(2)
| Ms. Rometty was appointed to the Board committees:Talat Imran | | | | | | | | | | Mir Imran | | | | | | | | | | Dennis Ausiello | | | | | | | | | ✔ | Jean-Luc Butel(1) | | | ✔ | | | ✔ | | | ✔* | Laureen DeBuono | | | ✔* | | | ✔ | | | | Andrew Farquharson(2) | | | ✔ | | | | | | | Maulik Nanavaty(3) | | | ✔ | | | ✔* | | | ✔ | Lyn Baranowski | | | | | | ✔ | | | ✔ | Lisa Rometty | | | | | | | | | | Total meetings in fiscal year 2021 | | | 4 | | | 1 | | | 1 |
(1)
| Mr. Butel served on the Compensation Committee until replaced by Ms. Baranowski in November 2021. |
(2)
| Mr. Farquharson served on the Audit Committee until replaced by Mr. Butel in June 2021. |
(3)
| Mr. Nanavaty served on the Nominating and Corporate Governance Committee until replaced by Ms. Baranowski in November 2021.Audit Committee in November 2022. |
Below is a description of each committee of the Board of Directors. The Board of Directors has determined that each member of each committee meets the applicable Nasdaq rules and regulations regarding “independence” and each member is free of any relationship that would impair his or her individual exercise of independent judgment with regard to the Company. The Audit Committee of the Board of Directors was established by the Board in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to oversee the Company’s corporate accounting and financial reporting processes, systems of internal control over financial reporting, and audits of its financial statements. For this purpose, the Audit Committee performs several functions. The Audit Committee evaluates the performance of and assesses the qualifications of the independent registered public accounting firm; determines and approves the engagement of the independent registered public accounting firm; determines whether to retain or terminate the existing independent registered public accounting firm or to appoint and engage a different independent registered public accounting firm; determines and approves the retention of the independent registered public accounting firm to perform any proposed permissible non-audit services; monitors the rotation of partners of the independent registered public accounting firm on the Company’s audit engagement team as required by law and considers any relationships of the independent registered public accounting firm that may affect the independent registered public accounting firm independence; reviews and approves or disapproves transactions between the company and any related persons; confers with management and the independent registered public accounting firm regarding the scope, adequacy and effectiveness of internal control over financial reporting; establishes procedures, when and as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters; meets to review with management and the independent registered public accounting firm significant issues that arise regarding accounting principles and financial statement presentation; and meets to review the Company’s annual audited financial statements and quarterly financial statements with management and the independent registered public accounting firm, including a review of the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Audit Committee is composed of four directors: Mr. Butel, Ms. DeBuono, Mr. Nanavaty and Ms. Rometty. The Audit Committee met four times during the fiscal year ended December 31, 2022. The Board has adopted a written Audit Committee charter that is available to stockholders on the Company’s website at ir.ranitherapeutics.com. TABLE OF CONTENTS The Board of Directors reviews the Nasdaq listing standards definition of independence for Audit Committee members on a quarterly basis and has determined that all members of the Company’s Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A)(i) and (ii) of the Nasdaq listing standards). The Board of Directors has also determined that Ms. DeBuono qualifies as an “audit committee financial expert,” as defined in applicable SEC rules. The Board of Directors made a qualitative assessment of Ms. DeBuono’s level of knowledge and experience based on a number of factors, including her formal education, experience as a chief executive officer and general counsel for public reporting companies and a chief financial officer for several large healthcare companies. Report of the Audit Committee of the Board of Directors* The Audit Committee reviews our financial reporting process on behalf of the Board. Management has the primary responsibility for the preparation and integrity of the consolidated financial statements and the reporting process, including establishing and monitoring the system of internal financial controls. In fulfilling its oversight responsibilities, the Audit Committee hereby reports as follows: The Audit Committee has reviewed and discussed the audited consolidated financial statements for the fiscal year ended December 31, 2022 with our management; The Audit Committee has discussed with Ernst & Young LLP, our independent registered public accounting firm, who is responsible for expressing an opinion on the conformity of our consolidated financial statements with generally accepted accounting principles in the United States, its judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters required to be discussed by the applicable requirements of Auditing Standards No. 1301, “Communications with Audit Committees” issued by the Public Company Accounting Oversight Board (“PCAOB”); and The Audit Committee has received the written disclosures and the letter from Ernst & Young LLP required by PCAOB Ethics and Independence Rule 3526, “Communications with Audit Committees Concerning Independence,” regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with Ernst & Young LLP its independence from the Company and management. Based on the foregoing, the Audit Committee has recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Respectfully submitted by:
Mr. Jean-Luc Butel
Ms. Laureen DeBuono
Mr. Maulik Nanavaty
Ms. Lisa Rometty *The material in this report is not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. The Compensation Committee is composed of three directors: Ms. DeBuono, Mr. Nanavaty and Ms. Baranowski. All members of the Company’s Compensation Committee are independent (as independence is currently defined in Rule 5605(d)(2) of the Nasdaq listing standards). The Compensation Committee met two times during the fiscal year. The Board has adopted a written Compensation Committee charter that is available to stockholders on the Company’s website at ir.ranitherapeutics.com/corporate-governance/governance-overview. As of the date of the 2023 annual meeting of stockholders, Ms. Baranowski will cease to be a member of the Compensation Committee. TABLE OF CONTENTS The Audit Committee is composed of three directors: Mr. Butel, Ms. DeBuono and Mr. Nanavaty. The Audit Committee met four times during the fiscal year ended December 31, 2021. The Board has adopted a written Audit Committee charter that is available to stockholders on the Company’s website at ir.ranitherapeutics.com.
