Audit fees consisted of aggregate fees billed for assurance and related professional services rendered by our independent public accounting firm for the audit of our annual financial statements, review of financial statements included in our quarterly reports on Form 10-Q and services that are normally provided in connection with statutory and regulatory filings or engagements, including the issuance of consents in connection with registration statement filings.
All Other Fees
All other fees consisted of licenses for accounting research and other tools.
Pre-Approval Policies and Procedures
The formal written charter for our audit committee requires that the audit committee pre-approve all audit and non-audit services to be provided to us by our independent registered public accounting firm, other than services approved in accordance with appropriate pre-approval policies established by the audit committee and applicable SEC rules.
The audit committee’s policy generally provides that the audit committee will not engage an independent registered public accounting firm to render any audit, audit-related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the audit committee or (ii) entered into pursuant to the pre-approval policies and procedures. Unless a type of service to be provided by our independent registered public accounting firm has received this latter general pre-approval under the pre-approval policy, it requires specific pre-approval by the audit committee. Without limiting the foregoing, the audit committee may delegate authority to one or more independent members of the committee to grant pre-approvals of audit and permitted non-audit services, and any such pre-approvals must be presented to the audit committee at its next scheduled meeting.
All of the services listed in the table above were preapproved by our audit committee.
Board Recommendation
The Board of Directors unanimously recommends a vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023.
Audit Committee Report
The Audit Committee of the Board of Directors has furnished the following report, in accordance with rules established by the Securities and Exchange Commission (“SEC”), for inclusion in this Proxy Statement.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements in the Annual Report on Form 10-K for the year ended December 31, 2022, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. In addition, the Audit Committee reviewed and discussed with management the internal audit plan for the year ended December 31, 2022. Furthermore, the Audit Committee reviewed and discussed with the Company’s management the Company’s design and functioning of its internal controls over financial reporting. The Audit Committee reviewed with PricewaterhouseCoopers LLP, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Committee under generally accepted auditing standards. In addition, the Committee has discussed with PricewaterhouseCoopers LLP the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board. The Audit Committee has received the written disclosures and the letter from PricewaterhouseCoopers LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding PricewaterhouseCoopers LLP’s communications with the Audit Committee concerning independence, and has discussed with PricewaterhouseCoopers LLP their independence. The Audit Committee also considered the compatibility of non-audit services with PricewaterhouseCoopers LLP’s independence.
The Audit Committee discussed with PricewaterhouseCoopers LLP the overall scope and plans for their audit. The Audit Committee regularly meets with PricewaterhouseCoopers LLP, with and without management present, to discuss the results of their examination, the Company’s internal controls, and the overall quality of the Company’s financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2022 for filing with the SEC. The Audit Committee nominates PricewaterhouseCoopers LLP for appointment by the
Company’s shareholders as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023.
Submitted by the Audit Committee of the Company’s Board of Directors
Elizabeth G. O’Farrell, Chair of the Committee
William J. Link, Ph.D.
Richard L. Lindstrom, M.D.
Gary M. Winer
The table below identifies and sets forth certain biographical and other information regarding our executive officers as of April 12, 2023. There are no family relationships among any of our executive officers or directors.
| | | | | | | | |
Executive Officer | | Age | | | Position | | In Current
Position
Since |
Nicholas T. Curtis | | | 67 | | | Chief Executive Officer and Director | | 2012 |
Alan B. Connaughton | | | 51 | | | Chief Operating Officer | | 2015 |
Thomas R. Staab, II | | | 55 | | | Chief Financial Officer and Secretary | | 2020 |
See page 10 of this Proxy Statement for the biography of Nicholas T. Curtis.
Alan B. Connaughton has served as our chief operating officer since April 2015. Prior to becoming Chief Operating Officer, Mr. Connaughton was our vice president of operations from January 2008 until April 2015. Mr. Connaughton has over 20 years of experience working with medical device companies. Mr. Connaughton received a B.S. from University College Galway, an M.S. from Queens University College and an M.B.A. from Rollins College.
Thomas R. Staab, II has served as our Chief Financial Officer since May 2020. Before joining us, Mr. Staab served as a Senior Vice President, Chief Financial Officer and Treasurer at BioCryst Pharmaceuticals, Inc., a publicly-traded biopharmaceutical company, from July 2011 to February 2020. Prior to BioCryst, Mr. Staab served as Executive Vice President, Chief Financial Officer and Treasurer of Inspire Pharmaceuticals from May 2003 through its acquisition by Merck & Co., Inc. in May 2011, and acting Chief Financial Officer and Treasurer at Triangle Pharmaceuticals, Inc. through its acquisition by Gilead Sciences, Inc. in 2003. Before joining the biopharmaceutical industry, Mr. Staab spent eight years working for PricewaterhouseCoopers LLP providing audit and business advisory services to national and multi-national corporations in various industries. He is a Certified Public Accountant and received a B.S. in Business Administration and a Master of Accounting from the University of North Carolina at Chapel Hill.
Corporate Governance Guidelines
Our Board of Directors has adopted Corporate Governance Guidelines. A copy of these Corporate Governance Guidelines can be found in the “Corporate Governance” section of the “Investor Relations” page of our website located at www.lensar.com, or by writing to our Secretary at our offices at 2800 Discovery Drive, Orlando, Florida, 32826. Among the topics addressed in our Corporate Governance Guidelines are:
| | |
•Board independence and qualifications
•Board leadership and structure
•Executive sessions of independent directors
•Selection of new directors
•Director orientation and continuing education
•Change of principal occupation
•Director responsibilities
| | •Board access to senior management
•Board access to third-party advisors
•Board and committee self-evaluations
•Meeting attendance by directors and non-directors
•Board committees, responsibilities and independence
•Communication with the board
|
Board Leadership Structure
Our Board of Directors does not have a policy on whether the role of the Chairperson and Chief Executive Officer should be separate and, if it is to be separate, whether the Chairperson should be selected from the non-employee directors or be an employee. If the chairperson of the Board is a member of management or does not otherwise qualify as independent, our Corporate Governance Guidelines provide that the independent directors may elect a lead
independent director (the “Lead Director”). The Lead Director’s responsibilities include, but are not limited to: presiding over all meetings of the Board at which the Chairperson of the Board is not present, including any executive sessions of the independent directors; approving Board meeting schedules and agendas; and acting as the liaison between the independent directors, on the one hand, and the Chief Executive Officer and Chairperson of the Board, on the other. Our Corporate Governance Guidelines provide that, at such times as the Chairperson of the Board qualifies as independent, the Chairperson of the Board may serve as Lead Director.
