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ONTRAK, INC.
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2200 Paseo Verde Parkway, Suite 280
Henderson, NV 89052
(310) 444-4300 |
NOTICE OF INTENT TO CONVENE IN VIRTUAL MEETING FORMAT THE ANNUAL MEETING OF THE STOCKHOLDERS TO BE HELD ON AUGUST 29, 2022
Dear Stockholders of Ontrak, Inc.:
You are invited to participate in the 2022 Annual Meeting (the “Annual Meeting”)attend a special meeting of stockholders of Ontrak, Inc., a Delaware corporation (“Ontrak” or the “Company”), to be held on Monday, August 29, 2022February 20, 2023 at 12:00 p.m. Pacific Time. Due to our continuing concerns about protecting the healthThe special meeting will be convened and well-being of our stockholders and employees in the evolving public health environment relating to the coronavirus pandemic, the Board of Directors has determined to convene and conduct the Annual Meeting on Monday, August 29, 2022 at 12:00 p.m. Pacific Time, conducted in a virtual meeting format at https://web.lumiagm.com/250638678.format. Stockholders will NOTnot be able to attend the Annual Meetingspecial meeting in-person. The accompanying Proxy Statementproxy statement includes instruction on how to accessattend the virtual Annual Meetingspecial meeting and how to listen, vote and submit questions from home or any remote location with Internet connectivity. questions.
At the Annual Meeting, wespecial meeting, our stockholders will consider and vote upon the following items:
1.To elect four (4) Directors to hold office until the next annual meeting and until their respective successors are elected and qualified (the “Board Election Proposal”);
2.To ratify the appointment of EisnerAmper LLP as Ontrak’s independent registered public accounting firm for the 2022 fiscal year (the “Auditor Ratification Proposal”);
3.To approve ana proposal to give our board of directors the authority, at its discretion, to file a certificate of amendment to our amended and restated certificate of incorporation to effect a reverse split of our outstanding common stock at a ratio that is not less than 4:1 and not greater than 6:1, without reducing the terms of the Company’s 2017 Stock Incentive Plan (as amended to date, the “2017 Plan”) to (i) provide for an additional 4,000,000 shares to be issued in connection with awards granted thereunder, and (ii) to amendthe “evergreen” or automatic replenishment provision of the 2017 Plan pursuant to which theauthorized number of shares authorized for issuance underof our common stock, with the 2017 Plan is automatically increased on an annual basisfinal ratio to 3%be selected by our board of directors in its discretion following stockholder approval, and to be effected, if at all, in the sole discretion of our board of directors at any time within one year of the issued and outstanding sharesdate of the Company (the “2017 Plan Amendment Proposal”);special meeting without further approval or authorization of our stockholders;
4.2. To approve the issuance of shares of our common stock, convertible notes and the shares of our common stock issuable upon conversion thereof, and warrants to purchase shares of our common stock and the Company to Acuitas Capital LLCshares of our common stock issuable upon exercise thereof, in each case, pursuant to athe Master Note Purchase Agreement dated April 15, 2022, for the purposes of complying with NASDAQ Listing Rule 5635 (the “Shares Issuance Proposal”);
5.To approve the issuance of warrants and shares underlying such warrants to Acuitas Capital LLC pursuant to a Master Note Purchase Agreement Dated April 15, 2022,as amended, for purposes of complying with NASDAQNasdaq Listing Rule 5635, to the extent required (the “Warrant Issuance Proposal”);5635; and
6.To approve the non-employee director retention plan (the “Director Retention Plan Proposal”);
7.To approve an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to remove certain restrictions on transfers of the Company’s securities as set out in Article EIGHTH of the Certificate of Incorporation (the “Charter Amendment Proposal”);
8.3. To approve the adjournment of the special meeting, if necessary or advisable, to solicit additional proxies in favor of Proposal 7the proposals described above if there are not sufficient votes to approve Proposal 7 (the “Adjournment Proposal”); andeither of such proposals.
9.To transact any other business that may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting.
These items of business are more fully described in the Proxy Statement accompanying this Notice.
YOUROUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES AND IN FAVOR OF ALL THE OTHER PROPOSALS OUTLINED IN THE ACCOMPANYING PROXY STATEMENT.PROPOSALS.
TheOur board of directors of Ontrak has fixed the close of business on July 15, 2022January 17, 2023 as the record date for the Annual Meeting.special meeting. Only stockholders of record on the record date are entitled to notice of and to vote at the Annual Meeting. Further information regarding voting rights and the matters to be voted upon is presented in the accompanying Proxy Statement.
special meeting.
You are cordially invited to participate in the Annual Meeting.special meeting. Whether or not you expect to participate inattend the Annual Meeting,special meeting, please complete, date, sign and return the enclosed proxy or submit your proxy through the internet or by telephone as promptly as possible in order to ensure your representation at the Annual Meeting. If you have requested physical materials to be mailed to you, a return envelope (which is postage prepaid if mailed in the United States) is enclosed for your convenience to use if you choose to submit your proxy by mail. Even if you have voted by proxy, you may still vote online if you attend the virtual Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other agent and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from that record holder. Only stockholders of record at the close of business on the record date may vote at the Annual Meeting or any adjournment or postponement thereof. This notice is being mailed to all stockholders of record entitled to vote at the Annual Meeting on or about July 28, 2022.
By order of the Board of Directors,
special meeting.
| | | | | |
Henderson, Nevada
| By order of the Board of Directors, |
| January 20, 2023 | /s/Terren S. Peizer |
Terren S. Peizer
Chairman of the Board and Chief Executive ChairmanOfficer
Henderson, Nevada
July 25, 2022Important Notice Regarding the Availability of Proxy Materials for the special meeting
The notice of special meeting and the proxy statement and form of proxy card are available at https://ontrakhealth.com/investors/ financial-information/.
PROXY STATEMENT
FOR THE 2022 ANNUAL
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 20, 2023
Important Notice Regarding the Availability of Proxy Materials for the 2022 Annual Meeting
This proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”) are available for viewing, printing and downloading at https://ontrakhealth.com/investors/financial-information/ and on our website at www.ontrakhealth.com. Certain documents referenced in the proxy statement are available on our website. However, we are not including the information contained on our website, or any information that may be accessed by links on our website, as part of, or incorporating it by reference into, this Proxy Statement.
The Notice of Annual Meeting, Proxy Statement and proxy card and the 2021 Annual Report are first being mailed to our stockholders on or about July 28, 2022.QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT, THE VIRTUAL ANNUAL
SPECIAL MEETING AND VOTING
Why did I receive these proxy materials?
We are providing these proxy materials in connection with the solicitation by the Boardboard of Directorsdirectors of Ontrak, Inc., a Delaware corporation (sometimes referred to as “we,” “our,” “us,” the “Company,” the “Corporation” or “Ontrak”) in this proxy statement), of proxies to be voted at our 2022 Annual Meetinga special meeting of Stockholders (the “Annual Meeting”)stockholders scheduled to be held at 12:00 p.m. Pacific Time on February 20, 2023 and at any adjournment or postponement thereof.
The notice of the special meeting, this proxy statement and proxy card are first being sent or made available to stockholders on or about January 20, 2023.
Who can vote at the special meeting?
Only our stockholders of record at the close of business on January 17, 2023, the record date for the special meeting, or their legal proxy holders, are entitled to vote at the meeting. There were 27,280,986 shares of common stock outstanding and entitled to vote on the record date. Each share of common stock is entitled to one vote on each matter properly brought before the special meeting.
How may I participate in the special meeting?
The special meeting will be a completely virtual Annual Meeting?meeting conducted via live audio webcast. We believe this technology provides expanded access, improved communication and cost savings for our stockholders. Hosting a virtual meeting enables increased stockholder attendance and participation from any location around the world.
To participate in the virtual Annual Meeting,special meeting, go to https://web.lumiagm.com/250638678. Online check-in for the special meeting will begin at 12:00 p.m. PDTPacific Time on August 29, 2022.February 20, 2023. We suggest logging-on at that time to allow ample time for the check-in procedures. Please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone or similar companies.
Stockholders of record: Shares registered directly in your name
If you are a stockholder of record as of July 15, 2022, the record date (the “Record date”) for the Annual Meeting,special meeting, you should click on “I have a login,” enter the control number found on your proxy card you previously received, and enter the password “ontrak2022” (the“ontrak2023” (the password is case sensitive).
Beneficial owners: Shares registered in the name of a broker, bank or other nominee
If, on the record date, your shares were not held in your name, but rather in an account at a broker, bank, or other nominee, then you are the beneficial owner of those shares and those shares are considered to be held in “street name.” The organization holding those shares is considered to be the stockholder of record for purposes of the special meeting. If your shares are held in “street name” through a broker, bank or other nominee,street name, in order to participate in the virtual annualspecial meeting you must first obtain a legal proxy from your broker, bank or other nominee reflectingnominee. Please see the number of shares of Ontrak’s common stock you beneficially held as ofdiscussion below under the Record Date, your name and email address. You then must submit a request for registration to American Stock Transfer & Trust Company, LLC: (1) by email to proxy@astfinancial.com; (2) by facsimile to 718-765-8730 or (3) by mail to American Stock Transfer & Trust Company, LLC, Attn: Proxy Tabulation Department, 6201 15th Avenue, Brooklyn, NY 11219. Requests for registration must be labeled as “Legal Proxy” and be received by American Stock Transfer & Trust Company, LLC no later than 5:00 p.m. Eastern Time on August 22, 2022.
