |
|
| * |
|
| |
Zsolt Harsanyi (Director)(14) |
|
| 24,049 |
|
| * |
|
| |
Grady Grant III (Director)(15) |
|
| 16,666 |
|
| * |
|
| |
Barbara Lopez Kunz (Director)(16) |
|
| 16,666 |
|
| * |
|
| |
All executive officers and directors as a group (11 persons) (17) |
|
| 5,208,540 |
|
|
| 11.74 | % |
|
| Beneficial Ownership(1) | ||||||||
| Number of Shares | Percent of Total | |||||||
Armistice Capital(2) | 4,765,835 | 9.99 | % | |||||
Stonepine Capital Management, LLC(3) | 4,273,862 | 9.44 | % | |||||
Point72 Asset Management(4) | 3,200,100 | 6.83 | % | |||||
AIGH Capital Management(5) | 3,200,000 | 6.88 | % | |||||
FuadEl-Hibri (Director)(6) | 2,998,064 | 6.62 | % | |||||
Marvin White (Officer & Director)(7) | 807,648 | 1.76 | % | |||||
Jeffrey G. Lamothe (Officer)(8) | 284,655 | * | ||||||
Daniel J. Abdun-Nabi (Director) | 144,767 | * | ||||||
John E. Niederhuber, M.D. (Director) | 55,797 | * | ||||||
Zsolt Harsanyi (Director) | 85,416 | * | ||||||
Grady Grant III (Director) | 47,416 | * | ||||||
Barbara Lopez Kunz (Director) | 113,480 | * | ||||||
All executive officers and directors as a group (12 persons) (9) | 5,892,975 | 12.45 | % | |||||
* | Less than one percent. |
(1) | This table is based upon information supplied by officers, directors and principal |
| (2) |
|
| (3) | Based on information provided in a Schedule 13G that was filed with the SEC on March 18, 2019 by Stonepine Capital Management, LLC, Stonepine Capital Management, LLC is the beneficial owner of 4,273,862 shares and has sole voting power with respect to 4,273,862 shares and sole dispositive power with respect to 4,273,862 shares of Aptevo’s common stock as of March 7, 2019. The address for Stonepine Capital Management, LLC is 919 NW Bond Street, Suite 204, Bend, OR 97703. |
| Based on information provided in a Schedule 13G that was filed with the SEC on March 12, 2019 by Point72 Asset Management, L.P., Point72 Asset Management, L.P. is the beneficial owner of 3,200,100 shares and has shared voting power with respect to |
| (5) | Based on information provided in a Schedule 13G that was filed with the SEC on March 20, 2019 by AIGH Capital Management, LLC, AIGH Capital Management, LLC is the beneficial owner of 3,200,000 shares and has sole voting power with respect to 1,950,000 shares and sole dispositive power with respect to 3,200,000 shares of Aptevo’s common stock as of March 20, 2019. The address for AIGH Capital Management, LLC is 6006 Berkeley Avenue, Baltimore, MD 21209. |
| Mr. El-Hibri has a beneficial ownership interest in |
1,175,169 shares held by Intervac, L.L.C.;
762,077 shares held by BioVac, L.L.C.; and
824,5361,024,536 shares held directly byMr. El-HibriEl-Hibri; and
16,66636,282 shares of common stock issuable upon the exercise of options help by Mr. El-Hibri that are exercisable on or within 60 days of March 20,December 31, 2019.
|
|
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(7) |
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|
| Includes |
| Includes |
| Includes |
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|
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than ten percent
HOUSEHOLDING OF PROXY MATERIALS
SEC rules permit companies, brokers, banks or other agents to deliver a single copy of a registered class of the Company’s equity securities,proxy statement to file with the SEC initial reports of ownershiphouseholds at which two or more stockholders reside. This practice, known as “householding,” is designed to reduce duplicate mailings and reports of changes in ownership of common stocksave significant printing and postage costs as well as natural resources. Stockholders sharing an address who have been previously notified by their broker, bank or other equity securities of the Company. Officers, directorsagent and greater than ten percent stockholders are required by SEC regulationhave consented to furnish the Company with copies of all Section 16(a) forms they file.
To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during 2018, and that all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with and filed timely.
Set forth below is information regarding the positions, ages and business experience of eachhouseholding will receive only one copy of our executive officers asproxy statement.