The positions of our Chair of the Board and our Chief Executive Officer are currently separate. Dr. Link, an independent director, serves as Chairman of the Board, and Mr. Curtis serves as our Chief Executive Officer.
The Board believes that our current leadership structure of Chief Executive Officer and Chair of the Board being held by two individuals, with the Chair qualified as independent, is in the best interests of the Company and its stockholders and strikes the appropriate balance between the Chief Executive Officer’s responsibility for the strategic direction, day-to day-leadership and performance of our Company and the Chair of the Board’s responsibility to guide overall strategic direction of our Company and provide oversight of our corporate governance and guidance to our Chief Executive Officer and to set the agenda for and preside over Board meetings. We recognize that different leadership structures may be appropriate for companies in different situations and believe that no one structure is suitable for all companies. Accordingly, the Board will continue to periodically review our leadership structure and make such changes in the future as it deems appropriate and in the best interests of the Company and its stockholders.
Director Independence
Under our Corporate Governance Guidelines and the applicable Nasdaq Stock Market LLC (“Nasdaq”) rules (the “Nasdaq rules”), a director is not independent unless the Board affirmatively determines that he or she does not have a direct or indirect material relationship with us or any of our subsidiaries. In addition, the director must not be precluded from qualifying as independent under the per se bars set forth by the Nasdaq rules.
Our Board has undertaken a review of its composition, the composition of its committees and the independence of our directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board of Directors has determined that none of Dr. Lindstrom, Dr. Link, Mr. McLaughlin, Ms. O’Farrell, Ms. Weisner and Mr. Winer, representing six of our seven directors, has 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 qualifies as “independent” as that term is defined under the Nasdaq rules. In making these determinations, our Board considered the relationships that each non-employee director has with us and all other facts and circumstances our Board deemed relevant in determining their independence, including the director’s beneficial ownership of our common stock.
Board Committees
Our Board of Directors has three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee, each of which has the composition and the responsibilities described below. In addition, from time to time, special committees may be established under the direction of our Board when necessary to address specific issues. Each of the audit committee, the compensation committee and the nominating and corporate governance committee operates under a written charter.
| | | | | | |
Director
| | Audit
Committee
| | Compensation
Committee
| | Nominating and
Corporate
Governance
Committee
|
William J. Link, PhD
| | X
| | X
| | X
|
Richard L. Lindstrom, MD
| | X
| | Chair
| | X
|
John P. McLaughlin
| | | | | | |
Elizabeth G. O'Farrell
| | Chair
| | | | |
Aimee S. Weisner
| | | | X
| | |
Gary M. Winer
| | X
| | X
| | Chair
|
Audit Committee
Our audit committee is responsible for, among other things:
•overseeing our accounting and financial reporting process;
•appointing, compensating, retaining and overseeing the work of our independent auditor and any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or related work or performing other audit, review or attest services for us;
•discussing with our independent auditor any audit problems or difficulties and management’s response;
•pre-approving all audit and non-audit services provided to us by our independent auditor (other than those provided pursuant to appropriate preapproval policies established by the audit committee or exempt from such requirement under the rules of the Securities and Exchange Commission);
•reviewing and discussing our annual and quarterly financial statements with management and our independent auditor;
•discussing our risk management policies;
•overseeing management of our financial risks, cybersecurity and data protection risks, and, as necessary or advisable, other material risks;
•reviewing and approving or ratifying any related person transactions;
•overseeing our compliance program with respect to legal and regulatory requirements;
•establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters, and for the confidential and anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; and
•preparing the audit committee report required by SEC rules.
Our audit committee currently consists of William J. Link, PhD, Richard L. Lindstrom, MD, Elizabeth G. O’Farrell, and Gary M. Winer, with Ms. O’Farrell serving as chair. All members of our audit committee meet the requirements for financial literacy under the applicable Nasdaq rules and regulations. Our Board of Directors has affirmatively determined that each member of our audit committee qualifies as “independent” under Nasdaq’s additional standards applicable to audit committee members and Rule 10A-3 of the Exchange Act of 1934, as amended (the “Exchange Act”). In addition, our Board of Directors has determined that Ms. O’Farrell, Dr. Link, Dr. Lindstrom and Mr. Winer each qualify as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K.
Compensation Committee
Our compensation committee is responsible for, among other things:
•reviewing and approving corporate goals and objectives with respect to the compensation of our Chief Executive Officer, evaluating our Chief Executive Officer’s performance in light of these goals and objectives and recommending our Chief Executive Officer’s compensation to our Board of Directors;
•reviewing and setting or making recommendations to our Board of Directors regarding the compensation of our other executive officers;
•reviewing and making recommendations to our Board of Directors regarding director compensation;
•reviewing and approving or making recommendations to our Board of Directors regarding our incentive compensation and equity-based plans, policies and arrangements; and
•appointing and overseeing any compensation consultants;
•reviewing and discussing annually with management our “Compensation Discussion and Analysis,” to the extent required; and
•preparing the annual compensation committee report required by SEC rules, to the extent required.
Our compensation committee currently consists of William J. Link, PhD, Richard L. Lindstrom, MD, Aimee S. Weisner, and Gary M. Winer, with Dr. Lindstrom serving as chair. Our Board of Directors has determined that each member of our compensation committee qualifies as “independent” under Nasdaq’s additional standards applicable to compensation committee members and is a “non-employee director” as defined in Section 16b-3 of the Exchange Act.
Pursuant to the compensation committee’s charter, the compensation committee has the authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors to assist in carrying out its responsibilities. Before selecting any such consultant, counsel or advisor, the compensation committee reviews and considers the independence of such consultant, counsel or advisor in accordance with applicable Nasdaq rules. We must provide appropriate funding for payment of reasonable compensation to any advisor retained by the compensation committee.
Compensation Consultants
The compensation committee has the authority under its charter to retain outside consultants or advisors, as it deems necessary or advisable. In accordance with this authority, the compensation committee has engaged the services of Arnosti Consulting, Inc. as its independent outside compensation consultant.
As requested by the compensation committee, in 2022, Arnosti Consulting, Inc.’s services to the compensation committee included, assisting us in developing our peer group composition, analyzing benchmarking data with respect to our executives’ overall individual compensation and providing information regarding current trends and developments in executive compensation, equity-based awards, severance agreements and best practices in the use of long term incentives to encourage employee retention based on our peer group.