The Board of Directors reviews the Nasdaq listing standards definition of independence for Audit Committee members on a quarterly basis and has determined that all members of the Company’s Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A)(i) and (ii) of the Nasdaq listing standards).
The Board of Directors has also determined that Ms. DeBuono qualifies as an “audit committee financial expert,” as defined in applicable SEC rules. The Board of Directors made a qualitative assessment of Ms. DeBuono’s level of knowledge and experience based on a number of factors, including her formal education, experience as a chief executive officer and general counsel for public reporting companies and a chief financial officer for several large healthcare companies.
Report of the Audit Committee of the Board of Directors*
The Audit Committee reviews our financial reporting process on behalf of the Board. Management has the primary responsibility for the preparation and integrity of the consolidated financial statements and the reporting process, including establishing and monitoring the system of internal financial controls. In fulfilling its oversight responsibilities, the Audit Committee hereby reports as follows:
The Audit Committee has reviewed and discussed the audited consolidated financial statements for the year ended December 31, 2021 with our management;
The Audit Committee has discussed with Ernst & Young LLP, our independent registered public accounting firm, who is responsible for expressing an opinion on the conformity of our consolidated financial statements with generally accepted accounting principles in the United States, its judgments as to the quality, not just the acceptability, of our accounting principles and such other matters required to be discussed by the applicable requirements of Auditing Standards No. 1301, “Communications with Audit Committees” issued by the Public Company Accounting Oversight Board (“PCAOB”); and
The Audit Committee has received the written disclosures and the letter from Ernst & Young LLP required by PCAOB Ethics and Independence Rule 3526, “Communication with Audit Committees Concerning Independence,” regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with Ernst & Young LLP its independence from the Company and management.
Based on the foregoing, the Audit Committee has recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Respectfully submitted by:
Mr. Jean-Luc Butel
Ms. Laureen DeBuono
Mr. Maulik Nanavaty
*The material in this report is not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
The Compensation Committee is composed of three directors: Ms. DeBuono, Mr. Nanavaty and Ms. Baranowski. All members of the Company’s Compensation Committee are independent (as independence is currently defined in Rule 5605(d)(2) of the Nasdaq listing standards). The Compensation Committee met one time during the fiscal year. The Board has adopted a written Compensation Committee charter that is available to stockholders on the Company’s website at ir.ranitherapeutics.com.
The Compensation Committee of the Board of Directors acts on behalf of the Board to review, recommend for adoption and oversee the Company’s overall compensation strategy, policies, plans and programs, including: TABLE OF CONTENTS
review and recommend to the Board for approval corporate and individual performance objectives relevant to the compensation of the Company’s executive officers, directors and other senior management and evaluation of performance in light of these stated objectives; review and recommend to the Board for approval the compensation and other terms of employment or service, including severance and change-in-control arrangements, of the Company’s Chief Executive Officer and evaluation of the Chief Executive Officer’s performance in light of these stated objectives; review and recommend to the Board the type and amount of compensation to be paid or awarded to Board members; oversee the appointment, compensation and work of the compensation consultants, independent legal counsel or other advisors engaged for the purpose of advising the committee; and administer the Company’s equity compensation plans, pension and profit-sharing plans, deferred compensation plans and other similar plan and programs. Compensation Committee Processes and Procedures Typically, the Compensation Committee meets at least two times annually and with greater frequency if necessary. The agenda for each meeting is usually developed by the Chair of the Compensation Committee. The Compensation Committee meets regularly in executive session. However, from time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. The Chief Executive Officer may not be present during any deliberations or determinations of the Compensation Committee regarding his compensation. The charter of the Compensation Committee grants the Compensation Committee full access to all books, records, facilities and personnel of the Company. In addition, under the charter, the Compensation Committee has the authority to obtain, at the expense of the Company, advice and assistance from compensation consultants and internal and external legal, accounting or other advisors and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties. The Compensation Committee has direct responsibility for the oversight of the work of any consultants or advisers engaged for the purpose of advising the Committee. In particular, the Compensation Committee has the sole authority to retain, in its sole discretion, compensation consultants to assist in its evaluation of executive and director compensation, including the sole authority to approve the consultant’s reasonable fees and other retention terms, all at the expense of the Company. Under the charter, the Compensation Committee may select, or receive advice from, a compensation consultant, independent legal counsel or other advisers to the Compensation Committee, only after taking into consideration six factors, prescribed by the SEC and Nasdaq, that bear upon the adviser’s independence; however, there is no requirement that any adviser be independent. During the past