If I already submitted a proxy,heading, “How do I have to vote again?
No. If you already submittedvote?” for information on obtaining a proxy, your vote will be counted and you do not need to submit a new proxy or vote online at the virtual Annual Meeting.legal proxy.
If I haveWhat proposals will be submitted to the stockholders for a vote?
There are three matters scheduled for a vote:
1. To approve a proposal to give our board of directors the authority, at its discretion, to file a certificate of amendment to our amended and restated certificate of incorporation to effect a reverse split of our outstanding common stock at a ratio that is not yet submitted a proxy, may I still do so?less than 4:1 and not greater than 6:1, without reducing the authorized number of shares of our common stock, with the final ratio to be selected by our board of directors in its discretion following stockholder approval, and to be effected, if at all, in the sole discretion of our board of directors at any time within one year of the date of the special meeting without further approval or authorization of our stockholders. We refer to this proposal as the "Reverse Stock Split Proposal."
2. To approve the issuance of shares of our common stock, convertible notes and the shares of our common stock issuable upon conversion thereof, and warrants to purchase shares of our common stock and the shares of our common stock issuable upon exercise thereof, in each case, pursuant to the Master Note Purchase Agreement dated April 15, 2022, as amended, for purposes of complying with Nasdaq Listing Rule 5635. We refer to this proposal as the “Keep Well Proposal.”
3. To approve the adjournment of the special meeting, if necessary or advisable, to solicit additional proxies in favor of the proposals described above if there are not sufficient votes to approve either of such proposals. We refer to this proposal as the “Adjournment Proposal.”
Yes. If you have not yet submitted a proxy, you may do so by (a) visiting www.voteproxy.com and following the on screen instructions (have your proxy card available when you access the webpage), or (b) calling toll-free 1-800-PROXIES (1-800-776-9437) in the U.S. or 1-718-921-8500 from foreign countries from any touch-tone phone and follow the instructions (have your proxy card available when you call), or (c) submitting your proxy card by mail by using the previously provided self-addressed, stamped envelope.
May I revoke a previously submitted proxy or otherwise change my vote at the virtual Annual Meeting?
Yes. You may change or revoke your vote by writing to us, by submitting another properly signed proxy card with a more recent date, or by voting again by the telephone or Internet voting options described below. If your shares are held in “street name” through a bank, broker or other nominee, any changes need to be made through them. Your last vote will be the vote that is counted.
Unless revoked, a proxy will be voted at the virtual meeting in accordance with the stockholder’s indicated instructions. In the absence of instructions, proxies will be voted FOR the election of the four (4) nominees identified in the Proxy Statement as directors, FOR the Auditor Ratification Proposal, FOR the 2017 Plan Amendment Proposal, FOR the Shares Issuance Proposal, FOR the Warrant Issuance Proposal, FOR the Director Retention Plan Proposal, FOR the Charter Amendment Proposal, and FOR the Adjournment Proposal.
How do I vote at the virtual Annual Meeting?vote?
Stockholders of record; Shares registered directly in your name.
If you are a stockholder of record, you may vote online atduring the virtual Annual Meeting on August 29, 2022 or votespecial meeting, by proxy using the enclosed proxy card, the Internet or telephone. Whether or not you plan to participate in the Annual Meeting,special meeting, we urge you to vote by proxy to ensure your vote is counted. Even if you have already votedvote by proxy, you may still attend the virtual Annual Meetingspecial meeting and vote online at the virtual Annual Meeting on August 29, 2022,during meeting, if you choose.
•To vote online atduring the virtual Annual Meeting on August 29, 2022,special meeting, follow the instructions above under “How do I participate in the Annual Meeting?special meeting?” click on “I have a login,” enter the control number found on your proxy card you previously received, and enter the password “ontrak2022”“ontrak2023” (the password is case sensitive).
•To vote using the proxy card, please complete, sign and date the proxy card and return it in the prepaid envelope. If you returnwe receive your signed proxy card to us before the Annual Meeting,special meeting, we will vote your shares as you direct.instructed on the proxy card. If you do not have the prepaid envelope, please mail your completed proxy card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717, U.S.A.
•To vote via the Internet, please go to www.voteproxy.com and follow the instructions. Please have your proxy card handy when you go to the website.
•To vote via the telephone, you can vote by calling the telephone number on your proxy card. Please have your proxy card handy when you call. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been properly recorded.
•To vote via the Internet, please go to www.voteproxy.com and follow the instructions. Please have your proxy card handy when you go to the website. As with telephone voting, you can confirm that your instructions have been properly recorded.
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day until 11:59 p.m. Eastern Time on August 28, 2022.February 19, 2023. After that, telephone and Internet voting will be closed, and if you want to vote your shares, you will either need to ensure that your proxy card is received bybefore voting begins at the Company before the date of the Annual Meetingspecial meeting or attend the virtual Annual Meeting tospecial meeting and vote your shares online.
online during the meeting.Beneficial owner;owners: Shares held in account at brokerage, bank or other organization.
If your shares are registered in the name of youra broker, bank or other agent,nominee
If you are the “beneficial owner” of those shares and those shares are considered as held in “street name.” If you are a beneficial owner of shares registeredheld in thestreet name, of your broker, bank or other agent, you should have received a proxy card and voting instructions with these proxy materials from that organizationyour broker, bank or other nominee, rather than directly from us. Simply complete and mailAs a beneficial owner, you have the proxy card as instructedright to instruct the organization holding your shares how to vote your shares. You should have received a notice containing voting instructions from the organization that holds your shares. Follow the instructions provided by your broker, bank or other agentthat organization to ensure that your vote is counted. You may be eligible to vote your shares electronically over the Internet or by telephone depending on your broker, bank or other agent. A large number of banks and brokerage firms offer Internet and telephone voting. If your bank or brokerage firm does not offer Internet or telephone voting information, please complete and return your proxy card in the self-addressed, postage-paid envelope provided. To vote in person at the virtual Annual Meeting,special meeting, you must first obtain a valid legal proxy from the organization that holds your broker, bank or other agentshares and then you must register in advance to attend the Annual Meeting. Followspecial meeting. Please contact the instructions fromorganization that holds your broker or bank included with these proxy materials, or contact your broker or bankshares to request a legal proxy form.proxy.
After obtaining a valid legal proxy, from your broker, bank or other agent, to then register to attend the Annual Meeting,special meeting you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to our transfer agent, American Stock Transfer & Trust Company, LLC. Requests for registration should be directedLLC: (1) by email to proxy@astfinancial.com;proxy@astfinancial.com(2) by facsimile to 718-765-8730 or (3) by mail to facsimile number 718-765-8730. Written requests can be mailed to:
American Stock Transfer & Trust Company, LLC,
Attn: Proxy Tabulation Department,
6201 15th15th Avenue,
Brooklyn, NY 11219
11219. Requests for registration must be labeled as “Legal Proxy” and be received by American Stock Transfer & Trust Company, LLC no later than 5:00 p.m., Eastern Time on August 22, 2022.
February 13, 2023. You will receive a confirmation of your registration by email after we receive your registration materials.materials are received by our transfer agent. You may then attend the Annual Meetingspecial meeting and vote your shares at https://web.lumiagm.com/250638678 during the meeting. The password for the meeting is ontrak2022."ontrak2023" (the password is case sensitive). Follow the instructions provided to vote. We encourage you to access the meeting prior to the start time leaving ample time for the check in.
Who can help answer any other questions I might have?
If you have any questions concerning the virtual Annual Meeting (including accessing the meeting by virtual means) or would like additional copies of the Proxy Statement or need help voting your shares of the Company’s common stock, please contact our transfer agent:
American Stock Transfer & Trust Company, LLC
The Notice of Annual Meeting, 2021 Annual Report, Proxy Statement and form of Proxy Card are available at:
https://ontrakhealth.com/investors/financial-information/
Who is entitled to vote at the Annual Meeting?
Only stockholders of record at the close of business on July 15, 2022 (the “Record Date”), are entitled to vote at the Annual Meeting. On the Record Date, there were 20,966,127 shares of Ontrak’s common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting.
May I revoke a previously submitted proxy or otherwise change my vote?
What Is the difference between holding shares as a stockholder of record and as a beneficial owner?
If on July 15, 2022Yes. You may revoke your shares were registered directly in your name with Ontrak’s transfer agent, American Stock Transfer & Trust Company, LLC, then you are the “stockholder of record.” Whetherproxy or not you plan to participate in the Annual Meeting, we urge you to fill out and return the enclosed proxy card or vote via the Internet or by telephone to ensurechange your vote is counted.
If on July 15, 2022 your shares were held in a stock brokerage account or by a bank or other similar organization, then you are considered the “beneficial owner” of those shares. These proxy materials have been forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct your broker, bank or other agent how to vote the shares in your account. You are also invited to participate in the Annual Meeting. However, because you are not the stockholder of record, you may not vote your shares online at the virtual Annual Meeting unless you request and obtain a valid proxy from your broker, bank or other agent.
What am I voting on?
