☒
☐
999 Skyway825 Industrial Road, Suite 150
400
San Carlos, California 94070
10, 2022
2022.
April 27, 2022
10, 2022
Street Name Stockholders. Street name stockholders who wish to attend the online-only virtual meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Street name stockholders who e-mail a valid legal proxy will be issued a meeting control number that will allow them to register to attend and participate in the online-only meeting. After contacting Continental, a street name stockholder will receive an e-mail prior to the meeting with a link and instructions for entering the virtual meeting. Street name stockholders should contact Continental at least 5 business days prior to the meeting date.
calling:
45262131#
nominee.
3
Advisory Vote on the FrequencyRatification of the Advisory Vote on the Compensation of our Named Executive OfficersIndependent Accountants (Proposal No. 3).
majority.
Approval of our 2020 ESPP (Proposal No. 5). For the approval of our 2020 ESPP, the affirmative vote of the majority of shares present, in person or represented by proxy, and voting on the matter is required for approval. Shares voted to abstain are included in the number of shares present or represented and voting on each matter. Shares subject to broker “non-votes” are considered to be not entitled to vote for the particular matter and have the practical effect of reducing the number of affirmative votes required to achieve a majority for such matter by reducing the total number of shares from which the majority is calculated.
Ratification of Independent Accountants (Proposal No. 6). For the ratification of the appointment of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020, an affirmative vote of a majority of the shares present, in person or represented by proxy, and voting on such matter is required for approval. Shares voted to abstain are included in the number of shares present or represented and voting. Brokers are entitled to vote on this matter without direction from you, and therefore are included in the number of affirmative votes required to achieve a majority.
|
Is my vote confidential?
999 Skyway
400
999 Skyway
400
Our bylaws also provide that the only business that may be conducted at an annual meeting is business that is (1) specified in the notice of meeting (or any supplement thereto) given by or at the direction of our Board of Directors, (2) otherwise properly brought before the meeting by or at the direction of our Board of Directors (or any committee thereto), or (3) properly brought before the meeting by a stockholder who has delivered Timely Notice (as defined below) to our Corporate Secretary.
Meeting:
Maria Fardis, Ph.D.
We expect that all of the foregoing nominees will accept such nomination; however, in the event that a director nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by our Board of Directors to fill such vacancy. If you are a street name stockholder and you do not give voting instructions to your broker or nominee, your broker will leave your shares unvoted on this matter.
Directors with Terms expiring at the Annual Meeting/Nominees | Age | Position | Director Since | |||
Iain Dukes, D.Phil. | 61 | Chairman of the Board of Directors | 2016 | |||
Maria Fardis, Ph.D. | 52 | President, Chief Executive Officer and Director | 2016 | |||
Athena Countouriotis, M.D. | 48 | Director | 2019 | |||
Ryan Maynard | 50 | Director | 2015 | |||
Merrill A. McPeak | 84 | Director | 2011 | |||
Wayne P. Rothbaum | 52 | Director | 2016 | |||
Michael Weiser, M.D., Ph.D. | 57 | Director | 2018 |
Nominees
Directors with Terms Expiring at the Annual Meeting/Nominees | | | Age | | | Position | | | Director Since | |
Iain Dukes, D. Phil. | | | 63 | | | Chairman of the Board of Directors | | | 2016 | |
Athena Countouriotis, M.D. | | | 50 | | | Director | | | 2019 | |
Ryan Maynard | | | 52 | | | Director | | | 2015 | |
Merrill A. McPeak | | | 86 | | | Director | | | 2011 | |
Wayne P. Rothbaum | | | 54 | | | Director | | | 2016 | |
Michael Weiser, M.D., Ph.D. | | | 59 | | | Director | | | 2018 | |
each director is included below.
Maria Fardis, Ph.D. Dr. Fardis joined the Company as President and Chief Executive Officer on June 1, 2016 and was appointed to our Board of Directors on June 7, 2016. Since joining, the Company has been transformed from an early-stage development company to a company with multiple late-stage programs involving lifileucel and LN-145 for treatment of multiple solid tumors. Dr. Fardis served as the Chief Operating Officer of Acerta Pharma B.V., a clinical-stage biopharmaceutical company, from January 2015 to March 2016, where she worked on the development of Calquence® until the company’s acquisition by AstraZeneca. From 2011 to 2014, she worked at Pharmacyclics, Inc., where she was a key contributor in the creation of a broad clinical program leading to global approvals for Imbruvica® in multiple hematologic malignancies, and where she served as Chief of Oncology Operations and Alliances. Prior to joining Pharmacyclics, from August 2001 to April 2011, Dr. Fardis held increasingly senior positions in Medicinal Chemistry and the project and portfolio management department at Gilead Sciences, Inc., where she was involved with multiple therapeutic areas including antivirals, oncology, and cardiovascular therapeutics and worked on the development and life cycle management of Letairis®. Dr. Fardis received her Ph.D. in Organic Chemistry from the University of California, Berkeley and her B.S. summa cum laude, in chemistry from the University of Illinois, Urbana-Champaign. Dr. Fardis holds an M.B.A., with highest honors, from Golden Gate University.
Our Board of Directors believes that Dr. Fardis is highly qualified to serve as a member of the Board of Directors because of her experience as an executive of multiple prior biopharmaceutical companies, extensive experience in drug development, and strong scientific background.
Athena Countouriotis, M.D. Dr. Countouriotis joined our Board of Directors in June 2019. Dr. Countouriotis is the President and Chief Executive Officer of Turning Point Therapeutics and was named to its board of directors in September 2018. Dr. Countouriotis has also served as the Chief Medical Officer for multiple public biotechnology companies, including Adverum Biotechnologies, Halozyme Therapeutics and Ambit Biosciences. Earlier in her career, Dr. Countouriotis led development of products for Pfizer and Bristol-Myers Squibb, including Sutent®Sutent®, Mylotarg®Mylotarg®, Bosulif®Bosulif® and Sprycel®Sprycel®. She serves on the board of directors at Turning Point Therapeutics, and Passage Bio. Dr. Countouriotis holds an undergraduate degree from the University of California, Los Angeles and an M.D. from the Tufts University School of Medicine. She received training at the University of California, Los Angeles and at the Fred Hutchinson Cancer Research Center in the Pediatric Hematology-Oncology Program.
Although Dr. Countouriotis is an executive officer of a public company and she serves on the board of one other public company, she is still able to devote the time necessary to our Board of Directors. We believe her experience makes her a valuable asset to the Board of Directors.
Wayne P. Rothbaum. Mr. Rothbaum joined our Board of Directors on June 7, 2016. Mr. Rothbaum is currently the President of Quogue Capital LLC, a life sciences private equity investment fund that he founded in 2001. Beginning in 2012, Mr. Rothbaum served as thehas been a co-founder and largest investorexecutive chairman of several life sciences companies, including Acerta Pharma, B.V., a Dutch biotech focused on developing selective, covalent small molecules to treat cancer and inflammation. Acerta Pharmawhich was sold to AstraZeneca in February 2016. From February 2013 until its sale in February 2016, Mr. Rothbaum served as the executive chairman of AcertaKartos Therapeutics, and Telios Pharma. From 1993 until 2001, Mr. Rothbaum led the biotechnology practice at the strategic consulting firm The Carson Group. Mr. Rothbaum graduated Phi Beta Kappa from Binghamton University in 1990 with a dual major in political science and psychology and received his master’s degree in international economicsaffairs from the George Washington University.
Board Diversity Matrix | | ||||||||||||||||||||||||||||||
Total Number of Directors | | | | | | | | | 6 | | |||||||||||||||||||||
Part I: Gender Identity | | | Female | | | Male | | | | | | | | | Non-Binary | | | Did Not Disclose Gender | | ||||||||||||
Directors | | | | | 1 | | | | | | 5 | | | | | | | | | | | | — | | | | | | — | | |
Part II: Demographic Background | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
African American or Black | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | |
Alaskan Native or Native American | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | |
Asian | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | |
Hispanic or Latinx | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | |
Native Hawaiian or Pacific Islander | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | |
White | | | | | 1 | | | | | | 5 | | | | | | | | | | | | — | | | | | | — | | |
Two or More Races or Ethnicities | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | |
LGBTQ+ | | | | | | | | | | | | | | | | | 1 | | | | | | | | | | | | | | |
Did Not Disclose Demographic Background | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | | |
Minimum Criteria for Board of Directors Members. Under the director nominations process, each Board of Directors candidate must possess at least the following specific minimum qualifications:
Timing of the Identification and Evaluation Process. Our fiscal year is the calendar year. The Nominating and Corporate Governance Committee expects generally to meet one or more times to consider, among other things, candidates to be recommended to the Board of Directors for inclusion in our recommended slate of director nominees for the next annual meeting and our Proxy Statement. TheOur Board of Directors usually meets each March or early April and at that meeting approves, among other things, the slate of director nominees to be submitted to and recommended for election by stockholders at the annual meeting, which is typically held in May or June. All candidates, whether identified internally or by a nomination received from a stockholder, who after evaluation are recommended by the Nominating and Corporate Governance Committee and the independent members of the Board of Directors, and approved by the Board of Directors, will be included in our recommended slate of director nominees in our Proxy Statement.
Although Dr. Dukes is technically considered not independent under such rules because he had a prior consulting agreement within the past three years, his consulting agreement expired more than twelve months prior in 2020.
Our Board of Directors has also acted by written consent multiple times during 2021.
was held.
The Audit Committee operates pursuant to a written charter. Among other things, the Audit Committee is responsible for:
|
Our Board of Directors
Athena Countouriotis, M.D.
Report of the Audit Committee of
formed a short-term committee, which we refer to as the Scientific Committee, consisting of Mr. Rothbaum and Dr. Weiser as the two directors on this committee and other members and consultants. The AuditScientific Committee provides assistance to ouris primarily responsible for providing management hands-on guidance for regulatory affairs and clinical development matters, reviewing the Company’s regulatory strategy and any material filings and communications with the U.S. Food and Drug Administration (the “FDA”) regarding any of the Company’s clinical programs. The Scientific Committee will remain active until such time as the Board of Directors in fulfilling its oversight responsibilitydecides to the Company’s stockholders, potential stockholders, the investment community,disband this committee if and others relating to our financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function, the annual independent audit of our financial statements and the ethics programs when established by our management and our Board of Directors.it is no longer needed. The AuditScientific Committee has the sole authority (subject to stockholder ratification) to appoint or replace the outside auditors and is directly responsible for determining the compensation of the independent auditors. In discharging its oversight role, the Audit Committee is empowered to investigate any matter brought to its attention, with full access to all of our books, records, facilities and personnel, and to retain its own legal counsel and other advisers as it deems necessary or appropriate.
As part of its oversight of our financial statements, the Audit Committee reviewed and discussed with both management and our outside auditors our interim financial statements and annual audited financial statements that are included in our Quarterly Reports on Form 10-Q and Annual Report on Form 10-K, respectively. The Audit Committee held six meetings during the fiscal year ended December 31, 2019, including regular meetings in conjunction with the close of each fiscal quarter, during which the Audit Committee reviewed and discussed the Company’s financial statements with management and Marcum LLP. These Audit Committee meetings routinely include executive sessions of the committee, as well as private sessions with Marcum LLP. Our management advised the Audit Committee in each case that all such financial statements were prepared in accordance with accounting principles generally accepted in the United States of America and reviewed significant accounting issues with the Audit Committee. These reviews included discussion with the outside auditors of matters required to be discussedby Auditing Standard 1301, “Communications with Audit Committees,” issued by the Public Company Accounting Oversight Board.
During the fiscal year ended December 31, 2019, Marcum LLP served as our independent registered public accounting firm and audited our financial statements forremained active throughout the year ended December 31, 2019. Marcum LLP did not have any financial interest, direct or indirect, in our Company,2021 and did not have any connection with our Company except in its professional capacity as our independent auditors. As discussed in Proposal No. 6 below, the Audit Committee has engaged Marcum LLP as our independent registered public accountants for the fiscal year ending December 31, 2020.
The Audit Committee discussed with Marcum LLP, the auditors of our 2019 annual financial statements, matters relatingcontinues to its independence, including a review of audit and non-audit fees and the letter and written disclosures made by Marcum LLP to the Audit Committee pursuant to Public Company Accounting Oversight Board (United States) Rule 3526.
Audit and non-audit services to be provided by Marcum LLP are subject to the prior approval of the Audit Committee. In general, the Audit Committee’s policy is to grant such approval where it determines that the non-audit services are compatible with maintaining the independent registered public accounting firm’s independence and there are cost or other efficiencies in obtaining such services from the independent registered public accounting firm as compared to other possible providers.
Taking all of these reviews and discussionsremain very active into account, the Audit Committee recommended to our Board of Directors that our Board of Directors approve the inclusion of our audited financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was deemed filed with the SEC on February 25, 2020.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Ryan Maynard (Chair)
Merrill McPeak
Michael Weiser, M.D., Ph.D.
2022.
Our Board of Directors is currently comprised of a majority of individuals who are independent from the management of the Company and, assuming that the nominees are elected at the Annual Meeting, five of the sevensix members of our Board of Directors will continue to be independent directors. Our Board of Directors and its committees meet regularly throughout the year to assure that the independent directors are well briefed and informed with regard to the Company’s affairs. Each of the independent directors has access to the executive officers of the Company. In this fashion, we seek to maintain well informed, independent directors who are prepared to make informed decisions regarding our business affairs.
2021 and continues to be permitted in 2022.
| | | | | | Annual Cash Retainer ($)(1) | | | Annual Equity Compensation(2) | | ||||||
Board of Directors membership | | | | | | | $ | 35,000 | | | | | | 35,000 | | |
Chairman of the Board of Directors (Extra Retainer) | | | | | | | $ | 25,000 | | | | | | 35,000 | | |
Audit Committee | | | Chair | | | | $ | 15,000 | | | | | | | | |
| | | Member | | | | $ | 7,500 | | | | | | | | |
Compensation Committee | | | Chair | | | | $ | 15,000 | | | | | | | | |
| | | Member | | | | $ | 7,500 | | | | | | | | |
Nominating and Corporate Governance Committee | | | Chair | | | | $ | 15,000 | | | | | | | | |
| | | Member | | | | $ | 7,500 | | | | | | | | |
Annual Cash Retainer(1) | Annual Equity Compensation(2) | |||||||||
Board of Directors membership | $ | 35,000 | 35,000 | |||||||
Chairman of the Board of Directors (Extra Retainer) | $ | 25,000 | 35,000 | |||||||
Audit Committee | Chair | $ | 15,000 | |||||||
Member | $ | 7,500 | ||||||||
Compensation Committee | Chair | $ | 15,000 | |||||||
Member | $ | 7,500 | ||||||||
Nominating and Corporate Governance Committee | Chair | $ | 15,000 | |||||||
Member | $ | 7,500 |
The table below shows the compensation received by each of our non-employee directors during 20192021 for serving on the Board of Directors and on its committees. Our non-employee directors do not receive fringe or other benefits.
Name | Fees Earned or Paid in Cash | Options Awards ($)(1) | Total ($) | |||||||||
Athena Countouriotis, M.D. | $ | 27,885 | $ | 450,363 | $ | 478,248 | ||||||
Iain Dukes, D.Phil. | $ | 60,000 | $ | 900,725 | $ | 960,725 | ||||||
Ryan Maynard | $ | 50,000 | $ | 450,363 | $ | 500,363 | ||||||
Merrill A. McPeak | $ | 65,000 | $ | 450,363 | $ | 515,363 | ||||||
Wayne P. Rothbaum(2) | $ | - | $ | - | $ | - | ||||||
Michael Weiser, M.D., Ph.D. | $ | 65,000 | $ | 643,375 | $ | 708,375 |
Name | | | Fees Earned or Paid in Cash ($) | | | Options Awards ($)(1) | | | Total ($) | | |||||||||
Athena Countouriotis, M.D. | | | | $ | 50,000 | | | | | $ | 546,917 | | | | | $ | 596,917 | | |
Iain Dukes, D. Phil. | | | | $ | 67,500 | | | | | $ | 1,093,834 | | | | | $ | 1,161,334 | | |
Ryan Maynard | | | | $ | 50,000 | | | | | $ | 546,917 | | | | | $ | 596,917 | | |
Merrill A. McPeak | | | | $ | 61,250 | | | | | $ | 546,917 | | | | | $ | 608,167 | | |
Wayne Rothbaum(2)(3) | | | | $ | 240,000 | | | | | $ | — | | | | | $ | 240,000 | | |
Michael Weiser, M.D., Ph.D.(2) | | | | $ | 305,000 | | | | | $ | 546,917 | | | | | $ | 851,917 | | |
(1) Represents the grant date value computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, “Compensation — Stock Compensation.” These amounts do not reflect the actual economic value that will be realized by the directors upon the vesting |
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.
* * *
PROPOSAL NO. 2 - ADVISORY VOTE ON THE COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS
Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), as set forth in Section 14A(a)stock options, the exercise of the Securities Exchange Actstock options, or the sale of 1934,the common stock underlying such stock options.
We are asking for stockholder approvalAs part of the compensationits oversight of our named executive officers as disclosed in this proxy statement in accordancefinancial statements, the Audit Committee reviewed and discussed with SEC rules, which include the disclosures under “Executive Compensation - Compensation Discussion and Analysis,” the compensation tables and the narrative discussion following the compensation tables. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the compensation policies and practices described in this proxy statement. Accordingly, we are asking you to approve the following resolution:
RESOLVED, that the compensation paid to the named executive officers of Iovance Biotherapeutics, Inc., as disclosed in the 2020 Proxy Statement of Iovance Biotherapeutics, Inc. pursuant to Item 402 of SEC Regulation S-K, including the compensation tables and narrative discussion, hereby is approved.
This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is advisory in nature and therefore is not binding on us, our Compensation Committee or our Board of Directors. Our Board of Directorsboth management and our Compensationoutside auditors our interim financial statements and annual audited financial statements that are included in our Quarterly Reports on Form 10-Q and Annual Report on Form 10-K, respectively. The Audit Committee however, valueheld four meetings during the opinions of our stockholders. To the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider the stockholders’ concerns, and our Compensation Committee will evaluate whether any actions are necessary to address those concerns.
Vote Required
The affirmative vote of a majority of the shares of our common stock present in person or represented by proxy and entitled to vote on this proposal at the Annual Meeting is required for advisory approval of the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
MANAGEMENT NAMED EXECUTIVE OFFICERS
Named Executive Officers
The following table sets forth information regarding our named executive officers as of the Record Date.
Maria Fardis, Ph.D. Dr. Fardis has served as our President and Chief Executive Officer since her appointment effective June 1, 2016. See, “Proposal No. 1: Election of Directors — Nominees for Director,” above.
Timothy E. Morris. Mr. Morris joined the Company as our Chief Financial Officer on August 14, 2017. Mr. Morris thereafter became our principal accounting officer on November 8, 2017. Prior to joining us, Mr. Morris was the Chief Financial Officer and Head of Business Development for AcelRx Pharmaceuticals, Inc., a publicly traded biopharmaceutical company focusing on the development and commercialization of sublingual therapies for the treatment of acute pain, from March 2014 until June 2017. From November 2004 to December 2013, Mr. Morris served as the Chief Financial Officer and Global Head of Corporate Development for VIVUS, Inc., a publicly traded biopharmaceutical company focused on the development and commercialization of therapies to treat obesity and restore sexual health. Prior to joining VIVUS, he served as Chief Financial Officer and Senior Vice President of Finance, Manufacturing and Administration at Questcor Pharmaceuticals, Inc. from September 2001 to November 2004. Prior thereto, Mr. Morris also served as Chief Financial Officer of Interpro Business Solutions, Inc., Utility.com, and RiboGene, Inc. Mr. Morris currently serves as a non-executive director of Humanigen, Inc. Mr. Morris is a Certified Public Accountant (inactive) and received a bachelor’s degree in business with emphasis in accounting from California State University, Chico.
Friedrich Graf Finckenstein, M.D. Dr. Graf Finckenstein joined the Company as our Chief Medical Officer on July 18, 2019. Dr. Graf Finckenstein is a physician-scientist with decades of experience in clinical medicine, laboratory cancer research, and drug development in the biopharmaceutical industry. Prior to joining Iovance he was Global Head of Oncology Translational Medicine at Roche Pharma Research and Early Development in Basel, Switzerland, where he led all clinical development aspects in the Oncology Discovery and Translational Area, including the design and conduct of clinical trials, exploratory development studies and translational medicine, biomarker and personalized healthcare strategy. Prior to that, Dr. Graf Finckenstein held multiple clinical leadership roles at Bristol-Meyers Squibb Company, where he worked on an array of products from early clinical development to late stage, including key contributions to the approval of Opdivo® in lung cancer. Dr. Graf Finckenstein has a medical degree from the University of Hamburg in Germany. He holds a German medical license, a pediatric board certification, and has conducted basic cancer research at the Ludwig Institute, San Diego Branch, the Children’s Hospital Los Angeles and the University of Hamburg.
Frederick G. Vogt, Ph.D., Esq. Dr. Vogt joined the Company on September 30, 2016 as our Vice President, Intellectual Property. Dr. Vogt was promoted to General Counsel on July 1, 2017. From May 2013 until he joined the Company, Dr. Vogt practiced law at the international law firm of Morgan, Lewis & Bockius LLP, focusing on intellectual property and business law in the life sciences and representing clients in patent strategy, transactional, and litigation matters. Prior to joining Morgan, Lewis & Bockius LLP, he served in numerous scientific, management, and legal roles of increasing responsibility over a period of 13 years at GlaxoSmithKline plc., where he focused primarily on oncology and cardiovascular drug development. Dr. Vogt holds a B.S. in Chemistry from Ursinus College, a Ph.D. in Chemistry from the Pennsylvania State University, and a J.D. from Temple University. He is admitted to practice in Pennsylvania and before the U.S. Patent and Trademark Office and the U.S. District Court for the Eastern District of Pennsylvania.
EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS
Overview of Executive Compensation Program
This section explains the objectives of our named executive officer compensation program, the compensation decisions we made with respect to compensation for our fiscal year ended December 31, 2019, and the factors we considered2021, including regular meetings in making those decisions, and focuses on the compensation of officers who are listed as our “named executive officers” in this proxy statement. The named executive officers include the following four officers who are currently employed with us:
Maria Fardis, Ph.D., our President and Chief Executive Officer,
Timothy E. Morris, our Chief Financial Officer,
Friedrich Graf Finckenstein, M.D., our Chief Medical Officer, and
Frederick G. Vogt, Ph.D., Esq., our General Counsel.
At our 2019 Annual Meeting of Stockholders, on an advisory basis, approximately 98% of the stockholders who voted on this matter approved the compensation of our named executive officers as disclosed in our 2019 proxy statement. Based on our continued engagement with our shareholders as well as the results of the 2019 stockholder advisory vote, the Compensation Committee has determined to follow the stockholders’ recommendation and to continue to follow our historical compensation policies and procedures, subject to recommendations received from our independent compensation consulting firm.
2019 Performance Highlights
2019 was a year of significant progress for us. Over the course of 2019, our stock price increased in value by 213%. The following are some of our performance highlights for 2019:
Compensation Policies and Practices at a Glance
What we do
What we do not do
Compensation Objectives and Philosophy
Our named executive officer compensation program is designed to meet the following key objectives:
Elements of Executive Officer Compensation
Our 2019 compensation program is made up of the following three direct compensation elements:
| |
| |
|
Mix of Executive Officer Compensation
Our Compensation Committee does not have any formal policies for allocating compensation among our three primary compensation elements. Rather, our Compensation Committee uses its judgment to determine the appropriate level and mix of compensation on an annual basisconjunction with the goal to balance current cash compensation with equity awards to reward both short-termclose of each fiscal quarter, during which the Audit Committee reviewed and long-term performance. In addition, we believe that our executive officer compensation programs should be focused on performance- and stock price-variable compensation elements. For 2019,discussed the mix of compensation at target for our executive officers was as follows:(1)
Role of the Board of Directors, the Compensation Committee, Management and Consultant
Our Compensation Committee is charged with, among other things, the responsibility of reviewing executive officer compensation policies and practices to ensure adherence to our compensation philosophy and objectives and that the total compensation paid to our executive officers is consistent with our performance, fair, reasonable and competitive with companies within our industry. Our Compensation Committee’s primary responsibilities with respect to determining executive compensation are (i) setting performance targets under our annual bonus plan; (ii) verifying that performance targets used for any performance-based compensation plan have been met before payment of any executive bonus or compensation; (iii) approving all amendments to, and terminations of, all compensation plans and any awards under such plans; (iv) granting any awards under any performance-based annual bonus, long-term incentive compensation and equity compensation plans to executive officers; (v) approving which executive officers and other employees receive awards under our equity and incentive compensation plan(s); and (vi) conducting an annual review of all compensation plans. In some cases, the Compensation Committee makes recommendations that our Board approve these items or grant equity awards.