fiscal year, after taking into consideration the six factors prescribed by the SEC and Nasdaq described above, the Compensation Committee engaged Radford, a division of Aon Consulting, Inc. (“Radford”) as compensation consultants. consultants. The Compensation Committee requested that Radford:Radford: evaluate the efficacy of the Company’s existing compensation strategy and practices in supporting and reinforcing the Company’s long-term strategic goals; and assist in refining the Company’s compensation strategy and in developing and implementing an executive compensation program to execute that strategy. As part of its engagement, Radford was requested by the Compensation Committee to develop a comparative group of companies and to perform analyses of competitive performance and compensation levels for that group. At the request of the Compensation Committee, Radford also conducted individual interviews with members of the Compensation Committee and senior management to learn more about the Company’s business operations and strategy, key performance metrics and strategic goals, as well as the labor markets in which the Company competes. Radford ultimately developed recommendations that were presented to the Compensation Committee for its consideration. Following an active dialogue with Radford, the Compensation Committee recommended that the Board of Directors approve the modified recommendations of Radford. TABLE OF CONTENTS Generally, the Compensation Committee’s process comprises two related elements: the determination of compensation levels and the establishment of performance objectives for the current year. For executives other than the Chief Executive Officer, the Compensation Committee solicits and considers evaluations and recommendations TABLE OF CONTENTS
submitted to the Committee by the Chief Executive Officer. In the case of the Chief Executive Officer, the evaluation of his performance is conducted by the Compensation Committee, which determines any adjustments to his compensation as well as awards to be granted. For all executives and directors as part of its deliberations, the Compensation Committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock ownership information, company stock performance data, analyses of historical executive compensation levels and current Company-wide compensation levels and recommendations of the Compensation Committee’s compensation consultant, including analyses of executive and director compensation paid at other companies identified by the consultant. Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee of the Board of Directors is responsible for identifying, reviewing and evaluating candidates to serve as directors of the Company (consistent with criteria approved by the Board), reviewing and evaluating incumbent directors, recommending to the Board candidates for election to the Board of Directors, making recommendations to the Board regarding the membership of the committees of the Board, reviewing and assessing the performance of the Board (including Board committees), and developing a set of corporate governance principles for the Company and reviewing and assessing those principles and their application. The Nominating and Corporate Governance Committee is composed of three directors: Dr. Ausiello, Mr. Butel and Ms. Baranowski. All members of the Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). The Nominating and Corporate Governance Committee met one timetwo times during the fiscal year. The Board has adopted a written Nominating and Corporate Governance Committee charter that is available to stockholders on the Company’s website and ir.ranitherapeutics.com.ir.ranitherapeutics.com/corporate-governance/governance-overview. As of the date of the 2023 annual meeting of stockholders, Ms. Baranowski will cease to be a member of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements, being over 21 years of age and having the highest personal integrity and ethics. The Nominating and Corporate Governance Committee also intends to consider such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to the affairs of the Company, demonstrated excellence in his or her field, having the ability to exercise sound business judgment, having a diverse personal background, perspective and experience and having the commitment to rigorously represent the long-term interests of the Company’s stockholders. However, the Board of Directors and/or the Nominating and Corporate Governance Committee may modify these qualifications from time to time. When this occurs, the Board of Directors and the Nominating and Corporate Governance Committee will evaluate existing members according to the new criteria. Candidates for director nominees are reviewed in the context of the current composition of the Board, the operating requirements of the Company and the long-term interests of stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee typically considers diversity (including diversity of gender, race, ethnicity, age, sexual orientation and gender identity), age, skills and such other factors as it deems appropriate, given the current needs of the Board and the Company, to maintain a balance of knowledge, experience and capability. The Nominating and Corporate Governance Committee appreciates the value of thoughtful Board refreshment, and regularly identifies and considers qualities, skills and other director attributes that would enhance the composition of the Board. In the case of incumbent directors whose terms of office are set to expire, the Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair the directors’ independence. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq purposes, which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of TABLE OF CONTENTS possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote. TABLE OF CONTENTS