If you would like to opt out of April 3, 2019: Biographical information with regard to Mr. White is presented under “Proposal 1—Election of Directors” in this Proxy Statement.
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Jeffrey G. Lamothe Mr. Lamothe has served as our Senior Vice Presidentpractice for future mailings and Chief Financial Officer since July 2016. He previously served as Emergent’s Vice President Finance, Biosciences Division. Mr. Lamothe assumed this role in February 2014 when Emergent concludedreceive separate proxy statements and, if applicable, annual reports for each stockholder sharing the acquisition of Cangene Corporation, where he was Chief Financial Officer. Mr. Lamothe assumed the role of Chief Financial Officer of Cangene in August 2012. Prior to that, Mr. Lamothe was the Chief Financial Officer for Smith Carter Architects and Engineers Incorporated,same address, please contact your broker, bank or other agent. You may also obtain a position which he held from January 2010 until July 2012. He also previously served as President and Chief Executive Officer of Kitchen Craft Cabinetry after occupying the position of VP Finance and Chief Financial Officer with that organization. Mr. Lamothe’s other past experience includes serving as Chief Financial Officer for Motor Coach Industries and he has held various roles at James Richardson & Sons, Limited and Ernst & Young LLP. Mr. Lamothe earned his Bachelor of Commerce (honours) degree from the University of Manitoba and is a Chartered Accountant/CPA.
Scott C. Stromatt, M.D. Dr. Stromatt has served as our Chief Medical Officer and Senior Vice President, Clinical Development & Medical Affairs since July 2016. From 2008 to August 2016, he served as Chief Medical Officer, Senior Vice President at Emergent and Chief Medical Officer, Senior Vice President at Trubion Pharmaceuticals Inc., where he was responsible for the clinical development programs for the ADAPTIR molecules. From 2003 to 2008, Dr. Stromatt worked at Cell Therapeutics, Inc., where he held the positions of Executive Vice President, Clinical Development and Regulatory Affairs from 2005 to 2008, Senior Vice President, Clinical Development and Regulatory Affairs from 2004 to 2005 and Vice President, Clinical Development from 2003 to 2004. In 2002, Dr. Stromatt worked at Northwest Biotherapeutics, Inc. as Vice President Clinical Research, Chief Medical Officer. From 2000-2002, Dr. Stromatt worked as a biotechnology analyst for Wall Street investment firm C.E. Unterberg. Dr. Stromatt earned a Bachelor of Science degree and MBA from the University of Colorado and medical degree from the University of Chicago. Dr. Stromatt is board certified in Internal Medicine.
Randy J. Maddux Mr. Maddux has served as our Senior Vice President, Operations since July 2016 and Chief Manufacturing Officer since March 2018. In this capacity, Mr. Maddux leads the Quality, Process and Analytical Development, Bioprocess Technologies, Supply Chain, and Site Services functions for the company. Prior to joining Aptevo, he spent 4 years as VP and Site Director at GSK, where he led the largest biopharmaceutical site within the GSK global manufacturing network. Prior to GSK, Mr. Maddux spent 9 years at Human Genomes Sciences as VP Quality and Operations and 8 years with Biogen in positions of increasing responsibility within the Quality organization. Mr. Maddux is a past member of the Life Sciences Foundation Board at Montgomery College. Mr. Maddux earned a Bachelors in Chemistry from East Carolina University and pursued post-graduate work in analytical chemistry before earning an MBA from the Fuqua School of Business at Duke University.
Jane Gross, Ph.D. Dr. Gross has served as our Senior Vice President and Chief Scientific Officer since September 2016. Dr. Gross served as VP of Research and Non-Clinical Development at Aptevo from July 2016 to September 2016. Dr. Gross leads research and non-clinical development focusing on the development of novel protein therapeutics based on the ADAPTIR™ platform, a position she has held for the last five years at Emergent. She leads research efforts in molecular biology and protein engineering, immunology, protein and cell sciences, pharmacology and translational research for clinical development. Dr. Gross has a Ph.D. in Immunology and over twenty-five years of experience in the discovery and development of novel protein therapeutics in autoimmune,
infectious disease and oncology indications.. Prior to joining Emergent, Dr. Gross served as VP of Immunology Research at ZymoGenetics Inc., where she led efforts in discovery and development of therapeutics from novel genes for treatment of AIID and cancer. Dr. Gross holds Ph.D. in Immunology from University of California at Berkeley.