The Compensation Committee reviews and considers our Chief Executive Officer’s recommendations with respect to compensation decisions for our named executive officers, other than herself. The Compensation Committee believes it is valuable to consider the recommendations of our Chief Executive Officer with respect to these matters because, given her knowledge of our operations, the biotechnology industry and the day-to-day responsibilities of our executive officers, she is in the best position to provide the Compensation Committee perspective into the performance of our executive officers. Our Board of Directors (without the participation of our Chief Executive Officer), after considering the recommendations of the Compensation Committee, makes the final determination with respect to the compensation of our Chief Executive Officer.
As part of the 2019 and 2020 executive compensation process, the Compensation Committee engaged Haigh & Company (“Haigh”) as its compensation consultant. Haigh provides us advisory services only with respect to executive and director compensation and worksCompany’s financial statements with management only withand Ernst & Young LLP, the approvalCompany’s independent registered public accounting firm, and underMarcum LLP, the direction of the Compensation Committee. Haigh assisted in the development of our 2019 peer group, reviewed the compensation components of our 2019 program for our named executive officers and advised the Compensation Committee regarding the components and levels of the executive compensation program, including our incentive and equity-based compensation plans. Haigh continues to make itself available on an ongoing basis to provide guidance to the Compensation Committee on compensation issues as they arise. The Compensation Committee has assessed Haigh’s independence pursuant to SEC rules and concluded that no conflict of interest exists that would prevent Haigh from independently advising the Compensation Committee.
Compensation Determination Process and the Role of Named Executive Officers in Compensation Decisions
We conduct an annual review of named executive officer compensation with a presentation by our Chief Executive Officer to our Board of Directors and Compensation Committee regarding each element of our executive compensation arrangements. Our Compensation Committee met on December 15, 2019 to establish year-end compensationCompany’s prior independent registered public accounting firm, for the fiscal year ended December 31, 2019. At the Compensation Committee’s direction, our Chief Executive Officer, in consultation with Haigh, typically prepares an2021. These
As partsessions of the compensation review, our Compensation Committee also considers changes to an executive officer’s compensation. The Compensation Committee in its discretion may revise our Chief Executive Officer’s recommendations or make its own recommendations to our Board of Directors, which may in turn suggest further revisions. The Compensation Committee, in consultation with our Chief Executive Officer, reviews each performance goal and determines the extent to which we achieved such goals. For a description of some of the goals established for 2019, see “2019 Named Executive Officer Compensation - Annual and Special Cash Bonuses,” below.
In accordance with Nasdaq requirements, the Compensation Committee also meets in an executive session without the Chief Executive Officer to consider and make recommendations to our Board of Directors regarding the Chief Executive Officer’s compensation, including base salary and cash bonus. The Compensation Committee recommends to our Board of Directors year-end annual stock option grants to our Chief Executive Officer. The Compensation Committee also grants year-end stock options to other named executive officers based on, among other factors, recommendations by our Chief Executive Officer.
Peer and Industry Data
For purposes of determining the competitiveness of 2019 compensation and setting compensation for 2020, our Compensation Committee, with the advice of Haigh, examined our 2019 peer group in light of our continued growth throughout 2019, which is anticipated to continue in 2020, the stage of development of our clinical programs, the growth in our headcount and changes in our market capitalization. With reference to these and other key business metrics, companies whose market capitalization and/or whose number of employees that were at the low end, below, or significantly above our targeted range were removed and new companies were added to the peer group for 2020. Based on its discussions with Haigh, the Compensation Committee identified the following 18 peer companies for determining the competitiveness of 2019 compensation and setting compensation for 2020 that were selected from among publicly-held U.S. pharmaceutical and biotechnology companies with comparable operations in the U.S. based on the following criteria: number, stage and indication of development programs, total R&D spending, number of employees, and market capitalization:
|
|
In 2019, Audentes Therapeutics, MyoKardia, and Xencor were added as peer companies based primarily on comparable headcount and market capitalization at the time of our Compensation Committee’s review. Location, expertise and field of drug development of the peer companies were also considered, because of the similarities between the talent pools accessible by these companies and by our Company. Aduro BioTech, Calithera Biosciences, CytomX Therapeutics, ImmunoGen, and Kura Oncology were removed from our prior year’s peer group primarily based on their stage of development and their market capitalization, which was below the low-end of our targeted range.
In addition to the compensation data of our peer group, our Compensation Committee and Haigh review industry specific, broad-based compensation surveys. In 2019, the Radford Global Life Science survey was used to supplement the peer company market data.
Benchmarking in the Context of Our Other Executive Compensation Principles
Our Compensation Committee and our Board of Directors use market data as one means of evaluating and establishing executive pay. In instances where an executive officer is believed to be especially suited to our Company or important to our success, the Compensation Committee may establish or recommend compensation that deviates from industry averages or other specific benchmarks. Upward or downward variations in total cash compensation and long-term incentives may also occur as a result of the individual’s experience level, the nature and level of the individual’s specific job responsibilities, the balance of the individual’s different elements of compensation, market factors and other strategic considerations.
Our Compensation Committee believes that, given the competitiveness of our industry and our corporate culture, our base compensation, annual cash bonuses and equity programs are flexible enough to reward the achievement of clearly defined corporate goals and are sufficient to retain our existing executive officers and to hire new executive officers with the appropriate qualifications and experience.
2019 Named Executive Officer Compensation
Base Salaries
The Compensation Committee considers salary increases for our named executive officers generally on an annual basis, setting salaries based on market compensation levels and the recommendations of our Chief Executive Officer after assessing each executive’s performance. A similar process is used by the Board of Directors in setting our Chief Executive Officer’s salary. The Chief Executive Officer does not provide recommendations on her own salary.
At its February 26, 2019 meeting, our Compensation Committee approved the following base salary actions:
Name and Position(1) | 2018 Salary | 2019 Salary | % Increase from Final 2018 Base Salary | |||||||||
Maria Fardis, Ph.D., President and Chief Executive Officer | $ | 600,000 | $ | 600,000 | 0 | % | ||||||
Timothy E. Morris, Chief Financial Officer | $ | 450,000 | $ | 460,000 | 2.22 | % | ||||||
Friedrich Graf Finckenstein, M.D., Chief Medical Officer | $ | -- | $ | 450,000 | (1 | ) | ||||||
Frederick G. Vogt, Ph.D., Esq., General Counsel and Corporate Secretary | $ | 375,000 | $ | 400,000 | 6.67 | % |
The Compensation Committee did not increase the salary of Dr. Fardis from her 2018 base salary level based on its determination that Dr. Fardis’ salary was already competitive with our peer group. In recognition of their performance, the Compensation Committee increased the 2019 base salaries of Mr. Morris to $460,000 and Dr. Vogt to $400,000 over their 2018 base salary levels. Dr. Graf Finckenstein became an employee of the Company on July 18, 2019 and received a 2019 base salary of $450,000.
Annual Incentive Bonuses
The corporate goals and objectives for fiscal year 2019 were based on meeting certain goals with respect to the Company’s operational performance as follows: (i) enrolling a specified number of patients in the Company’s clinical program including C-144-01 and C-145-04 clinical trials of its TIL therapies; (ii) ensuring that the Company’s second generation TIL manufacturing process is prepared for product registration; (iii) selecting a location and commencing work on a commercial manufacturing facility; (iv) completing certain regulatory interactions and submissions; ; (v) completing certain preclinical work to support IND applications in the U.S. for new Company products; (vi) achieving specified goals relating to submission of Company data for presentations at medical conferences; and (vii) managing the Company’s budget.
At its December 15, 2019 meeting, the Compensation Committee determined that the Company met 100% of its 2019 corporate goals and paid the following bonuses for 2019 performance. Mr. Morris did not receive a performance bonus for fiscal year 2019.
Name and Position | Hire Date | Annual Incentive Target %(1), (3) | 2019 Target Bonus Opportunity | 2019 Actual Bonus Payment(2) | 2019 Actual Bonus Payment (% of Target Award Opportunity) | |||||||||||||
Maria Fardis, Ph.D., President and Chief Executive Officer | 6/1/2016 | 100 | % | $ | 600,000 | $ | 600,000 | 100 | % | |||||||||
Timothy E. Morris, Chief Financial Officer | 8/14/2017 | 40 | % | $ | 184,000 | $ | - | 0 | % | |||||||||
Friedrich Graf Finckenstein, M.D., Chief Medical Officer(4) | 7/18/2019 | 40 | % | $ | 81,863 | $ | 82,500 | 101 | % | |||||||||
Frederick G. Vogt, Ph.D., Esq., General Counsel and Corporate Secretary | 9/30/2016 | 40 | % | $ | 160,000 | $ | 160,000 | 100 | % |
The Compensation Committee retains the right to make discretionary cash bonus payments in excess of the target cash bonus levels to the named executive officers if in its opinion a named executive officer’s performance justifies such excess payment. No excess payments were made for 2019.
2019 Initial and Annual Stock Option Awards
Our Board of Directors and Compensation Committee generally make annual stock option grants to our named executive officers in recognition of their performance, potential and the critical impact of their roles following our fiscal year. Dr. Graf Finckenstein was granted stock options upon becoming an employee with us.
At its February 26, 2019 meeting, our Compensation Committee approved the following stock option awards that were granted on March 4, 2019, except that Dr. Graf Finckenstein’s award was approved by our Board of Directors and was made in connection with his hiring:
Name | Grant Date | Number of Securities Underlying Options(1) | Exercise Price of Option Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards ($)(2) | ||||||||||
Maria Fardis, Ph.D. | 3/4/2019 | 400,000 | (3) | $ | 11.26 | $ | 2,907,960 | |||||||
Timothy E. Morris | 3/4/2019 | 100,000 | (3) | $ | 11.26 | $ | 726,990 | |||||||
Friedrich Graf Finckenstein, M.D.(4) | 7/18/2019 | 160,000 | (3) | $ | 25.78 | $ | 2,655,440 | |||||||
Frederick G. Vogt, Ph.D., Esq. | 3/4/2019 | 200,000 | (3) | $ | 11.26 | $ | 1,453,980 |
2020 Named Executive Officer Compensation
At its December 15, 2019 meeting, our Compensation Committee approved a 5% salary increase for Dr. Vogt resulting in a base salary for 2020 of $420,000. The Compensation Committee also approved the following stock option awards that were granted on January 3, 2020. Even though these awards are granted in part based on 2019 performance, these stock option values will not be disclosed in our executive compensation tables until our 2021 proxy:
Name | Grant Date | Number of Securities Underlying Options(1) | Exercise Price of Option Awards ($/Share) | Grant Date Fair Value of Stock Option Awards ($)(2) | ||||||||||
Maria Fardis, Ph.D. | 1/03/2020 | 500,000 | (3) | $ | 25.54 | $ | 8,139,400 | |||||||
Friedrich Graf Finckenstein, M.D. | 1/03/2020 | 75,000 | (3) | $ | 25.54 | $ | 1,220,910 | |||||||
Frederick G. Vogt, Ph.D., Esq. | 1/03/2020 | 150,000 | (3) | $ | 25.54 | $ | 2,441,820 |
Other Compensation Elements
Retirement Plans, Perquisites and Other Personal Benefits
Our named executive officers are eligible to participate in the employee benefit plans on the same terms and conditions as they are available to our other regular employees. These benefits include medical, dental, vision, disability and life insurance, flexible spending accounts, and a 401(k) plan.
Under the tax-qualified employee savings and retirement plan, our 401(k) plan, all eligible U.S. employees, including our named executive officers, may elect to defer a percentage of their eligible compensation in our 401(k) plan, subject to the annual IRS limit. In 2019, we matched 100% of the employee contributions up to 4% of annual eligible compensation. The 2019 matching contributions made under the Safe Harbor Matching Contribution are fully vested.
We do not provide perquisites or other personal benefits to our named executive officers other than those that we provide to our employees. We do not provide any tax reimbursement payments (including “gross-ups”) on any personal benefits, except in the case of certain relocation benefits.
Discretionary Cash Bonuses
From time to time, we may pay cash bonuses to employees upon the successful completion of certain projects and we may also pay sign-on bonuses to aid in recruiting certain key employees.
Employment Agreements and Termination Benefits.
We have entered into written employment agreements with each of our current and former named executive officers. The main purpose of these agreements is to protect our Company from business risks such as competition for each named executive officer’s service, loss of confidential information or trade secrets, solicitation of our other employees, and to define our respective rights to terminate the employment relationship. Each of these employment agreements can be terminated by either party at any time. Each employment agreement was individually negotiated, so there are some variations in the terms among named executive officers. Generally speaking, however, the employment agreements provide for termination and severance benefits that the Compensation Committee believes are consistent with industry practices for similarly situated executives. The Compensation Committee believes that the termination and severance benefits help the Company retain the named executive officers by providing them with a competitive employment arrangement and compensation for termination of their employment by us without “cause.”
In the event of termination of a named executive officer’s employment by us without “cause” or a resignation for “good reason,” the named executive officers will be, entitled to a lump-sum payment, which payment is equal to twelve months of base salary in the case of Dr. Fardis, and six months of base salary in the case of Mr. Morris, Dr. Graf Finckenstein, and Dr. Vogt. If a named executive officer’s employment is terminated by us without “cause” in connection with a change of control of our Company, the named executive officers will be entitled to a lump-sum payment equal to twelve months of base salary in the case of Dr. Fardis and Mr. Morris, and six months of base salary in the case of Dr. Graf Finckenstein and Dr. Vogt, plus in each instance the pro-rated amount of their respective minimum bonuses for those periods. In addition, if the employment agreements of Dr. Fardis, Dr. Graf Finckenstein, or Dr. Vogt are terminated by us without “cause” or by them for “good reason,” their unvested stock options vest immediately.
The specific terms of the termination and change of control arrangements,committee, as well as an estimate ofprivate sessions with Ernst & Young LLP and Marcum LLP. Our management advised the compensationAudit Committee in each case that would have been payable hadall such provisions been triggered as of the end of 2019, are described in detail in the section below entitled “Executive Compensation – Potential Payments Upon Termination/Change of Control.”
Other Executive Compensation Considerations
Stock Ownership Guidelines
Although stock option grants encourage equity ownership, we do not require our directors or executive officers to own a particular number of shares of our common stock. We believe that stock and option holdings among our directors and named executive officers are adequate at this time to appropriately align their interests with those of our stockholders.
Deductibility of Executive Compensation
The Compensation Committee takes into consideration the tax consequences of compensation to the named executive officers, but tax considerations are not a significant part of our Company’s compensation policy especially in light of the passage of the Tax Cuts and Jobs Act of 2017 (“TCJA”), which limits the deductibility of certain compensation to highly compensated executives.
Accounting for Share-Based Compensation
We account for share-based compensationfinancial statements were prepared in accordance with accounting principles generally accepted in the requirementsUnited States of FASB ASC Topic 718. ThisAmerica and reviewed significant accounting treatment hasissues with the Audit Committee. These reviews included discussion with the outside auditors of matters required to be discussed by Auditing Standard 1301, “Communications with Audit Committees,” issued by the Public Company Accounting Oversight Board.
Clawbacks
WeCompany except in its professional capacity as our independent auditors.
Insider Trading Policy
Our insider trading policy expressly prohibits short sales and derivative transactions of our stock by our named executive officers, directors and specified other employees, including short sales of our securities, including short sales “against the box”; purchases or sales of puts, callscost or other derivative securitiesefficiencies in obtaining such services from the independent registered public accounting firm as compared to other possible providers.
The foregoing policies remained in place through 2019, and, unless otherwise noted above, we expect to continue to follow them for the foreseeable future.
Compensation Committee Interlocks and Insider Participation
During 2019, no member of the Compensation Committee served as one of our officers, former officers, or employees. During 2019, none of our named executive officers served as a member of the compensation committee of any other entity, one of whose executive officers served as a member of our Board of Directors or Compensation Committee, and none of our named executive officers served as a member of the Board of Directors of any other entity, one of whose executive officers served as a member of our Compensation Committee.
2019 Stockholder Advisory Vote
Each year, we hold a non-binding advisory stockholder vote on the compensation program for our named executive officers. At our annual stockholder meetings held in 2017, 2018 and 2019, our stockholders approved, on an advisory basis, the compensation of our named executive officers. In evaluating our compensation arrangements in late 2018 (and most recently for 2019 year-end bonuses), we considered the support of our stockholders of our compensation arrangements and objectives. As a result, our Compensation Committee retains our general approach to executive compensation and continues to apply the same general principles and philosophy as in the prior fiscal years in determining executive compensation. Our Compensation Committee values the opinions of our stockholders and will take our stockholders’ opinionsdiscussions into account, when making compensation decisions for the members of our executive team, including the named executive officers.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee of our Board of Directors has reviewed and discussed with management the foregoing “Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K and, based on such review and discussions, the CompensationAudit Committee recommended to our Board of Directors that this “Compensation Discussion and Analysis” be includedour Board of Directors approve the inclusion of our audited financial statements in this Proxy Statement.
COMPENSATIONour Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the SEC on February 24, 2022.
Athena Countouriotis, M.D.
Merrill A. McPeak
Wayne P. Rothbaum
Summary Compensation of Named Executive Officers
The following table sets forth all compensation awards to, paid or earned by the following type of named executive officers for each of the Company’s last three years ended December 31, 2019, 2018, and 2017: (i) individuals who served as, or acted in the capacity of, the Company’s principal executive officer or principal financial officer for the year ended December 31, 2019; (ii) the Company’s most highly compensated executive officers, other than the principal executive officer or principal financial officer, who were serving as executive officers at the end of the year ended December 31, 2019; and (iii) up to two additional individuals for whom the disclosure would have been provided but for the fact that the individual was not serving as an executive officer of the Company at the end of the year ended December 31, 2019. We refer to these individuals collectively as our named executive officers.
Name and Principal | Salary (1) | Bonus |
Stock Awards |
Stock Options (2) | Non-Equity Incentive Plan Compensation (3) |
All Other Compensation | Total | |||||||||||||||||||||||
Position | Year | ($) | ($) | ($) | ($) | ($) | ($)(10) | |||||||||||||||||||||||
Current Officers: | ||||||||||||||||||||||||||||||
Maria Fardis, Ph.D. | 2019 | $ | 600,000 | $ | - | $ | - | $ | 2,907,960 | $ | 600,000 | $ | - | $ | 4,107,960 | |||||||||||||||
President and Chief | 2018 | $ | 600,000 | $ | - | $ | - | $ | 8,284,600 | (4) | $ | 510,000 | $ | - | $ | 9,394,600 | ||||||||||||||
Executive Officer | 2017 | $ | 500,000 | $ | - | $ | - | $ | - | $ | 350,000 | $ | - | $ | 850,000 | |||||||||||||||
Timothy E. Morris(5) | 2019 | $ | 460,000 | $ | - | $ | - | $ | 726,990 | $ | - | $ | 11,200 | $ | 1,198,190 | |||||||||||||||
Chief Financial | 2018 | $ | 450,000 | $ | - | $ | - | $ | - | $ | 153,000 | $ | 11,000 | $ | 614,000 | |||||||||||||||
Officer | 2017 | $ | 172,212 | $ | - | $ | - | $ | 1,262,500 | $ | 65,130 | (6) | $ | - | $ | 1,499,842 | ||||||||||||||
Friedrich Graf Finckenstein, M.D.(7) | 2019 | $ | 204,807 | $ | 160,000 | (8) | $ | - | $ | 2,665,440 | $ | 82,500 | $ | 11,200 | $ | 3,113,947 | ||||||||||||||
Chief Medical Officer | ||||||||||||||||||||||||||||||
Frederick G. Vogt, | 2019 | $ | 400,000 | $ | - | $ | - | $ | 1,453,980 | $ | 160,000 | $ | 11,200 | $ | 2,025,180 | |||||||||||||||
Ph.D., Esq.(9) | 2018 | $ | 375,000 | $ | - | $ | - | $ | - | $ | 127,500 | $ | 11,000 | $ | 513,500 | |||||||||||||||
General Counsel | 2017 | $ | 326,355 | $ | - | $ | - | $ | 393,070 | $ | 131,390 | (9) | $ | 9,075 | $ | 859,890 | ||||||||||||||
and Corporate Secretary |
|
Chief Executive Officer Pay Ratio
As a result of the recently adopted rules under the Dodd-Frank Act, SEC rules now require companies to disclose the ratio of the total annual compensation of the principal executive officer to the median employee’s total annual compensation. We identified the median employee by examining the 2019 total annual compensation for all individuals, excluding our Chief Executive Officer, who were employed by us on December 17, 2019. We included all employees. For all employees, we examined total compensation, which included base salary, incentive compensation plan payments, equity awards consisting of stock options, and other compensation such as 401(k) matching contributions. We annualized the compensation of all permanent employees who were not employed by us for all of 2019.
After identifying the median employee based on total cash compensation, we calculated annual total compensation for that employee using the same methodology we use for our named executive officers as set forth in the 2019 Summary Compensation Table above. We then updated the median employee’s compensation to be stated in the same manner as our named executive officers. The total annual compensation of the median employee for 2019 was $355,547. The total annual compensation including bonuses for our Chief Executive Officer for 2019 was $4,107,960. The ratio of Chief Executive Officer total annual compensation to the median employee total annual compensation for 2019 was approximately 11.6 to 1.
Outstanding Equity Awards
The following table sets forth outstanding stock options held by our named executive officers as of December 31, 2019. Options were granted in 2019 under the 2018 Plan and the remaining options were granted under the 2014 Plan. In addition, the following table sets forth the restricted stock units held by Dr. Fardis under a restricted stock unit agreement as of December 31, 2019.
Outstanding Equity Awards at Year Ended December 31, 2019
Option Awards | Stock Awards | |||||||||||||||||||||||||
Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | ||||||||||||||||||||
Maria Fardis, Ph.D. | 3/4/2019 | - | 400,000 | $ | 11.26 | 3/4/2029 | - | - | ||||||||||||||||||
2/9/2018 | 291,666 | 208,334 | $ | 16.80 | 2/9/2028 | - | - | |||||||||||||||||||
6/1/2016 | 437,498 | 62,502 | $ | 5.87 | 6/1/2026 | - | - | |||||||||||||||||||
6/1/2016 | - | - | - | - | 22,916 | $ | 634,315 | |||||||||||||||||||
Timothy E. Morris | 3/4/2019 | - | 100,000 | $ | 11.26 | 3/4/2029 | - | - | ||||||||||||||||||
8/14/2017 | 187,500 | 62,500 | $ | 5.05 | 8/14/2027 | - | - | |||||||||||||||||||
Friedrich Graf Finckenstein, M.D. | 7/18/2019 | - | 160,000 | $ | 25.78 | 7/18/2029 | - | - | ||||||||||||||||||
Frederick G. Vogt, Ph.D., Esq. | 3/4/2019 | - | 200,000 | $ | 11.26 | 3/4/2029 | - | - | ||||||||||||||||||
12/29/2017 | 24,933 | 12,467 | $ | 8.00 | 12/29/2027 | - | - | |||||||||||||||||||
3/16/2017 | 11,550 | 1,050 | $ | 7.45 | 3/16/2027 | - | - | |||||||||||||||||||
11/14/2016 | 200,000 | - | $ | 7.55 | 11/14/2026 | - | - |
Option Exercises and Restricted Stock Units Vested
The following table contains information for our named executive officers concerning the option awards that were exercised and restricted stock units that vested during the year ended December 31, 2019:
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting | Value Realized on Vesting ($)(1) | ||||||||||||
Maria Fardis, Ph.D. | - | $ | - | 45,833 | $ | 768,998 |
Potential Payments Upon Termination/Change of Control
Our named executive officer employment agreements have no specified term, and the employment relationship may be terminated by the named executive officers or by us at any time. The following table sets forth information regarding payments that would have been made to our named executive officers if they suffered an involuntary termination without cause not in connection with a change of control, or a termination without cause in connection with a change of control, and such termination payments were triggered on December 31, 2019. The closing price per share of our common stock on the Nasdaq Global Market on December 31, 2019 was $27.68. The amounts listed below do not include any taxes due in connection with such payments, including any tax under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) that may be triggered by such payments. See the Employment Agreements section following the table for potential additional benefits that may be awarded to the named executive officers as well as additional conditions that may apply to such payments.