All executive compensation services provided by Arnosti Consulting, Inc. during 2022 were conducted under the direction or authority of the compensation committee, and all work performed by Arnosti Consulting, Inc. was approved by the compensation committee. Neither Arnosti Consulting, Inc. nor any of its affiliates maintains any other direct or indirect business relationships with us or any of our subsidiaries. The compensation committee evaluated whether any work provided by Arnosti Consulting, Inc. raised any conflict of interest for services performed during 2022 and determined that it did not.
Additionally, during 2022, Arnosti Consulting, Inc. did not provide any services to us other than regarding executive, employee and director compensation and broad-based plans that do not discriminate in scope, terms, or operation, in favor of our executive officers or directors, and that are available generally to all salaried employees.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee is responsible for, among other things:
•identifying individuals qualified to become members of our Board, consistent with criteria approved by the Board, and ensure the Board has the requisite expertise and consists of persons with sufficiently diverse and independent backgrounds;
•recommending to our Board the persons to be nominated for election as directors and to each committee of the Board;
•reviewing the Board’s leadership structure and recommending any proposed changes to the Board;
•developing and recommending to our Board corporate governance guidelines, and reviewing and recommending to our Board proposed changes to our corporate governance guidelines from time to time; and
•overseeing the periodic evaluations of our Board and its committees.
Our nominating and corporate governance committee currently consists of William J. Link, PhD, Richard L. Lindstrom, MD, and Gary M. Winer, with Mr. Winer serving as chair. Our Board has determined that each member of our nominating and corporate governance committee qualifies as “independent” under applicable Nasdaq rules applicable to nominating and corporate governance committee members.
Board and Board Committee Meetings and Attendance
During fiscal 2022, our Board of Directors met 12 times, the audit committee met four times, the compensation committee met once and the nominating and corporate governance committee met twice. In 2022, each of our incumbent directors then serving attended at least 75% of the meetings of the Board and committees on which he or she served as a member.
Executive Sessions
Executive sessions, which are meetings of the non-management members of the Board, are regularly scheduled throughout the year. In addition on a regularly scheduled basis, but no less than twice a year, the independent directors meet in a private session that excludes management and any non-independent directors. The Chair of the Board presides at these meetings, and if absent, the non-management and independent directors in attendance, as applicable, determine which member will preside at such session.
Director Attendance at Annual Meeting of Stockholders
We do not have a formal policy regarding the attendance of our Board members at our annual meetings of stockholders, but we expect all directors to make every effort to attend any meeting of stockholders. All of our directors attended the 2022 Annual Meeting of Stockholders.
Director Nominations Process
The nominating and corporate governance committee is responsible for recommending candidates to serve on the Board and its committees. In considering whether to recommend any particular candidate to serve on the Board or its committees or for inclusion in the Board’s slate of recommended director nominees for election at the annual meeting of stockholders, the nominating and corporate governance committee considers the criteria set forth in our Corporate Governance Guidelines. Specifically, the nominating and corporate governance committee may take into account many factors, including, without limitation: personal and professional integrity, ethics and values; experience in corporate management, such as serving as an officer or former officer of a publicly held company; strong finance experience; relevant social policy concerns; experience relevant to our industry; experience as a board member or executive officer of another publicly held company; relevant academic expertise or other proficiency in an area of our operations; diversity of expertise and experience in substantive matters pertaining to our business relative to other board members; diversity of background and perspective, including, but not limited to, with respect to age, gender, race, place of residence and specialized experience, gender identification or identification as an underrepresented minority or as LGBTQ+, practical and mature business judgment, including, but not limited to, the ability to make independent analytical inquiries; and any other relevant qualifications, attributes or skills. In addition, the Board will consider whether there are potential conflicts of interest with the candidate’s other personal and professional pursuits. In determining whether to recommend a director for re-election, the nominating and corporate governance committee will also consider the director’s past attendance at meetings and participation in and contributions to the activities of the Board.
We consider diversity, such as gender, race, gender identification or identification as an underrepresented minority or as LGBTQ+ a meaningful factor in identifying director nominees, and view such diversity characteristics as meaningful factors in identifying director nominees, but do not have a formal diversity policy. The Board evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best perpetuate
the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience and background in these various areas.
In identifying prospective director candidates, the nominating and corporate governance committee may seek referrals from other members of the Board, management, stockholders and other sources, including third party recommendations. The nominating and corporate governance committee also may, but need not, retain a search firm in order to assist it in identifying candidates to serve as directors of the Company. The nominating and corporate governance committee uses the same criteria for evaluating candidates regardless of the source of the referral or recommendation. When considering director candidates, the nominating and corporate governance committee seeks individuals with backgrounds and qualities that, when combined with those of our incumbent directors, provide a blend of skills and experience to further enhance the Board’s effectiveness. In connection with its annual recommendation of a slate of nominees, the nominating and corporate governance committee also may assess the contributions of those directors recommended for re-election in the context of the Board evaluation process and other perceived needs of the Board.
Drs. Lindstrom and Link, both Class III director nominees, were initially recommended to serve as a director by our Chief Executive Officer. In determining to nominate each of the director nominees to be elected at the Annual Meeting, each were evaluated in accordance with our standard review process for director candidates described herein.
When considering whether the directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of our business and structure, the Board focused primarily on the information discussed in each of the board member’s biographical information set forth above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. This process resulted in the Board’s nomination of the incumbent directors named in this Proxy Statement and proposed for election by you at the Annual Meeting.
The nominating and corporate governance committee will consider director candidates recommended by stockholders, and such candidates will be considered and evaluated under the same criteria described above. Any recommendation submitted to the Company should be in writing and should include any supporting material the stockholder considers appropriate in support of that recommendation, but must include information that would be required under the rules of the SEC to be included in a proxy statement soliciting proxies for the election of such candidate and a written consent of the candidate to serve as one of our directors if elected and must otherwise comply with the requirements under our Bylaws for stockholders to recommend director nominees. Stockholders wishing to propose a candidate for consideration may do so by submitting the above information to the attention of the Secretary, LENSAR, Inc., 2800 Discovery Drive, Orlando, Florida 32826. All recommendations for director nominations received by the Secretary that satisfy our Bylaws requirements relating to such director nominations will be presented to the nominating and corporate governance committee for its consideration. Stockholders also must satisfy the notification, timeliness, consent and information requirements set forth in our Bylaws. These timing requirements are also described under the caption “Stockholder Proposals and Director Nominations.”