There are nine matters scheduled for a vote:
1.To elect four (4) Directors to hold office until the next annual meeting and until their respective successors are elected and qualified (the “Board Election Proposal”);
2.To ratify the appointment of EisnerAmper LLP as Ontrak’s independent registered public accounting firm for the 2022 fiscal year (the “Auditor Ratification Proposal”);
3.To approve an amendment to the terms of the Company’s 2017 Stock Incentive Plan (as amended to date, the “2017 Plan”) to (i) provide for an additional 4,000,000 shares to be issued in connection with awards granted thereunder, and (ii) to amendthe “evergreen” or automatic replenishment provision of the 2017 Plan pursuant to which the number of shares authorized for issuance under the 2017 Plan is automatically increased on an annual basis to 3% of the issued and outstanding shares of the Company (the “2017 Plan Amendment Proposal”);
4.To approve the issuance of shares of common stock of the Company to Acuitas Capital LLC pursuant to a Master Note Purchase Agreement dated April 15, 2022, for the purposes of complying with NASDAQ Listing Rule 5635 (the “Shares Issuance Proposal”);
5.To approve the issuance of warrants and shares underlying such warrants to Acuitas Capital LLC pursuant to a Master Note Purchase Agreement Dated April 15, 2022, for purposes of complying with NASDAQ Listing Rule 5635, to the extent required (the “Warrant Issuance Proposal”);
6.To approve the non-employee director retention plan (the “Director Retention Plan Proposal”);
7.To approve an amendment to the Company’s amended and restated certificate of incorporation (the “Certificate of Incorporation”), to remove certain restrictions on transfers of the Company’s securities as set out in Article EIGHTH of the Certificate of Incorporation (the “Charter Amendment Proposal”);
8.To approve the adjournment of the meeting, if necessary or advisable, to solicit additional proxies in favor of Proposal 7 if there are not sufficient votes to approve Proposal 7 (the “Adjournment Proposal”); and
9. To transact any other business that may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting.
What if I return a proxy card but do not make specific choices?
If your card does not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by your proxy card as recommended by the Board of Directors, unless your shares are held in street name and you fail to provide your broker, bank or other agent, as applicable, with voting instructions on proposals 1, 3, 4, 5, 6, 7 and 9 in which case your shares will be voted as “broker non-votes” on such proposal as described below. Ontrak does not expect that any matters other than the election of Directors and the other proposals described
herein will be brought before the Annual Meeting. If any other matter is properly presented at the Annual Meeting, your proxy (one of the individuals named on your proxy card) will vote your shares using their best judgment.
What can I do if I change my mind after I vote?
If you are a stockholder of record, you can revoke your proxy at any time before the final vote at the Annual Meetingspecial meeting by:
•giving written notice that you are revoking your proxy to the Secretary, Ontrak, Inc., 2200 Paseo Verde Parkway, Suite 280, Henderson, NV 89052;
•delivering a properly completed proxy card with a later date, or vote by telephone or on the Internet at a later date (we will vote your shares as directed in the last instructions properly received from you prior to the Annual Meeting)special meeting); or
•attending and voting online at the virtual Annual Meetingspecial meeting (note, simply attending the Annual Meetingspecial meeting will not, by itself, revoke your proxy).
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or other agent that is the holder of record and following its instructions.
Please note that to be effective, your new proxy card, internet or telephonic voting instructions or written notice of revocation must be received by the Secretary prior to the Annual Meetingspecial meeting and, in the case of internet or telephonic voting instructions, must be received before 11:59 p.m. Eastern Time on August 28, 2022.February 19, 2023.
Unless revoked, a proxy will be voted at the virtual meeting in accordance with the stockholder’s indicated instructions.
What shares are included on theif I return a proxy card?card but do not make specific voting choices?
If you are a stockholder of record, you will receive only oneyour proxy card fordoes not indicate your voting preferences, your shares will be voted FOR all the shares you hold of recordproposals described in certificate and book-entry form. If you are a beneficial owner, you will receive voting instructions from your broker, bank or other agent thatthis proxy statement.
What is the holderquorum requirement for the special meeting?
A quorum of record.
Is therestockholders is necessary to hold the special meeting. A quorum will be present if a listmajority of stockholdersthe outstanding shares of our common stock entitled to vote on the record date are present in person or represented by proxy at the Annual Meeting?
The namesspecial meeting. On the record date, there were 27,280,986 shares of stockholders of recordour common stock outstanding and entitled to votevote. Thus, 13,640,494 shares must be present or represented by proxy at the Annual Meetingspecial meeting in order for there to be a quorum. Abstentions and broker non-votes will be available ten days priorcounted as present for purposes of determining a quorum.
If there is no quorum, a majority of the shares represented at the meeting may adjourn the meeting to another time or date.
Who will count the Annual Meeting for any purpose relevant to the Annual Meeting, by contacting the Secretary of Ontrak, Inc.
How are votes counted?votes?
Votes will be counted by the inspector of election appointed for the Annual Meeting, who will separately count “For” and “Against” votes, and broker non-votes.special meeting.
What is a broker non-vote?
If you are a beneficial owner whose shares are held of record by a broker, bank, or other nominee, you must instruct the brokersuch organization how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the brokerorganization holding your shares does not have discretionary authority to vote. This is called a “broker non-vote.” In these cases, the broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum butWe expect that brokers, banks and other nominees will not be able to vote on those matters for which specific authorization is required.
If you are a beneficial owner whose shares are held of record by a broker, your broker hashave discretionary voting authority to vote your shares on Proposal No. 2, the Auditor RatificationReverse Stock Split Proposal and Proposal No. 8,on the Adjournment Proposal, even if the brokerorganization does not receive voting instructions from you. However,the beneficial owner of the shares. Even if an organization has discretionary authority to vote uninstructed shares, certain organizations may elect not to vote shares without an instruction from the beneficial owner. So, if you are a beneficial owner, please instruct the organization that holds your broker doesshares as to how you wish to vote your shares. We expect that brokers, banks and other nominees will not have discretionary authority to vote on Proposal No. 1, the Board Election Proposal, Proposal No. 3, the 2017 Amendment Proposal, Proposal No. 4, the Shares Issuance Proposal, Proposal No. 5, the Warrant Issuance Proposal, Proposal No. 6, the Director Retention Plan Proposal, or Proposal No. 7, the Charter AmendmentKeep Well Proposal. Accordingly, it is important that beneficial owners instruct their brokers how they wish to vote their shares.
What is the quorum requirement for the Annual Meeting?
A quorum of stockholders is necessary to hold a valid Annual Meeting. A quorum will be present if the holders of majority of the outstanding shares are represented by proxy or by stockholders present and entitled to vote at the Annual Meeting. On the Record Date, there were 20,966,127 shares outstanding and entitled to vote. Thus, 10,483,064 shares must be represented by proxy or by stockholders present and entitled to vote at the Annual Meeting. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum.
If there is no quorum, a majority of the shares so represented may adjourn the Annual Meeting to another time or date.
How many votes are required to approve each proposal?
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Proposal | VoteVotes Required | Impact of “Abstain” Votes | Broker Discretionary Voting Allowed? Impact of Broker Non-Votes |
| Reverse Stock Split Proposal | The affirmative vote of a majority of our outstanding shares of common stock as of the record date for the special meeting. | Abstentions will have the same effect as a vote against this proposal | Yes No broker non-votes are expected on this proposal. If there are any, they will have the same effect as a vote against this proposal. |
Proposal No. 1 – Board ElectionKeep Well Proposal | PluralityThe affirmative vote of votes cast | No |
Proposal No. 2 – Auditor Ratification Proposal | Majoritythe majority of shares present in person or represented by proxy at the special meeting and entitled to vote on this proposal. | YesAbstentions will have the same effect as a vote against this proposal | No Broker non-votes will not have any effect on the outcome of this proposal. |
Proposal No. 3 – 2017 AmendmentAdjournment Proposal | MajorityThe affirmative vote of the majority of shares present in person or represented by proxy at the special meeting and entitled to vote on this proposal. | No |
Proposal No. 4 – Shares Issuance ProposalAbstentions will have the same effect as a vote against this proposal | MajorityYes No broker non-votes are expected on this proposal. If there are any, they will not have any effect on the outcome of shares present and entitled to vote | No |
Proposal No. 5 – Warrant Issuance Proposal | Majority of shares present and entitled to vote | No |
Proposal No. 6 – Director Retention Plan Proposal | Majority of shares present and entitled to vote | No |
Proposal No. 7 - Charter Amendment Proposal | Majority of outstanding shares | No |
Proposal No. 8 – Adjournment Proposal | Majority of shares present and entitled to vote | Yesthis proposal. |
If you abstain from voting, your abstention will have the same effect as a vote against the matter, and the broker non-votes will not affect the outcome of such vote, except for Proposal No. 7, Charter Amendment Proposal, where a broker-non vote has the same effect as a vote against the matter.
Proposal No. 1 - Board Election Proposal; plurality vote
Directors are elected by a plurality of votes cast. This means that Directors who receive the most “FOR” votes are elected. There is no “AGAINST” option and votes that are “WITHHELD” or not cast, including broker non-votes, are not counted as votes “FOR” or “AGAINST.” If a Director nominee receives a plurality of votes but does not, however, receive a majority of votes, that fact will be considered by the Compensation and Nominating Committee of the Board in any future decision on Director Nominations.
