UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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☐ | Preliminary Proxy Statement |
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☒ | Definitive Proxy Statement |
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☐ | Soliciting Materials Pursuant to Rule 14a-12 |
TIMBER PHARMACEUTICALS, INC. |
(Name of Registrant as Specified In Its Charter) |
(Name(s) of Person(s) Filing Proxy Statement, if Other Than the Registrant) |
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TIMBER PHARMACEUTICALS, INC.
110 Allen3 Mountainview Road, Suite 401100,
Basking Ridge,Warren, NJ 0792007059
NOTICE OF SPECIALANNUAL MEETING OF STOCKHOLDERS
To be held on November 7, 2022June 2, 2023
To the Stockholders of Timber Pharmaceuticals, Inc.
You are cordially invited to attend the SpecialAnnual Meeting of Stockholders (the “Special Meeting”“Annual Meeting”) of Timber Pharmaceuticals, Inc. (the “Company”) to be held on November 7, 2022,Friday, June 2, 2023 at 1:00 p.m. Eastern Time. We are planning to hold the SpecialAnnual Meeting virtually via the Internet at www.virtualshareholdermeeting.com/TMBR2022SM.TMBR2023. You will not be able to attend the SpecialAnnual Meeting at a physical location. At the SpecialAnnual Meeting, stockholders will act on the following matters:
● | To elect five directors to our Board of Directors to hold office for the following year until their successors have been duly elected and qualified; | |
● | To approve an amendment to |
● | To ratify the | |
● | To consider any other matters that may properly come before the |
Only stockholders of record at the 4:00 p.m. Eastern Timeclose of business on October 3, 2022,April 20, 2023 are entitled to receive notice of and to vote at the SpecialAnnual Meeting or any postponement or adjournment thereof.
Your vote is important. Whether or not you plan to attend the SpecialAnnual Meeting, please vote electronically via the Internet or by telephone, or, if you requested paper copies of the proxy materials, please complete, sign, date and return the accompanying proxy card or voting instruction card in the enclosed postage-paid envelope. If you attend the SpecialAnnual Meeting virtually and prefer to vote at the SpecialAnnual Meeting, you may do so even if you have already voted your shares. You may revoke your proxy in the manner described in the proxy statement at any time before it has been voted at the SpecialAnnual Meeting.
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| By Order of the Board of Directors |
| /s/ John Koconis |
| John Koconis |
| Chief Executive Officer and Chairman of the Board |
Basking Ridge,May 1, 2023
Warren, New Jersey
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TIMBER PHARMACEUTICALS, INC.
PROXY STATEMENT
FOR THE NOVEMBER 7, 2022 SPECIAL2023 ANNUAL MEETING OF STOCKHOLDERS
This proxy statementProxy Statement contains information related to the SpecialAnnual Meeting of Stockholders to be held on Monday, November 7, 2022,Friday, June 2, 2023 at 1:00 p.m. Eastern Time (the “Special Meeting”“Annual Meeting”). We are planning to hold the SpecialAnnual Meeting virtually via the Internet, or at such other time and place to which the SpecialAnnual Meeting may be adjourned or postponed. In order to attend our SpecialAnnual Meeting, you must log in to www.virtualshareholdermeeting.com/TMBR2022SMTMBR2023 using the 16-digit control number on the Notice, proxy card or voting instruction form that accompanied the proxy materials.
Proxies for the SpecialAnnual Meeting are being solicited by the Company’sour Board of Directors (the “Board”“Board”). This proxy statementProxy Statement is first being made available to stockholders on or about , 2022.May 1, 2023.
Important Notice of Availability of Proxy Materials for the SpecialAnnual Meeting of Stockholders to be held on November 7, 2022.
June 2, 2023: Our proxy materials including our Notice of Internet Availability of Proxy Materials,this Proxy Statement for the November 7, Annual Meeting, our annual report for the fiscal year ended December 31, 2022 Special Meeting(the “Annual Report”) and proxy card are available on the Internet at www.proxyvote.com. Under Securities and Exchange Commission (“SEC”) rules, we are providing access to our proxy materials both by sending you this full set of proxy materials and by notifying you of the availability of our proxy materials on the Internet.
In this Proxy Statement, the terms “Timber,” “Company,” “we,” “us,” and “our” refer to Timber Pharmaceuticals, Inc. The mailing address of our principal executive offices is Timber Pharmaceuticals, Inc., 110 Allen3 Mountainview Road, Suite 401, Basking Ridge, New Jersey 07920.100, Warren, NJ 07059.
About the Meeting
Why are we calling this SpecialAnnual Meeting?
We are calling the SpecialAnnual Meeting to seek the approval of our stockholders:
● | To elect five directors to our Board of Directors to hold office for the following year until their successors have been duly elected and qualified; | |
● | To approve an amendment to our | |
● | To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2023; and | |
● | To consider any |
|
What are the Board’sBoard’s recommendations?
Our Board believes that the election of the director nominees identified herein, approval of an amendmentincrease to the number of authorized shares issuable under the Timber Pharmaceuticals, Inc. 2020 Omnibus Equity Incentive Plan, as amended (the “Plan”) and the appointment of KPMG LLP as our Charter to effectindependent registered public accounting firm for the Reverse Split isyear ending December 31, 2023 are advisable and in the best interests of the Company and our stockholders and recommends that you vote FOR Proposals 1 and 2.
Our Board strongly believes that the Reverse Split is necessary to maintain our listing on NYSE American. Accordingly, the Board has approved resolutions proposing the Reverse Split Charter Amendment to effect the Reverse Split and directed that it be submitted to our stockholders for adoption and approval at the Special Meeting. For additional information regarding the purpose and the rationale for the Reverse Split, see “Proposal 1: Purpose and Rationale for the Reverse Split” below.these proposals.
If you are a stockholder of record and you return a properly executed proxy card or vote by proxy over the Internet but do not mark the boxes showing how you wish to vote, your shares will be voted in accordance with the recommendations of the Board, as set forth above. With respect to any other matter that properly comes before our SpecialAnnual Meeting, the proxy holders will vote as recommended by the Board or, if no recommendation is given, at their own discretion.
Who is entitled to vote at the meeting?
Only stockholders holding sharesholders of record of our common stock and Series B Mirroring Preferred Stockat the close of business on April 20, 2023 (the “Series B Preferred Stock”“Record Date”) at 4:00 p.m. Eastern Time on the record date, October 3, 2022, are entitled to receive notice of the Annual Meeting and to cast one vote for each share of our common stock that they held on that date at the Special Meeting,meeting, or any postponement or adjournment of the meeting. As of the record date,Record Date, there were 146,524,8183,044,484 shares of our common stock and 13,000 sharesoutstanding. Each share of our Series B Preferred Stock outstanding.
Each holder of record of common stock is entitled to one vote per share of common stock on each matter to be acted upon at the Special Meeting.
Each holder of record of Series B Preferred Stock is entitled to cast 10,000,000 votes per share of Series B Preferred Stock on each matter to be acted upon at the Special Meeting; provided, that, such shares of Series B Preferred Stock shall, to the extent cast on a proposal, be automatically and without further action of the holders thereof voted in the same proportions as shares of common stock are voted on such proposal (excluding any shares of common stock that affirmatively abstain or are otherwise not voted). As an example, if the holders of 70% of the outstanding common stock voted at the Special Meeting are voted for Proposal 1, 70% of the votes cast by the holders of the Series B Preferred Stock shall be cast for Proposal 1.proposal.