Change in Control/Acceleration and Termination | Termination Without Cause | |||||||||||||||
Salary and | Equity | Salary and | Equity | |||||||||||||
Bonus | Acceleration | Bonus | Acceleration | |||||||||||||
Name | ($) | ($) | ($) | ($) | ||||||||||||
Maria Fardis, Ph.D. | $ | 1,200,000 | (1) | $ | 10,832,157 | (2) | $ | 1,200,000 | (1) | $ | 7,628,470 | (3) | ||||
Timothy E. Morris | $ | 644,000 | (4) | $ | 3,056,375 | (5) | $ | 230,000 | (6) | $ | - | |||||
Friedrich Graf Finckenstein, M.D. | $ | 225,000 | (6) | $ | 304,000 | (5) | $ | 225,000 | (6) | $ | - | |||||
Frederick G. Vogt, Ph.D., Esq. | $ | 200,000 | (6) | $ | 3,550,592 | (5) | $ | 360,000 | (7) | $ | 3,550,592 | (5) |
Employment Agreements
The following is a summary of the employment agreements we entered into with our four named executive officers, Dr. Fardis, Mr. Morris, Dr. Graf Finckenstein, and Dr. Vogt, who continue to serve as executive officers as of the Record Date.
Maria Fardis, Ph.D. On June 1, 2016, we entered into an Executive Employment Agreement with Maria Fardis, Ph.D., under which Dr. Fardis agreed to serve as our President and Chief Executive Officer. In her employment agreement, we have agreed to pay Dr. Fardis an annual base salary of $500,000 and a signing bonus of $150,000. In addition, on June 1, 2016, we granted to Dr. Fardis under our 2014 Plan stock options to purchase an aggregate of 500,000 shares of our common stock and entered into a restricted stock unit agreement pursuant to which we granted her 550,000 non-transferrable restricted stock units, outside the 2014 Plan, as an inducement of employment pursuant to the exception to the Nasdaq Stock Market rules that generally require stockholder approval of equity incentive plans. Dr. Fardis’ stock options have an exercise price per share of $5.87, vested 25% (125,000 shares) on June 1, 2017, with remaining options vesting in equal monthly installments over the 36-month period following June 1, 2017. The restricted stock units vest in installments as follows: (i) 137,500 restricted stock units vested upon the first anniversary of the effective date of her employment agreement; (ii) 275,000 restricted stock units vested upon the satisfaction of certain clinical trial milestones; and (iii) 137,500 restricted stock units vest in equal monthly installments over the 36-month period following the first anniversary of the effective date of her employment, in each case, provided that Dr. Fardis has been continuously employed with us as of such vesting dates. Dr. Fardis will also be eligible to participate in our annual incentive compensation program as approved by our Board of Directors, with target potential annual incentive compensation of 50% of her base annual salary. On February 9, 2018, the Board of Directors increased Dr. Fardis’ annual base salary from $500,000 to $600,000 and increased her annual cash bonus target as a percentage of her annual base salary from 50% to 100% of her base salary.
If we terminate Dr. Fardis’ employment agreement without “cause” (as defined in her employment agreement), or she terminates her employment for “good reason,” Dr. Fardis will be entitled to receive her base salary through the date of termination, any incentive compensation that was earned to the date of termination, and a severance payment equal to twelve months’ base annual salary and a full year’s Incentive Compensation. In addition, Dr. Fardis may be entitled to additional severance payments under certain circumstances. Further, there will be a twelve-month acceleration of her unvested stock options and unvested time-based restricted stock units, and she will have twelve months from the date of termination within which to exercise her vested options.
In the event of a “change of control” (as defined in her Executive Employment Agreement) of the Company, all of Dr. Fardis’ unvested time-based stock options and all unvested restricted stock units will vest immediately, whether or not her employment is terminated. If, either before or after a change in control, Dr. Fardis’ employment is terminated by us for any reason other than “cause” or she were to terminate her employment for “good reason,” Dr. Fardis will be entitled to receive all of the cash payments she would be entitled to receive in the event we were to terminate her employment without “cause.”
Timothy E. Morris. On August 4, 2017, we entered into an Executive Employment Agreement with Mr. Morris pursuant to which agreed to serve as our Chief Financial Officer, effective August 14, 2017. Under his employment agreement, we agreed to pay Mr. Morris an annual base salary of $450,000. In connection with his employment, we granted Mr. Morris a ten-year incentive stock option to purchase up to an aggregate of 250,000 shares of common stock at an exercise price of $5.05, which was equal to the closing trading price of our common stock on the date of his employment. Provided that Mr. Morris is still employed with us on the following dates, the Option will vest in installments as follows: (i) options for the purchase of one-third of the 250,000 shares shall vest on August 14, 2018; and (ii) the remaining options shall vest as to one-twelfth of 250,000 shares at the end of each quarter over the next two years after August 14, 2018. Mr. Morris will be eligible to participate in our annual cash bonus program applicable to executive employees, as approved annually by the Board of Directors. The maximum potential amount payable to Mr. Morris under the bonus plan, if earned, is 40% of his base salary earned during the applicable calendar year. Compensation under the bonus plan will be conditioned on the satisfaction of individual and corporate objectives, as established in writing by our Compensation Committee, and on the condition that Mr. Morris is still employed by us on the payment date of the bonus compensation. Mr. Morris’s annual salary was increased to $460,000, effective February 15, 2019.
Mr. Morris’s employment is “at-will” and not be for any pre-determined period of time. If the Company terminates Mr. Morris without cause, Mr. Morris will receive (i) his base salary through the date of termination; (ii) a severance payment equal to six months of his then base salary, provided he satisfies the severance conditions set forth in his employment agreement; and (iii) any benefits required to be paid in accordance with applicable benefit plans through the date of termination. If Mr. Morris’ employment is terminated without cause in connection with a “change of control” (as defined in his Executive Employment Agreement) of the Company, in addition to the foregoing termination payments, Mr. Morris will receive a change of control severance payment equal to six months of his then base salary, his prorated Incentive Compensation, and any of his time-based unvested stock options will become fully vested.
Friedrich Graf Finckenstein, M.D. On May 18, 2019, we entered into an Executive Employment Agreement with Friedrich Graf Finckenstein, M.D., under which Dr. Graf Finckenstein agreed to serve as our Chief Medical Officer. In his employment agreement, we agreed to pay Dr. Graf Finckenstein an annual base salary of $450,000 and a signing bonus of $160,000, which included relocation expenses. In addition, effective as of July 18, 2019, we granted him stock options to purchase an aggregate of 160,000 shares of our common stock. The stock options have an exercise price of $25.78, equal to the fair market value of the common stock at the close of trading on the Nasdaq Global Market as of the date of grant. The employment agreement provided that the foregoing stock options would vest in three installments as follows: (i) options for the purchase of 53,333 shares vested on the one-year anniversary of the effective date of his employment; and (ii) the remaining stock options vest as to 13,333 shares at the end of each quarter over the next two years. Dr. Graf Finckenstein is eligible to participate in our annual incentive compensation program as approved by our Board of Directors, with target potential annual incentive compensation of 40% of his base annual salary earned during the applicable calendar year.
Dr. Graf Finckenstein’s employment is “at-will” and not be for any pre-determined period of time. If the Company terminates Dr. Graf Finckenstein without cause, Dr. Graf Finckenstein will receive (i) his base salary through the date of termination; (ii) a severance payment equal to six months of his then base salary, provided he satisfies the severance conditions set forth in his employment agreement; and (iii) any benefits required to be paid in accordance with applicable benefit plans through the date of termination. If Dr. Graf Finckenstein’s employment is terminated without cause in connection with a “change of control” (as defined in the employment agreement) of the Company, in addition to the foregoing termination payments, Dr. Graf Finckenstein will receive a change of control severance payment equal to six months of his then base salary, his prorated Incentive Compensation, and any of his time-based unvested stock options will become fully vested.
Frederick G. Vogt, Ph.D., Esq. On August 7, 2016, we entered into an Executive Employment Agreement with Frederick G. Vogt, Ph.D., Esq., under which Dr. Vogt agreed to serve as our Vice President of Intellectual Property, effective September 30, 2016. In his employment agreement, we agreed to pay Dr. Vogt an annual base salary of $300,000 and a signing bonus of $50,000. In addition, effective as of September 30, 2016, we granted him stock options to purchase an aggregate of 200,000 shares of our common stock. The stock options have an exercise price of $8.23, equal to the fair market value of the common stock at the close of trading on the Nasdaq Global Market as of the date of grant. The employment agreement provided that the foregoing stock options would vest in three installments as follows: (i) options for the purchase of 66,672 shares vested on the one-year anniversary of the effective date of his employment; and (ii) the remaining stock options vest as to 16,672 shares at the end of each quarter over the next two years. Dr. Vogt is eligible to participate in our annual incentive compensation program as approved by our Board of Directors, with target potential annual incentive compensation of 30% of his base annual salary earned during the applicable calendar year, which was increased to 40% when he was promoted to General Counsel on July 1, 2017. Dr. Vogt’s annual salary was increased to $375,000, effective February 1, 2018, to $400,000, effective February 15, 2019, and to $420,000, effective February 14, 2020.
Dr. Vogt’s employment is “at-will”, and either party can terminate the employment agreement and Dr. Vogt’s employment without cause at any time. If we terminate Dr. Vogt’s employment without cause (as defined in his Executive Employment Agreement), whether or not in connection with a “change of control” (as defined in the agreement), Dr. Vogt will receive a severance payment equivalent to six months of his then-current base salary and all of Dr. Vogt’s unvested stock options will become fully vested, and he shall have six months from the date of termination within which to exercise his vested options.
2010 Equity Compensation Plan
On March 29, 2010, our Board of Directors adopted the 2010 Equity Compensation Plan (the “2010 Plan”) pursuant to which the Board of Directors reserved an aggregate of 35,000 shares of common stock for future issuance. The 2010 Plan provided for awards of incentive stock options, non-qualified stock options, rights to acquire restricted stock, rights to acquire unrestricted stock, and stock appreciation rights, or SARs, but since we did not obtain stockholder approval of the 2010 Plan within twelve months after the date our Board of Directors adopted the 2010 Plan, incentive stock options could not be granted thereunder. As of October 2011, options for the issuance of all 35,000 shares had been granted. As of December 31, 2019, 33,000 shares were available for grant under the 2010 Plan. However, we have decided not to grant any awards under the 2010 Plan in the future.
2011 Equity Incentive Plan
As of October 14, 2011, we adopted our 2011 Equity Incentive Plan (the “2011 Plan”). Employees, directors, consultants and advisors of the Company are eligible to participate in the 2011 Plan. The 2011 Plan initially had 180,000 shares of common stock reserved for issuance in the form of incentive stock options, non-qualified options, common stock, and grant appreciation rights. The 2011 Plan was not approved by our stockholders within the required one-year period following its adoption and, accordingly, no incentive stock options can be granted under the 2011 Plan. In August 2013 our Board of Directors and a majority of our stockholders approved an amendment to increase the number of shares available under the 2011 Plan from 180,000 shares to 1,900,000 shares, and an amendment to increase the number options or other awards that can be granted to any one person during a twelve-month period from 50,000 shares to 300,000 shares. The foregoing amendment to the 2011 Plan became effective in September 2013. As of December 31, 2019, 151,240 shares were available for future grant under the 2011 Plan.
2014 Equity Incentive Plan
On September 19, 2014, our Board of Directors adopted the Iovance Biotherapeutics, Inc. 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan was approved by our stockholders at the Annual Meeting of Stockholders held in November 2014. On June 10, 2016, our Board of Directors amended the 2014 Plan to increase the total number of shares that can be issued under the 2014 Plan to 9,000,000 shares. The foregoing increase in the number of shares available under the 2014 Plan was approved by our stockholders at the Annual Meeting of Stockholders held on August 16, 2016. As of December 31, 2019, 174,292 shares were available for future grant under the 2011 Plan.
The 2014 Plan contains provisions that are designed to protect our stockholders’ interests and to reflect strong corporate governance practices, including:
General. The 2014 Plan provides for awards of incentive stock options, non-statutory stock options, rights to acquire restricted stock, and stock appreciation rights, or SARs. Incentive stock options (“ISOs”) granted under the 2014 Plan are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code. Non-qualified stock options (NQSOs) granted under the 2014 Plan are not intended to qualify as incentive stock options under the Code. See “Certain Federal Income Tax Consequences” below for a discussion of the principal federal income tax consequences of awards under the 2014 Plan.
Purpose. Our Board of Directors adopted the 2014 Plan to provide a means by which our employees, directors and consultants may be given an opportunity to benefit from increases in the value of our common stock, to assist in attracting and retaining the services of such persons, to bind the interests of eligible recipients more closely to our Company’s interests by offering them opportunities to acquire shares of our common stock and to afford such persons stock-based compensation opportunities that are competitive with those afforded by similar businesses.
Administration. Our Board of Directors has authorized our Compensation Committee to administer the 2014 Plan, although the Board of Directors also, from time to time, participates in the administration of the 2014 Plan and the grant of options. Subject to the provisions of the 2014 Plan, our Compensation Committee has the power to determine in its discretion: (a) to grant options and SARs and grant or sell restricted stock; (b) to determine the fair market value of the shares of common stock subject to options or other awards; (c) to determine the exercise price of options granted, which shall be no less than the fair market value of any common stock on the date of grant, the economic terms of SARs granted, which shall provide for a benefit of the appreciation on common stock over not less than the value of our common stock on the date of grant, or the offering price of restricted stock; (d) to determine the persons to whom, and the time or times at which, options or SARs shall be granted or restricted stock granted or sold, and the number of shares subject to each option or SAR or the number of shares of restricted stock granted or sold; (e) to construe and interpret the terms and provisions of the 2014 Plan, of any applicable agreement and all options and SARs granted under the 2014 Plan, and of any restricted stock award under the 2014 Plan; (f) to prescribe, amend, and rescind rules and regulations relating to the 2014 Plan; (g) to determine the terms and provisions of each option and SAR granted and award of restricted stock (which need not be identical), including but not limited to, the time or times at which options and SARs shall be exercisable or the time at which the restrictions on restricted stock shall lapse; (h) with the consent of the grantee, to rescind any award or exercise of an option or SAR; (i) to modify or amend the terms of any option, SAR or restricted stock (with the consent of the grantee or holder of the restricted stock if the modification or amendment is adverse to the grantee or holder); (j) to accelerate or defer (with the consent of the grantee) the exercise date of any option or SAR or the date on which the restrictions on restricted stock lapse; (k) to issue shares of restricted stock to an optionee in connection with the accelerated exercise of an option by such optionee; (l) to authorize any person to execute on behalf of our Company any instrument evidencing the grant of an option, SAR or award of restricted stock; (m) to determine the duration and purposes of leaves of absence which may be granted to participants without constituting a termination of their employment for the purpose of the 2014 Plan; and (n) to make all other determinations deemed necessary or advisable for the administration of the 2014 Plan, any applicable agreement, option, SAR or award of restricted stock.
The Compensation Committee granted our Chief Executive Officer the authority to grant options to (i) newly hired non-executive employees, and (ii) non-executive employees as part of year-end bonus compensation. The Compensation Committee established a limit on the number of shares that may be granted and certain other parameters within which non-executive options could be granted by our Chief Executive Officer.
Eligibility. Incentive stock options may be granted under the 2014 Plan only to employees of our Company and its affiliates. Employees, directors and consultants of our Company and its affiliates are eligible to receive all other types of awards under the 2014 Plan.
Terms of Options and SARs. The exercise price of incentive stock options may not be less than the fair market value of our common stock subject to the option on the date of the grant and, in some cases, may not be less than 110% of such fair market value. The exercise price of nonstatutory options also may not be less than the fair market value of our common stock on the date of grant.
Options granted under the 2014 Plan may be exercisable in increments, or “vest,” as determined by our Board of Directors. Our Board of Directors has the power to accelerate the time as of which an option may vest or be exercised, with the consent of the optionee. The maximum term of options and SARs under the 2014 Plan is ten years, except that in certain cases the maximum term is five years. Options and SARs awarded under the 2014 Plan generally will terminate 90 days after termination of the participant’s service, subject to certain exceptions.
A recipient may not transfer an incentive stock option otherwise than by will or by the laws of descent and distribution. During the lifetime of the recipient, only the recipient may exercise an option or SAR. Our Board of Directors may grant nonstatutory stock options and SARs that are transferable to the extent provided in the applicable written agreement.
Terms of Restricted Stock Awards. Our Board of Directors or the Compensation Committee may issue shares of restricted stock under the 2014 Plan as a grant or for such consideration, including services, and, subject to the Sarbanes-Oxley Act of 2002, promissory notes, as determined in its sole discretion.
Shares of restricted stock acquired under a restricted stock purchase or grant agreement may, but need not, be subject to forfeiture to us or other restrictions that will lapse in accordance with a vesting schedule to be determined by our Board of Directors or the Compensation Committee. In the event a recipient’s employment or service with our Company terminates, any or all of the shares of common stock held by such recipient that have not vested as of the date of termination under the terms of the restricted stock agreement may be forfeited to our Company in accordance with such restricted stock agreement.
Rights to acquire shares of our common stock under the restricted stock purchase or grant agreement shall be transferable by the recipient only upon such terms and conditions as are set forth in the restricted stock agreement, as our Board of Directors shall determine in its discretion, so long as shares of common stock awarded under the restricted stock agreement remain subject to the terms of such agreement
Adjustment Provisions. If our common stock is changed by reason of a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification, then the number and class of shares of stock subject to each option and SAR outstanding under the 2014 Plan, and the exercise price of each outstanding option and the base value of SAR, will be automatically and proportionately adjusted, except that our company will not be required to issue fractional shares as a result of any such adjustments. Such adjustment in any outstanding option or SAR will be made without change in the total price applicable to the unexercised portion of the option or SAR, but with a corresponding adjustment in the price for each share covered by the unexercised portion of the option or SAR.
Effect of Certain Corporate Events. Except as otherwise provided in an applicable employment agreement, in the event of (i) a liquidation or dissolution of our Company, (ii) a merger or consolidation of our Company with or into another corporation or entity (other than a merger with a wholly-owned subsidiary), or (iii) a sale of all or substantially all of the assets of our Company in a single transaction or a series of related transactions, all options and SARs will terminate upon consummation of the transaction unless our Board of Directors determines that they will survive. If our Board of Directors determines that outstanding options and SARs will survive, and if our Company will not be the surviving entity in the transaction, our Board of Directors may provide that the outstanding options and SARs will be assumed or an equivalent option or SAR substituted by an applicable successor entity or any affiliate of the successor entity. If outstanding options and SARs are to terminate upon consummation of the corporate transaction, any options or SARs outstanding immediately prior to the consummation of the corporate transaction will be deemed fully vested and exercisable immediately prior to the consummation of the corporate transaction (provided that the option or SAR has not expired by its terms and that the grantee takes all steps necessary to exercise the option or SAR prior to the corporate transaction as required by the agreement evidencing the option or SAR).
Duration, Amendment and Termination. Our Board of Directors may suspend or terminate the 2014 Plan without stockholder approval or ratification, subject to certain restrictions, at any time or from time to time. Unless sooner terminated, the 2014 Plan will terminate ten years from the date of its adoption by our Board of Directors, or on September 19, 2024.
Our Board of Directors may also amend the 2014 Plan at any time, and from time to time. However, except as relates to adjustments upon changes in common stock, no amendment will be effective unless approved by our stockholders to the extent stockholder approval is necessary to preserve incentive stock option treatment for federal income tax purposes. Our Board of Directors may submit any other amendment to the 2014 Plan for stockholder approval in its discretion.
Certain Federal Income Tax Consequences of the 2014 Plan
Section 162(m). For the purposes of complying with the requirements under Section 162(m) of the Code relating to the deductibility for federal income tax purposes of employee expense associated with awards under the 2014 Plan of more than $1 million to “covered employees” within the meaning of Section 162(m), the 2014 Plan as originally approved by our Board of Directors and our stockholders provided that no eligible person shall be granted options or other awards during any twelve-month period covering more than 500,000 shares. This so-called Section 162(m) limitation was increased to 550,000 by the amendment to the 2014 Plan adopted by our board of directors on June 1, 2016. The amended limitation will not satisfy the requirements to Section 162(m) unless and until the limitation is approved by our stockholders. We are not seeking stockholder approval of this recent amendment at the Annual Meeting, but our Board of Directors may determine to present the amended Section 162(m) limitation for stockholder approval in the future.
Non-qualified Stock Options. There will be no federal income tax consequences to either the Company or the participant upon the grant of a non-discounted NQSO. However, the participant will realize ordinary income on the exercise of the NQSO in an amount equal to the excess of the fair market value of the common stock acquired upon the exercise of such option over the exercise price, and the Company will receive a corresponding deduction. The gain, if any, realized upon the subsequent disposition by the participant of the common stock will constitute short-term or long-term capital gain, depending on the participant’s holding period.
Incentive Stock Options. There will be no regular federal income tax consequences to either the Company or the participant upon the grant or exercise of an ISO. If the participant does not dispose of the shares of common stock for two years after the date the option was granted and one year after the acquisition of such shares of common stock, the difference between the aggregate option price and the amount realized upon disposition of the shares of common stock will constitute long-term capital gain or loss, and the Company will not be entitled to a federal income tax deduction. If the shares of common stock are disposed of in a sale, exchange or other “disqualifying disposition” during those periods, the participant will realize taxable ordinary income in an amount equal to the excess of the fair market value of the common stock purchased at the time of exercise over the aggregate option price (adjusted for any loss of value at the time of disposition), and the Company will be entitled to a federal income tax deduction equal to such amount, subject to the limitations under Section 162(m) of the Code.
While the exercise of an incentive stock option does not result in current taxable income, the excess of (1) the fair market value of the option shares at the time of exercise over (2) the exercise price, will be an item of adjustment for purposes of determining the participant’s alternative minimum tax income.
SARs. A participant receiving an SAR will not recognize income, and the Company will not be allowed a tax deduction, at the time the award is granted. When a participant exercises the SAR, the amount of cash and the fair market value of any shares of common stock received will be ordinary income to the participant and will be allowed as a deduction for federal income tax purposes to the Company, subject to limitations under Section 162(m) of the Code. In addition, the Board of Directors or the Compensation Committee, may at any time, in its discretion, declare any or all awards to be fully or partially exercisable and may discriminate among participants or among awards in exercising such discretion.
Restricted Stock. Unless a participant makes an election to accelerate recognition of the income to the date of grant, a participant receiving a restricted stock award will not recognize income, and the Company will not be allowed a tax deduction, at the time the award is granted. When the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of the common stock, and the Company will be entitled to a corresponding tax deduction at that time, subject to the limitations under Section 162(m) of the Code.
2018 Equity Incentive Plan
On March 9, 2018, our Board of Directors adopted the Iovance Biotherapeutics, Inc. 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan was approved by our stockholders at the Annual Meeting of Stockholders held on June 6, 2018. Except with respect to awards then outstanding, unless sooner terminated, the 2018 Plan will expire on the tenth anniversary of the date it was approved by stockholders and no further awards may be granted after such date.
The 2018 Plan contains provisions that are designed to protect our stockholders’ interests and to reflect strong corporate governance practices, including:
|
Administration. Our Board of Directors has authorized our Compensation Committee to administer the 2018 Plan, although the Board of Directors also, from time to time, participates in the administration of the 2018 Plan and the grant of options. The Compensation Committee has the authority to determine the terms and conditions of any agreements evidencing any awards granted under the 2018 Plan and to adopt, alter and repeal rules, guidelines and practices relating to the 2018 Plan. The Compensation Committee has full discretion to administer and interpret the 2018 Plan and to adopt such rules, regulations and procedures as it deems necessary or advisable and to determine, among other things, the time or times at which the awards may be exercised and whether and under what circumstances an award may be exercised.