Proposal No. 2 - Auditor Ratification Proposal; majority vote
Holders of a majority of shares present in person or represented by proxy at the Annual Meeting must vote “FOR” the Auditor Ratification Proposal. Abstentions will have the same effect as votes “AGAINST” this Proposal No. 2.
Proposal No. 3 – 2017 Amendment Proposal; majority vote
Holders of a majority of shares present in person or represented by proxy at the Annual Meeting must vote “FOR” the approval of the 2017 Plan Amendment Proposal. Abstentions will have the same effect as votes “AGAINST” this Proposal No. 3.
Broker non-votes will not have an effect on this Proposal No. 3.
Proposal No. 4– Shares Issuance Proposal; majority vote
Holders of a majority of shares present in person or represented by proxy at the Annual Meeting must vote “FOR” the approval of the Shares Issuance Proposal. Abstentions will have the same effect as votes “AGAINST” this Proposal No. 4.
Broker non-votes will not have an effect on this Proposal No. 4.
Proposal No. 5– Warrant Issuance Proposal; majority vote
Holders of a majority of shares present in person or represented by proxy at the Annual Meeting must vote “FOR” the approval of the Warrant Issuance Proposal. Abstentions will have the same effect as votes “AGAINST” this Proposal No. 5.
Broker non-votes will not have an effect on this Proposal No. 5.
Proposal No. 6– Director Retention Plan Proposal; majority vote
Holders of a majority of shares present in person or represented by proxy at the Annual meeting must vote “FOR” the approval of the Director Retention Plan Proposal. Abstentions will have the same effect as votes “AGAINST” this Proposal No. 6.
Broker non-votes will not have an effect on this Proposal No. 6.
Proposal No. 7– Charter Amendment Proposal; majority vote
Holders of a majority of the outstanding shares of Common Stock must vote “FOR” the approval of the Charter Amendment Proposal. Abstentions and broker non-votes will have the same effect as votes “AGAINST” this Proposal No. 7.
Proposal No. 8– Adjournment Proposal; majority vote
Holders of a majority of shares present in person or represented by proxy at the Annual meeting must vote “FOR” the approval of the Adjournment Proposal. Abstentions will have the same effect as votes “AGAINST” this Proposal No. 8. Broker non-votes will not have an effect on this Proposal No. 8.
How will my shares be voted at the Annual Meeting?
At the Annual Meeting, the persons named in the proxy card will vote your shares as you instruct. If you sign your proxy card and return it without indicating how you would like to vote your shares, your proxy will be voted as the Board of Directors recommends, unless your votes constitute broker non-votes, which is:
•FOR the Board Election Proposal;
•FOR the Auditor Ratification Proposal;
•FOR the 2017 Plan Amendment Proposal;
•FOR the Shares Issuance Proposal;
•FOR the Warrant Issuance Proposal;
•FOR the Director Retention Plan Proposal;
•FOR the Charter Amendment Proposal; and
•FOR the Adjournment Proposal.
Do I have cumulative voting rights?
No, our Certificate of Incorporation doesstockholders do not provide forhave cumulative voting.voting rights.
Am I entitled to dissenter rights or appraisal rights?
No, our stockholders are not entitled to dissenters’ rights or appraisal rights under the Delaware General Corporation Law foron any of the matters being submitted to stockholders at the Annual Meeting.special meeting.
Could other matters be decided at the Annual Meeting?At the date of this Proxy Statement, we did not know of any matters to be considered at the Annual Meeting other than the items described in this Proxy Statement. If any other business is properly presented at the Annual Meeting, your proxy card grants authority to the proxy holders to vote on such matters in their discretion.
Can I access the Notice of Annual Meeting and Proxy Statement and the 2021 Annual Report viathis proxy statement on the Internet?
Yes, this Notice of Annual Meeting, Proxy Statement and the 2021 Annual Report areproxy statement is available on our website at www.ontrakhealth.com.www.ontrakhealth.com. Instead of receiving future proxy statements and accompanying materials by mail, most stockholders can elect to receive an e-mail that will provide electronic links to them. Opting to receive your proxy materials online will save us the cost of producing documents and mailing them to your home or business,you, and also gives you an electronic link to the proxy voting site.
Stockholders of Record:You may enroll in the electronic proxy delivery service at any time by accessing your stockholder account at www.amstock.com and following the enrollment instructions.
Beneficial Owners:You also may be able to receive copies of these documents electronically. Please check the information provided in the proxy materials sent to you by your broker, bank or other holder of recordnominee regarding the availability of this service.
Who will pay for the cost of this proxy solicitation?
Ontrak will pay the cost of soliciting proxies. Proxies may be solicited on our behalf by Directors,our directors, officers or employees in person or by telephone, electronic transmission and facsimile transmission or by other means of communication. Directors,Our directors, officers or employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to the beneficial owners.
We also retained the services of Alliance Advisors LLC to aid in the solicitation of proxies. We expect that we will pay Alliance Advisors LLC fees of approximately $6,000 in the aggregate, plus reasonable out-of-pocket expenses, for soliciting proxies. We may engage Alliance Advisors LLC for additional solicitation work and incur fees greater than $6,000 depending on a variety of factors, including preliminary voting turnout and results. We have agreed to indemnify Alliance Advisors LLC against certain liabilities relating to or arising out of their engagement.
How can I find out the results of the voting at the Annual Meeting?special meeting?
Preliminary voting results will be announced at the Annual Meeting.special meeting. Final voting results will be reported in a Current Report on Form 8-K filed with the Securities and Exchange Commission.
Who can help answer questions I might have about the special meeting, including if I have any questions about how to vote?
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Nominees
We currentlyIf you have a Board consistingany questions concerning the virtual special meeting (including accessing the meeting by virtual means) or would like additional copies of six directors. There are four (4) nominees for director to be voted on at the 2022 Annual Meeting and upon their election, the size of our Board will be reduced to that number of directors. On May 24, 2022, Mr. Edward Zecchini and Ms. Diane Seloff notified us that they would not stand for re-election at the 2022 Annual Meeting. Mr. Zecchini’s and Ms. Seloff’s respective decisions not to stand for re-election at the 2022 Annual Meeting were not due to any disagreement with the Company on any matter relating to our operations, policies,this proxy statement or practices. The Director nominees have consented to serve as Directors. Each Director to be elected will hold office until the next annual meeting and until his or her respective successor is elected and qualified. If anyneed help voting your shares of the nominees declines to serve or becomes unavailable for any reason, or if a vacancy occurs before the election (although we know of no reason to anticipate that this will occur), the proxies may be voted for such substitute nominees as we may designate. Should a nominee become unable to serve or should a vacancy on the Board occur before the 2022 Annual Meeting, the Board may either reduce its size or designate a substitute nominee. If a substitute nominee is named, your shares will be voted for the election of the substitute nominee designated by the Board, unless your shares are treated as a broker non-vote. In the vote on the election of the Director nominees, stockholders may vote “FOR” nominees or “WITHHOLD” votes from nominees. The four (4) Director nominees receiving the highest number of “FOR” votes will be elected as Directors. Votes that are withheld, abstentions and broker non-votes will have no effect on the outcome of the election.
The persons appointed by the Board as proxies intend to vote for the election of each of the below director nominees, unless you indicate otherwise on the proxy or voting instruction card or if your vote is treated as a broker non-vote. Set forth below is biographical and other information about the Director nominees. Following each nominee’s biographical information, we have provided information concerning the particular experience, qualifications, attributes and/or skills that led the Nominations and Governance Committee and the Board to determine that each nominee should serve as a Director.
Our Board unanimously recommends that you vote “FOR” the nominees named below.
| | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Position | | Director Since |
| Terren S. Peizer | | 62 | | Chairman of the Board and Executive Chairman | | 2003 |
| Richard A. Berman | | 77 | | Director, Chairman of the Audit Committee, and Member of the Nomination and Governance Committee | | 2014 |
| Michael Sherman | | 63 | | Director, Chairman of the Compensation Committee, Chairman of the Nomination and Governance Committee and Audit Committee Member | | 2017 |
| Robert Rebak | | 55 | | Director, Nomination and Governance Committee Member and Compensation Committee Member | | 2019 |
Terren S. Peizer is the founder of our Company and an entrepreneur, investor, and financier with a vested interest in healthcare, having founded and successfully commercialized several healthcare companies. He has served as Chairman of the Board of Directors since the Company’s inception in 2003 through April 11, 2021. Effective April 12, 2021, Mr. Peizer was appointed to serve as the Executive Chairman, and continues to serve as Chairman of the Board. He will resume his role as the Company’s Chief Executive Officer on August 12, 2022.Mr. Peizer is also the Chairman of BioVie, Inc., a biotech company focused on the end stage liver disease ascites. In addition, he serves as the Executive Chairman of Verde, Inc., a company producing 100% plant-based, compostable, and biodegradable plastic and mobility companies EVmo, Inc. and ZipMo, Inc. Mr. Peizer is also the Executive Chairman of the blockchain company, Casper Labs, Inc. Mr. Peizer is Chairman of Acuitas Group Holdings, LLC, (“Acuitas”) his personal investment vehicle, and holding company that is the owner of all of his portfolio companyAlliance Advisors
9200 Broadacres Drive, Suite 300
interests. Through Acuitas, Mr. Peizer owns Acuitas Capital, LLC, an industry leader in investing in micro and small capitalization equities, having invested over $1.5 billion directly into portfolio companies. Mr. Peizer has been the largest beneficial shareholder of, and has held various senior executive positions with, several other publicly traded growth companies, including having served as Chairman of Cray, Inc., a supercomputer company recently sold to Hewlett Packard, Inc. Mr. Peizer has a background in venture capital, investing, mergers and acquisitions, corporate finance, and previously held senior executive positions with the investment banking firms Goldman Sachs, First Boston, and Drexel Burnham Lambert. He holds his B.S.E. in Finance from The Wharton School of Finance and Commerce.Toll Free: 855-796-2126
We believe Mr. Peizer’s qualifications to serve on our board of directors include his role as an investor and executive positions in several private and public companies, including numerous companies in the healthcare field. He has extensive knowledge and experience in the financial and healthcare industries and provides extensive insight and experience with capital markets and publicly traded companies at all stages of development.