Michael Adelman Mr. Adelman leads all commercial functionsseparate proxy statement without charge by contacting us at Aptevo Therapeutics as Senior Vice President, Commercial Operations, a position that he has held since 2012 at Cangene Corporation, which was acquired by Emergent in 2014. Mr. Adelman brings over 25 years of industry-specific commercial leadership experience in areas including sales, marketing, contracting, pricing, commercial analytics, and alliance management. Prior to joining Cangene, Mr. Adelman was VP of Marketing and Sales at Adolor Corporation and Sr. Director, Marketing Strategy at AstraZeneca. Mr. Adelman earned a Bachelor of Science degree in business administration, graduating Magna Cum Laude from Northeastern University, before earning an MBA from New York University.
Inc., Attn: Shawnte Mitchell, Ms. Mitchell has served as ourSecretary, Senior Vice President, General Counsel and Corporate Affairs, since August 2016, where she serves as a member of the executive leadership team and as an advisor to the Board of Directors. Ms. Mitchell also leads a team that provides legal and human resources support for all the offices of Aptevo. Prior to Aptevo, Ms. Mitchell served in roles of increasing responsibility at Emergent from May 2009 to July 2016, most recently as Vice President, Associate General Counsel and Assistant Corporate Secretary of Emergent from July 2015 to July 2016. Prior to Emergent, Ms. Mitchell worked at Ropes & Gray LLP. Ms. Mitchell has a Bachelor of Science, Biological Sciences from Stanford University and a JD from The George Washington University.
The following table shows for 2017 and 2018 compensation awarded to or paid to, or earned by, the Company’s Chief Executive Officer and its two other most highly compensated executive officers as of December 31, 2018 (the “named executive officers”).
Name and Principal Position |
| Year |
| Salary |
|
| Bonus(1) |
|
| Option Awards(2) |
|
| Stock Awards(3) |
|
| All Other Compensation(4) |
|
| Total |
| ||||||
Marvin L. White |
| 2018 |
| $ | 565,123 |
|
| $ | 213,334 |
|
| $ | 318,112 |
|
|
| — |
|
| $ | 8,250 |
|
| $ | 1,104,819 |
|
Chief Executive Officer and President |
| 2017 |
| $ | 543,387 |
|
| $ | 290,712 |
|
| $ | 206,204 |
|
|
| — |
|
| $ | 8,100 |
|
| $ | 1,048,403 |
|
|
| 2016 |
| $ | 222,322 |
|
| $ | 238,881 |
|
| $ | 385,761 |
|
|
| — |
|
| $ | 123,125 |
|
| $ | 970,089 |
|
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|
|
|
|
|
Jeffrey G. Lamothe |
| 2018 |
| $ | 402,903 |
|
| $ | 139,405 |
|
| $ | 141,430 |
|
|
| — |
|
| $ | 8,250 |
|
| $ | 691,987 |
|
Senior Vice President and Chief Financial Officer |
| 2017 |
| $ | 387,406 |
|
| $ | 183,631 |
|
| $ | 91,676 |
|
|
| — |
|
| $ | 8,100 |
|
| $ | 670,814 |
|
|
| 2016 |
| $ | 157,738 |
|
| $ | 153,473 |
|
|
| — |
|
| $ | 148,999 |
|
| $ | 101,815 |
|
| $ | 562,025 |
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Scott C. Stromatt, M.D. |
| 2018 |
| $ | 420,815 |
|
| $ | 138,027 |
|
| $ | 141,430 |
|
|
| — |
|
| $ | 8,610 |
|
| $ | 708,882 |
|
Senior Vice President and Chief Medical Officer |
| 2017 |
| $ | 412,564 |
|
| $ | 170,801 |
|
| $ | 91,676 |
|
|
| — |
|
| $ | 8,100 |
|
| $ | 683,142 |
|
|
| 2016 |
| $ | 185,999 |
|
| $ | 144,900 |
|
|
| — |
|
| $ | 390,682 |
|
| $ | 2,236 |
|
| $ | 723,817 |
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Employment, Severance and Change in Control Agreements
The Company does not have any employment contracts with its named executive officers; however, the Company does have a Senior Management Severance Plan (“Severance Plan”) effective as of July 29, 2016 through December 31, 2021, renewing thereafter for one year increments unless terminated ninety (90) days prior to the expiration of the then current term. A participant in this Severance Plan is an employee of the Company with the title Chief Executive Officer, Executive Vice President, Senior Vice President or Vice President, who has been employed by the Company for at least six (6) months, has been designated to participate and executed the plan acknowledgement form. In the event a participant in the Severance Plan is terminated by the Company without cause, the participant shall become entitled to the following:
unpaid base salary
unused paid time off through date of termination
reimbursement for any unreimbursed expense incurred by participant prior to date of termination
employee and fringe benefits and perquisites to which such participant may be entitled to as of the date of termination
an amount equal to the percentage of such participant’s compensation set forth in the table below opposite such participant’s title, to be paid, in equal installments over the period set forth in the table below opposite such participant’s title:
Title |
| Percentage of Compensation |
|
| Period (months) |
Chief Executive Officer |
| 150% |
|
| 18 |
Executive Vice President |
| 125% |
|
| 15 |
Senior Vice President |
| 75% |
|
| 9 |
Vice President |
| 50% |
|
| 6 |
any bonus earned but unpaid as of the date of termination for any previously completed year, to be paid in a lump sum
pro rata target annual bonus in respect of the year of termination, to be paid in a single lump-sum
continued eligibility for such participant and his/her eligible dependents to receive employee benefits.
If during the term of the Severance Plan, the participant’s employment is terminated with cause, then participant shall not be entitled to receive any compensation, benefits or rights and any stock options or other equity participation benefits vested on or prior to the date of such termination, shall immediately terminate.
A participant may also be provided a cash lump sum payment within thirty (30) days of termination of employment to the sum of: any unpaid base salary, accrued time off through date of termination and reimbursement of unreimbursed expenses, an bonus earned but unpaid, pro rata target annual bonus, employee benefits as of the date of termination, any unvested company stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-unit awards held by such participant that are outstanding on the date of the termination of employment shall become fully vested as of such date and the period during which any Equity Award held by such participant that is outstanding on such date may be exercised shall be extended to a date that is the later of the fifteenth day of the third month following the date, or December 31 of the calendar year in which such Equity Award would otherwise have expired if the exercise period had not been extended but not beyond the final date such Equity Award could be exercised if the participant employment had not terminated, in each case based on the terms of such Equity Award at the original grant date, and an amount equal to the percentage of such participant’s compensation set forth in the table below opposite such participant’s title:
The participant and his/her eligible dependents shall continue to be eligible for benefits in accordance with the following chart:
Title |
| Percentage of Compensation |
|
| Period (months) |
Chief Executive Officer |
| 250% |
|
| 30 |
Executive Vice President |
| 200% |
|
| 24 |
Senior Vice President |
| 125% |
|
| 12 |
Vice President |
| 65% |
|
| 6 |
Base Salaries and Target Bonuses
The Compensation Committee (“Committee”) approved annual base salaries and target bonus percentages for 2018. The 2018 bonuses were determined by a review of the achievement of Company and individual performance goals and other factors deemed relevant by the Committee. The following table sets forth the base salary and target performance bonus percentages for 2018:
Name and Title |
| 2018 Base Salary |
|
| 2018 Target Performance Percentage |
| ||
Marvin L. White Chief Executive Officer and President |
| $ | 565,123 |
|
|
| 50 | % |
Jeffrey G. Lamothe Senior Vice President and Chief Financial Officer |
| $ | 402,903 |
|
|
| 40 | % |
Scott C. Stromatt, M.D. Senior Vice President and Chief Medical Officer |
| $ | 420,815 |
|
|
| 40 | % |
Outstanding Equity Awards at December 31, 2018
The following table sets forth information regarding unexercised Aptevo stock options and unvested restricted stock unit awards outstanding as of December 31, 2018 for each of our named executive officers.