Eligibility. Any current or prospective employees, directors, officers, consultants or advisors of the Company or its affiliates who are selected by the Compensation Committee are eligible for awards under the 2018 Plan. The Compensation Committee will have the sole and complete authority to determine who will be granted an award under the 2018 Plan.
Number of Shares Authorized. Pursuant to the 2018 Plan, we have reserved an aggregate of 6,000,000 shares of our common stock for issuance of awards to be granted thereunder. All of the shares of our common stock reserved under the plan may be issued as incentive stock options under the 2018 Plan. The maximum number of equity awards that may be awarded to the non-employee members of the Board of Directors for serving on the Board of Directors, shall be an amount equal to the product of 50,000 times the number of non-employee members on the Board of Directors; provided, that the foregoing limitation shall not apply in respect of any awards issued to a non-employee director in respect of (i) any one-time equity grant upon a non-employee director’s initial appointment or election to the Board of Directors, or (ii) equity grants for services provided to the Company other than services as a member of the Board of Directors. The total amount of awards granted annually to the non-employee members of the Board of Directors may allocated amongst the non-employee members of the Board of Directors in a manner determined by the Board of Directors. If any award granted under the 2018 Plan expires, terminates, or is canceled or forfeited without being settled, vested or exercised, shares of our common stock subject to such award will again be made available for future grants. Any shares that are surrendered or tendered to pay the exercise price of an award or to satisfy withholding taxes owed, or any shares reserved for issuance, but not issued, with respect to settlement of a stock appreciation right, will not again be available for grants under the 2018 Plan.
Change in Capitalization. If there is a change in our capitalization in the event of a stock or extraordinary cash dividend, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of shares of our common stock or other relevant change in capitalization or applicable law or circumstances, such that the Compensation Committee determines that an adjustment to the terms of the 2018 Plan (or awards thereunder) is necessary or appropriate, then the Compensation Committee shall make adjustments in a manner that it deems equitable. Such adjustments may be to the number of shares reserved for issuance under the 2018 Plan, the number of shares covered by awards then outstanding under the 2018 Plan, the limitations on awards under the 2018 Plan, or the exercise price of outstanding options, or such other equitable substitution or adjustments as the Compensation Committee may determine appropriate.
Awards Available for Grant. The Compensation Committee may grant awards of non-qualified stock options, incentive (qualified) stock options, stock appreciation rights (“SARs”), restricted stock awards, restricted stock units, other stock-based awards, other cash-based awards or any combination of the foregoing. Awards may be granted under the 2018 Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by the Company or with which the Company combines, which are referred to herein as “Substitute Awards.”
Stock Options. The Compensation Committee will be authorized to grant options to purchase shares of our common stock that are either “qualified,” meaning they are intended to satisfy the requirements of Section 422 of the Code for incentive stock options, or “non-qualified,” meaning they are not intended to satisfy the requirements of Section 422 of the Code. All options granted under the 2018 Plan shall be non-qualified unless the applicable award agreement expressly states that the option is intended to be an incentive stock option. Options granted under the 2018 Plan will be subject to the terms and conditions established by the Compensation Committee. Under the terms of the 2018 Plan, the exercise price of the options will not be less than the fair market value (or 110% of the fair market value in the case of an incentive stock option granted to a 10% stockholder) of our common stock on the date of grant (except with respect to Substitute Awards). Options granted under the 2018 Plan will be subject to such terms, including the exercise price and the conditions and timing of exercise, as may be determined by the Compensation Committee and specified in the applicable award agreement. The maximum term of an option granted under the 2018 Plan will be ten years from the date of grant (or five years in the case of an incentive stock option granted to a 10% stockholder), provided that if the term of a non-qualified option would expire at a time when trading in the shares of our common stock is prohibited by the Company’s insider trading policy, the option’s term shall be extended automatically until the 30th day following the expiration of such prohibition (as long as such extension shall not violate Section 409A of the Code). Payment in respect of the exercise of an option may be made in cash, by check, by cash equivalent or by such other method as the Compensation Committee may permit in its sole discretion, including, to the extent permitted by the Compensation Committee, (i) by delivery of shares of our common stock valued at the fair market value on the date the option is exercised, provided that such shares are not subject to any pledge or other security interest, (ii) by delivery of other property having a fair market value equal to the exercise price and all applicable required withholding taxes, (iii) if there is a public market for the shares of our common stock at such time, by means of a broker-assisted cashless exercise mechanism or (iv) by means of a “net exercise” procedure effected by withholding the minimum number of shares otherwise deliverable in respect of an option that are needed to pay the exercise price and up to the maximum withholding taxes, or any combination of the foregoing. In all events of cashless or net exercise, any fractional shares of common stock will be settled in cash.
Stock Appreciation Rights. The Compensation Committee will be authorized to award SARs under the 2018 Plan. SARs will be subject to the terms and conditions established by the Compensation Committee. A SAR is a contractual right that allows a participant to receive, in the form of either cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain period of time. An option granted under the 2018 Plan may include SARs, and SARs may also be awarded to a participant independent of the grant of an option. SARs granted in connection with an option shall be subject to terms similar to the option corresponding to such SARs, including with respect to vesting and expiration. Except as otherwise provided by the Compensation Committee (in the case of Substitute Awards or SARs granted in tandem with previously granted options), the strike price per share of our common stock underlying each SAR shall not be less than 100% of the fair market value of such share, determined as of the date of grant and the maximum term of a SAR granted under the 2018 Plan will be ten years from the date of grant.
Restricted Stock. The Compensation Committee will be authorized to grant restricted stock under the 2018 Plan, which will be subject to the terms and conditions established by the Compensation Committee. Restricted stock is common stock that is generally non-transferable and is subject to other restrictions determined by the Compensation Committee for a specified period. Any accumulated dividends will be payable at the same time that the underlying restricted stock vests.
Restricted Stock Unit Awards. The Compensation Committee will be authorized to grant restricted stock unit awards, which will be subject to the terms and conditions established by the Compensation Committee. A restricted stock unit award, once vested, may be settled in a number of shares of our common stock equal to the number of units earned, in cash equal to the fair market value of the number of shares of our common stock earned in respect of such restricted stock unit award or in a combination of the foregoing, at the election of the Compensation Committee. Restricted stock units may be settled at the expiration of the period over which the units are to be earned or the Compensation Committee may establish a program for deferred delivery, in compliance with Section 409A of the Code. To the extent provided in an award agreement, the holder of outstanding restricted stock units shall be entitled to be credited with dividend equivalent payments upon the payment by us of dividends on shares of our common stock, either in cash or, at the sole discretion of the Compensation Committee, in shares of our common stock having a fair market value equal to the amount of such dividends (or a combination of cash and shares), and interest may, at the sole discretion of the Compensation Committee, be credited on the amount of cash dividend equivalents at a rate and subject to such terms as determined by the Compensation Committee, which accumulated dividend equivalents (and interest thereon, if applicable) shall be payable at the same time that the underlying restricted stock units are settled.
Other Stock-Based Awards. The Compensation Committee will be authorized to grant awards of unrestricted shares of our common stock, rights to receive grants of awards at a future date, other awards denominated in shares of our common stock, or awards that provide for cash payments based in whole or in part on the value of our common stock under such terms and conditions as the Compensation Committee may determine and as set forth in the applicable award agreement.
Effect of a Change in Control. Unless otherwise provided in an award agreement, or any applicable employment, consulting, change in control, severance or other agreement between us and a participant, in the event of a change in control (as defined in the 2018 Plan), if a participant’s employment or service is terminated by us other than for cause (and other than due to death or disability) within the 12-month period following a change in control, then (i) all then-outstanding options and SARs held by such participant will become immediately exercisable as of such participant’s date of termination with respect to all of the shares subject to such option or SAR; and/or (ii) the restricted period (and any other conditions) shall expire as of such participant’s date of termination with respect to all of the then-outstanding shares of restricted stock or restricted stock units held by such participant (including without limitation a waiver of any applicable performance goals); provided that with respect to any award whose vesting or exercisability is otherwise subject to the achievement of performance conditions, the portion of such award that shall become fully vested and immediately exercisable shall be based on the assumed achievement of actual or target performance as determined by the Compensation Committee and, unless otherwise determined by the Compensation Committee, prorated for the number of days elapsed from the grant date of such award through the date of termination. In addition, the Compensation Committee may in its discretion and upon at least ten days’ notice to the affected persons, cancel any outstanding award and pay the holders, in cash, securities or other property (including of the acquiring or successor company), or any combination thereof, the value of such awards based upon the price per share of the Company’s common stock received or to be received by other shareholders of the Company in connection with the transaction (it being understood that any option or SAR having a per-share exercise price or strike price equal to, or in excess of, the fair market value (as of the date specified by the Compensation Committee) of a share of the Company’s common stock subject thereto may be canceled and terminated without payment or consideration therefor). Notwithstanding the above, the Compensation Committee shall exercise such discretion over the timing of settlement of any award subject to Section 409A of the Code at the time such award is granted.
Nontransferability. Each award may be exercised during the participant’s lifetime by the participant or, if permissible under applicable law, by the participant’s guardian or legal representative. No award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a participant other than by will or by the laws of descent and distribution unless the Compensation Committee permits the award to be transferred to a permitted transferee (as defined in the 2018 Plan).
Amendment. Our Board of Directors may amend, suspend or terminate the 2018 Plan at any time, subject to stockholder approval if necessary to comply with any tax, stock exchange rules, or other applicable regulatory requirement. No amendment, suspension or termination will materially and adversely affect the rights of any participant or recipient of any award without the consent of the participant or recipient.
The Compensation Committee may, to the extent consistent with the terms of any applicable award agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any award theretofore granted or the associated award agreement, prospectively or retroactively; provided, that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any participant with respect to any award theretofore granted will not to that extent be effective without the consent of the affected participant; and provided further that, without stockholder approval, (i) no amendment or modification may reduce the exercise price of any option or the strike price of any SAR, (ii) the Compensation Committee may not cancel any outstanding option and replace it with a new option (with a lower exercise price) or cancel any SAR and replace it with a new SAR (with a lower strike price) or, in each case, with another award or cash in a manner that would be treated as a repricing (for compensation disclosure or accounting purposes), (iii) the Compensation Committee may not take any other action considered a repricing for purposes of the stockholder approval rules of the applicable securities exchange on which our common shares are listed and (iv) the Compensation Committee may not cancel any outstanding option or SAR that has a per-share exercise price or strike price (as applicable) at or above the fair market value of a share of our common stock on the date of cancellation and pay any consideration to the holder thereof. However, stockholder approval is not required with respect to clauses (i), (ii), (iii) and (iv) above with respect to certain adjustments on changes in capitalization.
Certain Federal Income Tax Consequences of the 2018 Plan
Stock Options. Holders of incentive stock options will generally incur no federal income tax liability at the time of grant or upon vesting or exercise of those options. However, the spread at exercise will be an “item of tax preference,” which may give rise to “alternative minimum tax” liability for the taxable year in which the exercise occurs. If the holder does not dispose of the shares before the later of two years following the date of grant and one year following the date of exercise, the difference between the exercise price and the amount realized upon disposition of the shares will constitute long-term capital gain or loss, as the case may be. Assuming the holding period is satisfied, no deduction will be allowed to us for U.S. federal income tax purposes in connection with the grant or exercise of the incentive stock option. If, within two years following the date of grant or within one year following the date of exercise, the holder of shares acquired through the exercise of an incentive stock option disposes of those shares (a “disqualifying disposition”), the participant will generally realize taxable compensation at the time of such disposition equal to the difference between the exercise price and the lesser of the fair market value of the share on the date of exercise or the amount realized on the subsequent disposition of the shares, and that amount will generally be deductible by us for U.S. federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code. Any additional gain and any loss would be a capital gain or loss. The applicable capital gain tax rate will depend on the length of the Participant’s share holding period measured from the exercise date. Finally, if an incentive stock option becomes first exercisable in any one year for shares having an aggregate value in excess of $100,000 (based on the grant date value), the portion of the incentive stock option in respect of those excess shares will be treated as a non-qualified stock option for federal income tax purposes.
No income will be realized by a participant upon grant or vesting of an option that does not qualify as an incentive stock option (“a non-qualified stock option”). Upon the exercise of a non-qualified stock option, the participant will recognize ordinary compensation income in an amount equal to the excess, if any, of the fair market value of the purchased shares on the date of exercise over the option exercise price, and the participant’s tax basis will equal the sum of the compensation income recognized and the exercise price paid. We will be able to deduct this same excess amount for U.S. federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code. In the event of a sale of shares received upon the exercise of a non-qualified stock option, any appreciation or depreciation after the exercise date generally will be taxed as capital gain or loss and will be long-term gain or loss if the holding period for such shares is more than one year.
SARs. No income will be realized by a participant upon grant or vesting of a SAR. Upon the exercise of a SAR, the participant will recognize ordinary compensation income in an amount equal to the fair market value of the payment received in respect of the SAR. We will be able to deduct this same amount for U.S. federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code.
Restricted Stock. A participant will not be subject to tax upon the grant of an award of restricted stock unless the participant elects to be taxed on the date of grant pursuant to Section 83(b) of the Code. On the date an award of restricted stock is no longer subject to a substantial risk of forfeiture (i.e., the vesting date), the participant will have taxable compensation equal to the difference between the fair market value of the shares on that date over the amount the participant paid for such shares, if any, unless the participant made an election under Section 83(b) of the Code to be taxed on the date of grant. If the participant made an election under Section 83(b), the participant will have taxable compensation on the date of grant equal to the difference between the fair market value of the shares on the date of grant over the amount the participant paid for such shares, if any. If the election is made, the participant will not be allowed a deduction for, or recoupment of, taxes paid on account of shares that fail to vest or on account of any subsequent decrease in the value of the shares. (Special rules apply to the receipt and disposition of restricted shares received by officers and directors who are subject to Section 16(b) of the Exchange Act). We will be able to deduct, in the same year as it is recognized by the participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code.
Restricted Stock Units. A participant will not be subject to tax upon the grant or vesting of a restricted stock unit award. Rather, upon the delivery of shares or cash pursuant to a restricted stock unit award, the participant will have taxable compensation equal to the fair market value of the number of shares (or the amount of cash) the participant actually receives with respect to the award. We will be able to deduct the amount of taxable compensation to the participant for U.S. federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code.
Section 409A
Code Section 409A imposes complex rules on nonqualified deferred compensation arrangements, including requirements with respect to elections to defer compensation and the timing of payment of deferred amounts. Depending on how they are structured, certain equity-based awards may be subject to Code Section 409A, while others are exempt. If an award is subject to Code Section 409A and a violation occurs, the compensation is includible in income when no longer subject to a substantial risk of forfeiture and the participant may be subject to a 20% penalty tax and, in some cases, interest penalties. The 2018 Plan and awards granted under the 2018 Plan are intended to be exempt from or conform to the requirements of Code Section 409A.
Section 162(m) and the Company’s Deduction.
Generally, whenever a participant recognizes ordinary income under the 2018 Plan, a corresponding deduction is available to the Company, provided that the Company complies with certain reporting requirements. However, under Code Section 162(m), the Company will be denied a deduction for compensation paid to certain senior executives that exceeds $1,000,000, unless the compensation is “performance-based compensation” within the meaning of the Code.
Beginning January 1, 2018, with the passage of the TCJA, this limitation will apply to the Company's Chief Executive Officer, Chief Financial Officer, the Company's three next highest-paid executive officers, and anyone who was such a covered person starting with 2017. Prior to January 1, 2018, certain performance-based compensation was excluded from the $1,000,000 deduction limit. Under the TCJA, beginning January 1, 2018 (with an exception for certain grandfathered arrangements), the Company will be denied a deduction for any compensation exceeding $1,000,000.
Equity Compensation Plan Information
The following table summarizes, as of December 31, 2019, (i) the number of shares of our common stock that are issuable under our equity compensation plans upon the exercise of outstanding options, and other rights, (ii) the weighted-average exercise price of such options and rights, and (iii) the number of securities remaining available for future issuance under our equity compensation plans.
Plan Category | Number of securities to be issued exercise of outstanding warrants and rights (a) | Weighted- average exercise price of outstanding options, warrants (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||
2018 Equity Incentive Plan | 2,702,400 | $ | 14.63 | 3,297,600 | ||||||||
2014 Equity Incentive Plan | 5,983,312 | $ | 10.61 | 174,292 | ||||||||
Equity compensation plans not approved by our stockholders:(1) | ||||||||||||
2010 Equity Compensation Plan | 2,000 | $ | 117.00 | 33,000 | ||||||||
2011 Equity Incentive Plan | 807,000 | $ | 13.25 | 151,240 | ||||||||
Total | 9,494,712 | $ | 12.00 | 3,656,132 |
Equity Incentive Compensation Philosophy
We believe that successful long-term corporate performance is more likely to be achieved with a corporate culture that encourages a long-term focus by our named executive officers and other employees through the use of equity awards, the value of which depends on our stock performance. We established our 2014 Equity Incentive Plan and 2018 Equity Incentive Plan to provide all of our employees, including our named executive officers, with incentives to help align our employees’ interests with the interests of our stockholders and to enable them to participate in the long-term appreciation of our stockholder value. Additionally, equity awards provide an important retention tool for all employees, as the awards generally are subject to vesting over an extended period of time based on continued service with us.
Typically, we grant equity awards upon an employee’s hire. In addition, equity awards may also be granted for performance annually at, or soon after, the end of each year, depending on position, performance and tenure at the Company. We normally grant stock options or stock awards to new employees when they join our Company based upon their position with us and their relevant prior experience. Our Board of Directors has granted our Chief Executive Officer the discretion to grant options to non-executive employees upon joining our Company, and to make grants during each annual non-executive employee review cycle. Our Board of Directors has reviewed and approved both the total number of shares that our Chief Executive Officer can grant under such options, and the range of shares subject to such grants based on each employee’s position with the Company. Options are granted based on a combination of individual contributions to our Company and on general corporate achievements, which may include the attainment of product development milestones (such as commencement and completion of clinical trials) and attaining other annual corporate goals and objectives.
The awards granted by the Company generally vest over the first three years of the ten-year option term (although some previously granted awards vest over four years), or upon the achievement of certain milestones. Unless otherwise agreed to by us with respect to a termination without “cause” or for “good reason,” vesting and exercise rights generally cease upon termination of employment, except in the case of death (subject to a one-year limitation), disability or retirement. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including voting rights or the right to receive dividends or dividend equivalents. In addition to the initial option grants, our Compensation Committee may grant additional options to retain our employees and reward, or provide incentive for, the achievement of corporate goals and strong individual performance.
It is our policy to award stock options at an exercise price equal to the closing price on the Nasdaq Global Market of our common stock on the date of the grant. For purposes of determining the exercise price of stock options for newly hired employees, other than executive officers, the grant date is deemed to be the first day of employment and the authority to make such a grant is delegated to our Chief Executive Officer. For other employee stock option grants, the grant date is such date as is determined by the Compensation Committee when it approves the stock option grant.
We have no program, practice or plan to grant stock options, in coordination with the release of material nonpublic information. We also have not timed the release of material nonpublic information for the purpose of affecting the value of stock options or other compensation, and we have no plan to do so. We have no policy regarding the adjustment or recovery of stock option awards in connection with the restatement of our financial statements, as our stock option awards have not been tied to the achievement of specific financial statement goals.
We do not take into consideration any amounts realized by our named executive officers from prior stock option or stock awards in determining whether to grant new stock options, restricted stock units or restricted stock awards
On September 8, 2017 we entered into a three-year consulting agreement (the “Consulting Agreement”) with Iain Dukes, D. Phil, the Chairman of our Board of Directors. Under the Consulting Agreement, Dr. Dukes agreed to consult with us regarding business development opportunities, licensing transactions and technology acquisitions, and any such strategic initiatives appropriate for the Company that Dr. Dukes may identify. In consideration for his services, we granted Dr. Dukes a ten-year, non-qualified stock option to purchase up to 150,000 shares of our common stock at an exercise price of $7.30 per share (the closing trading price of the common stock on the Nasdaq Global Market on September 8, 2017). The stock option vests in 12 quarterly installments (with 1/12th of the option shares having vested on the date of grant). The vesting of the stock option will accelerate, and the entire stock option will become fully vested upon the closing of a significant licensing transaction, a material product acquisition, a material strategic transaction, or upon a Change of Control transaction. A “Change of Control” is defined to mean: (1) a merger or consolidation or the sale or exchange by our of capital stock, where our stockholders do not obtain or retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock or other voting equity of the surviving or acquiring corporation or other surviving or acquiring entity, in substantially the same proportion as before such transaction; (2) any transaction or series of related transactions to which this Company is a party in which in excess of fifty percent (50%) of our voting power is transferred; or (3) the sale or exchange of all or substantially all of our assets, where our stockholders do not obtain or retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock or other voting equity of the corporation or other entity acquiring our assets, in substantially the same proportion as before such transaction.
In July 2017, we filed a post-effective amendment to a registration statement on Form S-3 to register the public sale of certain securities, including 446,433 shares owned by General McPeak, a member of our Board of Directors.
Director Independence
Our Board of Directors has determined that Dr. Countouriotis, General McPeak, Mr. Rothbaum, Mr. Maynard and Dr. Weiser qualify as “independent directors” as defined under the applicable Nasdaq Stock Market Rules and the rules of the SEC, satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act, and have no material relationships with us (either directly or as a partner, stockholder or officer of any entity) that are inconsistent with a finding of their independence as members of our Board of Directors. Our Board of Directors has determined that Mr. Maynard, General McPeak and Dr. Weiser, the current members of our Audit Committee, also are “independent” for purposes of service as the members of our Audit Committee.
Commitment to Corporate Responsibility
Iovance’s corporate responsibility is fundamental to our long-term success, as well as our commitment to healthcare for critically ill cancer patients. It is also now more than ever important to our stakeholders. We have a commitment to environmental, social and governance (“ESG”) issues. We continue to improve our environmental sustainability by, among other programs, complying with our local and state recycling programs and building and modifying facilities with the environment in mind. Further, we have a commitment to social issues, including the diversity of our board, management and employees. It starts at the top, where we have two female directors, including a female Chief Executive Officer. Lastly, our corporate governance principles are focused on ethics and transparency. We will continue to focus on ESG issues during 2020.