The Nominating and Corporate Governance Committee may consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board may do so by delivering a written recommendation to the Secretary at the Company’s principal executive office not later than the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting. Submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation that the nominating stockholder is a beneficial or record holder of the Company’s stock and has been a holder for at least one year. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected. Communications With The Board of Directors Historically, the Company has not provided a formal process related to stockholder communications with the Board. Nevertheless, every effort has been made to ensure that the views of stockholders are heard by the Board or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely manner. The Company believes its responsiveness to stockholder communications to the Board has been excellent. Nevertheless, during the upcoming year, the Nominating and Corporate Governance Committee will give full consideration to the adoption of a formal process for stockholder communications with the Board and, if adopted, publish it promptly and post it to the Company’s website. The Company has adopted the Rani Therapeutics Holdings, Inc. Code of Business Conduct and Ethics that applies to all officers, directors and employees. The Code of Business Conduct and Ethics is available on the Company’s website at ir.ranitherapeutics.com.ir.ranitherapeutics.com/corporate-governance/governance-overview. If the Company makes any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a provision of the Code of Business Conduct and Ethics to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website. Corporate Governance Guidelines In June 2021, the Board of Directors documented the governance practices followed by the Company by adopting Corporate Governance Guidelines to assure that the Board will have the necessary authority and practices in place to review and evaluate the Company’s business operations as needed and to make decisions that are independent of the Company’s management. The guidelines are also intended to align the interests of directors and management with those of the Company’s stockholders. The Corporate Governance Guidelines set forth the practices the Board intends to follow with respect to board composition and selection, including diversity, board meetings and involvement of senior management, Chief Executive Officer performance evaluation and succession planning, and board committees and compensation. In May 2022, the Board of Directors amended the Corporate Governance Guidelines to add ten-year term limits for non-employee directors; provided however, that if a stockholder beneficially owns more than 50% of the outstanding voting power of the Company then such stockholder may designate a director to whom the term limit would not apply. The Corporate Governance Guidelines, as well as the charters for each committee of the Board, may be viewed at ir.ranitherapeutics.com.ir.ranitherapeutics.com/corporate-governance/governance-overview. Prohibition on Hedging, Short Sales, and Pledging The Board of Directors has adopted an insider trading policy that applies to all of our employees, directors and consultants. This policy prohibits hedging or similar transactions designed to decrease the risks associated with holding shares of the Company’s stock. In addition, the insider trading policy prohibits trading in derivative securities related to the Company’s stock, which include publicly traded call and put options, engaging in short selling of the Company’s stock, purchasing the Company’s stock on margin or holding it in a margin account, and pledging the shares as collateral for a loan. TABLE OF CONTENTS
Ratification of Selection of Independent Registered Public Accounting Firm The Audit Committee of the Board of Directors has selected Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 20222023 and has further directed that management submit the selection of its independent registered public accounting firm for ratification by the stockholders at the annual meeting. Ernst & Young LLP has audited the Company’s consolidated financial statements since 2019. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting.annual meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. Neither the Company’s Bylaws nor other governing documents or law require stockholder ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm. However, the Audit Committee of the Board is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders. The affirmative vote of the holders of a majority of the voting power of the shares present in person or virtually or represented by proxy and entitled to vote on the matter at the annual meeting will be required to ratify the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2022.2023. Principal Accountant Fees and Services The following table represents aggregate fees billed to the Company for the fiscal years ended December 31, 20212022 and 20202021 by Ernst & Young LLP, the Company’s principal accountant. Audit Fees(1) | | | $2,337 | | | $450 | Audit-Related Fees | | | — | | | — | Tax Fees(2) | | | 200 | | | — | All Other Fees | | | — | | | — | Total Fees | | | $2,537 | | | $450 |
Audit Fees (1) | | | $1,167 | | | $2,337 | Audit-related Fees | | | — | | | — | Tax Fees (2) | | | — | | | 200 | All Other Fees | | | — | | | — | Total Fees | | | $1,167 | | | $2,537 |
(1)
| Audit Fees consisted of fees and expenses covering the audit of ourthe Company’s consolidated financial statements,statements; review of the interim condensed consolidated financial statements,statements; accounting and financial reporting consultations, and the issuance of consents in connection with registration statement filings with the SECconsultations; and comfort letters, in connectionconsents and assistance with and review of documents relating to our initial public offering (“IPO”).securities. The audit fees for the year ended December 31, 2021 include services associated with our IPO,the Company’s initial public offering (“IPO”), which was completed in August 2021. |
(2)
| Tax Fees consisted of fees and expenses for tax planning services associated with ourthe IPO. |
All fees described above were pre-approved by the Audit Committee. TABLE OF CONTENTS