Board Role in Risk Oversight
The Board of Directors has overall responsibility for risk oversight, including, as part of regular Board and committee meetings, general oversight of executives’ management of risks relevant to the Company. A fundamental part of risk oversight is not only understanding the material risks a company faces and the steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. The involvement of the Board of Directors in reviewing our business strategy is an integral aspect of the Board’s assessment of management’s tolerance for risk and its determination of what constitutes an appropriate level of risk for the Company. While the full Board has overall responsibility for risk oversight, it is supported in this function by its audit committee, compensation committee and nominating and corporate governance committee. Each of the committees regularly reports to the Board.
The audit committee assists the Board in fulfilling its risk oversight responsibilities by periodically reviewing our accounting, reporting and financial practices, including the integrity of our financial statements, the effectiveness of internal controls, our compliance with legal and regulatory requirements, matters involving cybersecurity and data protection and our enterprise risk management program. Through its regular meetings with management, including the finance and legal functions, the audit committee reviews and discusses significant areas of our business and
summarizes for the Board areas of risk and the appropriate mitigating factors. The compensation committee assists the Board by overseeing and evaluating risks related to the Company’s compensation structure and compensation programs, including the formulation, administration and regulatory compliance with respect to compensation matters. The nominating and corporate governance committee assists the Board by overseeing and evaluating programs and risks associated with Board organization, membership and structure, and corporate governance. In addition, our Board receives periodic detailed operating performance reviews from management.
Committee Charters and Corporate Governance Guidelines
Our Corporate Governance Guidelines, charters of the audit committee, compensation committee and nominating and corporate governance committee and other corporate governance information are available under the Governance section of the Investor Relations page of our website located at www.lensar.com, or by writing to our Secretary at our offices at 2800 Discovery Drive, Orlando, Florida 32826.
Code of Business Conduct and Ethics
We have adopted a code of business conduct and ethics (the “Code of Conduct”) that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer or controller, or persons performing similar functions. Our Code of Conduct is available under the Governance section of the Investor Relations page of our website at www.lensar.com. In addition, we intend to post on our website all disclosures that are required by law or the Nasdaq rules concerning any amendments to, or waivers of, any provisions of our Code of Conduct.
Anti-Hedging Policy
Our Board of Directors has adopted an Insider Trading Compliance Policy, which applies to all of our directors, officers and employees, as well as their family members and entities under their control. The policy prohibits such persons and entities from engaging in hedging transactions involving our equity securities, such as prepaid variable forward contracts, equity swaps, collars and exchange funds, or other transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our equity securities.
Communications with the Board
Any securityholder or any other interested party who desires to communicate with our Board of Directors, our non-management directors or any specified individual director, may do so by directing such correspondence to the attention of the Secretary, LENSAR, Inc., 2800 Discovery Drive, Orlando, Florida, 32826. The Secretary will forward the communication to the appropriate director or directors as appropriate.
Board Diversity Matrix (as of April 12, 2023)
| | | | | | | | | | | | | | | | |
Board Size | | | |
Total Number of Directors | | 7 | |
| | Female | | | Male | | | Non-Binary | | | Did Not Disclose Gender | |
Part I: Gender Identity | | | | | | | | | | | | |
Directors | | | 2 | | | | 4 | | | | — | | | | 1 | |
Part II: Demographic Background | | | | | | | | | | | | |
African American or Black | | | — | | | | — | | | | — | | | | — | |
Alaskan Native or Native American | | | — | | | | — | | | | — | | | | — | |
Asian | | | — | | | | — | | | | — | | | | — | |
Hispanic or Latinx | | | — | | | | — | | | | — | | | | — | |
Native Hawaiian or Pacific Islander | | | — | | | | — | | | | — | | | | — | |
White | | | 2 | | | | 4 | | | | — | | | | — | |
Two or More Races or Ethnicities | | | — | | | | — | | | | — | | | | — | |
LGBTQ+ | | — | |
Did Not Disclose Demographic Background | | 1 | |
EXECUTIVE AND DIRECTOR COMPENSATION
This section discusses the material components of the executive compensation program for our executive officers who are named in the “Summary Compensation Table” below. In 2022, our “named executive officers” were Nicholas T. Curtis, our Chief Executive Officer; Alan B. Connaughton, our Chief Operating Officer; and Thomas R. Staab, II, our Chief Financial Officer.
Summary Compensation Table
The following table presents summary information regarding the total compensation that was awarded to, earned by or paid to our named executive officer for services rendered during the years ended December 31, 2022 and 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and principal position | | Year | | Salary
($) | | | Stock
awards
($)(1) | | | Option
awards
($)(2) | | | Non-equity
Incentive
Plan
Compensation
($)(3) | | | All other
compensation
($)(4) | | | Total ($) | |
Nicholas T. Curtis | | 2022 | | | 517,669 | | | | 181,200 | | | | 397,772 | | | | 350,055 | | | | 13,500 | | | | 1,460,196 | |
Chief Executive Officer | | 2021 | | | 490,523 | | | | — | | | | 435,846 | | | | 389,340 | | | | 8,731 | | | | 1,324,440 | |
Alan B. Connaughton | | 2022 | | | 388,300 | | | | 90,600 | | | | 198,886 | | | | 192,555 | | | | 13,500 | | | | 883,841 | |
Chief Operating Officer | | 2021 | | | 367,892 | | | | — | | | | 217,923 | | | | 214,137 | | | | 12,900 | | | | 812,852 | |
Thomas R. Staab, II | | 2022 | | | 366,738 | | | | 90,600 | | | | 198,886 | | | | 165,330 | | | | 26,519 | | | | 848,073 | |
Chief Financial Officer | | 2021 | | | 347,454 | | | | — | | | | 217,923 | | | | 183,855 | | | | 25,198 | | | | 774,430 | |
(1)Represents the grant date fair value of stock awards granted during 2022 computed in accordance with FASB ASC 718. See Note 11,Stock-Based Compensation, to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 16, 2023, for a description of the assumptions used in valuing these awards. For 2022, this column reflects the grant date fair value of restricted stock units (“RSUs”) granted to our named executive officers by us in January 2022.
(2)Represents the grant date fair value of stock options granted computed in accordance with FASB ASC 718. See Note 11,Stock-Based Compensation, to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 16, 2023, for a description of the assumptions used in valuing these awards. For 2021 and 2022, this column reflects the grant date fair value of the stock option awards granted to our named executive officers by us in April 2021 and January 2022, respectively.