Who can attend the meeting?
All stockholders as of the record date,Record Date, or their duly appointed proxies, may attend the SpecialAnnual Meeting. Attendance at the SpecialAnnual Meeting shall solely be via the Internet at www.virtualshareholdermeeting.com/TMBR2022SMTMBR2023 using the 16-digit control number on the Notice, proxy card or voting instruction form that accompanied the proxy materials. Stockholders will not be able to attend the SpecialAnnual Meeting at a physical location.
The live webcast of the SpecialAnnual Meeting will begin promptly at 1:00 p.m. Eastern Time on November 7, 2022.Time. Online access to the audio webcast will open approximately 30 minutes prior to the start of the SpecialAnnual Meeting to allow time for our stockholders to log in and test their devices’ audio system. We encourage our stockholders to access the meeting in advance of the designated start time.
An online portal will be available to our stockholders at www.proxyvote.com commencing approximately on or about , 2022.May 1, 2023. By accessing this portal, stockholders will be able to vote in advance of the SpecialAnnual Meeting. Stockholders may also vote, and submit questions, during the SpecialAnnual Meeting on www.virtualshareholdermeeting.com/TMBR2022SM.TMBR2023. To demonstrate proof of stock ownership, you will need to enter the 16-digit control number received with your Notice, proxy card or voting instruction form to submit questions and vote at our SpecialAnnual Meeting. If you hold your shares in “street name” (that is, through a broker or other nominee), you will need authorization from your broker or nominee in order to vote. We intend to answer questions submitted during the meeting that are pertinent to the Company and the items being brought for stockholder vote at the SpecialAnnual Meeting, as time permits, and in accordance with the Rules of Conduct for the SpecialAnnual Meeting. To promote fairness, efficiently use the Company’s resources and ensure all stockholder questions are able to be addressed, we will respond to no more than three questions from a single stockholder. We have retained Broadridge Financial Solutions to host our virtual SpecialAnnual Meeting and to distribute, receive, count and tabulate proxies.
What constitutes a quorum?
The presence at the SpecialAnnual Meeting, in person or by proxy, of thirty-four percent (34%) of the voting power of all issued and outstanding shares of our capital stock entitled to vote at the SpecialAnnual Meeting will constitute a quorum for our meeting; provided, that the shares of Series B Preferred Stock will not be counted for the purposes of determining whether a quorum is present. Signed proxies received but not votedmeeting. Proxies marked as abstentions, withheld votes and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.
How do I vote?
Your vote is important. Instead of mailing a printed copy of our proxy materials to all of our stockholders, we provide access to these materials via the Internet. This reduces the amount of paper necessary to produce these materials as well as the costs associated with mailing these materials to all stockholders. Accordingly, on or about , 2022, we will begin mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to all stockholders of record on our books at the close of business on the record date and will post our proxy materials at www.proxyvote.com. Stockholders may choose to access our proxy materials at www.proxyvote.com or may request to receive a printed set of our proxy materials. In addition, the Notice and www.proxyvote.com provide information regarding how you may request to receive proxy materials in printed form by mail, or electronically by email, on an ongoing basis.
You may vote on the Internet, by telephone, by mail or by attending the SpecialAnnual Meeting and voting electronically, all as described below. The Internet and telephone voting procedures are designed to authenticate stockholders by use of a control number and to allow you to confirm that your instructions have been properly recorded. If you vote by telephone or on the Internet, you do not need to return your proxy card or voting instruction card.
Vote on the Internet
If you are a stockholder of record, you may submit your proxy by going to www.proxyvote.com and following the instructions provided in the Notice.with your proxy materials and on your proxy card. If you requested printed proxy materials, you may follow the instructions provided with your proxy materials and on your proxy card. If your shares are held with a broker, you will need to go to the website provided on your Notice or voting instruction card. Have your Notice, proxy card or voting instruction card in hand when you access the voting website. On the Internet voting site, you can confirm that your instructions have been properly recorded. If you vote on the Internet, you can also request electronic delivery of future proxy materials. Internet voting facilities are available now and will be available 24 hours a day until 11:59 p.m., Eastern Time, on November 6, 2022.June 1, 2023.
Vote by Telephone
If you are a stockholder of record, you can also vote by telephone by dialing 1-800-690-6903. If your shares are held with a broker, you can vote by telephone by dialing the number specified on your voting instruction card. Have your proxy card or voting instruction card in hand when you call. Telephone voting facilities are available now and will be available 24 hours a day until 11:59 p.m., Eastern Time, on November 6, 2022.June 1, 2023.
Vote by Mail
If you have requested printed proxy materials,are a stockholder of record, you may choose to vote by mail by marking your proxy card or voting instruction card, dating and signing it, and returning it in the postage-paid envelope provided. If the envelope is missing and you are a stockholder of record, please mail your completed proxy card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. If the envelope is missing and your shares are held with a broker, please mail your completed voting instruction card to the address specified therein. Please allow sufficient time for mailing if you decide to vote by mail as it must be received by 11:59 p.m. on November 6, 2022.
Please note that if you received a Notice of Internet Availability, you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote on the Internet and how to request paper copies of the proxy materials.June 1, 2023.
Voting at the SpecialAnnual Meeting
You will have the right to vote at the SpecialAnnual Meeting.
You will have the right to vote on the day of, or during, the SpecialAnnual Meeting on www.virtualshareholdermeeting.com/TMBR2022SM.TMBR2023. To demonstrate proof of stock ownership, you will need to enter the 16-digit control number received with your Notice, proxy card or voting instruction form to vote at our Special Meeting if it is held remotely.Annual Meeting.
Even if you plan to attend our SpecialAnnual Meeting remotely, we recommend that you also submit your proxy as described above so that your vote will be counted if you later decide not to attend our SpecialAnnual Meeting.
The shares voted electronically, telephonically, or represented by the proxy cards received, properly marked, dated, signed and not revoked, will be voted at the SpecialAnnual Meeting.
What if I vote and then change my mind?
You may revoke your proxy at any time before it is exercised by:
● | filing with |
● | submitting a later-dated vote by telephone or on the Internet; |
● | sending in another duly executed proxy bearing a later date; or |
● | attending the |
Your latest vote will be the vote that is counted.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
Many of our stockholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
Stockholder of Record
If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares, the stockholder of record. As the stockholder of record, you have the right to grant your voting proxy directly to us or to vote at the SpecialAnnual Meeting.
Beneficial Owner
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker, bank or nominee which is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker as to how to vote and are also invited to attend the SpecialAnnual Meeting. However, because you are not the stockholder of record, you may not vote these shares unless you obtain a signed proxy from the record holder giving you the right to vote the shares. If you do not vote your shares or otherwise provide the stockholder of record with voting instructions, your shares may constitute broker non-votes. The effect of broker non-votes is more specifically described in “What vote is required to approve each proposal?” below.
What vote is required to approve each proposal?
The holders of thirty-four percent (34%) of the voting power of the capital stock issued and outstanding on the record dateRecord Date must be present, in person or by proxy, at the SpecialAnnual Meeting in order to have the required quorum for the transaction of business; provided, that shares of Series B Preferred Stock will not be counted for the purposes of determining whether a quorum is present.business. Pursuant to Delaware corporate law, abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.