Richard A. Bermanhas served as the Company’s director since 2014. Heis the Associate Vice President of Strategic initiatives for the University of South Florida Research and Innovation. He is a visiting professor of social entrepreneurship in the Muma College of Business, and a professor in the institute of innovation and advanced discovery at USF. As a recognized global leader, Mr. Berman has held positions in health care, education, politics and management. He has worked with several foreign governments, the United Nations, the U.S. Department of Health and Welfare, the FDA, and as a cabinet level official for the state of New York. He has also worked with McKinsey & Co, NYU Medical Center, Westchester Medical, Korn-Ferry International, Howe-Lewis International and numerous startup companies. In 1995, Mr. Berman was selected by Manhattanville College to serve as its tenth President. Mr. Berman is credited with the turnaround of the College, where he served until 2009. Mr. Berman serves on the board of several organizations including EmblemHealth and as an elected member of the National Academy of Medicine of the National Academy of Sciences (Formerly known as the Institute of Medicine). Mr. Berman received his BBA, MBA, and MPH from the University of Michigan and holds honorary doctorates from Manhattanville College and New York Medical College.
We believe Mr. Berman’s qualifications to serve on our board of directors include his extensive experience as an executive in several healthcare firms. In addition, as a board member of a health plan we believe he has an understanding of our customer base and current developments and strategies in the health insurance industry.
Michael Sherman has served as the Company’s director since July 2017. He has worked in finance for over 30 years, having last served as a Managing Director in Investment Banking, at Barclays Plc. Prior to Barclays, Mr. Sherman was at Lehman Brothers, Inc. and Salomon Brothers Inc. Mr. Sherman specialized in equity capital markets and covered Healthcare companies, in addition to companies in other sectors. Mr. Sherman also is currently a Board Member at BioVie, Inc., a specialty pharmaceutical company. Mr. Sherman began his career in finance as a lawyer at Cleary, Gottlieb, Steen & Hamilton in New York City and Hong Kong.
We believe that Mr. Sherman’s qualifications to serve on our board of directors include his experience in the banking and securities industry, and his experience in the healthcare industry.
Robert Rebak has served as the Company’s director since July 2019. Mr. Rebak currently serves as the Chief Executive Officer of Forefront Telecare, a behavioral telehealth company serving seniors in health systems, long-term care facilities, and home health settings across the US, where he has been responsible for company vision, strategy, growth, culture, and overall operating performance since January 2019. From June 2016 to June 2018, he served as the President and Chief Executive Officer of AbleTo (acquired in May 2020 by Optum), a behavioral telehealth company serving adult health plan members nationwide. From November 2014 to March 2016, he served as President, Consumer Solutions for Sharecare, a health and wellness patient engagement platform. He joined Sharecare through its acquisition of QualityHealth, a digital patient acquisition and engagement platform, where he was Chairman and Chief Executive Officer from February 2009 to November 2014. Mr. Rebak previously served as Managing Partner of Rosetta, from June 2005 to January 2007. He joined Rosetta through its acquisition of SimStar, where he served as President of the healthcare-specific digital marketing firm from February 1999 to June 2005. He has raised over $70 million in growth capital from both strategic and financial investors and has led two successful
company sale transactions. Mr. Rebak has previously served on both private equity backed company and not-for-profit Boards, and currently serves as a Board Director of The Quell Foundation. Mr. Rebak holds an MBA in Finance and Marketing from the University of Chicago Booth School of Business and a BA in History and Economics from Vanderbilt University.
We believe Mr. Rebak’s qualifications to serve on our board of directors include his experience in the digital health, telehealth, and behavioral health sectors of the healthcare industry.
Plurality Voting
Under Delaware law and Ontrak’s Amended and Restated Bylaws, a vote by a plurality of the shares voting is required for the election of Directors. Under plurality voting, nominees who receive the most “FOR” votes are elected; there is no “AGAINST’’ option and votes that are “WITHHELD” or not cast are disregarded in the count. If a nominee receives a plurality of votes but does not, however, receive a majority of votes, that fact will be considered by the Compensation and Nominating Committee in any future decision on nominations.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
THE ELECTION OF EACH OF THESE NOMINEES AS DIRECTORS.
ROLE AND COMPOSITION OF THE BOARD OF DIRECTORS
The Board of Directors, which is elected by the stockholders, is the ultimate decision-making body of the Company, except with respect to those matters reserved to the stockholders. It selects the Executive Chairman and Chief Executive Officer, or person or persons performing similar functions, and other members of the senior management team, and provides an oversight function for the Executive Chairman’s and Chief Executive Officer’s execution of overall business strategy and objectives. The Board acts as an advisor and counselor to senior management and validates business strategy and direction. The Board’s primary function is to monitor the performance of senior management and facilitate growth and success by providing mentoring and actionable business advice honed by substantial substantive knowledge of the Company’s business and history tempered with significant outside business experience.
Our Amended and Restated Bylaws state that the number of Directors shall be determined from time to time by the Board of Directors. Directors shall be elected at the annual meeting of stockholders. In all elections for Directors, every stockholder shall have the right to vote the number of shares owned by such stockholders for each director to be elected. A director or the entire Board, may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at the election of directors. Vacancies in the Board may be filled by a majority of the Directors or by an election either at an annual meeting or at a special meeting of the stockholders called for that purpose. Any directors elected by the stockholders to fill the vacancy shall hold office for the balance of the term for which he or she was elected. A director appointed by the Board to fill the vacancy shall serve until the next meeting of stockholders at which directors are elected.
Independence of the Board of Directors
Our common stock is traded on the NASDAQ Global Market. The Board has determined that five of the current members of the Board of Directors qualify as “independent,” as defined by the listing standards of the NASDAQ. Consistent with these considerations, after review of all relevant transactions and relationships between each director, or any of his family members, and the Company, its senior management and its independent auditors, the Board has determined further that Messrs. Berman, Sherman, Zecchini, Rebak and Ms. Seloff are independent under the listing standards of NASDAQ. On May 24, 2022, Mr. Edward Zecchini and Ms. Diane Seloff notified us that they would not stand for re-election at the 2022 Annual Meeting. Mr. Zecchini’s and Ms. Seloff’s respective decisions not to stand for re-election at the 2022 Annual Meeting were not due to any disagreement with the Company on any matter relating to our operations, policies, or practices. In making this determination, the Board considered that there were no new transactions or relationships between its current independent directors and the Company, its senior management and its independent auditors since last making this determination.
Each member of our Board serving on our Audit, Compensation and Nominations and Governance committees is “independent” within the meaning of the applicable Nasdaq listing standards.
2021 Meetings and Attendance
During 2021, the Board held 7 meetings. All Directors attended at least 75% or more of the aggregate number of meetings of the Board and Board Committees on which they served.
Committees of the Board of Directors
Audit Committee
Our audit committee currently consists of three directors, Messrs. Berman and Sherman and Ms. Seloff with Mr. Berman serving as the chairman of the audit committee. The audit committee held 5 meetings during the 2021 year. On May 24, 2022, Ms. Seloff notified us that she did not wish to stand for re-election to the Board at the Company’s 2022 Annual Meeting and as a result will cease to serve as a member of the Audit Committee, effective August 29, 2022, the date of this Annual Meeting and will be replaced on the audit committee by Mr. Rebak assuming he is re-elected. The Board of Directors has determined that each of the members of the audit committee are independent as defined by the NASDAQ rules, meet the applicable requirements for audit committee members, including Rule 10A-3(b) under the Exchange Act, and that Mr. Berman qualifies as an “audit committee financial expert” as defined by Item 401(h)(2) of Regulation S-K. The duties and responsibilities of the audit committee include (i) selecting, evaluating and, if appropriate, replacing our independent registered accounting firm, (ii) reviewing the plan and scope of audits, (iii) reviewing our significant accounting policies, any significant deficiencies in the design or operation of internal controls or material weakness therein and any significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation and (iv) overseeing related auditing matters.
A copy of the audit committee’s written charter is publicly available through the “Investors-Governance” section of our website at www.ontrakhealth.com.
Nominations and Governance Committee
Our nominations and governance committee currently consists of three members, Messrs. Sherman, Berman, and Rebak, who are all independent as defined by the NASDAQ rules. The nominations and governance committee held 4 meetings during 2021. Mr. Sherman serves as the chairman of the nominations and governance committee. The committee nominates new directors and periodically oversees corporate governance matters.