Common Stock | ||||||||
Name and Address of Beneficial Owner | Number of Shares | Percent of Class (1) | ||||||
5% and Greater Stockholders | ||||||||
The Vanguard Group Inc. 100 Vanguard Blvd. Malvern, PA 19335 (2) | 10,853,129 | (2) | 8.6 | % | ||||
Perceptive Advisors LLC Joseph Edelman Perceptive Life Sciences Master Fund Ltd 51 Astor Place, 10th Floor New York, NY 10003 (3) | 10,417,887 | (3) | 8.2 | % | ||||
BlackRock Inc. 55 East 52nd Street New York, NY 10055 (4) | 9,594,660 | (4) | 7.6 | % | ||||
Avoro Capital Advisors LLC 110 Greene Street, Suite 800 New York, NY 10012 (5) | 9,565,000 | (5) | 7.5 | % | ||||
Quogue Capital LLC 101 Central Park West, Suite 1F New York, New York 10019 (6) | 9,000,000 | (6) | 7.1 | % | ||||
T. Rowe Price Associates Inc. 100 E. Pratt Street Baltimore, MD 21202 (7) | 6,509,856 | (7) | 5.1 | % | ||||
Named Executive Officers and Directors | ||||||||
Merrill A. McPeak | 726,583 | (8) | * | |||||
Michael Weiser, M.D., Ph.D. | 237,632 | (9) | * | |||||
Ryan D. Maynard | 225,000 | (10) | * | |||||
Maria Fardis, Ph.D. | 1,343,074 | (11) | 1.1 | % | ||||
Timothy E. Morris | 270,541 | (10) | * | |||||
Frederick G. Vogt, Ph.D., Esq. | 323,400 | (10) | * | |||||
Wayne P. Rothbaum | 9,000,000 | (12) | 7.1 | % | ||||
Iain Dukes, D. Phil. | 442,000 | (13) | * | |||||
Athena Countouriotis, M.D. | 35,000 | (13) | * | |||||
Friedrich Graf Finckenstein, M.D. | - | * | ||||||
All directors, director nominees and current executive officers as a group (10 persons) | 12,603,230 | (14) | 9.9 | % |
| Common Stock | |
Name and Address of Beneficial Owner | Number of Shares | | | Percent of Class(1) | |
The Vanguard Group, Inc. 100 Vanguard Malvern, PA 19335 | | | | | 12,013,511(2) | | | | | | 7.5% | | |
Perceptive Advisors LLC Joseph Edelman Perceptive Life Sciences Master Fund Ltd. 51 Astor Place, 10th Floor New York, NY 10003 | | | | | 11,134,432(3) | | | | | | 7.0% | | | ||
Wellington Management Group LLP 280 Congress Street Boston, MA 02210 | | | | | 9,584,082(4) | | | | | | 6.0% | | | ||
Quogue Capital LLC 1171 S. Ocean Blvd. Delray Beach, FL 33483 | | | | | 9,000,000(5) | | | | | | 5.6% | | |
Avoro Capital Advisors 110 Greene Street, Suite 800 New York, NY 10012 | | | | | 8,675,000(6) | | | | | | 5.4% | | |
BlackRock Inc. 55 East 52nd Street New York, NY 10055 | | | 7,408,505(7 | | | | | | 4.6% | | |
Franklin Resources Inc One Franklin Parkway San Mateo, CA 94403 | | | 5,797,716(8) | | | | | | 3.6% | | | ||
T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 | | | | | 4,663,785(9) | | | | | | 2.9% | | |
Named Executive Officers and Directors | | | | | | | | | | | | | |
Merrill A. McPeak | | | | | 745,033(10) | | | | | | * | | |
Michael Weiser, M.D., | | | | | 298,882(11) | | | | | | * | | |
Ryan D. Maynard | | | | | 286,250(12) | | | | | | * | | |
Frederick G. Vogt, Ph.D., J.D. | | | | | 705,689(12) | | | | | | * | | |
Jean -Marc Bellemin | | | | | 94,633(15) | | | | | | * | | |
Wayne Rothbaum | | | | | 9,000,000(13) | | | | | | 5.6% | | |
| | | Common Stock | | |||||||||
Name and Address of Beneficial Owner | | | Number of Shares | | | Percent of Class(1) | | ||||||
Iain Dukes, D. Phil. | | | | | 564,500(14) | | | | | | * | | |
Athena Countouriotis, M.D. | | | | | 96,250(12) | | | | | | * | | |
Friedrich Graf Finckenstein, M.D. | | | | | 264,267(12) | | | | | | * | | |
Igor Bilinsky, Ph.D. | | | | | 81,345(12) | | | | | | * | | |
Maria Fardis, Ph.D. | | | | | 94,512(16) | | | | | | * | | |
Michael Swartzburg | | | | | —(17) | | | | | | * | | |
All directors, director nominees and current executive officers as a group (10 persons) | | | | | 12,136,849(18) | | | | | | 7.6% | | |
Plan Category | | | Number of securities to be issued upon exercise of outstanding options, warrants, rights, and vesting of stock awards (a) | | | Weighted-average exercise or base price of outstanding options, warrants, rights, and stock awards (b) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | |||||||||
2018 Equity Incentive Plan, as amended in 2020 | | | | | 9,221,854 | | | | | $ | 27.19 | | | | | | 3,886,948 | | |
2014 Equity Incentive Plan | | | | | 3,191,546 | | | | | $ | 13.60 | | | | | | 60,785 | | |
Equity compensation plans not approved by our stockholders:(1) | | | | | | | | | | | | | | | | | | | |
2010 Equity Compensation Plan | | | | | — | | | | | $ | — | | | | | | — | | |
2011 Equity Incentive Plan | | | | | 941,000 | | | | | $ | 15.57 | | | | | | — | | |
2021 Inducement Plan | | | | | 276,475 | | | | | $ | 18.56 | | | | | | 753,525 | | |
Total | | | | | 13,630,875 | | | | | $ | 24.95 | | | | | | 4,671,258 | | |
Name | | | Age | | | Position | |
Frederick G. Vogt, Ph.D., J.D. | | | 48 | | | Interim Chief Executive Officer and President, General Counsel | |
Jean-Marc Bellemin | | | 50 | | | Chief Financial Officer | |
Friedrich Graf Finckenstein, M.D. | | | 55 | | | Chief Medical Officer | |
Igor Bilinsky, Ph.D. | | | 49 | | | Chief Operating Officer | |
Compensation Element | | | Purpose | |
Base Salary | | | • Fixed cash compensation that is reviewed annually and adjusted as appropriate based on individual performance and internal and external practices and levels. • Attracts and retains executives by offering fixed compensation that is competitive with market opportunities and that recognizes each executive’s position, role, responsibility, and experience. | |
Annual Incentives | | | • Variable cash compensation based on performance versus pre-established annual goals as well as individual performance. • Designed to | |
Long-Term Incentives | | | • Variable long-term compensation payable in the form of time-vesting stock |
• Generally, employees receive an initial equity grant upon joining the Company. Annually thereafter, employees are eligible for grants of |
• Intended to • Promotes the long-term retention of • Promotes an ownership culture among our employees. | |
| Allogene Therapeutics, Inc.(1) Arena Pharmaceuticals, Inc.(1) Atara Biotherapeutics, Inc. Blueprint Medicines Corp. ChemoCentryx, Inc. Cytokinetics, Inc. Deciphera Pharmaceuticals, Inc.(1) | | Epizyme, Inc. Fate Therapeutics, Inc. Mirati Therapeutics, Inc. MyoKardia, Inc. Nektar Therapeutics(1) Principia Biopharma, Inc.(1) Xencor, Inc. | |
| Allakos Inc.(1) Arcus Biosciences, Inc.(1) Arena Pharmaceuticals, Inc. Atara Biotherapeutics, Inc. Blueprint Medicines Corp. BridgeBio Pharma, Inc.(1) ChemoCentryx, Inc. | | Cytokinetics, Inc. Deciphera Pharmaceuticals, Inc. Denali Therapeutics Inc.(1) Fate Therapeutics, Inc. Instil Bio, Inc.(1) Mirati Therapeutics, Inc. Nektar Therapeutics Xencor, Inc. | |
Name and Principal Position | | | 2020 Salary | | | Ending 2021 Salary | | | % Increase from Final 2020 Base Salary | | |||||||||
Frederick G. Vogt, Ph.D., J.D., Interim Chief Executive Officer and President(1) | | | | $ | 420,000 | | | | | $ | 500,000 | | | | | | 19% | | |
Friedrich Graf Finckenstein, M.D., Chief Medical Officer | | | | $ | 450,000 | | | | | $ | 470,000 | | | | | | 4% | | |
Jean-Marc Bellemin, Chief Financial Officer | | | | $ | 450,000 | | | | | $ | 450,000 | | | | | | — | | |
Igor Bilinsky, Ph.D., Chief Operating Officer(2) | | | | $ | — | | | | | $ | 450,000 | | | | | | — | | |
Maria D. Fardis, Ph.D., Former Chief Executive Officer and President (3) | | | | $ | 600,000 | | | | | $ | 600,000 | | | | | | — | | |
Michael Swartzburg, Former Vice President, Finance and interim Principal Financial Officer and Principal Accounting Officer(4) | | | | $ | 306,190 | | | | | $ | 318,440 | | | | | | 4% | | |
Name and Principal Position | | | 2021 Bonus Eligible Salary | | | Annual Incentive Target %(1) | | | 2021 Target Bonus Opportunity | | | 2021 Actual Bonus Payment(2) | | | 2021 Actual Bonus Payment (% of Target Award Opportunity) | | |||||||||||||||
Frederick G. Vogt, Ph.D., J.D., Interim Chief Executive Officer and President(3) | | | | $ | 500,000 | | | | | | 60% | | | | | $ | 300,000 | | | | | $ | 270,000 | | | | | | 90% | | |
Friedrich Graf Finckenstein, M.D., Chief Medical Officer | | | | $ | 470,000 | | | | | | 40% | | | | | $ | 188,000 | | | | | $ | 169,200 | | | | | | 90% | | |
Jean-Marc Bellemin, Chief Financial Officer | | | | $ | 450,000 | | | | | | 40% | | | | | $ | 180,000 | | | | | $ | 162,000 | | | | | | 90% | | |
Igor Bilinsky, Ph.D., Chief Operating Officer (4) | | | | $ | 450,000 | | | | | | 40% | | | | | $ | 180,000 | | | | | $ | 162,000 | | | | | | 90% | | |
Maria Fardis, Ph.D., Former Chief Executive Officer and President(5) | | | | $ | 600,000 | | | | | | 100% | | | | | $ | 600,000 | | | | | $ | — | | | | | | — | | |
Michael Swartzburg, Former Vice President, Finance and interim Principal Financial Officer and Principal Accounting Officer | | | | $ | 318,400 | | | | | | 30% | | | | | $ | 95,332 | | | | | $ | — | | | | | | — | | |
Name | | | Grant Date | | | Number of Securities Underlying Options(1) | | | Exercise Price of Option Awards ($/Share) | | | Grant Date Fair Value of Option Awards ($)(3) | | ||||||||||||
Frederick G. Vogt, Ph.D., J.D. | | | | | 1/4/2021 | | | | | | 175,000(2) | | | | | $ | 46.26 | | | | | $ | 4,710,843 | | |
Friedrich Graf Finckenstein, M.D. | | | | | 1/4/2021 | | | | | | 100,000(2) | | | | | $ | 46.26 | | | | | $ | 2,691,910 | | |
Jean-Marc Bellemin(4) | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | |
Igor Bilinsky, Ph.D.(5) | | | | | 3/15/2021 | | | | | | 150,000(2) | | | | | $ | 34.91 | | | | | $ | 3,047,175 | | |
Maria Fardis, Ph.D.(6) | | | | | 1/4/2021 | | | | | | 250,000(2) | | | | | $ | 46.26 | | | | | $ | 6,729,775 | | |
Michael Swartzburg(7) | | | | | 1/4/2021 | | | | | | 45,000(2) | | | | | $ | 46.26 | | | | | $ | 1,211,360 | | |
Name | | | Cash Retention Bonus(1) | | | Number of Securities Underlying Options(2) | | | Number of Securities Underlying Stock Awards | | | Exercise or Base Price of Stock and Option Awards ($/Share) | | | Grant Date Fair Value of Stock and Option Awards(3) | | | |||||||||||||||||
Frederick G. Vogt, Ph.D., J.D. | | | | $ | 176,400 | | | | | | 73,900(4) | | | | | | — | | | | | $ | 23.87 | | | | | $ | 1,046,882 | | | | ||
| | | | | | | | | | | 100,000(5) | | | | | | — | | | | | $ | 23.87 | | | | | $ | 1,416,620 | | | | | |
Friedrich Graf Finckenstein, M.D. | | | | $ | 188,000 | | | | | | — | | | | | | 39,380(4) | | | | | $ | 23.87 | | | | | $ | 940,001 | | | | ||
Jean-Marc Bellemin | | | | $ | 180,000 | | | | | | — | | | | | | 37,700(4) | | | | | $ | 23.87 | | | | | $ | 899,899 | | | | ||
Igor Bilinsky, Ph.D. | | | | $ | 180,000 | | | | | | — | | | | | | 37,700(4) | | | | | $ | 23.87 | | | | | $ | 899,899 | | | |
Name | | | Grant Date | | | Number of Securities Underlying Options(1)(3) | | | Number of Securities Underlying Stock Awards(3) | | | Exercise or Base Price of Stock and Option Awards ($/Share) | | | Grant Date Fair Value of Stock and Option Awards(2) | | |||||||||||||||
Frederick G. Vogt, Ph.D., J.D. | | | | | 1/14/2022 | | | | | | — | | | | | | 250,000 | | | | | $ | 15.49 | | | | | $ | 3,872,500 | | |
Friedrich Graf Finckenstein, M.D. | | | | | 1/14/2022 | | | | | | 67,500 | | | | | | 33,750 | | | | | $ | 15.49 | | | | | $ | 1,150,166 | | |
Jean-Marc Bellemin | | | | | 1/14/2022 | | | | | | 135,000 | | | | | | — | | | | | $ | 15.49 | | | | | $ | 1,254,758 | | |
Igor Bilinsky, Ph.D. | | | | | 1/14/2022 | | | | | | 67,500 | | | | | | 33,750 | | | | | $ | 15.49 | | | | | $ | 1,150,166 | | |
Name and Principal Position | | | Year | | | Salary ($) | | | Bonus(1) ($) | | | Stock Awards(2) ($) | | | Stock Option(3) ($) | | | Non-Equity Incentive Plan Compensation(4) ($) | | | All Other Compensation ($)(5) | | | Total ($) | | ||||||||||||||||||||||||
Current Officers: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Frederick G. Vogt, Ph.D., J.D., Interim President and Chief Executive Officer | | | | | 2021 | | | | | | 471,208 | | | | | | — | | | | | | — | | | | | | 7,174,345 | | | | | | 270,000 | | | | | | 11,600 | | | | | | 7,927,153 | | |
| | | 2020 | | | | | | 418,333 | | | | | | — | | | | | | — | | | | | | 2,441,820 | | | | | | 84,000 | | | | | | 11,400 | | | | | | 2,955,553 | | | ||
| | | 2019 | | | | | | 397,917 | | | | | | — | | | | | | — | | | | | | 1,453,980 | | | | | | 160,000 | | | | | | 11,200 | | | | | | 2,023,097 | | | ||
Friedrich Graf Finckenstein, M.D., Chief Medical Officer | | | | | 2021 | | | | | | 468,333 | | | | | | — | | | | | | 940,001 | | | | | | 2,691,910 | | | | | | 169,200 | | | | | | 11,600 | | | | | | 4,281,044 | | |
| | | 2020 | | | | | | 450,000 | | | | | | — | | | | | | — | | | | | | 1,220,910 | | | | | | 90,000 | | | | | | 11,400 | | | | | | 1,772,310 | | | ||
| | | 2019 | | | | | | 204,807 | | | | | | 160,000 | | | | | | — | | | | | | 2,655,440 | | | | | | 82,500 | | | | | | 11,200 | | | | | | 3,113,947 | | | ||
Jean-Marc Bellemin, Chief Financial Officer | | | | | 2021 | | | | | | 450,000 | | | | | | — | | | | | | 899,899 | | | | | | — | | | | | | 162,000 | | | | | | 11,600 | | | | | | 1,523,499 | | |
| | | 2020 | | | | | | 22,212 | | | | | | 130,000 | | | | | | — | | | | | | 4,418,700 | | | | | | — | | | | | | — | | | | | | 4,570,912 | | | ||
Igor Bilinsky, Ph.D., Chief Operating Officer | | | | | 2021 | | | | | | 357,981 | | | | | | 50,000 | | | | | | 899,899 | | | | | | 3,047,175 | | | | | | 162,000 | | | | | | 7,367 | | | | | | 4,524,421 | | |
Former Officers: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Maria Fardis, Ph.D.(6) | | | | | 2021 | | | | | | 281,923 | | | | | | — | | | | | | — | | | | | | 6,729,775 | | | | | | — | | | | | | — | | | | | | 7,011,698 | | |
Former President and Chief Executive Officer | | | | | 2020 | | | | | | 600,000 | | | | | | — | | | | | | — | | | | | | 8,139,400 | | | | | | 300,000 | | | | | | — | | | | | | 9,039,400 | | |
| | | 2019 | | | | | | 600,000 | | | | | | — | | | | | | — | | | | | | 2,907,960 | | | | | | 600,000 | | | | | | — | | | | | | 4,107,960 | | | ||
Michael Swartzburg(8) | | | | | 2021 | | | | | | 65,321 | | | | | | 30,000(7) | | | | | | — | | | | | | 1,211,360 | | | | | | — | | | | | | 7,328 | | | | | | 1,314,008 | | |
Former Vice President, Finance and interim Principal Accounting Officer | | | | | 2020 | | | | | | 305,208 | | | | | | — | | | | | | — | | | | | | 707,767 | | | | | | 50,521 | | | | | | 11,400 | | | | | | 1,074,896 | | |
Name | | | Grant Date | | | Target Bonus ($) | | | All other option awards: Number of Securities Underlying Options(2) | | | All other Stock Awards: Number of Shares of Stock Units | | | Exercise or Base Price of Option and Stock Awards ($/Share) | | | Grant Date Fair Value of Option and Stock Awards | | | ||||||||||||||||||||
Frederick G. Vogt, Ph.D., J.D. | | | | | 1/4/2021 | | | | | $ | 300,000(1) | | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | ||
| | | 1/4/2021 | | | | | $ | — | | | | | | 175,000(3) | | | | | | — | | | | | $ | 46.26 | | | | | $ | 4,710,843(5) | | | | ||||
| | | 6/14/2021 | | | | | $ | — | | | | | | 73,900(4) | | | | | | — | | | | | $ | 23.87 | | | | | $ | 1,046,882(5) | | | | ||||
| | | 6/14/2021 | | | | | $ | — | | | | | | 100,000(3) | | | | | | — | | | | | $ | 23.87 | | | | | $ | 1,416,620(5) | | | | ||||
| | | 6/14/2021 | | | | | $ | 176,400(8) | | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | ||||
Friedrich Graf Finckenstein, M.D. | | | | | 1/4/2021 | | | | | $ | 188,000(1) | | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | ||
| | | 1/4/2021 | | | | | $ | — | | | | | | 100,000(3) | | | | | | — | | | | | $ | 46.26 | | | | | $ | 2,691,910(5) | | | | ||||
| | | 6/14/2021 | | | | | $ | — | | | | | | — | | | | | | 39,380(4) | | | | | $ | 23.87 | | | | | $ | 940,001(6) | | | | ||||
| | | 6/14/2021 | | | | | $ | 188,000(8) | | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | ||||
Jean-Marc Bellemin | | | | | 1/4/2021 | | | | | $ | 180,000(1) | | | | | | — | | | | | | | | | | | $ | — | | | | | $ | — | | | | ||
| | | 6/14/2021 | | | | | $ | 180,000(8) | | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | ||||
| | | 6/14/2021 | | | | | $ | — | | | | | | — | | | | | | 37,700(4) | | | | | $ | 23.87 | | | | | $ | 899,899(6) | | | | ||||
Igor Bilinsky, Ph.D. | | | | | 3/15/2021 | | | | | $ | 180,000(1) | | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | ||
| | | 3/15/2021 | | | | | $ | — | | | | | | 150,000(3)(7) | | | | | | — | | | | | $ | 34.91 | | | | | $ | 3,047,175(5) | | | | ||||
| | | 6/14/2021 | | | | | $ | — | | | | | | — | | | | | | 37,700(4) | | | | | $ | 23.87 | | | | | $ | 899,899(6) | | | | ||||
| | | 6/14/2021 | | | | | $ | 180,000(8) | | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | ||||
Maria Fardis, Ph.D. | | | | | 1/4/2021 | | | | | $ | 600,000(1) | | | | | | — | | | | | | | | | | | $ | — | | | | | $ | — | | | | ||
| | | 1/4/2021 | | | | | $ | | | | | | | 250,000(3) | | | | | | — | | | | | $ | 46.26 | | | | | $ | 6,729,775(5) | | | | | | ||
Michael Swartzburg | | | | | 1/4/2021 | | | | | $ | 95,532(1) | | | | | | 45,000(3) | | | | | | — | | | | | $ | 46.26 | | | | | $ | 1,211,360(5) | | | |
| | | | | | | | | Option Awards | | | Stock Awards | | | ||||||||||||||||||||||||||||||||
| | | Grant Date and Vesting Commencement Date(1) | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date(3) | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(4) | | | |||||||||||||||||||||||
Frederick G. Vogt, Ph.D., J.D., Interim President and Chief Executive Officer, and General Counsel | | | | | 6/14/2021(2) | | | | | | — | | | | | | 73,900 | | | | | $ | 23.87 | | | | | | 6/14/2031 | | | | | | — | | | | | | — | | | | ||
| | | 6/14/2021 | | | | | | — | | | | | | 100,000 | | | | | $ | 23.87 | | | | | | 6/14/2031 | | | | | | — | | | | | | — | | | | ||||
| | | 1/4/2021 | | | | | | — | | | | | | 175,000 | | | | | $ | 46.26 | | | | | | 1/4/2031 | | | | | | — | | | | | | — | | | | ||||
| | | 1/3/2020 | | | | | | 87,496 | | | | | | 62,504 | | | | | $ | 25.54 | | | | | | 1/3/2030 | | | | | | — | | | | | | — | | | | ||||
| | | 3/4/2019 | | | | | | 183,250 | | | | | | 16,750 | | | | | $ | 11.26 | | | | | | 3/4/2029 | | | | | | — | | | | | | — | | | | ||||
| | | 12/29/2017 | | | | | | 37,400 | | | | | | — | | | | | $ | 8.00 | | | | | | 12/29/2027 | | | | | | — | | | | | | — | | | | ||||
| | | 3/16/2017 | | | | | | 12,600 | | | | | | — | | | | | $ | 7.45 | | | | | | 3/16/2027 | | | | | | — | | | | | | | | | | ||||
| | | 11/14/2016 | | | | | | 200,000 | | | | | | — | | | | | $ | 7.55 | | | | | | 11/14/2026 | | | | | | — | | | | | | — | | | | ||||
Friedrich Graf Finckenstein, M.D., Chief Medical Officer | | | | | 6/14/2021(2) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 39,380 | | | | | $ | 751,764 | | | | ||
| | | 1/4/2021 | | | | | | — | | | | | | 100,000 | | | | | $ | 46.26 | | | | | | 1/4/2031 | | | | | | — | | | | | | — | | | | ||||
| | | 1/3/2020 | | | | | | 43,748 | | | | | | 31,252 | | | | | $ | 25.54 | | | | | | 1/3/2030 | | | | | | — | | | | | | — | | | | ||||
| | | 7/18/2019 | | | | | | 119,998 | | | | | | 40,002 | | | | | $ | 25.78 | | | | | | 7/18/2029 | | | | | | — | | | | | | — | | | | ||||
Jean-Marc Bellemin, Chief Financial Officer | | | | | 6/14/2021(2) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 37,700 | | | | | $ | 719,693 | | | | ||
| | | 12/14/2020 | | | | | | 49,995 | | | | | | 100,005 | | | | | $ | 50.26 | | | | | | 12/14/2030 | | | | | | — | | | | | | — | | | | ||||
Igor Bilinsky, Ph.D., Chief Operating Officer | | | | | 6/14/2021(2) | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | 37,700 | | | | | $ | 719,693 | | | | | |
| | | 3/15/2021 | | | | | | — | | | | | | 150,000 | | | | | $ | 34.91 | | | | | | 3/15/2031 | | | | | | — | | | | | | — | | | | ||||
Former Officers: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Maria Fardis, Ph.D., Former President and Chief Executive Officer(5) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Michael Swartzburg, Former Vice President, Finance and interim Principal Financial Officer and Principal Accounting Officer (6) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | |
| | | Option Awards | | | Stock Awards | | ||||||||||||||||||
Name | | | Number of Shares Acquired on Exercise | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting | | | Value Realized on Vesting ($)(2) | | ||||||||||||
Maria Fardis, Ph.D., Former Chief Executive Officer | | | | | 1,299,500 | | | | | $ | 16,465,406 | | | | | | — | | | | | $ | — | | |
Michael Swartzburg, Former Vice President, Finance and interim Principal Accounting Officer | | | | | 133,773 | | | | | $ | 1,992,887 | | | | | | — | | | | | $ | — | | |
| Change in Control/ Acceleration and Termination ($) | | | Termination Without Cause ($) | | | Termination Due to Death or ($) | | |||||||||||
Frederick G. Vogt, Ph.D., J.D. | | | | | | | | | | | | | | | | | | | |
Cash severance | | | | | 550,000(1) | | | | | | 800,000(5) | | | | | | 300,000(6) | | |
Equity acceleration | | | | | 131,153(2) | | | | | | 131,153(2) | | | | | | 131,153(10) | | |
Friedrich Graf Finckenstein, M.D. | | | | | | | | | | | | | | | | | | | |
Cash severance | | | | | 235,000(3) | | | | | | 235,000(3) | | | | | | — | | |
Equity acceleration | | | | | 751,764(4) | | | | | | — | | | | | | 751,764(10) | | |
Jean-Marc Bellemin | | | | | | | | | | | | | | | | | | | |
Cash severance | | | | | 225,000(3) | | | | | | 225,000(3) | | | | | | — | | |
Equity acceleration | | | | | 719,693(4) | | | | | | — | | | | | | 719,693(10) | | |
Igor Bilinsky, Ph.D. | | | | | | | | | | | | | | | | | | | |
Cash severance | | | | | 225,000(3) | | | | | | 225,000(3) | | | | | | — | | |
Equity acceleration | | | | | 719,693(4) | | | | | | — | | | | | | 719,693(10) | | |
Former Officers | | | | | | | | | | | | | | | | | | | |
Maria Fardis, Ph.D. | | | | | | | | | | | | | | | | | | | |
Cash severance | | | | | 1,200,000(7) | | | | | | 1,200,000(7) | | | | | | 600,000(6) | | |
Equity acceleration | | | | | 262,305(8) | | | | | | 262,305(9) | | | | | | 262,305(10) | | |
Michael Swartzburg | | | | | | | | | | | | | | | | | | | |
Cash severance | | | | | — | | | | | | — | | | | | | — | | |
Equity acceleration | | | | | — | | | | | | — | | | | | | 22,958(10) | | |
* * *
"SAY ON PAY" VOTES
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Company is required to include in this proxy statement and to present atAPPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
In line with our past practices, and based on the resultsbest interests of our first sayCompany and our stockholders.