With respect to the approvalelection of an amendment to our Charter, at the discretion of the Board, to effect the Reverse Splitdirectors (Proposal 1), the affirmative votedirectors are elected by a plurality of at least a majority inthe voting power of our issued and outstandingthe shares of commonour capital stock present or represented by proxy and Series B Preferred Stock entitled to vote, on Proposal 1, voting together as a single class is requiredand the director nominees who receive the greatest number of votes at the Annual Meeting (up to approve this proposal.the total number of directors to be elected) will be elected. As a result, abstentionswithheld votes and “broker non-votes”,broker non-votes, if any, will havenot affect the same effect asoutcome of the vote on Proposal 1. Consequently, only shares that are voted in favor of a particular nominee will be counted toward such nominee’s achievement of a plurality. You may not vote “AGAINST” this proposal. Accordingly, it is particularly important that beneficial owners instruct their brokers how they wish to vote their shares.your shares cumulatively for the election of directors.
With respect to the approval of an increase to the adjournmentnumber of authorized shares issuable under the 2020 Omnibus Equity Incentive Plan (Proposal 2), the New York Stock Exchange ("NYSE") requires that Proposal 2 be approved by the affirmative vote off a majority of the Specialvotes cast on such proposal. As a result, abstentions, broker non-votes, if any, and any other failure to submit a proxy or vote in person at the meeting, will not affect the outcome of the vote of Proposal 2.
With respect to the ratification of the appointment of KPMG LLP (Proposal 3) and the approval of any other matter that may properly come before the Annual Meeting, (Proposal 2), the affirmative vote of a majority of the votes cast is required to approve this proposal.such proposals. As a result, abstentions, and “broker non-votes” (see below),broker non-votes, if any, and any other failure to submit a proxy or vote in person at the meeting, will not affect the outcome of the vote on these proposals.of Proposal 3 or any other matter that may properly come before the Annual Meeting.
Holders of the common stock will not have any dissenters’ rights of appraisal in connection with any of the matters to be voted on at the meeting.
What are “broker non-votes”“broker non-votes”?
Banks and brokers acting as nominees are permitted to use discretionary voting authority to vote proxies for proposals that are deemed “routine” by the New York Stock ExchangeNYSE (the exchange that makes such determinations), but are not permitted to use discretionary voting authority to vote proxies for proposals that are deemed “non-routine” by the New York Stock Exchange.NYSE. A broker “non-vote” occurs when a proposal is deemed “non-routine” and a nominee holding shares for a beneficial owner does not have discretionary voting authority with respect to the matter being considered and has not received instructions from the beneficial owner. The determination of which proposals are deemed “routine” versus “non-routine” may not be made by the New York Stock ExchangeNYSE until after the date on which this proxy statementProxy Statement has been mailed to you. As such, it is important that you provide voting instructions to your bank, broker or other nominee, if you wish to determine the voting of your shares.
Under the applicable rules governing such brokers, we believe Proposal 13 to approve an amendment toratify the appointment of KPMG LLP as our Charter, at the discretion of the Board, to effect the Reverse Spiltindependent registered public accounting firm is likely to be considered a “routine” item. This means that brokers may vote using their discretion on such proposals on behalf of beneficial owners who have not furnished voting instructions. In contrast, certain items are considered “non-routine”, and a “broker non-vote” occurs when brokers do not receive voting instructions from beneficial owners with respect to such items because the brokers are not entitled to vote such uninstructed shares. We believe Proposal 1 to elect directors and Proposal 2 to approve an increase to the number of authorized shares issuable under the 2020 Omnibus Equity Incentive Plan are likely to be considered “non-routine”, which means that brokers cannot vote your uninstructed shares when they do not receive voting instructions from you. Furthermore, if approval of Proposal 13 is deemed by the New York Stock ExchangeNYSE to be a “non-routine” matter, brokers will not be permitted to vote on Proposal 13 if the broker has not received instructions from the beneficial owner. If the New York Stock Exchange determines Proposal 1 to be “non-routine,” failure to vote on Proposal 1, which requires the affirmative vote of at least a majority of our issued and outstanding voting securities, or to instruct your broker how to vote any shares held for you in your broker’s names, will have the same effect as a vote against such proposal. Accordingly, it is particularly important that beneficial owners instruct their brokers how they wish to vote their shares for Proposal 1.
Abstentions and broker non-votes, if any, with respect to Proposal 2 to approve an adjournment of the Special Meeting will not affect the outcome of such proposal. Accordingly, it is particularly important that beneficial owners instruct their brokers how they wish to vote their shares. Abstention and broker non-votes will be counted for purposes of determining whether there is a quorum present at the Special Meeting.
If your shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how you wish your shares to be voted so you may participate in the stockholder voting on these important matters.
How are we soliciting this proxy?
Pursuant to SEC rules, we are providing access to our proxy materials both by sending you this full set of proxy materials and by notifying you of the availability of our proxy materials online at www.proxyvote.com.
We are soliciting this proxy on behalf of our Board and will pay all expenses associated therewith. Some of our officers and other employees also may, but without compensation other than their regular compensation, solicit proxies by mail or personal conversations, or by telephone, facsimile or other electronic means. We have also retained Alliance Advisors to assist it in the solicitation of proxies. Alliance Advisors will solicit proxies on behalf of Timber from individuals, brokers, bank nominees and other institutional holders in the same manner described above. The fees that will be paid to Alliance Advisors are anticipated to be approximately $10,000, and we will reimburse their out-of-pocket expenses. We have also agreed to indemnify Alliance Advisors against certain claims.
We will also, upon request, reimburse brokers and other persons holding stock in their names, or in the names of nominees, for their reasonable out-of-pocket expenses for forwarding proxy materials to the beneficial owners of the capital stock and to obtain proxies.
PROPOSAL 1: TO ELECT FIVE DIRECTORS TO THE BOARD OF DIRECTORS TO HOLD OFFICE
FOR THE FOLLOWING YEAR UNTIL THEIR SUCCESSORS HAVE BEEN DULY ELECTED
AND QUALIFIED
Our Board currently consists of five directors, all of whom are being nominated for reelection at this Annual Meeting. Each of our current directors will hold their positions on the Board until the Annual Meeting. Each of the five director nominees named below will stand for election at the Annual Meeting. Each director’s term will then continue until the earlier of the election and qualification of their successor, or their death, resignation or removal. At the recommendation of our Nominating and Corporate Governance Committee, our Board proposes that the five director nominees named below be elected as directors to serve until the 2024 Annual Meeting and until such director’s successor is duly elected and qualified or until such director’s earlier resignation or removal. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term and until the director’s successor is duly elected and qualified. Each of the five nominees listed below are incumbent directors.
Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the election of directors. In accordance with our Bylaws and Delaware law, a stockholder entitled to vote for the election of directors may withhold authority to vote for certain nominees for directors or may withhold authority to vote for all nominees for directors. Withheld votes and broker non-votes will not be treated as a vote for or against any particular director nominee and will not affect the outcome of the election. Stockholders may not vote, or submit a proxy, for a greater number of nominees than the five nominees named below. The five director nominees receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the five director nominees named below. If any director nominee becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead be voted for the election of a substitute nominee proposed by our Board. Each person nominated for election has agreed to serve if elected. Our management has no reason to believe that any nominee will be unable to serve.