The charter of the nominations and governance committee provides that the committee will consider board candidates recommended for consideration by our stockholders, provided the stockholders provide information regarding candidates as required by the charter or reasonably requested by us within the timeframe proscribed in Rule 14a-8 of Regulation 14A under the Exchange Act, and other applicable rules and regulations. Recommendation materials are required to be sent to the nominations and governance committee c/o Ontrak, Inc., 2200 Paseo Verde Parkway, Suite 280, Henderson, NV 89052. There are no specific minimum qualifications required to be met by a director nominee recommended for a position on the board of directors, nor are there any specific qualities or skills that are necessary for one or more of our directors to possess, other than as are necessary to meet any requirements under the rules and regulations applicable to us. Although our board of directors does not maintain a specific policy with respect to board diversity, our nominations and governance committee believes that our Board members and the candidates that it nominates to serve on our Board constitute a diverse group and offer a broad range of perspectives, backgrounds and experiences to serve the interest of our shareholders.
The nominations and governance committee considers director candidates that are suggested by members of the board of directors, as well as management and stockholders. The committee may also retain a third-party executive search firm to identify candidates. The process for identifying and evaluating nominees for director, including nominees recommended by stockholders, involves reviewing potentially eligible candidates, conducting background
and reference checks, interviews with the candidate and others (as schedules permit), a meeting to consider and approve the candidate and, as appropriate, preparing and presenting to the full board of directors an analysis with respect to particular recommended candidates. The nominations and governance committee endeavors to identify director nominees who have the highest personal and professional integrity, have demonstrated exceptional ability and judgment, and, together with other director nominees and members, are expected to serve the long term interest of our stockholders and contribute to our overall corporate goals.
A copy of the nominations and governance committee’s written charter is publicly available through the “Investors-Governance” section of our website at www.ontrakhealth.com.
Compensation Committee
The compensation committee currently consists of three directors, Messrs. Sherman, Zecchini and Rebak, who are all independent as defined by the NASDAQ rules. On May 24, 2022, Mr. Zecchini notified us that he did not wish to stand for re-election to the Board at the Company’s 2022 Annual Meeting and as a result will cease to serve as a member of the Compensation Committee, effective August 29, 2022, the date of this Annual Meeting and will be replaced on the compensation committee by Mr. Berman assuming he is re-elected. Mr. Sherman serves as the chairman of the compensation committee. During 2021, the compensation committee held 8 meetings. The compensation committee reviews and recommends to the board of directors for approval the compensation of our executive officers.
A copy of our compensation committee’s written charter is publicly available through the “Investors-Governance” section of our website at www.ontrakhealth.com.
Board Diversity
Although the Company does not presently have a formal Board Diversity Policy, we believe in diversity and value the benefits that diversity can bring to our board of directors. Diversity promotes the inclusion of different perspectives and ideas, mitigates against group think and ensures that the Company has the opportunity to benefit from all available talent. The promotion of a diverse Board makes prudent business sense and makes for better corporate governance. Of our six board members, one is female.
The Company seeks to maintain a Board comprised of talented and dedicated directors with a diverse mix of expertise, experience, skills and backgrounds. The skills and backgrounds collectively represented on the Board should reflect the diverse nature of the business environment in which the Company operates. For purposes of Board composition, diversity includes, but is not limited to, business experience, geography, age, gender and ethnicity. In particular, the Board should include an appropriate number of female directors.
The Company is committed to a merit-based system for Board composition within a diverse and inclusive culture which solicits multiple perspectives and views and is free of conscious or unconscious bias and discrimination. When assessing Board composition or identifying suitable candidates for appointment or re-election to the Board, the Company will consider candidates on merit against objective criteria having due regard to the benefits of diversity and the needs of the Board. As we pursue future Board recruitment efforts, our nominations and governance committee will continue to see candidates who can contribute to the diversity of views and perspectives of the Board. This includes seeking out individuals of diverse ethnicities, a balance in terms of gender, and individuals with diverse perspectives informed by other personal and professional experiences.
Email: OTRK@allianceadvisors.com
Board Diversity Matrix
Pursuant to Rule 5606(f) of the Nasdaq Listing Rules, set forth below is certain information on each director’s voluntary self-identified characteristics as of July 21, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Number of Directors | | 6 | | | | | | |
| | | | | | | | |
| | Female | | Male | | Non-Binary | | Did Not Disclose |
| Part I: Gender Identity | | | | | | | | |
| Directors | | 1 | | 4 | | 0 | | 1 |
| | | | | | | | |
| Part II: Demographic Background | | | | | | | | |
| African American or Black | | 0 | | 0 | | 0 | | 0 |
| Alaskan Native or American Indian | | 0 | | 0 | | 0 | | 0 |
| Asian | | 0 | | 0 | | 0 | | 0 |
| Hispanic or Latinx | | 0 | | 0 | | 0 | | 0 |
| Native Hawaiian or Pacific Islander | | 0 | | 0 | | 0 | | 0 |
| White | | 1 | | 4 | | 0 | | 0 |
| Two or More Races or Ethnicities | | 0 | | 0 | | 0 | | 0 |
| LGBTQ+ | | 0 | | 0 | | 0 | | 0 |
| Did Not Disclose Demographic Background | | 0 | | 0 | | 0 | | 1 |
Executive Officers
The following table lists our executive officers as of the date of this Proxy Statement and their respective ages and positions. For information regarding Terren S. Peizer, our Executive Chairman, see “Information Regarding Our Board of Directors” above.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Name | | Age | | Position |
Terren S. Peizer (1) | | 62 | | Chairman of the Board and Executive Chairman |
Jonathan Mayhew (2) | | 59 | | Chief Executive Officer |
Brandon H. LaVerne (3) | | 50 | | Co-President and Chief Operating Officer |
James J. Park (4) | | 45 | | Chief Financial Officer, Chief Accounting Officer and Principal Accounting Officer |
Mary Louise Osborne (5) | | 61 | | Co-President and Chief Commercial Officer |
Arik Hill (6) | | 52 | | Chief Information Officer |
Robert Accordino (7) | | 41 | | Chief Medical Officer |
__________
(1) Mr. Peizer served as the Chairman of the Board and Chief Executive Officer of the Company through April 11, 2021 and was appointed to serve as Executive Chairman of the Company as of April 12, 2021. Mr. Peizer continues to serve as Chairman of the Board and he will resume his role as the Company’s Chief Executive Officer on August 12, 2022.
(2) Mr. Mayhew was appointed to serve as the Chief Executive Officer of the Company as of April 12, 2021.On June 24, 2022, Mr. Mayhew gave notice of his resignation, effective August 12, 2022.
(3) Mr. LaVerne was appointed Co-President and Chief Operating Officer of the Company on June 27, 2022 and he previously served as the Chief Financial Officer of the Company.
(4) Mr. Park was appointed to serve as the Chief Financial Officer of the Company on June 27, 2022 and Principal Accounting Officer of the Company on August 10, 2021.
(5) Ms. Osborne was appointed as the Co-President and Chief Commercial Officer of the Company on June 27, 2022 and she previously served as the Chief Customer Officer of the Company since August 30, 2021.
(6) Mr. Hill was appointed as the Chief Information Officer of the Company on August 30, 2021.
(7) Dr. Accordino was appointed as the Chief Medical Officer of the Company on September 27, 2021. On July 7, 2022, the Company accepted Dr. Accordino’s resignation, effective July 29, 2022.
Jonathan Mayhew has served as our Chief Executive Officer since April 2021. Prior to joining the Company, Mr. Mayhew most recently served as Executive Vice President and Chief Transformation Officer of CVS Health, where he had enterprise-wide oversight of the entire portfolio of CVS business transformation initiatives and played a key role in shaping CVS Health’s integrated value story. Previously, he was President of U.S. Markets for the Aetna Health Care Business, where he was responsible for $52 billion in revenue and $4.3 billion in operating income for all commercial and Medicare lines of business. Prior to joining Aetna, Mr. Mayhew was a founding principal, CEO and President of Freedom Disability. Mr. Mayhew holds a degree from Providence College. On June 24, 2022, Mr. Mayhew gave notice of his resignation, effective August 12, 2022.
Brandon H. LaVerne has served as the Company’s Co-President and Chief Operating Officer since June 27, 2022 and he previously served as the Company’s Chief Financial Officer from March 2020 until his promotion on June 27, 2022. Prior to joining the Company, Mr. LaVerne worked at PCM, Inc. from October 1998 until its sale in August 2019 and most recently served as its Chief Financial Officer, Chief Accounting Officer, Treasurer and Assistant Secretary between July 2007 and August 2019. Prior to joining PCM, Inc., Mr. LaVerne worked as the Corporate Accounting Supervisor for Computer Sciences Corporation from September 1996 to October 1998, and started his career with Deloitte & Touche LLP in September 1993. Mr. LaVerne received his Bachelor of Science in Accounting from University of Southern California and is a Certified Public Accountant (Inactive).
James J. Park has served as the Company’s Chief Financial Officer since June 27, 2022, Principal Accounting Officer since August 10, 2021 and Chief Accounting Officer since September 2019. Prior to joining the Company, Mr. Park served as Controller of Cornerstone OnDemand, Inc., a cloud-based software company from 2012 to 2019. In addition, he has 10 years of public accounting experience with PricewaterhouseCoopers. Mr. Park is a Certified Public Accountant (Inactive) and holds a Bachelor of Arts degree in Economics with an Accounting emphasis from the University of California, Santa Barbara.