Proposal No. 3, commonly known as a “say on frequency” vote, gives stockholders the opportunity to endorse or not endorse the decision of the Board of Directors to hold an advisory vote on executive compensation at each annual meeting of stockholders hereafter. This proposal will be presented at the Annual Meeting as a resolution in substantially the following form:
RESOLVED, that the stockholders approve the Company’s presentation at every annual meeting of stockholders hereaftersubject of a proposaldisagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to approveItem 304 of Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).
| | | 2021 | | | 2020 | | ||||||
Audit fees: | | | | $ | 963,050 | | | | | $ | 537,188 | | |
Audit related fees: | | | | $ | — | | | | | $ | — | | |
Tax fees: | | | | $ | — | | | | | $ | — | | |
All other fees: | | | | $ | — | | | | | $ | — | | |
Total | | | | $ | 963,050 | | | | | $ | 537,188 | | |
This vote will notthe fiscal years ended December 31, 2021 and 2020 is compatible with maintaining the auditor’s independence. All audit and non-audit services that may be binding on the Board of Directors and may not be construed as overruling a decisionprovided by our principal accountant to us require pre-approval by the Board of DirectorsAudit Committee. Further, our auditor shall not provide those services to us specifically prohibited by the SEC, including bookkeeping or creating or implying any changeother services related to the fiduciary dutiesaccounting records or financial statements of the Board. The Compensationaudit client; financial information systems design and implementation; appraisal or valuation services, fairness opinion, or contribution-in-kind reports; actuarial services; internal audit outsourcing services; management functions; human resources; broker-dealer, investment adviser, or investment banking services; legal services and expert services unrelated to the audit; and any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.
Stockholders can choose one of four choices for this Proposal on the proxy card: one year, two years, three years,Marcum LLP or abstain. Stockholders are not voting to approve or disapprove our Board’s recommendation.
Ernst & Young LLP.
THE RATIFICATION OF
As of December 31, 2021, there were no shares of common stock available for issuance under the 2011 Plan.
On March 9, 2018, our Board of Directors adopted the 2018 Plan. The 2018 Plan was approved by our stockholders at the Annual Meeting of Stockholders held on June 6, 2018. Except with respect to awards then outstanding, unless sooner terminated, the 2018 Plan will expire on the tenth anniversary of the date it was approved by stockholders and no further awards may be granted after such date. On March 24, 2020, our Board adopted an amendment to the 2018 Plan to increase the total number of shares that can be issued under the 2018 Plan from 6,000,000 shares to 14,000,000 shares, subject to stockholder approval of the amendment.
|
• |
14,000,00020,700,000 shares of our common stock for issuance of awards to be granted thereunder. All of the shares of our common stock reserved under the plan may be issued as incentive stock options under the 2018 Plan, as amended. The maximum number of equity awards that may be awarded to the non-employee members of the Board of Directors for serving on the Board of Directors, shall be an amount equal to the product of 50,000 times the number of non-employee members on the Board of Directors; provided, that the foregoing limitation shall not apply in respect of any awards issued to a non-employee director in respect of (i) any one-time equity grant upon a non-employee director’s initial appointment or election to the Board of Directors, or (ii) equity grants for services provided to the Company other than services as a member of the Board of Directors. The total amount of awards granted annually to the non-employee members of the Board of Directors may be allocated amongst the non-employee members of the Board of Directors in a manner determined by the Board of Directors. If any award granted under the 2018 Plan, as amended, expires, terminates, or is canceled or forfeited without being settled, vested or exercised, shares of our common stock subject to such award will again be made available for future grants. Any shares that are surrendered or tendered to pay the exercise price of an award or to satisfy withholding taxes owed, or any shares reserved for issuance, but not issued, with respect to settlement of a stock appreciation right, will not again be available for grants under the 2018 Plan, as amended.
Stock Appreciation Rights. The Compensation Committee will be authorized to award SARs under the 2018 Plan, as amended. SARs will be subject to the terms and conditions established by the Compensation Committee. A SAR is a contractual right that allows a participant to receive, in the form of either cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain period of time. An option granted under the 2018 Plan, as amended, may include SARs, and SARs may also be awarded to a participant independent of the grant of an option. SARs granted in connection with an option shall be subject to terms similar to the option corresponding to such SARs, including with respect to vesting and expiration. Except as otherwise provided by the Compensation Committee (in the case of Substitute Awards or SARs granted in tandem with previously granted options), the strike price per share
SARs. No income will be realized by a participant upon grant or vesting of a SAR. Upon the exercise of a SAR, the participant will recognize ordinary compensation income in an amount equal to the fair market value of the payment received in respect of the SAR. We will be able to deduct this same amount for U.S. federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code.
| | | Stock Options | | | | | | | | |||||||||
Name and Position | | | Weighted Average Exercise Price ($) | | | Number of Stock Options (#) | | | Number of Restricted Stock Units (#) | | |||||||||
Frederick G. Vogt, Ph.D., J.D. | | | | $ | 35.10 | | | | | | 348,900 | | | | | | — | | |
Friedrich Graf Finckenstein, M.D., Chief Medical Officer | | | | $ | 46.26 | | | | | | 100,000 | | | | | | 39,380 | | |
Jean-Marc Bellemin, Chief Financial Officer | | | | $ | — | | | | | | — | | | | | | 37,700 | | |
Igor Bilinsky, Ph.D., Chief Operating Officer | | | | $ | 34.91 | | | | | | 150,000 | | | | | | 37,700 | | |
Maria Fardis, Ph.D., Former Chief Executive Officer | | | | $ | 46.26 | | | | | | 250,000 | | | | | | — | | |
Michael Swartzburg, Former Vice President, Finance and interim Principal Financial Officer and Principal Accounting Officer | | | | $ | 46.26 | | | | | | 45,000 | | | | | | — | | |
All Current and Former Executive Officers as a Group | | | | $ | 40.00(1) | | | | | | 893,900 | | | | | | 114,780 | | |
All Nonexecutive Directors as a Group | | | | $ | 26.33(1) | | | | | | 210,000 | | | | | | — | | |
All Employees as a Group (Including Officers who are not Executive Officers) | | | | $ | 39.95(1) | | | | | | 3,915,999 | | | | | | 1,138,760 | | |
Stock Options | ||||||||
Average Exercise Price | Number of Awards | |||||||
Name and Position | ($) | (#) | ||||||
Maria Fardis, Ph.D., Chief Executive Officer | 11.26 | 400,000 | ||||||
Timothy E. Morris, Chief Financial Officer | 11.26 | 100,000 | ||||||
Friedrich Graf Finckenstein, M.D., Chief Medical Officer | 25.78 | 160,000 | ||||||
Frederick G. Vogt, Ph.D., Esq. | 11.26 | 200,000 | ||||||
All Current Executive Officers as a Group | 13.96 (1) | 860,000 | ||||||
All Nonexecutive Directors as a Group | - | - | ||||||
All Employees as a Group (Including Officers who are not Executive Officers) | 14.72 (1) | 3,047,900 |
Overview
On March 24, 2020, our Board of Directors adopted the 2020 Employee Stock Purchase Plan (the “2020 ESPP”), subject to stockholder approval. A total of 500,000 shares of our common stock are available for sale under our 2020 ESPP, based upon the advice of our compensation consultant, Haigh, and upon review and recommendation by the Compensation Committee. In adopting the ESPP, our Board of Directors considered the benefits of stock purchase plans, including the adoption of similar plans by most of the companies in our peer group, the recruitment benefits of such plans, and the development of a stock ownership culture by our employees.
Summary
This section summarizes certain principal features of the 2020 ESPP. The summary is qualified in its entirety by reference to the complete text of the 2020 ESPP. Stockholders are urged to read the actual text of the 2020 ESPP in its entirety which is set forth in Appendix B to this proxy statement.
The 2020 ESPP authorizes the sale of an aggregate of 500,000 shares of our common stock. Appropriate adjustments will be made in the number of authorized shares and in outstanding purchase rights to prevent dilution or enlargement of participants’ rights in the event of a stock split or other change in our capital structure. Shares subject to purchase rights which expire or are cancelled will again become available for issuance under the 2020 ESPP.
The Compensation Committee will administer the 2020 ESPP and have full authority to interpret the terms of the 2020 ESPP. The 2020 ESPP provides, subject to certain limitations, for indemnification by us of any director, officer or employee against all reasonable expenses, including attorneys’ fees, incurred in connection with any legal action arising from such person’s action or failure to act in administering the 2020 ESPP.
All of our employees, including our named executive officers, are eligible to participate if they are customarily employed by us for at least 20 hours per week and more than five months in any calendar year. Non-employee Directors are not eligible to participate in the 2020 ESPP. If any local laws applicable to any of our non-United States employees require that participation in the 2020 ESPP be extended to additional classes of employees or otherwise impose different terms or restrictions on their participation, those requirements may be satisfied through separate offerings under the 2020 ESPP not intended to qualify under Section 423 of the Code, and such separate offerings will be treated part of a “Non-423 Plan” component of the 2020 ESPP. Employees in certain jurisdictions having unfavorable laws regarding stock purchase plans may be excluded from participating in the 2020 ESPP. As of December 31, 2019, we had 148 employees. However, an employee may not be granted rights to purchase stock under our 2020 ESPP if such employee:
Our 2020 ESPP is intended to qualify under Section 423 of the Code and the 2020 ESPP shall be so construed. The 2020 ESPP will typically be implemented through two consecutive six-month offering periods. The offering periods generally start on or about December 15th and June 15th of each year after an enrollment period. The Compensation Committee may, in its discretion, modify the terms of future offering periods, including establishing longer offering periods and providing for multiple purchase dates.
Our 2020 ESPP permits participants to purchase common stock through payroll deductions of up to 20.0% of their eligible compensation, which includes a participant’s regular and recurring straight time gross earnings and payments for overtime and shift premiums, but exclusive of sign-on bonuses, annual or other incentive bonuses, commissions, profit-sharing distributions or other incentive-type payments, any contributions made by us on the participant’s behalf to any employee benefit or welfare plan now or hereafter established (other than amounts deferred pursuant to Section 401(k) or Section 125 of the Code), payments in lieu of notice, payments pursuant to a severance agreement, termination pay, moving allowances, relocation payments, or any amounts directly or indirectly paid pursuant to the 2020 ESPP or any other stock purchase, stock option or other stock-based compensation plan, or similar types of compensation.
Amounts deducted and accumulated from participant compensation are used to purchase shares of our common stock at the end of each offering period. Under the terms of the 2020 ESPP, the purchase price of the shares may be 85.0% of the lower of the fair market value of our common stock on the first trading day of the offering period or on the last day of the offering period. Participants may end their participation at any time during an offering period and will be paid their accrued payroll deductions that have not yet been used to purchase shares of common stock. Participation ends automatically upon termination of employment with us.
Each participant in any offering will have an option to purchase for each full month contained in the offering period a number of shares which shall be the lesser of (i) the number of shares determined by dividing $2,083.33 by the fair market value of a share of our common stock on the first day of the offering period or (ii) 250 shares, and except as limited in order to comply with Section 423 of the Code. Prior to the beginning of any offering period, the Compensation Committee, as administrator of the 2020 ESPP, may alter the maximum number of shares that may be purchased by any participant during the offering period or specify a maximum aggregate number of shares that may be purchased by all participants in the offering period. If insufficient shares remain available under the plan to permit all participants to purchase the number of shares to which they would otherwise be entitled, the administrator will make a pro rata allocation of the available shares. Any amounts withheld from participants’ compensation in excess of the amounts used to purchase shares will be refunded, without interest.
A participant may not transfer rights granted under the 2020 ESPP other than by will, the laws of descent and distribution or as otherwise provided under the 2020 ESPP.
As further discussed below, in the event of a change in control, an acquiring or successor corporation may assume our rights and obligations under outstanding purchase rights or substitute substantially equivalent purchase rights. If the acquiring or successor corporation does not assume or substitute for outstanding purchase rights, then the purchase date of the offering periods then in progress will be accelerated to a date prior to the change in control.
Our 2020 ESPP will continue in effect until terminated by the Compensation Committee. The Compensation Committee has the authority to amend, suspend or terminate our 2020 ESPP as described below.
Purpose
The purpose of the 2020 ESPP is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward our eligible employees and by motivating such persons to contribute to the growth and profitability of the Company. The 2020 ESPP provides such eligible employees with an opportunity to acquire a proprietary interest in the Company through the purchase of common stock.
Valuation
On the Record Date, the fair market value per share of our common stock was $35.20, which was the closing price per share of our common stock on such date.
New Plan Benefits
While all of our employees employed by us for at least 20 hours per week who work more than five months in any calendar year will be eligible to participate in the 2020 ESPP and could purchase as much $25,000 worth of our common stock in a particular year, the actual amount or value of shares purchased by any given employee or group of employees is not determinable because it depends on the elections of each employee who chooses to participate. Therefore, it is not possible to determine the benefits that will be received in the future by participants in the 2020 ESPP or the benefits that would have been received by such participants if the 2020 ESPP had been in effect in the year ended December 31, 2019. Therefore, a New Plan Benefits table has not been provided.
Participant Withdrawal or Termination
A participant may withdraw from the 2020 ESPP by signing and delivering to our office or representative designated by us a written or electronic notice of withdrawal on a form provided by us for this purpose. Such withdrawal may be elected at any time prior to the end of an offering period; provided, however, that if a participant withdraws from the 2020 ESPP after a purchase date, the withdrawal shall not affect shares of common stock acquired by the participant on such purchase date. A participant who voluntarily withdraws from the 2020 ESPP is prohibited from resuming participation in the 2020 ESPP in the same offering from which he or she withdrew, but may participate in any subsequent offering by again satisfying the requirements of the 2020 ESPP. We may impose, from time to time, a requirement that the notice of withdrawal from the 2020 ESPP be on file with our office or representative designated by us for a reasonable period prior to the effectiveness of the participant’s withdrawal.
Upon a participant’s voluntary withdrawal from the 2020 ESPP, the participant’s accumulated 2020 ESPP account balance which has not been applied toward the purchase of shares of common stock shall be refunded to the participant as soon as practicable after the withdrawal, without the payment of any interest, and the participant’s interest in the 2020 ESPP and the offering shall terminate. Such amounts to be refunded may not be applied to any other offering under the 2020 ESPP.
Change in Control
In the event of a “Change in Control” (as defined in the 2020 ESPP) of the Company, the surviving, continuing, successor, or purchasing corporation or parent thereof, as the case may be (the “Acquiring Corporation”), may, without the consent of any participant, assume or continue our rights and obligations under outstanding purchase rights or substitute substantially equivalent purchase rights for the Acquiring Corporation’s stock. If the Acquiring Corporation elects not to assume, continue or substitute for the outstanding purchase rights, the purchase date of the then current offering period shall be accelerated to a date before the date of the Change in Control specified by the Compensation Committee, but the number of shares of common stock subject to outstanding purchase rights shall not be adjusted. All purchase rights which are neither assumed or continued by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control.
Amendment or Termination of the 2020 ESPP
The Compensation Committee, as administrator of the 2020 ESPP, may at any time amend, suspend or terminate the 2020 ESPP, except that (a) no such amendment, suspension or termination shall affect purchase rights previously granted under the 2020 ESPP unless expressly provided by the Compensation Committee, and (b) no such amendment, suspension or termination may adversely affect a purchase right previously granted under the 2020 ESPP without the consent of the participant, except to the extent permitted by the 2020 ESPP or as may be necessary to qualify the 2020 ESPP as an employee stock purchase plan pursuant to Section 423 of the Code or to comply with any applicable law, regulation or rule. In addition, an amendment to the 2020 ESPP must be approved by the stockholders of the Company within twelve months of the adoption of such amendment if such amendment would authorize the sale of more shares than are then authorized for issuance under the 2020 ESPP or would change the definition of the corporations that may be designated by the Compensation Committee as “Participating Companies” (as defined in the 2020 ESPP). Notwithstanding the foregoing, in the event that the Compensation Committee determines that continuation of the 2020 ESPP Plan or an offering would result in unfavorable financial accounting consequences to us, the Compensation Committee may, in its discretion and without the consent of any participant, including with respect to an offering period then in progress: (i) terminate the 2020 ESPP or any offering period, (ii) accelerate the purchase date of any offering period, (iii) reduce the discount or the method of determining the purchase price in any offering period (e.g., by determining the purchase price solely on the basis of the “Fair Market Value” (as defined in the 2020 ESPP) on the purchase date), (iv) reduce the maximum number of shares of common stock that may be purchased in any offering period, or (v) take any combination of the foregoing actions.
54
Federal Income Tax Consequences Relating to the 2020 ESPP
The following is a summary of the principal U.S. federal income tax consequences generally applicable to awards made to a U.S. employee under the 2020 ESPP. It does not describe all federal tax consequences under the 2020 ESPP, nor does it describe state or local tax consequences.
The 2020 ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. Amounts withheld from pay under the 2020 ESPP are taxable income to participating employees in the year in which the amounts otherwise would have been received, but the participating employees will not be required to recognize additional income for federal income tax purposes either at the time the employee is deemed to have been granted a right to purchase common stock (on the first day of an offering period) or when the right to purchase common stock is exercised (on the last day of the purchase period).
If the participating employee holds the common stock purchased under the 2020 ESPP for at least two years after the first day of the offering period in which the common stock was acquired (the “Grant Date”) and for at least one year after the date the common stock is purchased, when the participating employee disposes of the common stock, he or she will recognize as ordinary income an amount equal to the lesser of:
If the participating employee disposes of the common stock within two years after the Grant Date or within one year after the date the common stock is purchased, he or she will recognize ordinary income equal to the fair market value of the common stock on the last day of the purchase period in which the common stock was acquired less the amount paid for the common stock. The ordinary income recognition pertains to any disposition of common stock acquired under the 2020 ESPP (such as by sale, exchange or gift).
Upon disposition of the common stock acquired under the 2020 ESPP, any gain realized in excess of the amount reported as ordinary income will be reportable by the participating employee as a capital gain, and any loss will be reportable as a capital loss. Amounts required to be reported as ordinary income on the disposition of the common stock may be added to the purchase price in determining any remaining capital gain or loss. Capital gain or loss will be long-term if the employee has satisfied the two-year holding period requirement described above or, in any event, if the employee has held the common stock for at least one year. Otherwise, the capital gain or loss will be short-term.
If the participating employee satisfies the two-year holding period for common stock purchased under the 2020 ESPP, we will not receive any deduction for federal income tax purposes with respect to that common stock or the right under which it was purchased. If the employee does not satisfy the two-year holding period, we will be entitled to a deduction in an amount equal to the amount that is considered ordinary income. Otherwise, the 2020 ESPP has no tax effect on the Company.
If the exercise of a purchase right does not constitute an exercise pursuant to an “employee stock purchase plan” under section 423 of the Code, the exercise of the purchase right will be treated as the exercise of a nonstatutory stock option. The participant would therefore recognize ordinary income on the purchase date equal to the excess of the fair market value of the shares acquired over the purchase price. Such income is subject to withholding of income and employment taxes. Any gain or loss recognized on a subsequent sale of the shares, as measured by the difference between the sale proceeds and the sum of (i) the purchase price for such shares and (ii) the amount of ordinary income recognized on the exercise of the purchase right, will be treated as a capital gain or loss, as the case may be.
Vote Required for Approval
We are asking our stockholders to approve the 2020 ESPP. A copy of the 2020 ESPP is included as Appendix B to this Proxy Statement.
Approval of the 2020 ESPP by the stockholders of the Company will require the affirmative vote of a majority of the shares of common stock voted on the matter. Under Delaware law and our Bylaws, abstentions are counted as votes cast, and therefore have the same effect as votes against approval of the 2020 ESPP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF OUR 2020 EMPLOYEE STOCK PURCHASE PLAN
* * *
PROPOSAL NO. 6 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee appointed Marcum LLP as our independent registered public accounting firm for 2020. Marcum LLP served as our independent registered public accounting firm and audited our consolidated financial statements for our fiscal years ended December 31, 2019, 2018, 2017, and 2016. Representatives of Marcum LLP are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions.
At the Annual Meeting, our stockholders are being asked to ratify the appointment of Marcum LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2019. Our Audit Committee is submitting the appointment of Marcum LLP to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. Notwithstanding this appointment of Marcum LLP as our independent registered public accounting firm, and even if our stockholders ratify that appointment, our Audit Committee, in its discretion, may appoint another independent registered public accounting firm at any time during our 2018 fiscal year if our Audit Committee believes that such a change would be in the best interests of our Company and our stockholders.
If our stockholders do not ratify the appointment of Marcum LLP, our Audit Committee may reconsider the appointment.
Fees Paid to the Independent Registered Public Accounting Firm
The following table presents fees for professional audit services and other services rendered to our Company by Marcum LLP for our fiscal years ended December 31, 2019 and 2018, respectively.
2019 | 2018 | |||||||
Audit fees: | $ | 423,601 | $ | 375,965 | ||||
Audit related fees: | $ | - | $ | - | ||||
Tax fees: | $ | - | $ | - | ||||
All other fees: | $ | - | $ | - | ||||
Total | $ | 423,601 | $ | 375,965 |
In the above table, “audit fees” are fees for professional services for the audit of the Company’s financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and the fiscal year ended December 31, 2018, including internal control attestations, and review of financial statements included in its quarterly reports on Form 10-Q and for services that are normally provided in connection with regulatory filings and public offerings. “Audit-related fees” represent fees for professional services for assurance and related services that are reasonably related to the performance of the audit or review of financial statements and that are not reported under the “audit fees” category. “Tax fees” are fees for tax compliance, tax advice and tax planning.
Our Audit Committee of our Board of Directors considered whether the provision of the services described above for the fiscal years ended December 31, 2019 and 2018, is compatible with maintaining the auditor’s independence. All audit and non-audit services that may be provided by our principal accountant to us require pre-approval by the Audit Committee of our Board of Directors. Further, our auditor shall not provide those services to us specifically prohibited by theFISCAL YEAR 2021 ANNUAL REPORT AND SEC including bookkeeping or other services related to the accounting records or financial statements of the audit client; financial information systems design and implementation; appraisal or valuation services, fairness opinion, or contribution-in-kind reports; actuarial services; internal audit outsourcing services; management functions; human resources; broker-dealer, investment adviser, or investment banking services; legal services and expert services unrelated to the audit; and any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.
Auditor Independence
In our fiscal year ended December 31, 2019, there were no other professional services provided by Marcum LLP that would have required our audit committee to consider their compatibility with maintaining the independence of Marcum LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT
OF MARCUM LLP
* * *
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our Company’s executive officers and directors, and persons who own more than 10% of a registered class of our Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater than 10% stockholders are required by SEC regulations to furnish our Company with copies of all Section 16(a) forms they file.