Nominees for Election for a Term Expiring at the 2023 Annual Meeting
The following table sets forth the name, age, position and tenure of our directors who are up for election at the Annual Meeting:
| | | | | | Served as a |
Name | Age | Position(s) | Director Since | |||
John Koconis | 53 | Chief Executive Officer and Chairman of the Board | 2020 | |||
David Cohen, M.D. | 58 | Director | 2020 | |||
Lubor Gaal, Ph.D. | 55 | Director | 2020 | |||
Gianluca Pirozzi, M.D., Ph.D. | 46 | Director | 2020 | |||
Edward J. Sitar | 62 | Lead Independent Director | 2020 |
The following biographical descriptions set forth certain information with respect to the director nominees, based on information furnished to Timber by each director nominee.
John Koconis has served as our Chief Executive Officer, as a director on our Board since May 2020 and as our President and Chairman of the Board since April 20, 2021. Mr. Koconis previously served as Chief Executive Officer of Timber Pharmaceuticals, LLC, the Company’s wholly-owned subsidiary (“Timber Sub”) from June 2019 through April 2020 and has served on Timber Sub’s board of managers since July 2019. From July 2016 to January 2019 Mr. Koconis served as Executive Vice President and Chief Commercial Officer at Castle Creek Pharmaceuticals LLC, a biopharmaceutical company. Prior to that, Mr. Koconis served as Global Lead for Dermatology & Respiratory at Sanofi Genzyme, a biotechnology company, from January 2016 to July 2016. Mr. Koconis served as President and Chief Executive Officer of LEO Pharma Inc., a specialty pharmaceutical company, from 2009 to 2014. Mr. Koconis received a Bachelor of Science in Biology from Loyola University Chicago and an MBA from the Quinlan School of Business at Loyola University Chicago. Mr. Koconis’ healthcare industry and executive business experience qualifies him to serve on our Board.
David Cohen, M.D., has served as a director on our Board since August 2020. Dr. Cohen is the Charles C. and Dorothea E. Harris Professor of Dermatology at New York University School of Medicine, where he also serves as Executive Vice Chairman for Operations and Strategy, and Vice Chairman of Clinical Affairs. Dr. Cohen joined the NYU faculty in 1994 and his work has concentrated on cutaneous allergic and toxic reactions to exogenous and photo-reactive chemicals and the interaction of environmental stressors on the skin. He currently serves on the board of directors of Evommune, Inc., a private research and development company. Dr. Cohen received a Bachelor of Science in biomedical science from the City University of New York, an M.D. from State University of New York at Stony Brook School of Medicine and an M.P.H. in environmental science from Columbia University School of Public Health. Dr. Cohen’s healthcare industry and executive experience qualifies him to serve on our Board.
Lubor Gaal, Ph.D., has served as a director on our Board since August 2020. Dr. Gaal has over 20 years of experience working for biotech and pharmaceutical companies in Europe and the United States. As of March 2022, Dr. Gaal is the Chief Financial Officer of Targovax, a publicly listed oncology biotechnology company focused on developing immune-oncology medicine and RNA therapeutics. Dr. Gaal previously worked as the Managing Director of Locust Walk, a global life science transaction firm, from July 2018 to March 2022. Prior to Locust Walk, he was the Head of External Innovation and Licensing and a member of the R&D Management Committee at Almirall, a leading Dermatology company globally. Dr. Gaal held various senior business development positions at Bristol-Myers Squibb as well as Bayer AG. In addition to his long experience in pharmaceutical companies, he also held executive management roles at Neuro3d and Vectron therapeutics, two European biotech companies. He started his career in California, where he advised biotech and pharma companies on strategy and transactions at Burrill & Co. in San Francisco, California. Dr. Gaal has a Ph.D. in Neurosciences from the University of California in Berkeley, California. Dr. Gaal’s executive business experience qualifies him to serve on our Board.
Gianluca Pirozzi, M.D., Ph.D., has served as a director on our Board since May 2020. Dr. Pirozzi is a clinical immunologist with over 20 years of experience in the pharmaceutical industry. Since October 2019, Dr. Pirozzi has served as SVP, Head of Clinical Development and Translational Sciences at Alexion Pharmaceuticals (Nasdaq: ALXN), a global biopharmaceutical company dedicated to Rare Disease Development. Prior to that, Dr. Pirozzi served as Head of Development for Rare Diseases and Translational Gene Therapy at Sanofi-Genzyme (Nasdaq: SNY), a global biopharmaceutical company from July 2018 to September 2019, and as Global Project Head of Dupixent from 2013 to 2018. Dr. Pirozzi has also served on the board of directors of Imbria Pharmaceuticals since September 2018 and has been a scientific advisor of SMS Research Foundation since December 2015. Dr. Pirozzi holds an M.D. from Università Campus Bio-Medico di Roma and a Ph.D. in Immunology from Sapienza Università di Roma and completed a Post-Doc in Immunology at the Pasteur Institute in Paris, France. Dr. Pirozzi’s industry experience qualifies him to serve on our Board.
Edward J. Sitar has served as a director on our Board since May 2020. Mr. Sitar has had extensive financial leadership experience. As of January 18, 2022, Mr. Sitar is the Chief Financial Officer of Variantyx, Inc., an emerging diagnostic company. Mr. Sitar has served as the Chief Financial Officer of 9 Meters Biopharma, Inc. formerly known as Innovate Biopharmaceuticals Inc. (Nasdaq: NMTR), a clinical stage biotechnology company. Prior to that, he served as Acting Chief Financial Officer of CareDox, Inc., a technology company, as the Chief Financial Officer of Ammon Analytical Laboratory, a company focused on specialty testing for the drug treatment community and as the Chief Financial Officer of Vyant Bio, Inc. (f/k/a Cancer Genetics, Inc.) (Nasdaq: VYNT), a company focused on precision medicine for oncology Mr. Sitar holds a Bachelor of Science in accounting from the University of Scranton and is licensed as a Certified Public Accountant in New Jersey. Mr. Sitar’s public company and industry experience qualify him to serve on our Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE DIRECTOR NOMINEES.
Board of Director Composition
Our Board currently consists of five members. Our directors hold office until their successors have been elected and qualified or until the earlier of the end of their term, their resignation, or their removal.
We have no formal policy regarding board diversity. Our priority in selection of board members is identification of members who will further the interests of our stockholders through his or her established record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members, knowledge of our business and understanding of the competitive landscape.
Board of Director Meetings
From January 1, 2022 through December 31, 2022, (i) our Board met nine times; (ii) our audit committee of the Board (the “Audit Committee”) met four times; (iii) our compensation committee of the Board (the “Compensation Committee”) met four times; (iv) our nominating and corporate governance committee of the Board (the “Nominating and Corporate Governance Committee”) met one time; and (v) our science and technology committee of the Board (the “Science and Technology Committee”) met six times. Each director attended at least 75% of the aggregate of (i) the total number of meetings of our Board (held during the period for which such director served on the Board) and (ii) the total number of meetings of all committees of our Board on which such director served (during the periods for which the director served on such committee or committees). We do not have a formal policy requiring members of our Board to attend our annual meetings.