Mary Louise Osborne has served as the Company’s Co-President and Chief Commercial Officer since June 27, 2022 and Chief Customer Officer since August 2021. Prior to joining the Company, Ms. Osborne served as the Regional Vice President, Medicaid of CVS Health from 2013 to 2020. Prior to CVS Health, Ms. Osborne served as the President of Government Business for Coventry where she led the Mid Atlantic Government Businesses from 2002 to 2013. Ms. Osborne received her Bachelor of Arts degree from Duquesne University in 1983.
Arik Hill has served as the Company’s Chief Information Officer since August 2021. Prior to joining the Company, Mr. Hill served as the Chief Information Officer of The New York Foundling from 2017 to 2021. Prior to The New York Funding, Mr. Hill served as Vice President of Customer Success at HealthEdge Software, Inc. from 2013 to 2017. From 2006 to 2013, Mr. Hill was Chief Information Officer and Vice President of Information Technology Services at FirstCare Health Plans. Mr. Hill holds a Bachelor of Science degree in Health Care Administration from Oregon State University’s School of Public Health with a concentration in Operations Management and Business.
Dr. Robert Accordino has served as the Company’s Chief Medical Officer since September 2021. Prior to joining the Company, Dr. Accordino served as the Chief Mental Health Officer of Quartet Health from 2018 to 2021. Prior to Quartet, Dr. Accordino was Chief of Psychiatry and Behavioral Health at CareMore Health from 2017 to 2018. From 2016 to 2017, Dr. Accordino served as the White House Fellow to the Secretary of Defense and chaired the Secretary of the Army Symposium on Suicide Prevention and Social Media. Dr. Accordino holds a Bachelor of Arts degree in Psychology from Princeton University, a Master of Science degree in Experimental Psychology from Oxford University and a Doctor of Medicine degree from Mount Sinai Icahn School of Medicine. On July 7, 2022, the Company accepted Dr. Accordino’s resignation, effective July 29, 2022.
Code of Ethics
Our Board of Directors has adopted a code of ethics applicable to our chief executive officer, chief financial officer and persons performing similar functions. Our code of ethics is accessible on our website at
http://www.ontrakhealth.com. Disclosure regarding any amendments to, or waivers from, provisions of the code of ethics will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended (Exchange Act), requires our directors and executive officers, and persons who own more than 10% of our outstanding common stock, to file with the SEC, initial reports of ownership and reports of changes in ownership of our equity securities. Such persons are required by SEC regulations to furnish us with copies of all such reports they file.
To our knowledge, based solely on a review of the copies of such reports furnished to us regarding the filing of required reports, we believe that all Section 16(a) reports applicable to our directors, executive officers and greater-than-ten-percent beneficial owners with respect to fiscal 2021 were timely filed, except that an initial report of ownership was filed late by Dr. Accordino and a statement of changes in beneficial ownership was filed late for Mr. Sherman.
Anti-Hedging Policy
We have adopted an insider trading policy that includes a provision restricting trading of any interest or provision relating to the future price of our securities, such as a put, call or short sale.
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation paid during the last two fiscal years ended December 31, 2021 and 2020 to the following Executive Officers of the Company, who are referred to as the “Named Executive Officers”:
• Terren S. Peizer, our Chairman of the Board and Executive Chairman (1)
• Jonathan Mayhew, our Chief Executive Officer
• Robert Accordino, our Chief Medical Officer
• Mary Louise Osborne, our Co-President and Chief Commercial Officer
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Stock/Option | | All Other | | |
| Name and Principal | | | | | | | | Award | | Compensation | | |
| Position | | Year | | Salary ($) | | Bonus ($) | | ($)(5) | | ($)(6)
| | Total ($) |
| | | | | | | | | | | | |
| Terren S. Peizer | | 2021 | | $ | 646,923 | | $ | — | | $ | — | | $ | 18,148 | | $ | 665,071 |
| Chairman of the Board and Executive Chairman (1) | | 2020 | | 450,000 | | — | | — | | 17,786 | | 467,786 |
| | | | | | | | | | | | |
| Jonathan E. Mayhew | | 2021 | | 350,000 | | — | | 8,359,187 | | 12,550 | | 8,721,737 |
| Chief Executive Officer (2) | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Robert Accordino | | 2021 | | 87,500 | | 340,000 | | 706,861 | | — | | 1,134,361 |
| Chief Medical Officer (3) | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Mary Louise Osborne | | 2021 | | 114,423 | | 87,500 | | 817,866 | | — | | 1,019,789 |
| Co-President and Chief Commercial Officer (4) | | | | | | | | | | | | |
__________
| | | | | |
(1) | Mr. Peizer served as the Chairman of the Board and Chief Executive Officer of the Company through April 11, 2021 and was appointed to serve as Executive Chairman of the Company as of April 12, 2021. Mr. Peizer continues to serve as Chairman of the Board and he will resume his role as the Company’s Chief Executive Officer on August 12, 2022. |
(2) | Mr. Mayhew was appointed to serve as the Chief Executive Officer of the Company on April 12, 2021. On June 24, 2022, Mr. Mayhew gave notice of his resignation, effective August 12, 2022.
|
(3) | Dr. Accordino was appointed to serve as the Chief Medical Officer of the Company on September 27, 2021. On July 7, 2022, the Company accepted Dr. Accordino’s resignation, effective July 29, 2022. |
(4) | Ms. Osborne was appointed to serve as our Co-President and Chief Commercial Officer on June 27, 2022 and Chief Customer Officer since August 30, 2021. |
(5) | Represents the aggregate grant date fair value of stock and option awards, valued in accordance with ASC 718, awarded to each of the named executive officers for each respective year. For a detailed discussion of the assumptions made in the valuation of stock and option awards, please see Notes 2 and 11 of our Notes to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2022. |
(6) | Includes group medical and dental benefits, group life insurance premiums, accidental death, long-term disability insurance and parking, to the extent these amounts exceed $10,000 in the aggregate for each Named Executive Officer. |
Narrative Disclosures to Summary Compensation Table
Executive Employment Agreements
Executive Chairman
We entered into a five-year employment agreement with our Executive Chairman (formerly Chief Executive Officer through April 11, 2021), Terren S. Peizer, effective as of September 29, 2003, which automatically renews after each five-year term. Mr. Peizer’s annual base salary was $650,000 in 2021 and $450,000 in 2020. Effective January 1, 2021, Mr. Peizer’s annual base salary was increased to $650,000. Mr. Peizer is also eligible for an annual bonus targeted at 100% of his base salary based on goals and milestones established and reevaluated on an annual basis by mutual agreement between Mr. Peizer and the Board of Directors. Mr. Peizer did not receive any annual bonus during the fiscal years ended December 31, 2021 and 2020. His base salary and bonus target will be adjusted each year to not be less than the median compensation of similarly positioned executives of similarly situated companies. Mr. Peizer receives executive benefits including group medical and dental insurance, term life insurance equal to 150% of his salary, accidental death and long-term disability insurance, grossed up for taxes. Mr. Peizer was not granted any equity awards during 2021 and 2020. All unvested options vest immediately in the event of a change in control, termination without good cause or resignation with good reason. In the event that Mr. Peizer is terminated without good cause or resigns with good reason prior to the end of the term, he will receive a lump sum payment equal to the remainder of his base salary and targeted bonus for the year of termination, plus three years of additional salary, bonuses and benefits. If any of the provisions above result in an excise tax, we will make an additional “gross up” payment to eliminate the impact of the tax on Mr. Peizer. Mr. Peizer will resume his role as the Company’s Chief Executive Officer on August 12, 2022. New terms for Mr. Peizer’s employment agreement are currently being negotiated.
Chief Executive Officer
We entered into a three-year employment agreement with Mr. Mayhew dated April 12, 2021, with an option to renew for an additional three-year term unless terminated by either party within 90 days of the end of the original term. Mr. Mayhew’s annual base salary is $525,000. Mr. Mayhew is also eligible for an annual bonus target of 100% of his base salary based upon achieving certain milestones. Mr. Mayhew did not receive any annual bonus during the fiscal period ended December 31, 2021. Mr. Mayhew received executive benefits, including group medical and dental insurance, term life insurance, accidental death and long-term disability insurance. Mr. Mayhew was granted 400,000 equity awards during 2021. All unvested options vest immediately in the event of a change in control. In the event that Mr. Mayhew is terminated without good cause or resigns for good reason, the option will continue to vest for a period of twelve months following the date of termination, he will receive a lump sum payment equal to twelve months of his base salary plus a pro-rata share of any bonus earned for the year of termination which is payable on the six-month anniversary of his termination and he will receive COBRA benefits for a period of twelve months. On June 24, 2022, Mr. Mayhew gave notice of his resignation, effective August 12, 2022.