Pre-Approval Policy and Procedures The Audit Committee has adopted a policy and procedures for the pre-approval of audit and non-audit services rendered by the Company’s independent registered public accounting firm, Ernst & Young LLP. The policy generally pre-approves specified services in the defined categories of audit services, audit-related services and tax services up to specified amounts. Pre-approval may also be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual, explicit, case-by-case basis before the independent registered public accounting firm is engaged to provide each service. The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the decision must be reported to the full Audit Committee at its next scheduled meeting. The Board Of Directors Recommends
A Vote In Favor Of Proposal 2.2. TABLE OF CONTENTS CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the ownership of the Company’s capital stock as of March 31, 20222023 by: (i) each nominee for director; (ii) each of the executive officers named in the Summary Compensation Table; (iii) all executive officers and directors of the Company as a group; and (iv) all those known by the Company to be beneficial owners of more than five percent of its common stock. Our Class A common stock entitles holders thereof to one vote per share and our Class B common stock entitles holders thereof to ten votes per share, voting together as a single class. Subject to the terms of theRani LLC’s fifth amended and restated limited liability company agreement of Rani LLC (“Rani LLC Agreement”), Class A units of Rani LLC together with Class B common stock of the Company (together referred to as a “Paired Interest”), are exchangeable for shares of Class A common stock on a one-for-one basis; provided that, at the Company’s election, the Company has the ability to effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Paired Interest redeemed. Any shares of Class B common stock will be cancelled on a one-for-one basis if, at the election of the holder, the Company redeems or exchanges such Paired Interest pursuant to the terms of the Rani LLC Agreement. Subject to the terms of the Rani LLC Agreement, certain individuals who own Class A units of Rani LLC without corresponding shares of Class B common stock of the Company (“non-corresponding Class A units”) have the ability to exchange such Class A units of Rani LLC for shares of Class A common stock on a one-for-one basis; provided that, at the Company’s election, the Company has the ability to effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each non-corresponding Class A unit of Rani LLC redeemed. Beneficial ownership of Class A units of Rani LLC is not reflected in this table; however, information concerning ownership of Class A units of Rani LLC is included in the footnotes below, where applicable. 5% Stockholders
| | | | | | | | | | | | | | | | | | | InCube Labs, LLC(1) | | | 13,664 | | | * | | | 22,411,124 | | | 90% | | | 22,424,788 | | | 82% | InCube Venture Associates II, LLC and Affiliates(2) | | | 2,374,614 | | | 10% | | | 256,623 | | | 1% | | | 2,631,237 | | | 2% | South Lake One LLC and Affiliates(3) | | | 6,532,148 | | | 27% | | | — | | | * | | | 6,532,148 | | | 2% | Aequanimitas LP and Affiliates(4) | | | 5,204,485 | | | 21% | | | — | | | * | | | 5,204,485 | | | 2% | Named Executive Officers and Directors
| | | | | | | | | | | | | | | | | | | Dennis Ausiello(7) | | | — | | | * | | | — | | | * | | | — | | | * | Lyn Baranowski | | | 6,087 | | | * | | | — | | | * | | | 6,087 | | | * | Jean-Luc Butel(5) | | | 49,073 | | | * | | | — | | | * | | | 49,073 | | | * | Laureen DeBuono(5) | | | 49,073 | | | * | | | — | | | * | | | 49,073 | | | * | Andrew Farquharson(2)(8) | | | 2,374,614 | | | 10% | | | 444,194 | | | 2% | | | 2,818,808 | | | 3% | Maulik Nanavaty(9) | | | — | | | * | | | 52,878 | | | * | | | 52,878 | | | * | Lisa Rometty | | | — | | | * | | | — | | | * | | | — | | | * | Mir Hashim(5)(10) | | | 53,696 | | | * | | | 172,148 | | | 1% | | | 225,844 | | | 1% | Mir Imran(1)(2) | | | 2,388,278 | | | 10% | | | 22,667,747 | | | 92% | | | 25,056,025 | | | 84% | Talat Imran(2)(6)(11) | | | 2,403,681 | | | 10% | | | — | | | * | | | 2,403,681 | | | 1% | Svai Sanford(5)(12) | | | 52,637 | | | * | | | — | | | * | | | 52,637 | | | * | All directors and executive officers as a group (11 persons) | | | 2,627,911 | | | 11% | | | 23,080,344 | | | 93% | | | 25,708,255 | | | 86% |
5% Stockholders
| | | | | | | | | | | | | | | | | | | InCube Labs, LLC(1) | | | 13,664 | | | * | | | 22,411,124 | | | 93% | | | 22,424,788 | | | 84% | South Lake One LLC and Affiliates(2) | | | 6,803,108 | | | 27% | | | — | | | — | | | 6,803,108 | | | 3% | Aequanimitas LP and Affiliates(3) | | | 5,271,378 | | | 21% | | | — | | | — | | | 5,271,378 | | | 2% | Named Executive Officers and Directors
| | | | | | | | | | | | | | | | | | | Dennis Ausiello(4) | | | 92,090 | | | * | | | — | | | — | | | 92,090 | | | * | Lyn Baranowski(5) | | | 44,174 | | | * | | | — | | | — | | | 44,174 | | | * | Jean-Luc Butel(6) | | | 135,788 | | | 1% | | | — | | | — | | | 135,788 | | | * | Laureen DeBuono(6) | | | 135,788 | | | 1% | | | — | | | — | | | 135,788 | | | * | Andrew Farquharson(7) | | | 114,234 | | | * | | | 436,500 | | | 2% | | | 550,734 | | | 2% | Mir Imran(8) | | | 115,555 | | | * | | | 22,660,053 | | | 94% | | | 22,775,608 | | | 85% | Maulik Nanavaty(9) | | | 103,107 | | | * | | | 52,878 | | | * | | | 155,985 | | | * | Lisa Rometty(6) | | | 37,906 | | | * | | | — | | | — | | | 37,906 | | | * | Mir Hashim(10) | | | 191,064 | | | 1% | | | 172,148 | | | 1% | | | 363,212 | | | 1% | Talat Imran(11) | | | 512,038 | | | 2% | | | — | | | — | | | 512,038 | | | * | Svai Sanford(12) | | | 180,912 | | | 1% | | | — | | | — | | | 180,912 | | | * | All directors and executive officers as a group (12 persons) | | | 1,685,537 | | | 7% | | | 23,072,650 | | | 96% | | | 24,758,187 | | | 87% |
*
| Represents beneficial ownership of less than 1% of the outstanding shares of our Class A common stock or Class B common stock. |
TABLE OF CONTENTS
(1)