(3)Represents amounts earned in the year shown and paid early in the following year under our annual performance bonus plan, as described below.
(4)For 2022, includes a 401(k) matching contribution made by us on behalf of the named executive officer ($12,200 for Messrs. Curtis and Connaughton and $10,035 for Mr. Staab), a company contribution of $1,300 to Messrs. Curtis and Connaughton’s health savings accounts and $11,630 in commuting expense reimbursements and $4,854 in related tax “gross up” payments related to such commuting expense reimbursements for Mr. Staab. For 2021, includes a 401(k) matching contribution made by us on behalf of the named executive officer ($7,431 for Mr. Curtis and $11,600 for Messrs. Connaughton and Staab), a company contribution of $1,300 to Messrs. Curtis and Connaughton’s health savings accounts and $9,560 in commuting expense reimbursements and $4,038 in related tax “gross up” payments related to such commuting expense reimbursements for Mr. Staab.
Narrative Disclosure to Compensation Tables
Annual Base Salary
We pay our named executive officers a base salary to compensate them for the satisfactory performance of services rendered to us. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. Base salaries for our named executive officers have generally been set at levels deemed necessary to attract and retain individuals with superior talent.
Effective January 11, 2022, our Board of Directors approved an increase in Messrs. Curtis’s, Connaughton’s, and Staab’s base salaries from $494,400, $370,800, and $350,200 to $518,600, $389,000, and $367,400, respectively.
Bonus Compensation
Each year our Board of Directors establishes a performance-based annual bonus program for our employees and our named executive officers based on individual performance, company performance or as otherwise determined appropriate.
Each named executive officer has an established target annual bonus amount. The target annual bonus amounts for each named executive officer, expressed as a percentage of annual base salary, are 75%, 55% and 50% for Messrs. Curtis, Connaughton and Staab, respectively.
For 2022, annual bonuses were based on the Company’s achievement of its corporate objectives related to financial, manufacturing, research and development, and other operational goals. In January 2023, our Board of Directors approved cash bonus payments for the 2022 fiscal year to be paid to the named executive officers. Bonus payments were based on the board’s evaluation of previously-established performance goals for 2022, which the Board of Directors determined had been achieved at 90% of targeted levels.
The annual bonuses paid to our named executive officers for 2022 are reflected in the Summary Compensation Table above.
Equity-Based Incentive Awards
Our equity-based incentive awards are designed to align our interests and the interests of our stockholders with those of our employees and consultants, including our named executive officers. The Board of Directors is responsible for approving equity grants.
On January 11, 2022, we granted stock options and RSUs to our named executive officers in the following amounts: Mr. Curtis, 105,000 option shares and 30,000 RSUs; Mr. Connaughton, 52,500 option shares and 15,000 RSUs; and Mr. Staab, 52,500 option shares and 15,000 RSUs. The stock options are scheduled to vest based on continued employment or service over four years, with 25% of the stock options vesting on the first anniversary of the grant and the remainder vesting ratably on a monthly basis over the next three years. The RSUs are scheduled to vest based on continued employment or service over four years, with 25% of the RSUs vesting on each anniversary of the grant.
Employment Letters with our Named Executive Officers
Nicholas T. Curtis Employment Letter
In July 2020, we entered into an employment letter with Mr. Curtis. Pursuant to his employment letter, Mr. Curtis serves as the Chief Executive Officer of the Company and reports directly to our Board of Directors. Under the employment letter, Mr. Curtis is entitled to receive an annual base salary as specified above and is eligible to receive an annual performance bonus based on his target annual bonus. His annual base salary and target annual bonus will be subject to review by our Board of Directors or its compensation committee on an annual basis. The actual amount of any such bonus will be determined by reference to the attainment of applicable performance objectives, as determined by the Company’s Board of Directors, and to Mr. Curtis’s continued employment with us through the applicable payment date.
Mr. Curtis’s employment letter provides that if he is terminated without cause or he resigns for good reason (each as defined in the employment letter), in each case prior to a change in control (as defined in our 2020 Plan), then he is entitled to the following: (1) a lump sum payment equal to the sum of (i) his base salary as in effect immediately prior to the separation, (ii) his target bonus for the year in which the separation occurs, and (iii) 12 months of premium payments to maintain health coverage under COBRA, and (2) accelerated vesting of such portion of his time-based equity awards as would have vested during the 12 months following his termination had he remained employed during such period.
Mr. Curtis’s employment letter further provides that if he is terminated without cause or he resigns for good reason, in each case within 12 months following a change in control, then he is entitled to the following: (1) a lump sum payment equal to the sum of (i) 18 months of base salary as in effect immediately prior to the separation, (ii) 150%
multiplied by his target bonus for the year in which the separation occurs, and (iii) 18 months of premium payments to maintain health coverage under COBRA, and (2) accelerated vesting of all of his time-based equity awards.
Payments due to Mr. Curtis in connection with his termination without cause or resignation for good reason are subject to his execution of a general release of claims and continued compliance with applicable restrictive covenants.
Alan B. Connaughton Employment Letter
In July 2020, we entered into an employment letter with Mr. Connaughton. Pursuant to his employment letter, Mr. Connaughton serves as the Chief Operating Officer of the Company and reports directly to our Chief Executive Officer. Under the employment letter, Mr. Connaughton is entitled to receive an annual base salary as specified above and is eligible to receive an annual performance bonus based on his target annual bonus. His annual base salary and target annual bonus will be subject to review by our Board of Directors or its compensation committee on an annual basis. The actual amount of any such bonus will be determined by reference to the attainment of applicable performance objectives, as determined by the Board of Directors, and to Mr. Connaughton’s continued employment with us through the applicable payment date.
Mr. Connaughton’s employment letter provides that if he is terminated without cause or he resigns for good reason (each as defined in the employment letter), then he is entitled to the following: (1) a lump sum payment equal to the sum of (i) 10 months of base salary, as in effect immediately prior to the separation, (ii) 85% of his target bonus for the year in which the separation occurs, and (iii) 10 months of premium payments to maintain health coverage under COBRA, and (2) accelerated vesting of such portion of his time-based equity awards as would have vested during the 12 months following his termination had he remained employed during such period.