|
| 2018 Outstanding Equity Awards at Fiscal Year-End |
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
| Options Awards |
|
| Stock Awards |
|
| ||||||||||||||||||
|
| Number of Securities Underlying |
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
|
|
|
| Option |
|
| Option Award |
|
| Unvested |
|
| Market Value |
|
| ||||
Name |
| Exercisable |
|
| Unexercisable |
|
| Award |
|
| Expiration Date |
|
| Stock Awards |
|
| Unvested Stock |
|
| ||||||
Marvin White |
|
| 35,643 |
| (1) |
| — |
|
| $ | 1.80 |
|
| 5/22/2021 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| 133,650 |
| (2) |
| 66,825 |
| (2) | $ | 2.94 |
|
| 8/3/2026 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| 25,266 |
| (3) |
| 50,534 |
| (3) | $ | 1.96 |
|
| 2/23/2027 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| 25,266 |
| (4) |
| 50,534 |
| (4) | $ | 2.15 |
|
| 5/31/2027 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| — |
|
|
| 151,600 |
| (10) | $ | 3.13 |
|
| 3/9/2028 |
|
|
| — |
|
| $ | — |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey G. Lamothe |
|
| 37,736 |
| (5) |
| — |
|
| $ | 2.47 |
|
| 3/10/2021 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| 26,996 |
| (6) |
| — |
|
| $ | 2.55 |
|
| 3/9/2022 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| 29,200 |
| (7) |
| 14,600 |
| (7) | $ | 2.97 |
|
| 2/28/2026 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| 11,233 |
| (3) |
| 22,467 |
| (3) | $ | 1.96 |
|
| 2/23/2027 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| 11,233 |
| (4) |
| 22,467 |
| (4) | $ | 2.15 |
|
| 5/31/2027 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| — |
|
|
| 67,400 |
| (10) | $ | 3.13 |
|
| 3/9/2028 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| — |
|
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 7,318 |
| (8) | $ | 9,294 |
| (9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott C. Stromatt, M.D. |
|
| 49,682 |
| (5) |
| — |
|
| $ | 2.47 |
|
| 3/10/2021 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| 55,586 |
| (6) |
| — |
|
| $ | 2.55 |
|
| 3/9/2022 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| 65,076 |
| (7) |
| 32,536 |
| (7) | $ | 2.97 |
|
| 2/28/2026 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| 11,233 |
| (3) |
| 22,467 |
| (3) | $ | 1.96 |
|
| 2/23/2027 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| 11,233 |
| (4) |
| 22,467 |
| (4) | $ | 2.15 |
|
| 5/31/2027 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| — |
|
|
| 67,400 |
| (10) | $ | 3.13 |
|
| 3/9/2028 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| — |
|
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 16,269 |
| (8) | $ | 20,662 |
| (9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows for 2018 certain information with respect to the compensation of all non-employee directors of the Company:
Name |
| Fees Earned or Paid in Cash ($) |
|
| Option Awards ($)(1)(2) |
|
| Total ($) |
| |||
Fuad El-Hibri |
| $ | 46,626 |
|
| $ | 92,089 |
|
| $ | 138,715 |
|
Daniel J. Abdun-Nabi |
| $ | 40,415 |
|
| $ | 92,089 |
|
| $ | 132,504 |
|
Grandy Grant, III |
| $ | 60,348 |
|
| $ | 92,089 |
|
| $ | 152,437 |
|
Zsolt Harsanyi, PhD. |
| $ | 65,200 |
|
| $ | 92,089 |
|
| $ | 157,289 |
|
Barbara Lopez Kunz |
| $ | 70,000 |
|
| $ | 92,089 |
|
| $ | 162,089 |
|
John E. Niederhuber, M.D. |
| $ | 77,606 |
|
| $ | 92,089 |
|
| $ | 169,695 |
|
|
|
|
|
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
Under the Aptevo Directors Compensation Program, Aptevo’s non-employee directors receive the compensation set forth in the table below. We also reimburse Aptevo’s non-employee directors for out-of-pocket expenses incurred in connection with attending our board and committee meetings.
Element |
| Program |
| |
Annual Cash Retainer |
| $ | 40,000 |
|
Committee Chair Retainer |
| $20,000 Audit $15,000 Compensation $10,000 Nominating/Governance |
| |
Committee Member Retainer |
| $10,000 Audit $7,500 Compensation $5,000 Nominating/Governance |
| |
|
|
|
|
|
Annual Equity Grant |
| 25,000 Options |
| |
Transactions With Related Persons
Related Person Transaction Policy
In 2016, we adopted a written Related Person Transaction Policy (“Policy”) that sets forth our policies and procedures for the review and approval or ratification of related person transactions. For purposes of our policy only, a “Related Person Transaction” is a transaction, arrangement or relationship in which we and any “related persons” are participants involving an amount that exceeds $120,000. A related person is an executive officer, director, or more than 5% stockholder of any class of our voting securities, including any of their immediate family member.