| Represents shares held by InCube Labs, LLC (“ICL”). Mir Imran is the sole managing member of ICL, which is wholly ownedwholly-owned by Mir Imran and his family. The address of this entity is 2051 Ringwood Avenue, San Jose, California 95131. |
TABLE OF CONTENTS (2)
| Represents shares held by InCube Ventures II, L.P. (“InCube Ventures II”), Rani Investment Corporation (“RIC”), and VH Moll, LP (“VH”). InCube Ventures II is a limited partnership and its general partners are Mir Imran, Andrew Farquharson and Wayne Roe. RIC is wholly-owned by InCube Ventures II which is owned 99% by its limited partner Raffles Fund I, Ltd., a Cayman Island company, and 1% by its general partner InCube Venture Associates II, LLC, a Delaware LLC. InCube Venture Associates II, LLC is owned by Mir Imran, Andrew Farquharson and Wayne Roe. VH is a limited partnership and has a general partner, InCube Crowdfunding LLC, in which Mir Imran, Talat Imran and Andrew Farquharson are each managing members. The address of these entities is 2051 Ringwood Avenue, San Jose, California 95131. |
(3)
| Represents shares held by South Lake One LLC (“South Lake One”). as disclosed pursuant to a Schedule 13D/A filed with the SEC by South Lake One on March 15, 2023 and a Form 4 filed with the SEC by South Lake One on April 3, 2023. South Lake Management LLC (“South Lake Management”) is controlled and managed by the Class A and Class B members of its board of managers whereby no member of the board of managers has direct or indirect control of South Lake Management, and no member of South Lake Management individually has the power to control South Lake Management or replace its board of managers. South Lake Management directly controls South Cone Investments Limited Partnership (“South Cone”) as its general partner with the power to manage South Cone. South Cone directly owns 100% of the issued and outstanding membership interest of South Lake One. South Lake One is managed by the Class A and Class B members of its board of managers whereby no member of the board of managers has direct or indirect control of South Lake One. South Cone, as the sole member of South Lake One, has the power to control South Lake One and replace its board of managers. The address of these entities is Avenida Presidente Riesco 5711 oficina 1603, Las Condes, Santiago, Chile. |
(4)(3)
| Represents shares held by Aequanimitas Limited Partnership (“Aequanimitas”), which as disclosed pursuant to a Schedule 13D filed with the SEC by Aequanimitas on February 1, 2022 and a Form 4 filed with the SEC by Aequanimitas on January 3, 2023. Aequanimitas has a general partner, Aequanimitas Management LLC, whose sole and controlling member is Isidoro Alfonso Quiroga Cortés. The address of these entities is Avenida Presidente Riesco 5711 oficina 1603, Las Condes, Santiago, Chile. |
(5)(4)
| Consists of shares of Class A common stock underlying options that are exercisable within 60 days of March 31, 2022.2023. Dr. Ausiello beneficially owns 92,074 non-corresponding Class A units of Rani LLC. |
(5)
| Represents (i) 38,087 shares of Class A common stock underlying options which are exercisable within 60 days of March 31, 2023, and (ii) 6,087 restricted shares of Class A common stock. |
(6)
| Includes 29,067Consists of shares of Class A common stock underlying options that are exercisable within 60 days of March 31, 2022.2023. |
(7)
| Dr. Ausiello beneficially owns 92,074 non-correspondingIncludes (i) 41,416 shares of Class A unitscommon stock underlying options that are exercisable within 60 days of March 31, 2023, (ii) 12,343 shares of Class A common stock held by VH Moll, LP, (iii) 7,694 shares of Class A common stock held by Rani Investment Corporation, (iv) 52,718 shares of Class A common stock held by InCube Ventures II and (v) 248,929 shares of Class B common stock held by InCube Ventures II. InCube Ventures II is a limited partnership and its general partners are Mir Imran, Andrew Farquharson and Wayne Roe. VH Moll, LP is a limited partnership and the members of the general partner are Andrew Farquharson and Talat Imran. Andrew Farquharson and Mir Imran are general partners of Rani LLC. |
(8)
| Investment Corporation. The address of VH Moll, LP, Rani Investment Corporation, and InCube Ventures II is 2051 Ringwood Avenue, San Jose, California 95131. Mr. Farquharson beneficially owns 242,421 non-corresponding Class A units of Rani LLC. |
(8)
| Includes (i) 41,416 shares of Class A common stock underlying options that are exercisable within 60 days of March 31, 2023, (ii) shares held by ICL (refer to footnote 1 above), (iii) 7,694 shares of Class A common stock held by Rani Investment Corporation, (iv) 52,718 shares of Class A common stock held by InCube Ventures II, L.P. and its affiliates (“InCube Ventures II”), and (v) 248,929 shares of Class B common stock held by InCube Ventures II. InCube Ventures II is a limited partnership and its general partners are Mir Imran, Andrew Farquharson and Wayne Roe. Andrew Farquharson and Mir Imran are general partners of Rani Investment Corporation. The address of InCube Ventures II and Rani Investment Corporation is 2051 Ringwood Avenue, San Jose, California 95131. |
(9)
| Represents (i) 92,090 shares of Class A common stock underlying options which are exercisable within sixty days of March 31, 2023, and (ii) 11,017 shares of Class A common stock held by a family member of Mr. Nanavaty. Mr. Nanavaty beneficially owns 155,118 non-corresponding Class A units of Rani LLC. |
(10)
| Mr.Includes 146,499 shares of Class A common stock underlying options which are exercisable within 60 days of March 31, 2023. Dr. Hashim beneficially owns 374,119 non-corresponding Class A units of Rani LLC. |
(11)
| Mr.Includes (i) 486,033 shares of Class A common stock underlying options that are exercisable within 60 days of March 31, 2023 and (ii) 12,343 shares of Class A common stock held by VH Moll, LP. VH Moll, LP is a limited partnership and members of the general partner are Andrew Farquharson and Talat Imran. The address of VH Moll, LP is 2051 Ringwood Avenue, San Jose, California 95131. Talat Imran beneficially owns 43,484 non-corresponding Class A units of Rani LLC. |
(12)