Director Independence
Our Board determines the independence of our directors by applying the independence principles and standards established by the NYSE American LLC, or NYSE American, including those published in the NYSE American LLC Company Guide. These provide that a director is independent only if our board of directors affirmatively determines that such director has no relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of such director. They also specify that a director who is an executive officer or employee of the Company precludes a determination of independence with respect to such director. Under the rules of the NYSE American, independent directors must comprise at least 50% of our Board. In addition, the rules of NYSE American require that, subject to specified exceptions, all members of our Audit, Compensation and Nominating and Corporate Governance committees must be independent.
Additionally, all audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other board committee, accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries or be an affiliated person of the listed company or any of its subsidiaries.
Further, all members of our Compensation Committee also must qualify as independent under the listing standards, as “non-employee directors” as defined in Rule 16b-3 promulgated under the Exchange Act and as “outside directors” as that term is defined in Section 162(m) of the Internal Revenue Code of 1986, as amended.
Our Board has undertaken a review of the independence of each director. Based on information provided by each director concerning their background, employment and affiliations, our Board determined that Dr. Cohen, Dr. Gaal, Dr. Pirozzi and Mr. Sitar do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of the NYSE American. In making these determinations, our Board considered the current and
prior relationships that each non-employee director has with our company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director, and any transactions involving them described in the section entitled “Transactions with Related Persons.”
Board Committees
Audit Committee
Our Audit Committee currently consists of Mr. Sitar, as chair, Dr. Cohen and Dr. Pirozzi, each of whom is “independent” as that term is defined under applicable SEC rules and NYSE listing standards. Our Board has determined that Mr. Sitar qualifies as an audit committee financial expert within the meaning of SEC regulations and the NYSE listing standards. In making this determination, our Board has considered the formal education and nature and scope of his previous experience, coupled with past and present service on various audit committees. Our Audit Committee assists our Board in its oversight of our accounting and financial reporting process and the audits of our financial statements.
Our Audit Committee’s responsibilities include:
● | selecting a firm to serve as the independent registered public accounting firm to audit the Company’s financial statements; | |
● | ensuring the independence of the independent registered public accounting firm; | |
● | discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and that firm, our interim and year-end operating results; | |
● | establishing procedures for employees to submit anonymously concerns about questionable accounting or audit matters; | |
● | considering the adequacy of our internal controls and internal audit function; | |
● | reviewing material related party transactions or those that require disclosure; and | |
● | approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm. |
All audit services to be provided to us and all non-audit services to be provided to us by our independent registered public accounting firm must be approved in advance by our Audit Committee.
Our Audit Committee operates pursuant to a charter that is available on our website at https://www.timberpharma.com/investors under the Corporate Governance section.
Compensation Committee
Our Compensation Committee currently consists of Dr. Gaal, as chair, Dr. Cohen, and Mr. Sitar, each of whom is “independent” as that term is defined under applicable SEC rules and NYSE listing standards. Our Compensation Committee assists our Board in the discharge of its responsibilities relating to the compensation of our executive officers and directors. Our Compensation Committee’s responsibilities include:
● | reviewing and approving, or recommending that our Board approve, the compensation of executive officers; | |
● | reviewing and approving, or recommending that our Board approve, the compensation of directors; | |
● | reviewing and recommending to our Board the terms of any compensatory agreements with executive officers; |
● | reviewing and approving, or making recommendations to our Board with respect to, incentive compensation and equity plans; and | |
● | reviewing the overall compensation philosophy. |
Our Compensation Committee operates pursuant to a charter that is available on our website at https://www.timberpharma.com/investors under the Corporate Governance section.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee currently consists of Dr. Pirozzi, as chair, Dr. Gaal and Mr. Sitar, each of whom is “independent” as that term is defined under applicable NYSE listing standards. The Nominating and Corporate Governance Committee’s responsibilities include:
● | identifying and recommending candidates for membership on our Board; | |
● | reviewing and recommending corporate governance guidelines and policies; | |
● | evaluating, and overseeing the process of evaluating, the performance of our Board; and | |
● | assisting our Board on corporate governance matters. |
Our Nominating and Corporate Governance Committee operates pursuant to a charter that is available on our website at https://www.timberpharma.com/investors under the Corporate Governance section.
Science and Technology Committee
Our Science and Technology Committee currently consists of Dr. Cohen, as chair, Dr. Pirozzi and Dr. Gaal. The Science and Technology Committee’s responsibilities include:
● | reviewing the Company’s scientific data for general Board discussion; | |
● | reviewing and considering management’s decisions regarding the allocation, deployment, utilization of, and investment in the Company’s scientific resources; | |
● | reviewing, evaluating, and advising the Board and management regarding the goals, objectives and direction of the Company’s research and development programs; | |
● | advising our Board and management on the scientific aspects of potential business transactions and opportunities; and | |
● | reviewing the Company’s overall intellectual property strategies. |
Stockholder Nominations for Directorships
Our Nominating and Corporate Governance Committee will consider potential director candidates recommended by stockholders as long as the stockholders comply with our certificate of incorporation, as amended (the “Charter”), and our amended and restated bylaws (the “Bylaws”) in recommending a potential candidate. A stockholder of record can nominate a candidate for election to the Board of Directors by complying with the procedures set forth in our Bylaws. Stockholders wishing to recommend a candidate for nomination should contact our Secretary in writing at: The Board of Directors, Timber Pharmaceuticals, Inc., 3 Mountainview Road, Suite 100, Warren, NJ 07059, Attention: Secretary. For more information, please see the section below titled “Stockholder Proposals.”
Assuming that the appropriate information is provided for candidates recommended by stockholders, our Nominating and Corporate Governance Committee will evaluate those candidates by following substantially the same process, and applying substantially the same criteria, as for candidates submitted by members of our Board or other persons, as described above and as set forth in our Charter.
Board Leadership Structure and Role in Risk Oversight
Currently, Mr. Koconis serves as our Chief Executive Officer and Chairman of the Board.
Periodically, our Board will assess the roles of Chairman and Chief Executive Officer, and our Board leadership structure to ensure the interests of Timber and our stockholders are best served. Our Board believes the current combination of the two roles is satisfactory at present. Mr. Koconis, as our Chief Executive Officer and Chairman, has extensive knowledge of all aspects of Timber and our business. The Board has appointed Mr. Sitar as Lead Independent Director. We have no policy requiring the combination or separation of leadership roles and our governing documents do not mandate a particular structure. This has allowed, and will continue to allow, our Board the flexibility to establish the most appropriate structure for the Company at any given time.
While management is responsible for assessing and managing risks for the Company, our Board is responsible for overseeing management’s efforts to assess and manage risk. This oversight is conducted primarily by our full Board, which has responsibility for general oversight of risks, and our standing Board committees. Our Board satisfies this responsibility through full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within the Company. Our Board believes that full and open communication between management and the Board is essential for effective risk management and oversight.
Stockholder Communications
Our Board will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate. Absent unusual circumstances or as contemplated by committee charters, and subject to advice from legal counsel, our Secretary is primarily responsible for monitoring communications from stockholders and for providing copies or summaries of such communications to the Board as the Secretary considers appropriate.
Communications from stockholders will be forwarded to all directors if they relate to important substantive matters or if they include suggestions or comments that the Secretary considers to be important for the Board to know. Communication relating to corporate governance and corporate strategy are more likely to be forwarded to the Board than communications regarding personal grievances, ordinary business matters, and matters as to which we tend to receive repetitive or duplicative communications.
Stockholders who wish to send communications to the Board should address such communications to: The Board of Directors, Timber Pharmaceuticals, Inc., 3 Mountainview Road, Suite 100, Warren, NJ 07059, Attention: Secretary.