Any Related Person Transaction proposed to be entered into by the Company must be reported to the Company’s General Counsel and shall be reviewed and approved by the Audit Committee of the Board (the “Committee”) in accordance with the terms of this Policy. If the General Counsel determines that advance approval of a Related Person Transaction is not practicable under the circumstances, the Committee shall review and, in its discretion, may ratify the Related Person Transaction at the next meeting of the Committee, or at the next meeting following the date that the Related Person Transaction comes to the attention of the General Counsel. Any Related Person Transaction previously approved by the Committee or otherwise already existing that is ongoing in nature shall be reviewed by the Committee annually.
A Related Person Transaction reviewed under this Policy will be considered approved or ratified if it is authorized by the Committee in accordance with the standards set forth in this Policy after full disclosure of the Related Person’s interests in the transaction. As appropriate for the circumstances, the Committee shall review and consider: (a) the Related Person’s interest in the Related Person Transaction; (b) the approximate dollar value of the amount involved in the Related Person Transaction; (c) 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; (d) whether the transaction was undertaken in the ordinary course of business of the Company; (e) whether the transaction with the Related Person is proposed to be, or was, entered into on terms no less favorable to the Company than terms that could have been reached with an unrelated third party; (f) the purpose of, and the potential benefits to the Company of, the transaction; and (g) 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 Committee will review all relevant information available to it about the Related Person Transaction. The Committee may approve or ratify the Related Person Transaction only if the Committee determines that, under all of the circumstances, the transaction is in, or is not inconsistent with, the best interests of the Company. The Committee may, in its sole discretion, impose such conditions as it deems appropriate on the Company or the Related Person in connection with approval of the Related Person Transaction.
Indemnity Agreements
The Company has entered into indemnity agreements with certain officers and directors which provide, among other things, that the Company will indemnify such officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position as a director, officer or other agent of the Company, and otherwise to the fullest extent permitted under Delaware law and the Company’s Bylaws.
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices of Internet Availability of Proxy Materials or other Annual Meeting materialswith respect to two or more stockholders sharing the same address by delivering a single Notice of Internet Availability of Proxy Materials or other Annual Meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are Aptevo stockholders will be “householding” the Company’s proxy materials. A single Notice of Internet Availability of Proxy Materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate Notice of Internet Availability of Proxy Materials, please notify your broker or Aptevo. Direct your written request to Aptevo Therapeutics Inc. Shawnte Mitchell, Secretary, Senior Vice President and General Counsel, 2401 4th Ave.Avenue, Suite 1050, Seattle, Washington 98121, or contact Shawnte Mitchell by telephone at (206)838-0500. at (206) 838-0500. We will promptly send additional copies of the proxy statement.
Stockholders who currently receivesharing an address that are receiving multiple copies of the Noticesproxy statement can request delivery of Internet Availabilitya single copy of Proxy Materials atthe proxy statement by contacting their addresses and would like to request “householding”broker, bank or other intermediary or by contacting us as indicated above.
OTHER MATTERS
We do not know of their communications should contact their brokers.
The Board of Directors knows of noany business other mattersthan that described in this proxy statement that will be presented for consideration or action by the stockholders at the AnnualSpecial Meeting. If, however, any other matters arebusiness relating to the purpose or purposes stated in this proxy statement is properly brought before the meeting, it isSpecial Meeting, shares represented by proxies will be voted in accordance with the intentionbest judgment of the persons named in the accompanying proxy to vote on such matters in accordance withproxies or their best judgment.substitutes.
By Order of the Board of Directors
Secretary, Senior Vice President, and General Counsel and Corporate Affairs
APPENDIX A copy
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
APTEVO THERAPEUTICS INC.
APTEVO THERAPEUTICS INC., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
FIRST: The name of this corporation is Aptevo Therapeutics Inc. (the “Company”).
SECOND: The date on which the Company’s Certificate of Incorporation was originally filed with the Secretary of State of the State of Delaware is February 22, 2016.