Mr. Connaughton’s employment letter further provides that if he is terminated without cause or he resigns for good reason, in each case within 12 months following a change in control, then he is entitled to the following: (1) a lump sum payment equal to the sum of (i) 15 months of base salary as in effect immediately prior to the separation, (ii) 125% multiplied by his target bonus for the year in which the separation occurs, and (iii) 15 months of premium payments to maintain health coverage under COBRA, and (2) accelerated vesting of all of his time-based equity awards.
Payments due to Mr. Connaughton in connection with his termination without cause or resignation for good reason are subject to his execution of a general release of claims and continued compliance with applicable restrictive covenants.
Thomas R. Staab, II Employment Letter
In July 2020, we entered into an employment letter with Mr. Staab. Pursuant to his employment letter, Mr. Staab serves as the Chief Financial Officer of the Company and reports to Mr. Curtis. Under the employment letter, Mr. Staab is entitled to receive an annual base salary as specified above and is eligible to receive an annual performance bonus based on his target annual bonus. His annual base salary and target annual bonus will be subject to review by our Board of Directors or its compensation committee on an annual basis. The actual amount of any such bonus will be determined by reference to the attainment of applicable performance objectives, as determined by the Company’s Board of Directors, and to Mr. Staab’s continued employment with us through the applicable payment date.
Mr. Staab’s employment letter provides that if he is terminated without cause or he resigns for good reason (each as defined in the employment letter), in each case prior to a change in control (as defined in our 2020 Plan), then he is entitled to the following: (1) a lump sum payment equal to the sum of (i) 9 months of base salary, as in effect immediately prior to the separation, (ii) 75% of his target bonus for the year in which the separation occurs, and (iii) 9 months of premium payments to maintain health coverage under COBRA, and (2) accelerated vesting of such portion of his time-based equity awards as would have vested during the 9 months following his termination had he remained employed during such period (but no less than 25% of the unvested equity awards will vest if such termination occurs during his first year of employment).
Mr. Staab’s employment letter further provides that if he is terminated without cause or he resigns for good reason, in each case within 12 months following a change in control, then he is entitled to the following: (1) a lump sum payment equal to the sum of (i) 12 months of base salary as in effect immediately prior to the separation, (ii) his target bonus
for the year in which the separation occurs, and (iii) 12 months of premium payments to maintain health coverage under COBRA, and (2) accelerated vesting of all of his time-based equity awards. In addition, if Mr. Staab’s termination occurs during his first nine months of employment, but following a change in control, the foregoing cash and healthcare severance benefits will be reduced by 50%.
Payments due to Mr. Staab in connection with his termination without cause or resignation for good reason are subject to his execution of a general release of claims and continued compliance with applicable restrictive covenants.
Defined Terms Under Employment Letters
For purposes of the employment letters with our named executive officers:
•“Cause” means a named executive officer’s: (1) intentional theft, willful misconduct, or breach of fiduciary duty for personal gain, (2) material failure to comply with our code of conduct and other written policies, (3) material and intentional theft or destruction of company property, (4) willful act that is detrimental to our reputation or business, (5) repeated failure to perform the named executive officer’s duties after an opportunity to cure the failure, (6) material breach of any agreement or covenant with the Company that is not cured within 20 days, or (7) conviction of any criminal act involving moral turpitude.
•“Good reason” means a named executive officer’s voluntary resignation following our failure to cure: (1) a material diminution in authority, duties or responsibilities, (2) for Mr. Curtis, a requirement that he report to anyone other than our Board of Directors, (3) a material reduction in the named executive officer’s base salary, (4) a material change in the location at which he must perform his duties, or (5) any material breach of the employment letters.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information regarding equity awards granted to our named executive officers that remained outstanding as of December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Stock Awards | | | Stock Options | |
| | Grant Date | | Number of Shares or Units of Stock That Have Not Vested
(#)(1) | | | Market Value of Shares or Units of Stock That Have Not Vested
($)(2) | | | Number of Securities Underlying Unexercised Options
(#)
Exercisable | | | Number of Securities Underlying Unexercised Options
(#)
Unexercisable(3) | | | Option Exercise Price
($)(4) | | | Option Expiration Date
(#)(5) | |
Nicholas T. Curtis | | July 22, 2020 | | | 170,075 | | | | 503,422 | | | | — | | | | — | | | | — | | | | — | |
| | December 7, 2020 | | | 34,013 | | | | 100,678 | | | | — | | | | — | | | | — | | | | — | |
| | April 12, 2021 | | | — | | | | — | | | | 40,997 | | | | 57,397 | | | | 6.91 | | | April 12, 2031 | |
| | January 11, 2022 | | | 30,000 | | | | 88,800 | | | | — | | | | — | | | | — | | | | — | |
| | January 11, 2022 | | | — | | | | — | | | | — | | | | 105,000 | | | | 6.04 | | | January 11, 2032 | |
Alan B. | | July 22, 2020 | | | 57,158 | | | | 169,188 | | | | — | | | | — | | | | — | | | | — | |
Connaughton | | December 7, 2020 | | | 11,433 | | | | 33,842 | | | | — | | | | — | | | | — | | | | — | |
| | April 12, 2021 | | | — | | | | — | | | | 20,499 | | | | 28,698 | | | | 6.91 | | | April 12, 2031 | |
| | January 11, 2022 | | | 15,000 | | | | 44,400 | | | | — | | | | — | | | | — | | | | — | |
| | January 11, 2022 | | | — | | | | — | | | | — | | | | 52,500 | | | | 6.04 | | | January 11, 2032 | |
Thomas R. Staab, II | | July 22, 2020 | | | 28,110 | | | | 83,206 | | | | — | | | | — | | | | — | | | | — | |
| | December 7, 2020 | | | 5,623 | | | | 16,644 | | | | — | | | | — | | | | — | | | | — | |
| | April 12, 2021 | | | — | | | | — | | | | 20,499 | | | | 28,698 | | | | 6.91 | | | April 12, 2031 | |
| | January 11, 2022 | | | 15,000 | | | | 44,400 | | | | — | | | | — | | | | — | | | | — | |
| | January 11, 2022 | | | — | | | | — | | | | — | | | | 52,500 | | | | 6.04 | | | January 11, 2032 | |
(1)With respect to the awards granted during 2020, represents shares of restricted stock which will vest in quarterly installments over a three-year period, with vesting of the remaining restricted stock shown in the table above occurring in January, May, August and November of 2023, subject to continued employment or service through the vesting date. With respect to the awards granted in 2022, represents RSUs which will vest in annual installments over a four-year period, with vesting of the remaining RSUs shown in the table above occurring on January 11, 2023, 2024, 2025 and 2026, subject to continued employment or service through the vesting date. In
addition, the restricted stock and RSUs will vest on an accelerated basis in the event of a change in control of the Company, an executive officer’s death or disability, or his termination of employment by the Company other than for cause (with each such term defined in his employment agreement).