| Includes 139,090 shares of Class A common stock underlying options which are exercisable within 60 days of March 31, 2023. Mr. Sanford beneficially owns 142,350 non-corresponding Class A units of Rani LLC. |
TABLE OF CONTENTS EXECUTIVE OFFICERSExecutive OfficersThe following table sets forth the names, ages, and positions of the Company’s executive officers as of March 30, 2022:2023: Talat Imran | | | 4142
| | | Chief Executive Officer and Director | Svai Sanford | | | 5253
| | | Chief Financial Officer | Mir Hashim | | | 6364
| | | Chief Scientific Officer | Eric Groen | | | 5152
| | | General Counsel |
Talat Imran. For Mr. Imran’s biography please refer to “Proposal 1: Election of Directors” above. Svai Sanford. Mr. Sanford has served as our Chief Financial Officer since November 2018. Prior to joining us, from June 2017 to November 2018, Mr. Sanford served as an executive consultant and acting Chief Financial Officer for pH Pharma Inc., a consumer skin care company. From September 2015 to March 2017, he served as the Chief Financial Officer of SFJ Pharmaceuticals, Inc., a drug development company, and from July 2012 to September 2015, he served as the Chief Financial Officer and Chief Accounting Officer of VIVUS, Inc., a public biopharmaceutical company. Mr. Sanford was a member of the audit practice at KPMG LLP from 1996 to 2002. He earned a B.S. in Accounting from Kansas State University and is a Certified Public Accountant (inactive). Mir Hashim. Dr. Hashim has served as our Chief Scientific Officer since June 2013 and was a member of our board of directors from June 2013 to June 2021. Dr. Hashim has served as Vice President, Research and Development, at InCube Labs, LLC, a medical device research company, since September 2008. Prior to this, he spent 18 years serving in multiple scientific roles at GlaxoSmithKline plc, a global pharmaceutical company, including as Head of Pharmacology. Dr. Hashim earned a B.S. in Biology and Chemistry from Osmania University, ana M.S. in Life Sciences from the University of Hyderabad and a Ph.D. in Pharmacology from the School of Medicine, Memorial University of Newfoundland. Dr. Hashim is the brother of Mir Imran, a director and the Chairman of the Company, and uncle of Talat Imran, a director and the Chief Executive Officer of the Company. Eric Groen. Mr. Groen has served as our General Counsel since July 2021. Prior to joining us, Mr. Groen served in various domestic and international roles of increasing responsibility over nearly 20 years at Amgen Inc., a global biotechnology company, including leading the legal teams responsible for business development transactions, operations and manufacturing and clinical trials. Most recently, he served as regional general counsel to Amgen Inc.’s commercial business in Canada, Latin America, Middle East and Africa. Mr. Groen earned a B.A. in Political Science from the University of California, Santa Barbara and a J.D. from Harvard Law School. TABLE OF CONTENTS SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS Descriptions of our 2021 Equity Incentive Plan (the “2021 Plan”) and our 2021 Employee Stock Purchase Plan (the “ESPP”) are contained in Note 92 and Note 11, respectively, of the Notes to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.2022. The following table provides certain information with respect to all of the Company’s equity compensation plans in effect as of December 31, 2021.2022. EQUITY COMPENSATION PLAN INFORMATIONEquity Compensation Plan Information
Plan Category | | Number of securities to be issued
upon exercise of outstanding
options, warrants and rights
(a) | | Weighted-average exercise
price of outstanding options,
warrants and rights
(b)(1) | | Number of securities remaining
available for issuance under
equity compensation plans
(excluding securities reflected in
column (a))
(c) | | Number of securities to be issued
upon exercise of outstanding
options, warrants and rights
(a) | | Weighted-average exercise
price of outstanding options,
warrants and rights
(b)(1) | | Number of securities remaining
available for issuance under
equity compensation plans
(excluding securities reflected in
column (a))
(c) | Equity compensation plans approved by stockholders | | 2,897,319(2) | | $14.12 | | 3,814,523(3) | | 4,454,086(2) | | $13.40 | | 5,072,582(3) | | | | | | | | | | | | | | Equity compensation plans not approved by stockholders | | — | | — | | — | | __ | | __ | | __ | | | | | | | | | | | | | | Total | | 2,897,319 | | $14.12 | | 3,814,523 | | 4,454,086 | | $13.40 | | 5,072,582 |
(1)
| The weighted average exercise price excludes restricted stock unit,units, which have no exercise price. |
(2)
| Includes 1,088,6952,609,511 shares of our Class A Common Stockcommon stock issuable pursuant to outstanding stock options under the 2021 Plan, 1,212,1241,179,075 shares of our Class A common stock issuable pursuant to outstanding stock options, which were issued under the 2016 Equity Incentive Plan and amended in connection with the IPO, and 596,500665,500 shares of our Class A common stock issuable pursuant to outstanding restricted stock units under the 2021 Plan. |
(3)
| Includes 3,314,523 shares of Class A Common Stock available for issuance under our 2021 Plan and 500,0004,511,017 shares of Class A common stock available for issuance under ourthe 2021 Plan and 561,565 shares of Class A common stock available for issuance under the ESPP. The number of shares of our Class A common stock reserved for issuance under the 2021 Plan automatically increases on January 1 of each year, starting on January 1, 2022 and continuing through January 1, 2031, by 5% of the aggregate number of shares of common stock of all classes issued and outstanding on December 31 of the immediately preceding calendar year, or a lesser number of shares determined by our Board of Directors prior to the applicable January 1. The maximum number of shares that may be issued upon the exercise of ISOsincentive stock options (“ISOs”) under ourthe 2021 Plan is 16,500,000 shares. The number of shares of Class A common stock reserved under the 2021 ESPP for issuance automatically increases on January 1 of each calendar year, beginning on January 1, 2022 and continuing through January 1, 2031, by the lesser of (1) 1% of the aggregate number of shares of common stock of all classes issued and outstanding on December 31 of the preceding calendar year, (2) 100,000 shares and (3) a number of shares determined by our Board of Directors. |