THIRD: The Board of Directors of the Company, acting in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware, adopted resolutions amending its Amended and Restated Certificate of Incorporation, as heretofore amended (the “Certificate of Incorporation”), as follows:1
Effective as of the effective time of 5:01 p.m., Eastern time, on the date this Certificate of Amendment is filed with the Secretary of State of the State of Delaware (the “Effective Time”), each two (2), three (3), four (4), five (5), six (6), seven (7), eight (8), nine (9), ten (10), eleven (11), twelve (12), thirteen (13), fourteen (14), fifteen (15), sixteen (16), seventeen (17), eighteen (18), nineteen (19), twenty (20) shares of the Company’s Annual ReportCommon Stock, par value $0.001 per share, issued and outstanding immediately prior to the SecuritiesEffective Time shall, automatically and Exchange Commissionwithout any action on Form 10-Kthe part of the Company or the respective holders thereof, be combined into one (1) share of Common Stock without increasing or decreasing the par value of each share of Common Stock (the “Reverse Split”);provided, however, no fractional shares of Common Stock shall be issued as a result of the Reverse Split and, in lieu thereof, upon receipt after the Effective Time by the exchange agent selected by the Company of a properly completed and duly executed transmittal letter and, where shares are held in certificated form, the surrender of the stock certificate(s) formerly representing shares ofpre-Reverse Split Common Stock, any stockholder who would otherwise be entitled to a fractional share of post-Reverse Split Common Stock as a result of the Reverse Split, following the Effective Time (after taking into account all fractional shares of post-Reverse Split Common Stock otherwise issuable to such stockholder), shall be entitled to receive a cash payment (without interest) equal to the fractional share of post-Reverse Split Common Stock to which such stockholder would otherwise be entitled multiplied by the average of the closing sales prices of a share of the Company’s Common Stock (as adjusted to give effect to the Reverse Split) on The Nasdaq Capital Market during regular trading hours for the fiscal year ended December 31, 2018five (5) consecutive trading days immediately preceding the date this Certificate of Amendment is availablefiled with the Secretary of State of the State of Delaware. Each stock certificate that, immediately prior to the Effective Time, represented shares ofpre-Reverse Split Common Stock shall, from and after the Effective Time, automatically and without chargeany action on the part of the Company or the respective holders thereof, represent that number of whole shares of post-Reverse Split Common Stock into which the shares ofpre-Reverse Split Common Stock represented by such certificate shall have been combined (as well as the right to receivecash in lieu of any fractional shares of post-Reverse Split Common Stock as set forth above;provided, however, that each holder of record of a certificate that represented shares ofpre-Reverse Split Common Stock shall receive, upon written request to: Corporate Secretary, surrender of such certificate, a new certificate representing the number of whole shares of post-Reverse Split Common Stock into which the shares ofAptevo Therapeutics Inc.pre-Reverse, Split Common Stock represented by such certificate shall have been combined pursuant to the Reverse Split, as well asany cash in lieu of fractional shares of post-Reverse Split Common Stock to which such holder may be entitled as set forth above. The Reverse Split shall be effected on a record2401 4th Ave. Suite 1050, Seattle, Washington 98121holder-by-record. holder basis, such that any fractional shares of post-Reverse Split Common Stock resulting from the Reverse Split and held by a single record holder shall be aggregated.
| 1 | These amendments approve the combination of any whole number of shares of Aptevo’s common stock between and including two (2) and twenty (20) into one (1) share of Aptevo’s common stock. By these amendments, the stockholders would approve each of the alternate amendments proposed by Aptevo’s Board of Directors. If the reverse stock split proposal is approved by stockholders, the Certificate of Amendment filed with the Secretary of State of the State of Delaware will include only that reverse stock split ratio determined by Aptevo’s Board of Directors to be in the best interests of Aptevo and its stockholders. The other amendments will be abandoned pursuant to Section 242(c) of the General Corporation Law of the State of Delaware. Aptevo’s Board of Directors may also elect not to effect any reverse stock split, in which case all proposed alternate amendments will be abandoned. |
FOURTH: The foregoing amendment was submitted to the stockholders of the Company for their approval, and was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware and shall be effective as of 5:01 p.m., Eastern time, on the date this Certificate of Amendment is filed with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF,APTEVO THERAPEUTICS INC. has caused this Certificate of Amendment to be signed by its President and Chief Executive Officer this day of , 2020.