SEC regulations require us to identify in this proxy statement anyone who filed a required report late during the most recent fiscal year. Based solely on our review of forms we received, or written representations from reporting persons stating that they were not required to file these forms, we believe that during the fiscal year ended December 31, 2019, all filings required under Section 16(a) of the Exchange Act, were filed in a timely manner, with the exception of monthly Forms 4 for our Chief Executive Officer that were required to be filed to report shares disposed of by the Company in accordance with the terms of the grant of the Restricted Stock Units (“RSUs”) dated June 1, 2016, to satisfy federal and state tax withholding and payment obligations resulting from the vesting and settlement of RSUs. Our Chief Executive Officer did not receive or sell any of the shares reported in these monthly Forms 4; these shares were withheld and subsequently canceled by the Company in accordance with the foregoing. The grant of the RSUs was previously reported in Table I of our Chief Executive Officer’s initial Form 4 reporting the acquisition of common stock pursuant to the June 1, 2016 grant.
Fiscal Year 2019 Annual Report and SEC Filings
Our financial statements for our fiscal year ended December 31, 20192021, are included in our 20192021 Annual Report, which we will make available to stockholders at the same time as this proxy statement. This proxy statement and our annual report are posted on our website at www.iovance.com and are also available from the SEC at its website at www.sec.gov. You may also obtain a copy of our annual report without charge by sending a written request to the Corporate Secretary, at Iovance Biotherapeutics, Inc., 999 Skyway825 Industrial Road, Suite 150,400, San Carlos, California 94070.
|
57
(g) “Change in Control” means, in the case of a particular Award, unless the applicable Award Agreement (or any employment, consulting, change-in-control, severance or other agreement between the Participant and the Company or any of its Affiliates) states otherwise, the first to occur of any of the following events:
(i) “Committee” means the Compensation Committee of the Board or a subcommittee thereof if required with respect to actions taken to comply with Rule 16b-3 promulgated under the Exchange Act in respect of Awards or, if no such Compensation Committee or subcommittee thereof exists, or if the Board otherwise takes action hereunder on behalf of the Committee, the Board.
(aa) “Permitted Transferee” has the meaning set forth in Section 14(b)(ii) of the Plan.
(b) The Committee may delegate all or any portion of its responsibilities and powers to any persons selected by it, except for grants of Awards to persons who are non-employee members of the Board or are otherwise subject to Section 16 of the Exchange Act. Any such delegation may be revoked by the Committee at any time.
(c) Share Counting. The Share Pool shall be reduced, on the date of grant, by the relevant number of shares of Common Stock for each Award granted under the Plan that is valued by reference to a share of Common Stock; provided that Awards that are valued by reference to shares of Common Stock but are required to be paid in cash pursuant to their terms shall not reduce the Share Pool. If and to the extent that Awards originating from the Share Pool terminate, expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised, vested, or settled, the shares of Common Stock subject to such Awards shall again be available for Awards under the Share Pool. Notwithstanding the foregoing, the following shares of Common Stock shall not become available for issuance under the Plan: (i) shares of Common Stock tendered by Participants, or withheld by the Company, as full or partial payment to the Company upon the exercise of Stock Options granted under the Plan; (ii) shares of Common Stock reserved for issuance upon the grant of Stock Appreciation Rights, to the extent that the number of reserved shares of Common Stock exceeds the number of shares of Common Stock actually issued upon the exercise of the Stock Appreciation Rights; and (iii) shares of Common Stock withheld by, or otherwise remitted to, the Company to satisfy a Participant’s tax withholding obligations upon the lapse of restrictions on, settlement of, or exercise of Awards granted under the Plan.
(e) Notification upon Disqualifying Disposition of an Incentive Stock Option. Each Participant awarded an Incentive Stock Option under the Plan shall notify the Company in writing immediately after the date on which the Participant makes a disqualifying disposition of any Common Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including, without limitation, any sale) of such Common Stock before the later of (i) two years after the date of grant of the Incentive Stock Option and (ii) one year after the date of exercise of the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures established by the Committee, retain possession, as agent for the applicable Participant, of any Common Stock acquired pursuant to the exercise of an Incentive Stock Option until the end of the period described in the preceding sentence, subject to complying with any instruction from such Participant as to the sale of such Common Stock.
(d) Method of Exercise. SARs may be exercised by delivery of written or electronic notice of exercise to the Company or its designee (including a third-party administrator) in accordance with the terms of the Award, specifying the number of SARs to be exercised and the date on which such SARs were awarded.
(ii) Unless otherwise provided by the Committee in an Award Agreement, upon the expiration of the Restricted Period and the attainment of any other vesting criteria established by the Committee, with respect to any outstanding Restricted Stock Units, the Company shall deliver to the Participant, or such Participant’s beneficiary (via book-entry notation or, if applicable, in stock certificate form), one share of Common Stock (or other securities or other property, as applicable) for each such outstanding Restricted Stock Unit that has not then been forfeited and with respect to which the Restricted Period has expired and any other such vesting criteria are attained (“Released Unit”); provided, however, that the Committee may elect to (A) pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock in respect of such Released Units or (B) establish a program for deferred delivery of Common Stock (or cash or part Common Stock and part cash, as the case may be) beyond the expiration of the Restricted Period in compliance with Section 409A of the Code. If a cash payment is made in lieu of delivering shares of Common Stock, the amount of such payment shall be equal to the Fair Market Value of the Common Stock as of the date on which the shares of Common Stock would have otherwise been delivered to the Participant in respect of such Restricted Stock Units.
(ii) providing for a substitution or assumption of Awards (or awards of an acquiring company), accelerating the delivery, vesting and/or exercisability of, lapse of restrictions and/or other conditions on, or termination of, Awards or providing for a period of time (which shall not be required to be more than ten (10) days) for Participants to exercise outstanding Awards prior to the occurrence of such event (and any such Award not so exercised shall terminate or become no longer exercisable upon the occurrence of such event); and
(b) Amendment of Award Agreements. The Committee may, to the extent not inconsistent with the terms of any applicable Award Agreement or the Plan, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted or the associated Award Agreement, prospectively or retroactively (including after the Participant’s termination of employment or service with the Company); provided, that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant with respect to any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant unless the Committee determines that such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination is either required or advisable in order for the Company, the Plan or the Award to satisfy any applicable law or regulation; and provided, further, that except as otherwise permitted under Section 11 of the Plan, if (i) the Committee reduces the Exercise Price of any Option or the Strike Price of any SAR, (ii) the Committee cancels any outstanding Option or SAR and replaces it with a new Option or SAR (with a lower Exercise Price or Strike Price, as the case may be) or other Award or cash in a manner that would either (A) be reportable on the Company’s proxy statement or Form 10-K (if applicable) as Options that have been “repriced” (as(as such term is used in Item 402 of Regulation S-K promulgated under the Exchange Act), or (B) result in any “repricing” for financial statement reporting purposes (or otherwise cause the Award to fail to qualify for equity accounting treatment), (iii) the Committee takes any other action that is considered a “repricing” for purposes of the stockholder approval rules of the applicable securities exchange or inter-dealer quotation service on which the Common Stock is listed or quoted, or (iv) the Committee cancels any outstanding Option or SAR that has a per-share Exercise Price or Strike Price (as applicable) at or above the Fair Market Value of a share of Common Stock on the date of cancellation, and pays any consideration to the holder thereof, whether in cash, securities, or other property, or any combination thereof, then, in the case of the immediately preceding clauses (i) through (iv), any such action shall not be effective without stockholder approval.
(iii) The terms of any Award transferred in accordance with the immediately preceding paragraph shall apply to the Permitted Transferee, and any reference in the Plan, or in any applicable Award Agreement, to the Participant shall be deemed to refer to the Permitted Transferee, except that (A) Permitted Transferees shall not be entitled to transfer any Award, other than by will or the laws of descent and distribution; (B) Permitted Transferees shall not be entitled to exercise any transferred Option unless there shall be in effect a registration statement on an appropriate form covering the shares of Common Stock to be acquired pursuant to the exercise of such Option if the Committee determines, consistent with any applicable Award Agreement, that such a registration statement is necessary or appropriate; (C) the Committee or the Company shall not be required to provide any notice to a Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Participant under the Plan or otherwise; (D) the consequences of the termination of the Participant’s employment by, or services to, the Company or an Affiliate under the terms of the Plan and the applicable Award Agreement shall continue to be applied with respect to the transferred Award, including, without limitation, that an Option shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the applicable Award Agreement; and (E) any non-competition, non-solicitation, non-disparagement, non-disclosure, or other restrictive covenants contained in any Award Agreement or other agreement between the Participant and the Company or any Affiliate shall continue to apply to the Participant and the consequences of the violation of such covenants shall continue to be applied with respect to the transferred Award, including without limitation the clawback and forfeiture provisions of Section 14(v) of the Plan.
(f) International Participants. With respect to Participants who reside or work outside of the United States, the Committee may amend the terms of the Plan or appendices thereto, or outstanding Awards, with respect to such Participants, in order to conform such terms with or accommodate the requirements of local laws, procedures or practices or to obtain more favorable tax or other treatment for the Participant, the Company or its Affiliates. Without limiting the generality of this subsection, the Committee is specifically authorized to adopt rules, procedures and sub-plans with provisions that limit or modify rights on death, disability, retirement or other terminations of employment, available methods of exercise or settlement of an Award, payment of income, social insurance contributions or payroll taxes, withholding procedures and handling of any stock certificates or other indicia of ownership that vary with local requirements. The Committee may also adopt rules, procedures or sub-plans applicable to particular Affiliates or locations.
(iii) The Committee may cancel an Award or any portion thereof if it determines that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of shares of Common Stock from the public markets, the Company’s issuance of Common Stock to the Participant, the Participant’s acquisition of Common Stock from the Company and/or the Participant’s sale of Common Stock to the public markets illegal, impracticable or inadvisable. If the Committee determines to cancel all or any portion of an Award in accordance with the foregoing, unless prevented by applicable laws, the Company shall pay to the Participant an amount equal to the excess of (A) the aggregate Fair Market Value of the shares of Common Stock subject to such Award or portion thereof canceled (determined as of the applicable exercise date, or the date that the shares would have been vested or delivered, as applicable), over (B) the aggregate Exercise Price or Strike Price (in the case of an Option or SAR, respectively) or any amount payable as a condition of delivery of shares of Common Stock (in the case of any other Award). Such amount shall be delivered to the Participant as soon as practicable following the cancellation of such Award or portion thereof.
(r) Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws thereof, or principles of conflicts of laws of any other jurisdiction that could cause the application of the laws of any jurisdiction other than the State of Delaware.
(x) No Interference. The existence of the Plan, any Award Agreement, and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company, the Board, the Committee, or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants, or rights to purchase stock or of bonds, debentures, or preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or that are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company or any Affiliate, or any sale or transfer of all or any part of their assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
APPENDIX B
IOVANCE BIOTHERAPEUTICS, INC.
2020 EMPLOYEE STOCK PURCHASE PLAN
1. Establishment, Purpose and Term of Plan.
1.1 Establishment. The Iovance Biotherapeutics, Inc. 2020 Employee Stock Purchase Plan (the “Plan”) is hereby established effective as of ________, 2020, the date of its approvaladopted by the stockholders of the Company (the “Effective Date”).
1.2 Purpose. The purpose of the Plan is to advance the interests of the Companyon June 8, 2020, and its stockholdersas further amended by providing an incentive to attract, retain and reward Eligible Employees of the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group. The Plan provides such Eligible Employees with an opportunity to acquire a proprietary interest in the Company through the purchase of Stock. The Company intends that the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code (including any amendments or replacements of such section), and the Plan shall be so construed.
1.3 Term of Plan. The Plan shall continue in effect until its termination by the Committee.
2. Definitions and Construction.
2.1 Definitions. Any term not expressly defined in the Plan but defined for purposes of Section 423 of the Code shall have the same definition herein. Whenever used herein, the following terms shall have their respective meanings set forth below:
(a) “Board” means the Board of Directors on March 7, 2022.
(b) “Change in Control” means the occurrence of any one orDirectors recommends a combination ofvote "FOR" the following:
(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total Fair Market Value or total combined voting power of the Company’s then-outstanding securities entitled to vote generally 1. To elect six directors named in the electionproxy statement accompanying this notice to serve until the 2023 Annual Meeting of Directors; provided, however, that a Change in Control shall not be deemed to have occurred if such degree of beneficial ownership results from any of the following: (A) an acquisition by any person who on the Effective Date is the beneficial owner of more than fifty percent (50%) of such voting power, (B) any acquisition directly from the Company, including, without limitation, pursuant to or in connection with a public offering of securities, (C) any acquisition by the Company, (D) any acquisition by a trustee or other fiduciary under an employee benefit plan of a Participating Company or (E) any acquisition by an entity owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the voting securities of the Company; or
(ii) an Ownership Change Event or series of related Ownership Change Events (collectively, a “Transaction”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding securities entitled to vote generally in the electionStockholders; The Board of Directors or, inrecommends that you vote FOR the caseproposals 2, 3 and 4. FOR AGAINST ABSTAIN 2. To approve, by non-binding advisory vote, the compensation of our named executive officers; DOD Election of Directors FOR WITHHOLD ALL D FOR ALL ALL D EXCEPT (1) (2) (3) (4) (5) (6) lain Dukes, D. Phil. Athena Countouriotis, M.D. Ryan Maynard Merrill A.McPeak Wayne P. Rothbaum Michael Weiser, M.D., Ph.D. D 3. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2022; and FOR AGAINST ABSTAIN DOD 4. To approve an Ownership Change Event described in Section 2.1(p)(iii), the entityamendment to which the assets of the Company were transferredour 2018 Equity Incentive Plan (the “Transferee”"2018 Plan"), as the case may be; or
(iii) approval by the stockholders of a plan of complete liquidation or dissolution of the Company;
provided, however, that a Change in Control shall be deemed not to include a transaction described in subsections (i) or (ii) of this Section 2.1(b) in which a majority of the members of the board of directors of the continuing, surviving or successor entity, or parent thereof, immediately after such transaction is comprised of Incumbent Directors.
For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities. The Committee shall determine whether multiple acquisitions of the voting securities of the Company and/or multiple Ownership Change Events are related and to be treated in the aggregate as a single Change in Control, and its determination shall be final, binding and conclusive.
(c) “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.
(d) “Committee” means the Compensation Committee and such other committee or subcommittee of the Board, if any, duly appointed to administer the Plan and having such powers in each instance as shall be specified by the Board. If, at any time, there is no committee of the Board then authorized or properly constituted to administer the Plan, the Board shall exercise all of the powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise any or all of such powers.
(e) “Company” means Iovance Biotherapeutics, Inc., a Delaware corporation, or any successor corporation thereto.
(f) “Compensation” means, with respect to any Offering Period, regular base wages or salary, overtime payments, shift premiums and payments for paid time off, calculated before deduction of (i) any income or employment tax withholdings or (ii) any amounts deferred pursuant to Section 401(k) or Section 125 of the Code. Compensation shall be limited to such amounts actually payable in cash or deferred during the Offering Period. Compensation shall not include (i) sign-on bonuses, annual or other incentive bonuses, commissions, profit-sharing distributions or other incentive-type payments, (ii) any contributions made by a Participating Company on the Participant’s behalf to any employee benefit or welfare plan now or hereafter established (other than amounts deferred pursuant to Section 401(k) or Section 125 of the Code), (iii) payments in lieu of notice, payments pursuant to a severance agreement, termination pay, moving allowances, relocation payments, or (iv) any amounts directly or indirectly paid pursuant to the Plan or any other stock purchase, stock option or other stock-based compensation plan, or any other compensation not expressly included by this Section.
(g) “Eligible Employee” means an Employee who meets the requirements set forth in Section 5 for eligibility to participate in the Plan.
(h) “Employee” means a person treated as an employee of a Participating Company for purposes of Section 423 of the Code. A Participant shall be deemed to have ceased to be an Employee either upon an actual termination of employment or upon the corporation employing the Participant ceasing to be a Participating Company. For purposes of the Plan, an individual shall not be deemed to have ceased to be an Employee while on any military leave, sick leave, or other bona fide leave of absence approved by the Company of ninety (90) days or less. If an individual’s leave of absence exceeds ninety (90) days, the individual shall be deemed to have ceased to be an Employee on the ninety-first (91st) day of such leave unless the individual’s right to reemployment with the Participating Company Group is guaranteed either by statute or by contract.
(i) “Fair Market Value” means, as of any date:
(i) If, on such date, the Stock is listed or quoted on a national or regional securities exchange or quotation system, the closing price of a share of Stock as quoted on the national or regional securities exchange or quotation system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or quotation system, the date on which the Fair Market Value is established shall be the last day on which the Stock was so traded or quoted prior to the relevant date, or such other appropriate day as determined by the Committee, in its discretion.
(ii) If, on the relevant date, the Stock is not then listed on a national or regional securities exchange or quotation system, the Fair Market Value of a share of Stock shall be as determined in good faith by the Committee.
(j) “Incumbent Director” means a director who either (i) is a member of the Board as of the Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but excluding a director who was elected or nominated in connection with an actual or threatened proxy contest relating to the election of directors of the Company).
(k) “Non-United States Offering” means a separate Offering covering Eligible Employees of one or more Participating Companies whose Eligible Employees are subject to a prohibition under applicable law on payroll deductions, as described in Section 11.1(b).
(l) “Offering” means an offering of Stock pursuant to the Plan, as provided in Section 6.
(m) “Offering Date” means, for any Offering Period, the first day of such Offering Period.
(n) “Offering Period” means a period, established by the Committee in accordance with Section 6, during which an Offering is outstanding.
(o) “Officer” means any person designated by the Board as an officer of the Company.
(p) “Ownership Change Event” means the occurrence of any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of securities of the Company representing more than fifty percent (50%) of the total combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of Directors; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the Company).
(q) “Parent Corporation” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code.
(r) “Participant” means an Eligible Employee who has become a participant in an Offering Period in accordance with Section 7 and remains a participant in accordance with the Plan.
(s) “Participating Company” means the Company and any Parent Corporation or Subsidiary Corporation designated by the Committee as a corporation the Employees of which may, if Eligible Employees, participate in the Plan. The Committee shall have the discretion to determine from time to time which Parent Corporations or Subsidiary Corporations shall be Participating Companies. The Committee shall designate from time to time and set forth in Exhibit A to this Plan those Participating Companies whose Eligible Employees may participate in the Plan.
(t) “Participating Company Group” means, at any point in time, the Company and all other corporations collectively which are then Participating Companies.
(u) “Purchase Date” means, for any Offering Period, the last day of such Offering Period, or, if so determined by the Committee, the last day of each Purchase Period occurring within such Offering Period.
(v) “Purchase Period” means a period, established by the Committee in accordance with Section 6, included within an Offering Period and on the final date of which outstanding Purchase Rights are exercised.
(w) “Purchase Price” means the price at which a share of Stock may be purchased under the Plan, as determined in accordance with Section 9.
(x) “Purchase Right” means an option granted to a Participant pursuant to the Plan to purchase such shares of Stock as provided in Section 8, which the Participant may or may not exercise during the Offering Period in which such option is outstanding. Such option arises from the right of a Participant to withdraw any payroll deductions or other funds accumulated on behalf of the Participant and not previously applied to the purchase of Stock under the Plan, and to terminate participation in the Plan at any time during an Offering Period.
(y) “Securities Act” means the Securities Act of 1933, as amended.
(z) “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2.
(aa) “Subscription Agreement” means a written or electronic agreement, in such form as specified by the Company, stating an Employee’s election to participate in the Plan and authorizing payroll deductions under the Plan from the Employee’s Compensation or other method of payment authorized by the Committee pursuant to Section 11.1(b).
(bb) “Subscription Date” means the last business day prior to the Offering Date of an Offering Period or such earlier date as the Company shall establish.
(cc) “Subsidiary Corporation” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.
2.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.
3. Administration.
3.1 Administration by the Committee. The Plan shall be administered by the Committee. All questions of interpretation of the Plan, of any form of agreement or other document employed by the Company in the administration of the Plan, or of any Purchase Right shall be determined by the Committee, and such determinations shall be final, binding and conclusive upon all persons having an interest in the Plan or the Purchase Right, unless fraudulent or made in bad faith. Subject to the provisions of the Plan, the Committee shall determine all of the relevant terms and conditions of Purchase Rights; provided, however, that all Participants granted Purchase Rights pursuant to an Offering shall have the same rights and privileges within the meaning of Section 423(b)(5) of the Code. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or any agreement thereunder (other than determining questions of interpretation pursuant to the second sentence of this Section 3.1) shall be final, binding and conclusive upon all persons having an interest therein. All expenses incurred in connection with the administration of the Plan shall be paid by the Company.
3.2 Authority of Officers. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election that is the responsibility of or that is allocated to the Company herein, provided that the Officer has apparent authority with respect to such matter, right, obligation, determination or election.
3.3 Power to Adopt Sub-Plans or Varying Terms with Respect to Non-U.S. Employees. The Committee shall have the power, in its discretion, to adopt one or more sub-plans of the Plan as the Committee deems necessary or desirable to comply with the laws or regulations, tax policy, accounting principles or custom of foreign jurisdictions applicable to employees of a subsidiary business entity of the Company, provided that any such sub-plan shall not be within the scope of an “employee stock purchase plan” within the meaning of Section 423 of the Code. Any of the provisions of any such sub-plan may supersede the provisions of this Plan, other than Section 4. Except as superseded by the provisions of a sub-plan, the provisions of this Plan shall govern such sub-plan. Alternatively and in order to comply with the laws of a foreign jurisdiction, the Committee shall have the power, in its discretion, to grant Purchase Rights in an Offering to citizens or residents of a non-U.S. jurisdiction (without regard to whether they are also citizens of the United States or resident aliens) that provide terms which are less favorable than the terms of Purchase Rights granted under the same Offering to Employees resident in the United States.
3.4 Power to Establish Separate Offerings with Varying Terms. The Committee shall have the power, in its discretion, to establish separate, simultaneous or overlapping Offerings having different terms and conditions and to designate the Participating Company or Companies that may participate in a particular Offering, provided that each Offering shall individually comply with the terms of the Plan and the requirements of Section 423(b)(5) of the Code that all Participants granted Purchase Rights pursuant to such Offering shall have the same rights and privileges within the meaning of such section.
3.5 Policies and Procedures Established by the Company. Without regard to whether any Participant’s Purchase Right may be considered adversely affected, the Company may, from time to time, consistent with the Plan and the requirements of Section 423 of the Code, establish, change or terminate such rules, guidelines, policies, procedures, limitations, or adjustments as deemed advisable by the Company, in its discretion, for the proper administration of the Plan, including, without limitation, (a) a minimum payroll deduction amount required for participation in an Offering, (b) a limitation on the frequency or number of changes permitted in the rate of payroll deduction during an Offering, (c) an exchange ratio applicable to amounts withheld or paid in a currency other than United States dollars, (d) a payroll deduction greater than or less than the amount designated by a Participant in order to adjust for the Company’s delay or mistake in processing a Subscription Agreement or in otherwise effecting a Participant’s election under the Plan or as advisable to comply with the requirements of Section 423 of the Code, and (e) determination of the date and manner by which the Fair Market Value of a share of Stock is determined for purposes of administration of the Plan. All such actions by the Company shall be taken consistent with the requirements under Section 423(b)(5) of the Code that all Participants granted Purchase Rights pursuant to an Offering shall have the same rights and privileges within the meaning of such section, except as otherwise permitted by Section 3.3 and the regulations under Section 423 of the Code.
3.6 Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or the Committee or as officers or employees of the Participating Company Group, to the extent permitted by applicable law, members of the Board or the Committee and any officers or employees of the Participating Company Group to whom authority to act for the Board, the Committee or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.
4. Shares Subject to Plan.
4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Sections 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be 500,000 and shall consist of authorized but unissued or reacquired shares of Stock, or any combination thereof. If an outstanding Purchase Right for any reason expires or is terminated or canceled, the shares of Stock allocable to the unexercised portion of that Purchase Right shall again be available for issuance under the Plan.