(2)The market value per share was calculated using the closing price per share of our common stock on December 30, 2022 ($2.96) , the last trading day of 2022.
(3)Options vest as to 25% of the total amount of the award on the one-year anniversary of the grant date and in thirty-six substantially equal monthly installments thereafter, subject to the named executive officer’s continued employment or service through each such vesting date.
(4)The exercise price per share for all options is equal to the fair market value of our common stock on the date of grant, as determined under our 2020 Incentive Award Plan.
(5)Options have a term of ten years from the date of grant.
Other Elements of Compensation
Perquisites, Health, Welfare and Retirement Benefits
Our named executive officers are eligible to participate in our employee benefit plans, including our medical, dental, vision, group life, disability and accidental death and dismemberment insurance plans, in each case on the generally on same basis as all of our other employees. We provide a 401(k) plan to our employees, including our current named executive officers, as discussed in the section below entitled “401(k) Plan.”
We generally do not provide perquisites or personal benefits to our named executive officers, except in limited circumstances. Our Board of Directors may elect to adopt qualified or non-qualified benefit plans in the future if it determines that doing so is in our best interests.
401(k) Plan
Our employees participate in a defined contribution employee retirement plan, or 401(k) plan. Our named executive officers are eligible to participate in the 401(k) plan on the same basis as other eligible employees. The 401(k) plan is intended to qualify as a tax-qualified plan under Section 401(k) of the Code. The 401(k) plan provides that each participant may make pre-tax deferrals from his or her compensation up to the statutory limit, which was $20,500 for calendar year 2022, and other testing limits. Participants that are 50 years or older can also make “catch-up” contributions, which in calendar year 2022 could be up to an additional $6,500 above the statutory limit. We also provide a matching contribution equal to 100% of an employee’s first 3% of contributions and 50% of the next 2% of contributions. Participant contributions are held and invested, pursuant to the participant’s instructions, by the plan’s trustee.
Nonqualified Deferred Compensation
We have not historically maintained nonqualified defined contribution plans or other nonqualified deferred compensation plans.
Termination or Change in Control Benefits
Our executive officers may become entitled to certain benefits or enhanced benefits in connection with a qualifying termination or a change in control of our company. Each of our executive officers’ employment agreements entitles them to certain benefits, upon a qualifying termination and in connection with a change in control of our company. For additional discussion, please see “Employment Agreements with our Named Executive Officers.”
Director Compensation
We provide compensation to our non-employee directors in the form of cash and stock-based compensation. We have reimbursed, and will continue to reimburse, our non-employee directors for their actual out-of-pocket costs and expenses incurred in connection with attending board meetings.
Pursuant to our non-employee director compensation program, our non-employee directors receive annual retainer fees and/or long-term equity awards. Under the non-employee director compensation program, each non-employee
director receives an annual retainer of $50,000, with the chairperson receiving an annual retainer of $75,000. Non-employee directors serving as the chairs of the audit, compensation and nominating and corporate governance committees receive additional annual retainers of $15,000, $10,000 and $9,000, respectively. Non-employee directors serving as members of the audit, compensation and nominating and corporate governance committees receive additional annual retainers of $7,500, $5,000 and $4,500, respectively.
Non-employee directors who are newly elected or appointed to our Board of Directors will receive initial stock option awards having a value of $200,000, calculated based on the Black-Scholes value on the grant date, vesting over three years with one-third of such options vesting on the first anniversary of the date of such election or appointment to the Board of Directors and the remainder vesting in equal monthly installments over the remaining two years thereafter.
Our non-employee directors are also eligible for annual equity awards. On the date of each annual meeting of our stockholders, including the 2022 annual meeting of our stockholders, each non-employee director received an annual stock option award having a value of $70,000, calculated based on the Black-Scholes value on the grant date, which vests in equal monthly installments over 12 months following the grant date and an annual RSU award having a value of $30,000, calculated based on the closing price per share for our common stock on the grant date, which vests on the first anniversary of the grant date.
All equity awards granted to our non-employee directors will vest upon a change in control of our company or upon a director’s death or disability. Compensation under our non-employee director compensation policy is subject to the annual limits on non-employee director compensation set forth in the 2020 Plan. Our Board of Directors or its authorized committee may modify the non-employee director compensation program from time to time in the exercise of its business judgment, taking into account such factors, circumstances and considerations as it shall deem relevant from time to time, subject to the annual limit on non-employee director compensation set forth in the 2020 Plan. As provided in the 2020 Plan, our Board of Directors or its authorized committee may make exceptions to this limit for individual non-employee directors in extraordinary circumstances, as the Board of Directors or its authorized committee may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation or in other compensation decisions involving non-employee directors.
The following table summarizes compensation received by our non-employee directors during the year ended December 31, 2022. Nicholas T. Curtis is not included in the following table as he served as an executive officer during 2022 and does not receive compensation for his board service. Mr. Curtis's compensation is included in the Summary Compensation Table in the “Executive and Director Compensation” section above.
Director Compensation Table
| | | | | | | | | | | | | | | | |
| | Fees Earned
or
Paid in Cash | | | Stock Awards(1) | | | Stock Options(2) | | | Total | |
Name | | ($) | | | ($) | | | ($) | | | ($) | |
Richard L. Lindstrom, M.D. | | | 72,000 | | | | 29,995 | | | | 69,958 | | | | 171,953 | |
William J. Link, Ph.D. | | | 92,000 | | | | 29,995 | | | | 69,958 | | | | 191,953 | |
John P. McLaughlin | | | 50,000 | | | | 29,995 | | | | 69,958 | | | | 149,953 | |
Elizabeth G. O'Farrell | | | 65,000 | | | | 29,995 | | | | 69,958 | | | | 164,953 | |
Aimee S. Weisner | | | 55,000 | | | | 29,995 | | | | 69,958 | | | | 154,953 | |
Gary M. Winer | | | 71,500 | | | | 29,995 | | | | 69,958 | | | | 171,453 | |
(1)Represents the grant date fair value of RSUs granted during 2022 computed in accordance with FASB ASC 718. See Note 11,Stock-Based Compensation, to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 16, 2023, for a description of the assumptions used in valuing these awards.