| APTEVO THERAPEUTICS INC. | ||
| By: | ||
| Marvin L. White | ||
| President and Chief Executive Officer | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 0000437171_1 R1.0.1.18 APTEVO THERAPEUTICS INC. C/O BROADRIDGE P.O. BOX 1342 BRENTWOOD, NY 11717 VOTE BY INTERNET - INTERNET—www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on May 14, 2019 for shares held directly and by 11:59 P.M. ET on May 12, 2019 for shares held in a Plan.March 10, 2020. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - PHONE—1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on May 14, 2019 for shares held directly and by 11:59 P.M. ET on May 12, 2019 for shares held in a Plan.March 10, 2020. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E66304-P18810 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY APTEVO THERAPEUTICS INC. The Board of Directors recommends you vote FOR the following: 1. To elect three nominees to the Board of Directors to hold office for a term expiring at our 2022 Annual Meeting of Stockholders. Nominees: 01) Fuad El-Hibri 02) John E. Niederhuber M.D. 03) Marvin L. White For Withhold All All For All Except To withhold authority to vote for any individual nominee(s), mark "For All Except"Proposals 1 and write the number(s) of the nominee(s) on the line below.2. For Against Abstain 2.1 To ratifyapprove an amendment to the selection byCompany’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Audit CommitteeCompany’s common stock at a ratio of between1-for-2 to1-for-20, with such ratio to be determined at the sole discretion of the Board of Directors and with such reverse stock split to be effected at such time and date, if at all, as determined by the Board of Ernst & Young LLP as the independent registered public accounting firmDirectors in its sole discretion. 2 To authorize an adjournment of the company for the fiscal year ending December 31, 2019.meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal 1. NOTE: Such other business relating to the purpose or purposes stated in the accompanying proxy statement as may properly come before the meeting or any continuation, adjournment or postponement thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
APTEVO TM THERAPEUTICS ANNUAL MEETING OF STOCKHOLDERS OF APTEVO THERAPEUTICS INC. MAY 15, 2019 Dear Stockholder: Please take note of the important information accompanying this proxy card. These are matters related to the operation of Aptevo Therapeutics Inc. that require your prompt attention. Your vote counts and you are strongly encouragedencourages to exercise your right to vote these shares. Please vote these shares using one of the methods described on the reverse side of this proxy card. Thank you in advance for your attempt considerationconsiderartion of these matters. Sincerely, Board of Directors of Aptevo Therapeutics Inc. 0000437171_2 R1.0.1.18 Important Notice Regarding the Availability of Proxy Materials for the AnnualSpecial Meeting: The Annual Report on Form 10-K and Proxy Statement is/areis available at www.proxyvote.com. E66305-P18810www.proxyvote.com . APTEVO THERAPEUTICS INC. AnnualSpecial Meeting of Stockholders May 15, 2019March 11, 2020 9:00 AM PDTlocal time This proxy is solicited by the Board of Directors The undersigned, revoking all prior proxies, hereby appoints Jeffrey G. Lamothe and Shawnte M. Mitchell as proxies, each with the full power of substitution, and hereby authorizes each of them to represent and to vote, as designated on the reverse side, all shares of common stock of Aptevo Therapeutics Inc. (the "Company"“Company”) held of record by the undersigned as of March 20, 2019January 31, 2020 at the AnnualSpecial Meeting of Stockholders to be held on May 15, 2019March 11, 2020 at 9:00 a.m., Pacificam local time at the World Trade Center Seattle, 2200 Alaskan Way,Company’s office at 2401 4th Avenue, Suite 1050, Seattle, WA 98121, and at any continuation, adjournment or postponement thereof, and, in their discretion, on any matters relating to the purpose or purposes stated in the accompanying proxy statement that may be properly presented for a vote at the Annual Meeting. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES AND "FOR" PROPOSALSpecial Meeting or at any continuation, adjournment or postponement thereof. This proxy, when properly executed, will be voted as directed. If no direction is given with respect to a particular proposal, this proxy will be voted “FOR” Proposal 1 and “FOR” Proposal 2. IN THEIR DISCRETION, THESE PROXIES OF THE UNDERSIGNED ARE AUTHORIZED TO VOTE UPON ANY AND ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.In their discretion, these proxies of the undersigned are authorized to vote upon any and all other matters that may properly come before the meeting. Continued and to be signed on reverse side