Code of Business Conduct and Ethics
We maintain a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the code is posted on the Corporate Governance section of our website, which is located at https://www.timberpharma.com. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a Current Report on Form 8-K.
The following table sets forth certain information regarding our current executive officers:
| | | | | | Served as an |
| | | | | | Officer |
Name | Age | Position(s) | Since | |||
John Koconis | 53 | Chief Executive Officer, President and Chairman of the Board | 2020 | |||
Joseph Lucchese | 56 | Chief Financial Officer, Executive Vice President, Treasurer and Secretary | 2020 | |||
Alan Mendelsohn, M.D. | 61 | Chief Medical Officer and Executive Vice President | 2021 |
Our executive officers are elected by, and serve at the discretion of, our Board. The business experience for the past five years, and in some instances, for prior years, of each of our executive officers is as follows:
John Koconis has served as our Chief Executive Officer since May 2020 and as our President and Chairman of the Board since April 2021. For Mr. Koconis’ biography, please see the section above entitled “Nominees for Election for a Term Expiring at the 2023 Annual Meeting.”
Joseph Lucchese has served as our Chief Financial Officer since May 2020. Mr. Lucchese also served as a Partner at TardiMed Sciences LLC (“TardiMed”) from January 2020 until October 2021. Prior to joining TardiMed, he was a founding member and Managing Director of Oncology Partners LLC, a boutique financial advisory firm serving development stage biotechnology companies and investors, from July 2015 to January 2020. Mr. Lucchese also served as the Managing Director of The ASR Group, a division of Oncology Partners which focuses on value maximization of biotechnology assets via M&A or licensing transactions, from January 2019 to January 2020. Prior to founding Oncology Partners LLC, Mr. Lucchese was a Managing Partner of Foundation Ventures, an investment banking firm servicing early life sciences companies.
Alan Mendelsohn, M.D., has served as our Chief Medical Officer since February 2021. Dr. Mendelsohn is a board-certified pediatric cardiologist with over 20 years of experience in clinical development and medical affairs. Prior to joining the Company, he served as Associate Vice President of Dermatology Medical Affairs for Sun Pharmaceuticals Industries Limited since December 2016. Dr. Mendelsohn has also served as Senior Director at Pfizer from November 2014 through December 2016 as well as Senior Director of Immunology Research and Development for Janssen Pharmaceuticals from November 2006 through January 2014. He has also served in various leadership roles at Centocor Inc., a Johnson & Johnson (NYSE: JNJ) company. Dr. Mendelsohn holds an M.D. from the State University of New York Health Science Center at Brooklyn.
Our Board has formed a Compensation Committee. The Compensation Committee is responsible for reviewing and approving management compensation, including salaries, bonuses, and equity compensation. We seek to provide competitive compensation arrangements that attract and retain key talent necessary to achieve our business objectives. At our 2022 Annual Meeting of Stockholders, stockholders voted, on an advisory, non-binding basis, to approve the compensation paid to our NEOs (as defined below).
2022 Summary Compensation Table
The following table presents information regarding the total compensation awarded to, earned by, or paid to each person serving as our Chief Executive Officer during the fiscal year ended December 31, 2022 and the two most highly-compensated executive officers (other than the Chief Executive Officer) who were serving as executive officers during the fiscal year ended December 31, 2022. These individuals are our named executive officers (“NEOs”) for 2022.
| | | | | All other | | ||||||||||||||||
| | | | Option awards | compensation | | ||||||||||||||||
Name and principal position | Year | Salary ($) | Bonus ($) | ($)(1) | ($) | Total ($) | ||||||||||||||||
John Koconis, | 2022 | $ | 370,731 | $ | 160,650 | $ | 122,406 | $ | 38,807 | (2) | $ | 692,594 | ||||||||||
CEO, President and Chairman | 2021 | $ | 356,731 | $ | 115,500 | $ | 486,331 | $ | 36,072 | (2) | $ | 994,634 | ||||||||||
Joseph Lucchese, | 2022 | $ | 363,462 | $ | 128,800 | $ | 61,203 | $ | 50,036 | (2)(3) | $ | 603,501 | ||||||||||
CFO, Treasurer, EVP, and Secretary | 2021 | $ | 240,154 | $ | 92,400 | $ | 208,009 | $ | 45,519 | (2) | $ | 586,082 | ||||||||||
Alan Mendelsohn | 2022 | $ | 311,538 | $ | 152,800 | $ | 61,203 | $ | 42,818 | (2) | $ | 568,359 | ||||||||||
Chief Medical Officer and EVP | 2021 | $ | 261,923 | $ | 124,000 | $ | 257,255 | $ | 40,972 | (2) | $ | 684,150 | ||||||||||
Zachary Rome (4) | 2022 | $ | 71,156 | $ | - | $ | - | $ | - | $ | 71,156 | |||||||||||
Former COO, EVP, Secretary and Director | 2021 | $ | 214,038 | $ | 41,580 | $ | 306,553 | $ | 40,273 | (2) | $ | 602,444 |
(1) | Amounts represent the aggregate fair value amount computed as of the grant date of each award in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. Assumptions used in the calculation of these amounts are included in Note 2 to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022. |
(2) | Represents payments of health insurance premiums for such NEO. |
(3) | Includes company match for 401(k) contributions for such NEO. |
(4) | Mr. Rome resigned from his positions in March 2022. |
Narrative Disclosure to Summary Compensation Table
Employment Agreements with our Named Executive Officers
We extended an offer letter agreement to Mr. Koconis on June 20, 2019 in connection with his position as Chief Executive Officer. Mr. Koconis is entitled to, among other things, (i) an annual gross base salary of $350,000 (which annual base salary will be increased to $400,000 upon the commercialization of our first product); and (ii) eligibility for a bonus up to 50% of his base salary. The offer constitutes an at-will employment agreement.
We entered into an offer letter with Mr. Lucchese on September 27, 2021 in connection with his position as Chief Financial Officer. Mr. Lucchese is entitled to, among other things, (i) an annual gross base salary of $350,000; and (ii) eligibility for a bonus up to 40% of his base salary. The offer letter constitutes an at-will employment agreement.
We entered into an offer letter with Dr. Mendelsohn on January 18, 2021 in connection with his position as Chief Medical Officer. Dr. Mendelsohn is entitled to, among other things, (i) an annual gross base salary of $300,000; and (ii) eligibility for a bonus up to 50% of his base salary. The offer letter constitutes an at-will employment agreement.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information regarding outstanding equity awards held by our NEOs as of December 31, 2022.