(2)Represents the grant date fair value of stock options granted during 2022 computed in accordance with FASB ASC 718. See Note 11,Stock-Based Compensation, to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 16, 2023, for a description of the assumptions used in valuing these awards.
The aggregate number of shares subject to restricted stock awards, RSUs and stock options outstanding at December 31, 2022 for the individuals who served as non-employee directors during 2022 was as follows:
| | | | | | | | | | | | |
| | At December 31, 2022 | |
Name | | Number of Shares of Restricted Stock Outstanding | | | Number of Shares Restricted Stock Units Outstanding | | | Number of Shares Underlying Stock Options Outstanding | |
Richard L. Lindstrom, M.D. | | | 56,223 | | | | 4,285 | | | | 6,507 | |
William J. Link, Ph.D. | | | 140,275 | | | | 4,285 | | | | 6,507 | |
John P. McLaughlin | | | — | | | | 4,285 | | | | 22,723 | |
Elizabeth G. O'Farrell | | | — | | | | 4,285 | | | | 22,723 | |
Aimee S. Weisner | | | — | | | | 4,285 | | | | 22,723 | |
Gary M. Winer | | | 6,843 | | | | 4,285 | | | | 6,507 | |
Equity Compensation Plan Information
The following table summarizes securities available under our equity compensation plans as of December 31, 2022. As of December 31, 2022, our 2020 Incentive Award Plan and our 2020 Employee Stock Purchase Plan were our only outstanding equity compensation plans.
| | | | | | | | | | | | | |
Plan category | | Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights
(#)
(a) | | | Weighted
average per
share exercise
price of
outstanding
options,
warrants
and rights
($)
(b) | | | Number of
securities
remaining
available
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(c) | | |
Equity compensation plans approved by security holders | | | 1,587,500 | | (1) | | 6.91 | | | | 1,178,828 | | (2) |
Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | | |
Total | | | 1,587,500 | | | | 6.91 | | | | 1,178,828 | | |
(1)Includes 1,201,790 shares subject to outstanding stock options and 85,710 outstanding RSUs under our 2020 Incentive Award Plan.
(2)Includes 176,286 shares available for issuance under our 2020 Employee Stock Purchase Plan, of which 176,286 were eligible for purchase during the offering period in effect on December 31, 2022.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information relating to the beneficial ownership of our common stockCommon Stock and Series A Convertible Preferred Stock as of March 28,June 2, 2023 by:
•each person, or group of affiliated persons, known by us to beneficially own more than 5% of the outstanding shares of any class of our common stock outstanding;outstanding voting securities;
•each of our named executive officers for 2022; and
•all directors and executive officers as a group.
The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, a person is deemed to be a “beneficial” owner of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. Except as indicated in the footnotes below, we believe, based on the information furnished to us, that the individuals and entities named in the table below have sole voting and investment power with respect to all shares of common stockCommon Stock beneficially owned by them, subject to any applicable community property laws.
The percentagenumber of shares beneficially owned is computed on the basis of 11,102,611 shares of our common stock outstanding as of March 28, 2023. Shares ofCommon Stock beneficially owned by our common stockdirectors and executive officers includes shares that a person hassuch persons have the right to acquire within 60 days of March 28,June 2, 2023, including through the exercise of stock options and warrants, the vesting of restricted stock units and the conversion of Series A Convertible Preferred Stock, as noted in the table footnotes.
| | | | | | | | | | | | | | | | | | | | |
| | | Shares Beneficially Owned Title or Class of Securities | | | | |
| | | Common Stock(2) | | | Series A Convertible
Preferred Stock(2) | | | | |
Name of Beneficial Owner(1) | | Number of
Shares
Beneficially
Owned | | | Percentage
Beneficially
Owned(3) | | | Number of
Shares
Beneficially
Owned | | | Percentage
Beneficially
Owned | | | Combined
Voting
Power(2) | |
Holders of More Than 5% | | | | | | | | | | | | | | | | | | | | |
North Run and affiliates(4) | | | 2,523,160 | | | | 19.99 | % | | | 20,000 | | | | 100 | % | | | 19.99 | % |
Park West Asset Management LLC(5) | | | 1,080,599 | | | | 9.65 | % | | | — | | | | — | | | | 8.56 | % |
Dimensional Fund Advisors LP(6) | | | 677,467 | | | | 6.05 | % | | | — | | | | — | | | | 5.37 | % |
Madison Avenue International LP(7) | | | 669,046 | | | | 5.97 | % | | | — | | | | — | | | | 5.30 | % |
Named Executive Officers and Directors | | | | | | | | | | | | | | | | | | | | |
Nicholas T. Curtis(8) | | | 843,071 | | | | 7.46 | % | | | — | | | | — | | | | 5.93 | % |
Alan B. Connaughton(9) | | | 302,331 | | | | 2.69 | % | | | — | | | | — | | | | 2.02 | % |
Thomas R. Staab, II(10) | | | 171,241 | | | | 1.52 | % | | | — | | | | — | | | | * | |
Thomas B. Ellis(4) | | | 2,528,689 | | | | 19.99 | % | | | 20,000 | | | | 100 | % | | | 19.99 | % |
Todd B. Hammer(4) | | | 2,528,689 | | | | 19.99 | % | | | 20,000 | | | | 100 | % | | | 19.99 | % |
Richard L. Lindstrom, M.D.(11) | | | 249,740 | | | | 2.22 | % | | | — | | | | — | | | | 1.65 | % |
William J. Link, Ph.D.(12) | | | 553,971 | | | | 4.93 | % | | | — | | | | — | | | | 4.06 | % |
John P. McLaughlin(13) | | | 121,078 | | | | 1.07 | % | | | — | | | | — | | | | * | |
Elizabeth G. O’Farrell(14) | | | 88,020 | | | | * | | | | — | | | | — | | | | * | |
Aimee S. Weisner(15) | | | 131,020 | | | | 1.16 | % | | | — | | | | — | | | | * | |
Gary M. Winer(16) | | | 81,544 | | | | * | | | | — | | | | — | | | | * | |
All executive officers and directors as a group (11 persons)(17) | | | 5,076,234 | | | | 38.52 | % | | | 20,000 | | | | 100 | % | | | 35.81 | % |
| | | | | | | | | | | | | | | | | | | | |
| * | Represents less than 1%. |
12