Chief Medical Officer
We entered into a three-year employment agreement with Dr. Accordino dated September 27, 2021, with an option to renew for an additional three-year term unless terminated by either party within 90 days of the end of the original term. Dr. Accordino’s annual base salary is $350,000. Dr. Accordino is also eligible for an annual bonus target of 40% of his base salary based upon achieving certain milestones. Dr. Accordino received a $340,000 bonus during the fiscal period ended December 31, 2021. Dr. Accordino received executive benefits, including group medical and dental insurance, term life insurance, accidental death and long-term disability insurance. Dr. Accordino was granted 100,000 equity awards during 2021. All unvested options vest immediately in the event of a change in control. In the event that Dr. Accordino is terminated without good cause or resigns for good reason, the option will continue to vest for a period of twelve months following the date of termination, he will receive a lump sum payment equal to six months of his base salary plus a pro-rata share of any bonus earned for the year of termination which is payable on the six-month anniversary of his termination and he will receive COBRA benefits for a period of six months. On July 7, 2022, the Company accepted Dr. Accordino’s resignation, effective July 29, 2022.
Co-President and Chief Commercial Officer
We entered into a three-year employment agreement with Ms. Osborne dated August 30, 2021, with an option to renew for an additional three-year term unless terminated by either party within 90 days of the end of the original term. Ms. Osborne’s annual base salary is $350,000. Ms. Osborne is also eligible for an annual bonus target of 75% of her base salary based upon achieving certain milestones and allows for overachievement to a maximum of 200% of her base salary. Ms. Osborne received a $87,500 bonus during the fiscal period ended December 31, 2021. Ms. Osborne received executive benefits, including group medical and dental insurance, term life insurance, accidental death and long-term disability insurance. Ms. Osborne was granted 100,000 equity awards during 2021. All unvested options shall vest immediately in the event of a change of control. In the event that Ms. Osborne is terminated without good cause or resigns for good reason, the option will continue to vest for a period of twelve months following the date of termination, she will receive a lump sum payment equal to six months of her base salary plus a pro-rata share of any bonus earned for the year of termination which is payable on the six-month anniversary of her termination and she will receive COBRA benefits for a period of six months. On June 27, 2022, Ms. Osborne was promoted to Co-President and Chief Commercial Officer. New terms for Ms. Osborne’s employment agreement are currently being negotiated.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth all outstanding equity awards held by our named executive officers as of December 31, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of | | Number of | | | | |
| | Securities | | Securities | | | | |
| | Underlying | | Underlying | | Option | | |
| | Unexercised | | Unexercised | | Exercise | | Option |
| | Options (#) | | Options (#) | | Price | | Expiration |
| Name | | Exercisable | | Unexercisable | | ($) | | Date |
| Terren S. Peizer | | | — | | | 642,307 | (1) | $7.50 | | 12/19/27 |
| | | — | | | 397,693 | (1) | 7.50 | | 08/02/28 |
| | | | | | 1,040,000 | | | | |
| | | | | | | | | | |
| Jonathan E. Mayhew | | | — | | | 400,000 | (2) | 31.22 | | 04/12/31 |
| | | | | | | | | | |
| Robert Accordino | | | — | | | 100,000 | (3) | 10.40 | | 09/27/31 |
| | | | | | | | | | |
| Mary Louise Osborne | | | — | | | 100,000 | (4) | 12.07 | | 08/30/31 |
___________
| | | | | |
(1) | The Compensation Committee determined that the performance condition for these options – the Volume Weighted Average Price of our common stock is $15.00 for at least twenty trading days within a period of thirty consecutive trading days ending on the trading day prior to January 1, 2023 – was satisfied on or before May 31, 2019. These options shall vest on January 1, 2023, subject to continuing service. |
(2) | One third of Mr. Mayhew’s stock options shall vest one-year from the date of grant and the remaining stock options shall vest equally over the next 24 months. |
(3) | One fourth of Dr. Accordino’s stock options shall vest one-year from the date of grant and the remaining stock options shall vest equally on the next 36 months. |
(4) | One fourth of Ms. Osborne’s stock options shall vest one-year from the date of grant and the remaining stock options shall vest equally over the next 36 months. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
Provisions of our employment and change of control arrangements with the named executive officers and our equity incentive plan or individual award agreements thereunder provide for certain payments to our named executive officers at or following or in connection with a termination of their employment or a change of control of the Company.
The agreements pursuant to which we granted stock options to our executive officers provide for full vesting of their unvested awards in the event of a change of control of our Company.
Under our stock incentive plans, a change of control is deemed to occur upon:
• any persons becoming the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities;
• a merger or consolidation of the Company whether or not approved by the Board of Directors, which would result in more than 50% of the total voting power represented by the voting securities; or
• the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval.
The table below sets forth the estimated payments that would be made to each of our named executive officers upon voluntary termination, involuntary termination, a change of control, and death or permanent disability. The actual amounts to be paid out can only be determined at the time of such named executive officer’s separation from the Company. The information set forth in the table assumes, as necessary:
• the termination and/or the qualified change in control event occurred on December 31, 2021 (the last business day of our last completed fiscal year); and
• the price per share of our common stock on the date of termination is $6.29 (the closing market price of our common stock on the Nasdaq Global Market on December 31, 2021).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Death or | | | | | | |
| | Voluntary | | Permanent | | Change of | | | Involuntary | |
| Name | | Termination | | Disability | | Control | | | Termination | |
| Terren S. Peizer | | | | | | | | | | | | |
| Salary, Bonus and Benefits | | | $ | 551,352 | | (1) | | $ | 591,265 | | (2) | $ | 551,352 | | (1) | | $ | 5,466,265 | | (3) |
| Acceleration of Equity Awards | | | — | | | — | (4) | — | (4) | | — | (4) |
| Total | | | $ | 551,352 | | | | $ | 591,265 | | | $ | 551,352 | | | | $ | 5,466,265 | | |
| | | | | | | | | | | | |
| Jonathan E. Mayhew | | | | | | | | | | | | |
| Salary, Bonus and Benefits | | | $ | — | | | | $ | — | | | $ | — | | | | $ | 551,810 | | (5) |
| Acceleration of Equity Awards | | | — | | | — | (4) | — | (4) | | — | (4) |
| Total | | | $ | — | | | | $ | — | | | $ | — | | | | $ | 551,810 | | |
| | | | | | | | | | | | |
| Robert Accordino | | | | | | | | | | | | |
| Salary, Bonus and Benefits | | | $ | — | | | | $ | — | | | $ | — | | | | $ | 180,322 | | (6) |
| Acceleration of Equity Awards | | | — | | | — | (4) | — | (4) | | — | (4) |
| Total | | | $ | — | | | | $ | — | | | $ | — | | | | $ | 180,322 | | |
| | | | | | | | | | | | |
| Mary Louise Osborne | | | | | | | | | | | | |
| Salary, Bonus and Benefits | | | $ | — | | | | $ | — | | | $ | — | | | | $ | 189,306 | | (7) |
| Acceleration of Equity Awards | | | — | | | — | (4) | — | (4) | | — | (4) |
| Total | | | $ | — | | | | $ | — | | | $ | — | | | | $ | 189,306 | | |
__________
| | | | | |
(1) | Pursuant to the terms of his employment agreement, Mr. Peizer would have received a lump sum amount of approximately $441,000 in accrued vacation grossed up for taxes upon a voluntary termination or a change in control. |
(2) | Pursuant to the terms of his employment agreement, Mr. Peizer would have received a lump sum amount of approximately $441,000 in accrued vacation and $11,000 in COBRA benefits for the twelve months following termination grossed up for taxes upon the event of death or permanent disability. |
(3) | Pursuant to the terms of his employment agreement, Mr. Peizer would have received three additional years of salary, three years bonus calculated at 100% of his salary, accrued vacation of approximately $441,000, COBRA benefits of approximately $32,000 grossed up for taxes upon an involuntary termination. |
(4) | Represents the value of stock options as of December 31, 2021 that would vest upon death or permanent disability, change of control or involuntary termination. Assumes that the vested options are immediately exercised, and the shares received upon exercise are immediately resold at the assumed per share price on the date of termination. As of December 31, 2021, all of the options are out-of-the money. |
(5) | Pursuant to the terms of his employment agreement, Mr. Mayhew would receive twelve months base salary upon termination without good cause or for good reason on the six-month anniversary of his termination and COBRA benefits for the twelve months following his date of termination. |
(6) | Pursuant to the terms of his employment agreement, Dr. Accordino would receive six months base salary upon termination without good cause or for good reason on the six-month anniversary of his termination and COBRA benefits for the six months following his date of termination. |
(7) | Pursuant to the terms of her employment agreement, Ms. Osborne would receive six months base salary upon termination without good cause or for good reason on the six-month anniversary of her termination and COBRA benefits for the six months following his date of termination. |
DIRECTOR COMPENSATION
The following table provides information regarding compensation that was earned or paid to the individuals who served as non-employee directors during the year ended December 31, 2021. Except as set forth in the table, during 2021, directors did not earn nor receive cash compensation or compensation in the form of stock awards, option awards or any other form:
| | | | | | | | | | | |
| Option Awards-5- | |
Name | ($) (1) |
Richard A. Berman | | $ | 213,318 |
Michael Sherman | | 218,911 |
Edward J. Zecchini (2) | | 86,224 |
Diane Seloff (3) | | 86,224 |
Robert Rebak | | 372,574 |
Gustavo A. Giraldo (4) | | 190,859 |
Katherine B. Quinn (5) | | 190,895 |
____________