| | Option awards | | | |||||||||||
| | Number of | Number of | | | ||||||||||
| | securities | securities | | | ||||||||||
| | underlying | underlying | Option | | ||||||||||
| | unexercised | unexercised | exercise | Option | ||||||||||
| | options (#) | options (#) | price | expiration | ||||||||||
Name | Grant date | exercisable | unexercisable | ($) | date | ||||||||||
John Koconis | 9/14/2021 | 7,419 | 10,381 | (1) | 44.50 | 9/13/2031 | |||||||||
4/15/2022 | - | 12,000 | (2) | 15.35 | 4/14/3032 | ||||||||||
Joseph Lucchese | 6/8/2020 | 1,416 | 526 | (3) | 143.50 | 6/7/2030 | |||||||||
| 9/27/2021 | 2,257 | 4,966 | (4) | 46.00 | 9/26/2031 | |||||||||
4/15/2022 | 0 | 6,000 | (5) | 15.35 | 4/14/2032 | ||||||||||
Alan Mendelsohn | 7/1/2021 | 2,465 | 4,495 | (6) | 59.00 | 6/30/2031 | |||||||||
4/15/2022 | 0 | 6,000 | (7) | 15.35 | 4/14/2032 |
(1) | The options vest in 36 equal monthly installments beginning on October 14, 2021, subject to continued employment with or service to the Company |
(2) | 25% of the options vested on April 15, 2023, and the remaining shares subject to this option vest 1/36 of the shares on the 15th day of each full calendar month thereafter, subject to continued employment with or service to the Company. |
(3) | 25% of the options vested on January 6, 2021, and the remaining shares subject to this option vest 1/36 of the shares on the last day of each full calendar month thereafter, subject to continued employment with or service to the Company. |
(4) | 25% of the options vested on September 27, 2022, and the remaining shares subject to this option vest 1/36 of the shares on the last day of each full calendar month thereafter, subject to continued employment with or service to the Company |
(5) | 25% of the options vest on April 15, 2023, and the remaining shares subject to this option vest 1/36 of the shares on the 15th day of each full calendar month thereafter, subject to continued employment with or service to the Company. |
(6) | 25% of the options vested on July 1, 2022, and the remaining shares subject to this option vest 1/36 of the shares will vest on the last day of each full calendar month thereafter, subject to continued employment with or service to the Company. |
(7) | 25% of the options vested on April 15, 2023 and the remaining shares subject to this option vest 1/36 of the shares on the 15th day of each full calendar month thereafter, subject to continued employment with or service to the Company. |
The following table summarizes, for each of our NEOs, the number of shares of common stock underlying outstanding value appreciation rights (“VARs”) held as of December 31, 2022.
| Number of Shares | | ||||||||||
| Underlying Unexercised VARs | Expiration | ||||||||||
Name | Exercisable | Unexercisable | Date | |||||||||
John Koconis | 2,531 | 1,662 | 7/1/2029 | |||||||||
Joseph Lucchese | - | - | - | |||||||||
Alan Mendelsohn | - | - | - |
Pension Benefits
None of our NEOs is covered by a pension plan or other similar benefit plan that provides for payments by us or other benefits from us at, following, or in connection with retirement.
Nonqualified Deferred Compensation
None of our NEOs is covered by a nonqualified defined contribution or other nonqualified deferred compensation plan.
Pay Versus Performance Table
We are providing the following information about the relationship between executive compensation actually paid and certain financial performance of our company as required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K.
Year | Summary Compensation Table ("SCT")Total for Principal Executive officer (“PEO”) (1) | Compensation Actually Paid to PEO (2) | Average Summary Compensation Table Total for Non-PEO NEOs (3) | Average Compensation Actually Paid to Non-PEO NEOs (4) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (“TSR”) (5) | Net Income (Loss) (millions) (6) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) |
2022 | $692,594 | $160,143 | $585,930 | $316,397 | $9 | ($19.379) |
2021 | $994,634 | $517,710 | $624,225 | $460,033 | $46 | ($10.639) |
(1) | The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Koconis (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation—Summary Compensation Table.” | |
(2) | The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Koconis, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Koconis during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, adjustments were made to Mr. Koconis’ total compensation for each year to determine the compensation actually paid as noted in the PEO SCT table below. | |
(3) | The dollar amounts reported in column (d) represent the average of the amounts reported for our NEOs as a group (excluding Mr. Koconis) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Koconis) included for purposes of calculating the average amounts in each applicable year are as follows: for 2022 and 2021, Mr. Lucchese, Mr. Mendelsohn and Mr. Rome for 2021. | |
(4) | The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Koconis), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Koconis) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Koconis) for each year to determine the compensation actually paid, using the same methodology described above in Note (2) as noted in the Average Non-PEO NEOs SCT Table below. | |
(5) | Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our company’s share price at the end and the beginning of the measurement period by our company’s share price at the beginning of the measurement period. No dividends were paid on stock or option awards in 2021 or 2022. | |
(6) | The dollar amounts reported represent the amount of net income (loss) reflected in our consolidated audited financial statements for the applicable year. |
PEO SCT | 2022 | 2021 | ||||||
Total Compensation as reported in Summary Compensation Table ("SCT") | $ | 692,594 | $ | 994,634 | ||||
Subtract: grant date fair value of equity awards granted during fiscal year reported in SCT | $ | (122,406 | ) | $ | (486,331 | ) | ||
Add: fair value of equity compensation granted in current year - value at year-end | $ | 1,010 | $ | 82,112 | ||||
Add: dividends accrued on vested shares/units | $ | - | $ | - | ||||
Add/(subtract): change in fair value from the end of the prior fiscal year to end of current fiscal year for awards made in prior fiscal years that were unvested at the end of the current fiscal year | $ | (411,056 | ) | $ | (72,715 | ) | ||
Add/(subtract): change in fair value from the end of the prior fiscal year to vesting date for awards made in prior fiscal years that vested during the current fiscal year | $ | - | $ | - | ||||
Subtract: fair value of forfeited awards determined at end of the prior year for awards made in prior fiscal years that were forfeited in the current fiscal year | $ | - | $ | - | ||||
Compensation Actually paid to CEO | $ | 160,143 | $ | 517,710 |
Average Non-CEO SCT Total to Compensation Actually Paid ("CAP") Reconciliation | ||||||||
Non-PEO NEOs SCT | 2022 | 2021 | ||||||
Total Compensation as reported in SCT | $ | 585,930 | $ | 624,225 | ||||
Subtract: grant date fair value of equity awards granted during fiscal year reported in SCT | $ | (61,203 | ) | $ | (257,272 | ) | ||
Add: fair value of equity compensation granted in current year - value at year-end | $ | 196 | $ | 43,262 | ||||
Add: dividends accrued on vested shares/units | $ | - | $ | - | ||||
Add/(subtract): change in fair value from the end of the prior fiscal year to end of current fiscal year for awards made in prior fiscal years that were unvested at the end of the current fiscal year | $ | (184,065 | ) | $ | (46,948 | ) | ||
Add/(subtract): change in fair value from the end of the prior fiscal year to vesting date for awards made in prior fiscal years that vested during the current fiscal year | $ | (247 | ) | $ | (3,348 | ) | ||
Subtract: fair value of forfeited awards determined at end of the prior year for awards made in prior fiscal years that were forfeited in the current fiscal year | $ | - | $ | - | ||||
Compensation Actually paid to Non-CEO NEOs | $ | 316,397 | $ | 460,033 |
Analysis of the Information Presented in the Pay Versus Performance Table
In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance Table.