4.2 Adjustments for Changes in Capital Structure. Subject to any required action by the stockholders of the Company and the requirements of Section 424 of the Code to the extent applicable, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting regular, periodic cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and kind of shares subject to the Plan, the Annual Increase, the limit on the shares which may be purchased by any Participant during an Offering (as described in Sections 8.1 and 8.2) and each Purchase Right, and in the Purchase Price in order to prevent dilution or enlargement of Participants’ rights under the Plan. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” If a majority of the shares which are of the same class as the shares that are subject to outstanding Purchase Rights are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another corporation (the “New Shares”), the Committee may unilaterally amend the outstanding Purchase Rights to provide that such Purchase Rights are for New Shares. In the event of any such amendment, the number of shares subject to, and the exercise price per share of, the outstanding Purchase Rights shall be adjusted in a fair and equitable manner as determined by the Committee, in its discretion. Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number, and in no event may the Purchase Price be decreased to an amount less than the par value, if any, of the stock subject to the Purchase Right. The adjustments determined by the Committee pursuant to this Section 4.2 shall be final, binding and conclusive.
5. Eligibility.
5.1 Employees Eligible to Participate. Each Employee of a Participating Company is eligible to participate in the Plan and shall be deemed an Eligible Employee, except the following:
(a) Any Employee who is customarily employed by the Participating Company Group for twenty (20) hours or less per week; or
(b) Any Employee who is customarily employed by the Participating Company Group for not more than five (5) months in any calendar year.
5.2 Exclusion of Certain Stockholders. Notwithstanding any provision of the Plan to the contrary, no Employee shall be treated as an Eligible Employee and granted a Purchase Right under the Plan if, immediately after such grant, the Employee would own, or hold options to purchase, stock of the Company or of any Parent Corporation or Subsidiary Corporation possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of such corporation, as determined in accordance with Section 423(b)(3) of the Code. For purposes of this Section 5.2, the attribution rules of Section 424(d) of the Code shall apply in determining the stock ownership of such Employee.
5.3 Determination by Company. The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee or an Eligible Employee and the effective date of such individual’s attainment or termination of such status, as the case may be. For purposes of an individual’s participation in or other rights, if any, under the Plan as of the time of the Company’s determination of whether or not the individual is an Employee, all such determinations by the Company shall be final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination as to such individual’s status as an Employee.
6. Offerings.
The Plan shall be implemented by sequential Offerings of approximately six (6) months’ duration or such other duration as the Committee shall determine. Offering Periods shall commence on or about the fifteenth (15th) days of June and December each year and end on or about the fourteenth (14th) day of the next December and June, respectively, occurring thereafter. Notwithstanding the foregoing, the Committee may establish additional or alternative concurrent, sequential or overlapping Offering Periods, a different duration for one or more Offering Periods or different commencing or ending dates for such Offering Periods; provided, however, that no Offering Period may have a duration exceeding twenty-seven (27) months. If the Committee shall so determine in its discretion, each Offering Period may consist of two (2) or more consecutive Purchase Periods having such duration as the Committee shall specify, and the last day of each such Purchase Period shall be a Purchase Date. If the first or last day of an Offering Period or a Purchase Period is not a day on which the principal stock exchange or quotation system on which the Stock is then listed is open for trading, the Company shall specify the trading day that will be deemed the first or last day, as the case may be, of the Offering Period or Purchase Period.
7. Participation in the Plan.
7.1 Initial Participation. An Eligible Employee may become a Participant in an Offering Period by delivering a properly completed written or electronic Subscription Agreement to the Company office or representative designated by the Company (including a third-party administrator designated by the Company) not later than the close of business on the Subscription Date established by the Company for that Offering Period. An Eligible Employee who does not deliver a properly completed Subscription Agreement in the manner permitted or required on or before the Subscription Date for an Offering Period shall not participate in the Plan for that Offering Period or for any subsequent Offering Period unless the Eligible Employee subsequently delivers a properly completed Subscription Agreement to the appropriate Company office or representative on or before the Subscription Date for such subsequent Offering Period. An Employee who becomes an Eligible Employee after the Offering Date of an Offering Period shall not be eligible to participate in that Offering Period but may participate in any subsequent Offering Period provided the Employee is still an Eligible Employee as of the Offering Date of such subsequent Offering Period.
7.2 Continued Participation. A Participant shall automatically participate in the next Offering Period commencing immediately after the final Purchase Date of each Offering Period in which the Participant participates provided that the Participant remains an Eligible Employee on the Offering Date of the new Offering Period and has not either (a) withdrawn from the Plan pursuant to Section 12.1, or (b) terminated employment or otherwise ceased to be an Eligible Employee as provided in Section 13. A Participant who may automatically participate in a subsequent Offering Period, as provided in this Section, is not required to deliver any additional Subscription Agreement for the subsequent Offering Period in order to continue participation in the Plan. However, a Participant may deliver a new Subscription Agreement for a subsequent Offering Period in accordance with the procedures set forth in Section 7.1 if the Participant desires to change any of the elections contained in the Participant’s then effective Subscription Agreement.
8. Right to Purchase Shares.
8.1 Grant of Purchase Right. Except as otherwise provided below, on the Offering Date of each Offering Period, each Participant in such Offering Period shall be granted automatically a Purchase Right consisting of an option to purchase the lesser of (a) that number of whole shares of Stock determined by dividing the Dollar Limit (determined as provided below) by the Fair Market Value of a share of Stock on such Offering Date or (b) the Share Limit (determined as provided below). The Committee may, in its discretion and prior to the Offering Date of any Offering Period, (i) change the method of, or any of the foregoing factors in, determiningincrease the number of shares of Stock subjectthe Company's common stock authorized for issuance thereunder from 14,000,000 shares to Purchase Rights20,700,000 shares. FOR AGAINST ABSTAIN DOD (Instruction: To withhold authority to be granted on such Offering Date, or (ii) specify a maximum aggregate number of shares that may be purchased by all Participants in an Offering or onvote for any Purchase Date within an Offering Period. No Purchase Right shall be granted on an Offering Date to any person who is not, on such Offering Date, an Eligible Employee. Forindividual nominee, mark "For All Except" and write the purposes of this Section, the“Dollar Limit” shall be determined by multiplying $2,083.33 by the number of months (rounded to the nearest whole month) in the Offering Period and rounding to the nearest whole dollar, and the“Share Limit” shall be determined by multiplying 250 shares by the number of months (rounded to the nearest whole month) in the Offering Period and rounding to the nearest whole share.
8.2 Calendar Year Purchase Limitation. Notwithstanding any provision of the Plan to the contrary, no Participant shall be granted a Purchase Right which permits his or her right to purchase shares of Stock under the Plan to accrue at a rate which, when aggregated with such Participant’s rights to purchase shares under all other employee stock purchase plans of a Participating Company intended to meet the requirements of Section 423 of the Code, exceeds Twenty-Five Thousand Dollars ($25,000) in Fair Market Value (or such other limit, if any, as may be imposed by the Code) for each calendar year in which such Purchase Right is outstanding at any time. For purposes of the preceding sentence, the Fair Market Value of shares purchased during a given Offering Period shall be determined as of the Offering Date for such Offering Period. The limitation described in this Section shall be applied in conformance with Section 423(b)(8) of the Code and the regulations thereunder.
9. Purchase Price.
The Purchase Price at which each share of Stock may be acquired in an Offering Period upon the exercise of all or any portion of a Purchase Right shall be established by the Committee; provided, however, that the Purchase Price on each Purchase Date shall not be less than eighty-five percent (85%) of the lesser of (a) the Fair Market Value of a share of Stocknominee's name on the Offeringline below) CONTROL NUMBER Signature Signature, if held jointly Date 2022 Note: Please s1gn exactly as name appears hereon. When shares are held by JOint owners, both should s1gn. When s1gn1ng as attorney, executor, admm1strator. trustee. guardian, or corporate officer, please give title as such. PLEASE DO NOT RETURN THE PROXY CARD IF YOU ARE VOTING ELECTRONICALLY.
10. Accumulation of Purchase Price through Payroll Deduction.
Except as provided in Section 11.1(b) with respect to a Non-United States Offering, shares of Stock acquired pursuant to the exercise of all or any portion of a Purchase Right may be paid for only by means of payroll deductions from the Participant’s Compensation accumulated during the Offering Period for which such Purchase Right was granted, subject to the following:
10.1 Amount of Payroll Deductions. Except as otherwise provided herein, the amount to be deducted under the Plan from a Participant’s Compensation on each pay day during an Offering Period shall be determined by the Participant’s Subscription Agreement. The Subscription Agreement shall set forth the percentage of the Participant’s Compensation to be deducted on each pay day during an Offering Period in whole percentages of not less than one percent (1%) (except as a result of an election pursuant to Section 10.3 to stop payroll deductions effective following the first pay day during an Offering) or more than twenty percent (20%). The Committee may change the foregoing limits on payroll deductions effective as of any Offering Date.
10.2 Commencement of Payroll Deductions. Payroll deductions shall commence on the first pay day following the Offering Date and shall continue to the end of the Offering Period unless sooner altered or terminated as provided herein.
10.3 Election to Decrease or Stop Payroll Deductions. During an Offering Period, a Participant may elect to decrease the rate of or to stop deductions from his or her Compensation by delivering to the Company office or representative designated by the Company (including a third-party administrator designated by the Company) an amended Subscription Agreement authorizing such change on or before the “Change Notice Date.” The “Change Notice Date” shall be a date prior to the beginning of the first pay period for which such election is to be effective as established by the Company from time to time and announced to the Participants. A Participant who elects, effective following the first pay day of an Offering Period, to decrease the rate of his or her payroll deductions to zero percent (0%) shall nevertheless remain a Participant in such Offering Period unless the Participant withdraws from the Plan as provided in Section 12.1.
10.4 Administrative Suspension of Payroll Deductions. The Company may, in its discretion, suspend a Participant’s payroll deductions under the Plan as the Company deems advisable to avoid accumulating payroll deductions in excess of the amount that could reasonably be anticipated to purchase the maximum number of shares of Stock permitted (a) under the Participant’s Purchase Right or (b) during a calendar year under the limit set forth in Section 8.2. Unless the Participant has either withdrawn from the Plan as provided in Section 12.1 or has ceased to be an Eligible Employee, suspended payroll deductions shall be resumed at the rate specified in the Participant’s then effective Subscription Agreement either (i) at the beginning of the next Offering Period if the reason for suspension was clause (a) in the preceding sentence, or (ii) at the beginning of the next Offering Period having a first Purchase Date that falls within the subsequent calendar year if the reason for suspension was clause (b) in the preceding sentence.
10.5 Participant Accounts. Individual bookkeeping accounts shall be maintained for each Participant. All payroll deductions from a Participant’s Compensation (and other amounts received from a non-United States Participant pursuant to Section 11.1(b)) shall be credited to such Participant’s Plan account and shall be deposited with the general funds of the Company. All such amounts received or held by the Company may be used by the Company for any corporate purpose.
10.6 No Interest Paid. Interest shall not be paid on sums deducted from a Participant’s Compensation pursuant to the Plan or otherwise credited to the Participant’s Plan account.
11. Purchase of Shares.
11.1 Exercise of Purchase Right.
(a) Generally. Except as provided in Section 11.1(b), on each Purchase Date of an Offering Period, each Participant who has not withdrawn from the Plan and whose participation in the Offering has not otherwise terminated before such Purchase Date shall automatically acquire pursuant to the exercise of the Participant’s Purchase Right the number of whole shares of Stock determined by dividing (a) the total amount of the Participant’s payroll deductions accumulated in the Participant’s Plan account during the Offering Period and not previously applied toward the purchase of Stock by (b) the Purchase Price. However, in no event shall the number of shares purchased by the Participant during an Offering Period exceed the number of shares subject to the Participant’s Purchase Right. No shares of Stock shall be purchased on a Purchase Date on behalf of a Participant whose participation in the Offering or the Plan has terminated before such Purchase Date.
(b) Purchase by Non-United States Participants for Whom Payroll Deductions Are Prohibited by Applicable Law. Notwithstanding Section 11.1(a), where payroll deductions on behalf of Participants who are citizens or residents of countries other than the United States (without regard to whether they are also citizens of the United States or resident aliens) are prohibited by applicable law, the Committee may establish a separate Offering (a “Non-United States Offering”) covering all Eligible Employees of one or more Participating Companies subject to such prohibition on payroll deductions. The Non-United States Offering shall provide another method for payment of the Purchase Price with such terms and conditions as shall be administratively convenient and comply with applicable law. On each Purchase Date of the Offering Period applicable to a Non-United States Offering, each Participant who has not withdrawn from the Plan and whose participation in such Offering Period has not otherwise terminated before such Purchase Date shall automatically acquire pursuant to the exercise of the Participant’s Purchase Right a number of whole shares of Stock determined in accordance with Section 11.1(a) to the extent of the total amount of the Participant’s Plan account balance accumulated during the Offering Period in accordance with the method established by the Committee and not previously applied toward the purchase of Stock. However, in no event shall the number of shares purchased by a Participant during such Offering Period exceed the number of shares subject to the Participant’s Purchase Right. The Company shall refund to a Participant in a Non-United States Offering in accordance with Section 11.4 any excess Purchase Price payment received from such Participant.
11.2 Pro Rata Allocation of Shares. If the number of shares of Stock which might be purchased by all Participants on a Purchase Date exceeds the number of shares of Stock remaining available for issuance under the Plan or the maximum aggregate number of shares of Stock that may be purchased on such Purchase Date pursuant to a limit established by the Committee pursuant to Section 8.1, the Company shall make a pro rata allocation of the shares available in as uniform a manner as practicable and as the Company determines to be equitable. Any fractional share resulting from such pro rata allocation to any Participant shall be disregarded.
11.3 Delivery of Title to Shares. Subject to any governing rules or regulations, as soon as practicable after each Purchase Date, the Company shall issue or cause to be issued to or for the benefit of each Participant the shares of Stock acquired by the Participant on such Purchase Date by means of one or more of the following: (a) by delivering to the Participant evidence of book entry shares of Stock credited to the account of the Participant, (b) by depositing such shares of Stock for the benefit of the Participant with any broker with which the Participant has an account relationship, or (c) by delivering such shares of Stock to the Participant in certificate form.
11.4 Return of Plan Account Balance. Any cash balance remaining in a Participant’s Plan account following any Purchase Date shall be refunded to the Participant as soon as practicable after such Purchase Date. However, if the cash balance to be returned to a Participant pursuant to the preceding sentence is less than the amount that would have been necessary to purchase an additional whole share of Stock on such Purchase Date, the Company may retain the cash balance in the Participant’s Plan account to be applied toward the purchase of shares of Stock in the subsequent Purchase Period or Offering Period.
11.5 Tax Withholding. At the time a Participant’s Purchase Right is exercised, in whole or in part, or at the time a Participant disposes of some orreverse side, all of the shares of Stock hecommon stock of IOVANCE BIOTHERAPEUTICS, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held on Friday, June 10, 2022 at 11:00 AM ET virtually via a live webcast at https://www.cstproxy.com/iovance/2022, and any adjournment or she acquires underpostponement of the Plan, the Participant shall make adequate provisionmeeting. Such proxies are authorized to vote in their discretion (i) for the federal, state, localelection of any person to the Board of Directors if the nominees named herein becomes unable to serve or for good cause will not serve; and foreign taxes (including social insurance),(ii) on such other business, if any, requiredas may properly be brought before the meeting or any adjournment or postponement of the meeting. (Continued, and to be withheld by any Participating Company upon exercise of the Purchase Right or upon such disposition of shares, respectively. A Participating Company may, but shall not be obligated to, withhold from the Participant’s compensation the amount necessary to meet such withholding obligations.
11.6 Expiration of Purchase Right. Any portion of a Participant’s Purchase Right remaining unexercised after the end of the Offering Period to which the Purchase Right relates shall expire immediately upon the end of the Offering Period.
11.7 Provision of Reportsmarked, dated and Stockholder Information to Participants. Each Participant who has exercised all or part of his or her Purchase Right shall receive, as soon as practicable after the Purchase Date, a report of such Participant’s Plan account setting forth the total amount credited to his or her Plan account prior to such exercise, the number of shares of Stock purchased, the Purchase Price for such shares, the date of purchase and the cash balance, if any, remaining immediately after such purchase that is to be refunded or retained in the Participant’s Plan account pursuant to Section 11.4. The report required by this Section may be delivered in such form and by such means, including by electronic transmission, as the Company may determine. In addition, each Participant shall be provided information concerning the Company equivalent to that information provided generally to the Company’s common stockholders.
12. Withdrawal from Plan.
12.1 Voluntary Withdrawal from the Plan. A Participant may withdraw from the Plan by signing and delivering to the Company office or representative designated by the Company (including a third-party administrator designated by the Company) a written or electronic notice of withdrawal on a form provided by the Company for this purpose. Such withdrawal may be elected at any time prior to the end of an Offering Period; provided, however, that if a Participant withdraws from the Plan after a Purchase Date, the withdrawal shall not affect shares of Stock acquired by the Participant on such Purchase Date. A Participant who voluntarily withdraws from the Plan is prohibited from resuming participation in the Plan in the same Offering from which he or she withdrew, but may participate in any subsequent Offering by again satisfying the requirements of Sections 5 and 7.1. The Company may impose, from time to time, a requirement that the notice of withdrawal from the Plan be on file with the Company office or representative designated by the Company for a reasonable period prior to the effectiveness of the Participant’s withdrawal.
12.2 Return of Plan Account Balance. Upon a Participant’s voluntary withdrawal from the Plan pursuant to Section 12.1, the Participant’s accumulated Plan account balance which has not been applied toward the purchase of shares of Stock shall be refunded to the Participant as soon as practicable after the withdrawal, without the payment of any interest, and the Participant’s interest in the Plan and the Offering shall terminate. Such amounts to be refunded in accordance with this Section may not be applied to any other Offering under the Plan.
13. Termination of Employment or Eligibility.
Upon a Participant’s ceasing, prior to a Purchase Date, to be an Employee of the Participating Company Group for any reason, including retirement, disability or death, or upon the failure of a Participant to remain an Eligible Employee, the Participant’s participation in the Plan shall terminate immediately. In such event, the Participant’s Plan account balance which has not been applied toward the purchase of shares of Stock shall, as soon as practicable, be returned to the Participant or, in the case of the Participant’s death, to the Participant’s beneficiary designated in accordance with Section 20, if any, or legal representative, and all of the Participant’s rights under the Plan shall terminate. Interest shall not be paid on sums returned pursuant to this Section 13. A Participant whose participation has been so terminated may again become eligible to participate in the Plan by satisfying the requirements of Sections 5 and 7.1.
14. Effect of Change in Control on Purchase Rights.
In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or parent thereof, as the case may be (the “Acquiring Corporation”), may, without the consent of any Participant, assume or continue the Company’s rights and obligations under outstanding Purchase Rights or substitute substantially equivalent purchase rights for the Acquiring Corporation’s stock. If the Acquiring Corporation elects not to assume, continue or substitute for the outstanding Purchase Rights, the Purchase Date of the then current Offering Period shall be accelerated to a date before the date of the Change in Control specified by the Committee, but the number of shares of Stock subject to outstanding Purchase Rights shall not be adjusted. All Purchase Rights which are neither assumed or continued by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control.
15. Nontransferability of Purchase Rights.
Neither payroll deductions or other amounts credited to a Participant’s Plan account nor a Participant’s Purchase Right may be assigned, transferred, pledged or otherwise disposed of in any manner other than as provided by the Plan or by will or the laws of descent and distribution. (A beneficiary designation pursuant to Section 20 shall not be treated as a disposition for this purpose.) Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw from the Plan as provided in Section 12.1. A Purchase Right shall be exercisable during the lifetime of the Participant only by the Participant.
16. Compliance with Securities Law.
The issuance of shares under the Plan shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities. A Purchase Right may not be exercised if the issuance of shares upon such exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any securities exchange or market system upon which the Stock may then be listed. In addition, no Purchase Right may be exercised unless (a) a registration statement under the Securities Act shall at the time of exercise of the Purchase Right be in effect with respect to the shares issuable upon exercise of the Purchase Right, or (b) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Purchase Right may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares under the Plan shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the exercise of a Purchase Right, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation, and to make any representation or warranty with respect thereto as may be requested by the Company.
17. Rights as a Stockholder and Employee.
A Participant shall have no rights as a stockholder by virtue of the Participant’s participation in the Plan until the date of the issuance of the shares of Stock purchased pursuant to the exercise of the Participant’s Purchase Right (as evidenced by the appropriate entrysigned, on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4.2. Nothing herein shall confer upon a Participant any right to continue in the employ of the Participating Company Group or interfere in any way with any right of the Participating Company Group to terminate the Participant’s employment at any time.
18. Notification of Disposition of Shares.
The Company may require the Participant to give the Company prompt notice of any disposition of shares of Stock acquired by exercise of a Purchase Right. The Company may require that until such time as a Participant disposes of shares of Stock acquired upon exercise of a Purchase Right, the Participant shall hold all such shares in the Participant’s name until the later of two years after the date of grant of such Purchase Right or one year after the date of exercise of such Purchase Right. The Company may direct that the certificates evidencing shares of Stock acquired by exercise of a Purchase Right refer to such requirement to give prompt notice of disposition.
19. Legends.
The Company may at any time place legends or other identifying symbols referencing any applicable federal, state or foreign securities law restrictions or any provision convenient in the administration of the Plan on some or all of the certificates representing shares of Stock issued under the Plan. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to a Purchase Right in the possession of the Participant in order to carry out the provisions of this Section. Unless otherwise specified by the Company, legends placed on such certificates may include but shall not be limited to the following:
“THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER HEREOF. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED HOLDER’S NAME (AND NOT IN THE NAME OF ANY NOMINEE).”
20. Designation of Beneficiary.
20.1 Designation Procedure. Subject to local laws and procedures, a Participant may file a written designation of a beneficiary who is to receive (a) shares and cash, if any, from the Participant’s Plan account if the Participant dies subsequent to a Purchase Date but prior to delivery to the Participant of such shares and cash, or (b) cash, if any, from the Participant’s Plan account if the Participant dies prior to the exercise of the Participant’s Purchase Right. If a married Participant designates a beneficiary other than the Participant’s spouse, the effectiveness of such designation may be subject to the consent of the Participant’s spouse. A Participant may change his or her beneficiary designation at any time by written notice to the Company.
20.2 Absence of Beneficiary Designation. If a Participant dies without an effective designation pursuant to Section 20.1 of a beneficiary who is living at the time of the Participant’s death, the Company shall deliver any shares or cash credited to the Participant’s Plan account to the Participant’s legal representative or as otherwise required by applicable law.
21. Notices.
All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
22. Amendment or Termination of the Plan.
The Committee may at any time amend, suspend or terminate the Plan, except that (a) no such amendment, suspension or termination shall affect Purchase Rights previously granted under the Plan unless expressly provided by the Committee, and (b) no such amendment, suspension or termination may adversely affect a Purchase Right previously granted under the Plan without the consent of the Participant, except to the extent permitted by the Plan or as may be necessary to qualify the Plan as an employee stock purchase plan pursuant to Section 423 of the Code or to comply with any applicable law, regulation or rule. In addition, an amendment to the Plan must be approved by the stockholders of the Company within twelve (12) months of the adoption of such amendment if such amendment would authorize the sale of more shares than are then authorized for issuance under the Plan or would change the definition of the corporations that may be designated by the Committee as Participating Companies. Notwithstanding the foregoing, in the event that the Committee determines that continuation of the Plan or an Offering would result in unfavorable financial accounting consequences to the Company, the Committee may, in its discretion and without the consent of any Participant, including with respect to an Offering Period then in progress: (i) terminate the Plan or any Offering Period, (ii) accelerate the Purchase Date of any Offering Period, (iii) reduce the discount or the method of determining the Purchase Price in any Offering Period (e.g., by determining the Purchase Price solely on the basis of the Fair Market Value on the Purchase Date), (iv) reduce the maximum number of shares of Stock that may be purchased in any Offering Period, or (v) take any combination of the foregoing actions.
* * *
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets forth the Iovance Biotherapeutics, Inc. 2020 Employee Stock Purchase Plan as duly adopted by the Board on March 24, 2020.
84
EXHIBIT A
Participating Companies
Iovance Biotherapeutics, Inc.
Iovance Biotherapeutics Manufacturing LLC
Iovance Biotherapeutics GmbH