All information provided above under the “Pay Versus Performance” heading will not be deemed to be incorporated by reference in any filing of our company under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Director Compensation Table 2022
Non-executive directors are entitled to receive fees for their services as directors. Non-executive directors are also eligible for equity awards under the Plan connection with their attendance at Board and committee meetings. The table below shows the total compensation paid to or earned by each of our non-executive directors during fiscal 2022 for service on our Board and on committees of our Board.
| Fees Earned | Stock | Option | | | |||||||||||||||
| or Paid in | Awards | Awards | All Other | Total | |||||||||||||||
Name | Cash ($) | ($)(2) | ($)(1) | Compensation ($) | ($) | |||||||||||||||
David Cohen, M.D | $ | 62,760 | $ | 30,700 | $ | 20,171 | - | $ | 113,631 | |||||||||||
Lubor Gaal, Ph.D | $ | 56,500 | $ | 30,700 | $ | 20,171 | - | $ | 107,371 | |||||||||||
Gianluca Pirozzi, M.D., Ph.D | $ | 58,000 | $ | 30,700 | $ | 20,171 | - | $ | 108,871 | |||||||||||
Edward J. Sitar | $ | 55,310 | $ | 46,050 | $ | 30,256 | - | $ | 131,616 |
(1) | The amounts in this column represent the aggregate grant date fair value of equity awards granted to the non-employee directors in 2022, computed in accordance with FASB ASC Topic 718. Mr. Cohen, Mr. Gaal and Mr. Pirozzi received 2,000 options each. Mr. Sitar received 3,000 options. For a discussion of the assumptions made in determining the grant date fair value of our equity awards, see Note 2 in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022, to which reference is hereby made. |
(2) | The amounts in this column represent the aggregate grant date fair value of restricted stock unit equity awards granted to the non-employee directors in 2022, computed in accordance with FASB ASC Topic 718. Mr. Cohen, Mr. Gaal and Mr. Pirozzi received 2,000 restricted stock units each. Mr. Sitar received 3,000 restricted stock units. For a discussion of the assumptions made in determining the grant date fair value of our equity awards, see Note 2 in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022, to which reference is hereby made. |
Retainer Fees. We provide a cash retainer fee to each of our non-employee directors for their services on the committees of our Board, paid quarterly in arrears.
Our non-employee directors are compensated as follows pursuant to the Company’s director compensation policy:
● | $35,000 annual retainer; | |
● | $15,000 for service as the chair of our Audit Committee and as the chair of our Science and Technology Committee; | |
● | $10,000 for service as the chair of our Compensation Committee; | |
● | $8,000 for service as the chair of our Nominating and Corporate Governance Committee; | |
● | $7,500 for service as a member of our Audit Committee and as a member of our Science and Technology Committee; | |
● | $5,000 for service as member of our Compensation Committee; and | |
● | $4,000 for service as a member of our Nominating and Corporate Governance Committee. | |
Equity Awards. Each newly-elected or appointed non-employee director will be granted a stock option, as determined by the Compensation Committee, to purchase our common stock. Each stock option award will vest and become exercisable in equal monthly installments over two years from the vesting commencement date, subject to such non-employee director’s continued service on our board of directors. The awards will have 10-year terms, however, they will terminate three years following the date upon which the awardee ceases to be one of our directors. In addition, all non-employee directors may be granted stock options to purchase our common stock and/or restricted stock units (“RSUs”), as determined by the Compensation Committee.
REPORT OF THE AUDIT COMMITTEE*
The undersigned members of the Audit Committee of the Board of Directors of Timber Pharmaceuticals, Inc. (the “Company”) submit this report in connection with the committee’s review of the financial reports of the Company for the fiscal year ended December 31, 2022, as follows:
1. | The Audit Committee has reviewed and discussed with management the audited financial statements for the Company for the fiscal year ended December 31, 2022. | |
2. | The Audit Committee has discussed with representatives of KPMG LLP, the Company’s independent public accounting firm, the matters which are required to be discussed with them under the applicable requirements of the Public Company Accounting Oversight Board and the SEC. | |
3. | The Audit Committee has discussed with representatives of KPMG LLP, the independent public accounting firm, the auditors’ independence from management and the Company has received the written disclosures and the letter from the independent auditors required by applicable requirements of the Public Company Accounting Oversight Board. |
In addition, the Audit Committee considered whether the provision of non-audit services by KPMG LLP is compatible with maintaining its independence. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board of Directors has approved) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for filing with the Securities and Exchange Commission.
Audit Committee,
Edward J. Sitar, Chair
David Cohen, M.D.
Gianluca Pirozzi, M.D., Ph.D.
* | The foregoing report of the Audit Committee is not to be deemed “soliciting material” or deemed to be “filed” with the Securities and Exchange Commission (irrespective of any general incorporation language in any document filed with the Securities and Exchange Commission) or subject to Regulation 14A of the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent we specifically incorporate it by reference into a document filed with the Securities and Exchange Commission. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of October 3, 2022April 20, 2023 (the “Beneficial Ownership Date”) with respect to the beneficial ownership of our common stock by the following: (i) each of Timber’sour current directors; (ii) each of Timber’sour named executive officers;officers, or NEOs; (iii) all of Timber’sour current executive officers and directors as a group; and (iv)(v) each other person known by Timberus to own beneficially more than five percent (5%) of the outstanding shares of our common stock.stock, if any.
The amounts and percentage of shares of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, common stock subject to securities held by that person that are currently exercisable or exercisable within 60 days of the Beneficial Ownership Date (“Presently Exercisable Securities”Securities”), if any, are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Except as indicated by footnote, the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable.
The table reflects 146,542,8183,044,484 shares our common stock outstanding as of the Beneficial Ownership Date plus any shares issuable upon exercise of Presently Exercisable Securities held by such person or entity.
Except as otherwise noted below, the address for persons listed in the table is c/o Timber Pharmaceuticals, Inc., 110 Allen3 Mountainview Road, Suite 401, Basking Ridge, New Jersey 07920.100, Warren, NJ 07059.
Name and Address of Beneficial Owner(1) | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||||||||
Common Stock | ||||||||||||||
Named Executive Officers, Executive Officers and Directors: | ||||||||||||||
John Koconis(2) | 492,654 | * | ||||||||||||
Joseph Lucchese(3) | 174,105 | * | ||||||||||||
Alan Mendelsohn(4) | 120,735 | * | ||||||||||||
Edward J. Sitar(5) | 126,400 | * | ||||||||||||
Gianluca Pirozzi(6) | 107,235 | * | ||||||||||||
David Cohen(7) | 109,259 | * | ||||||||||||
Lubor Gaal(8) | 109,259 | * | ||||||||||||
Zachary Rome(9) | 218,166 | * | ||||||||||||
| | | ||||||||||||
| Number of | Percentage of | ||||||||||||
| Shares | Shares | ||||||||||||
| Beneficially | Beneficially | ||||||||||||
Name of Beneficial Owner(1) | Owned | Owned (%) | ||||||||||||
Named Executive Officers and Directors: | ||||||||||||||
John Koconis(2) | 16,816 | * | ||||||||||||
Joseph Lucchese(3) | 6,418 | * | ||||||||||||
Alan Mendelsohn(4) | 5,324 | * | ||||||||||||
Edward J. Sitar(5) | 6,411 | * | ||||||||||||
Gianluca Pirozzi(6) | 4,594 | * | ||||||||||||
David Cohen(7) | 4,685 | * | ||||||||||||
Lubor Gaal(8) | 4,685 | * | ||||||||||||
All Executive Officers and Directors as a group (7 persons): | 1,239,647 | * | % | 48,933 | 1.61 | % | ||||||||
Series B Preferred Stock(10) | ||||||||||||||
Sabby Volatility Warrant Master Fund Ltd.(11) | 11,000 | 84.62 | % | |||||||||||
Intracoastal Capital LLC(12) | 2,000 | 15.38 | % |