TABLE OF CONTENTS We are an “emerging growth company” under applicable federal securities laws and are therefore permitted to take advantage of certain reduced public company reporting requirements. As an emerging growth company, we provide in this proxy statement the scaled disclosure permitted under the Jumpstart Our Business Startups Act of 2012. In addition, as an emerging growth company, we are not required to conduct votes seeking approval, on an advisory basis, of the compensation of our named executive officers or the frequency that such votes must be conducted. Summary Compensation Table The following table shows, for the fiscal years ended December 31, 20212022 and 2020,2021, compensation awarded to or paid to, or earned by, our Chief Executive Officer, our former Chief Executive Officer and our two other most highly-compensated executive officers as of December 31, 20212022 (“Named Executive Officers”). Summary Compensation TableMir Hashim
| | | 64 Talat Imran(3)
Chief Executive Officer
| | | 2021 | | | $408,333 | | | — | | | — | | | $10,999,490 | | | $375,000 | | | — | | | $11,782,823 | Mir Imran(4)
Chairman and former President and Chief Executive Officer
| | | 2021 | | | — | | | — | | | — | | | — | | | — | | | $33,333 | | | $33,333 | | 2020 | | | — | | | — | | | | | | — | | | — | | | — | | | — | Mir Hashim
Chief Scientific Officer
| | | 2021 | | | $396,923 | | | — | | | $2,300,256 | | | $2,010,118 | | | $300,000 | | | — | | | $5,007,297 | | 2020 | | | $325,532 | | | — | | | — | | | $144,750 | | | $160,000 | | | — | | | $630,282 | Svai Sanford
Chief Financial Officer
| | | 2021 | | | $375,737 | | | — | | | $2,077,272 | | | $1,918,675 | | | $300,000 | | | — | | | $4,671,684 | | 2020 | | | $302,564 | | | — | | | — | | | $77,200 | | | $140,000 | | | — | | | $519,764 |
| | | Chief Scientific Officer |
Eric Groen | | | 52 (1)
| Amounts contain the aggregate grant date fair value of restricted stock units granted to our Named Executive Officers during 2021 under our 2021 Plan. These amounts do not correspond to the actual value that may be recognized by the Named Executive Officers. | | | General Counsel |
(2)
| Amounts contain the aggregate grant date fair value of Profits Interests granted to our Named Executive Officers during 2020 and 2021 under our 2016 Equity Incentive Plan, including incremental equity-based compensation expense recognized as a result of a modification in connection with our IPO, and options to purchase our Class A common stock granted to our Named Executive Officers during 2021 under the 2021 Plan, each computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The assumptions used in calculating the grant date fair value of the award disclosed in this column are set forth in the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. These amounts do not correspond to the actual value that may be recognized by the named executive officers. |
(3)
| Talat Imran has served as our Chief Executive Officer since June 2021. Amounts reported represent the total compensation earned by Talat Imran in 2021, including prior to becoming Chief Executive Officer of the Company. |
(4)
| Mir Imran resigned from his position as President and Chief Executive Officer in June 2021. He did not receive any compensation for his services as President and Chief Executive Officer in 2020 or 2021. Amounts reported represent fees paid to Mir Imran in connection with attendance at meetings of the Board of Directors and committees thereto.Talat Imran. For Mr. Imran’s biography please refer to “Proposal 1: Election of Directors” above. Svai Sanford. Mr. Sanford has served as our Chief Financial Officer since November 2018. Prior to joining us, from June 2017 to November 2018, Mr. Sanford served as an executive consultant and acting Chief Financial Officer for pH Pharma Inc., a consumer skin care company. From September 2015 to March 2017, he served as the Chief Financial Officer of SFJ Pharmaceuticals, Inc., a drug development company, and from July 2012 to September 2015, he served as the Chief Financial Officer and Chief Accounting Officer of VIVUS, Inc., a public biopharmaceutical company. Mr. Sanford was a member of the audit practice at KPMG LLP from 1996 to 2002. He earned a B.S. in Accounting from Kansas State University and is a Certified Public Accountant (inactive). Mir Hashim. Dr. Hashim has served as our Chief Scientific Officer since June 2013 and was a member of our board of directors from June 2013 to June 2021. Dr. Hashim has served as Vice President, Research and Development, at InCube Labs, LLC, a medical device research company, since September 2008. Prior to this, he spent 18 years serving in multiple scientific roles at GlaxoSmithKline plc, a global pharmaceutical company, including as Head of Pharmacology. Dr. Hashim earned a B.S. in Biology and Chemistry from Osmania University, a M.S. in Life Sciences from the University of Hyderabad and a Ph.D. in Pharmacology from the School of Medicine, Memorial University of Newfoundland. Dr. Hashim is the brother of Mir Imran, a director and the Chairman of the Company, and uncle of Talat Imran, a director and the Chief Executive Officer of the Company. Eric Groen. Mr. Groen has served as our General Counsel since July 2021. Prior to joining us, Mr. Groen served in various domestic and international roles of increasing responsibility over nearly 20 years at Amgen Inc., a global biotechnology company, including leading the legal teams responsible for business development transactions, operations and manufacturing and clinical trials. Most recently, he served as regional general counsel to Amgen Inc.’s commercial business in Canada, Latin America, Middle East and Africa. Mr. Groen earned a B.A. in Political Science from the University of California, Santa Barbara and a J.D. from Harvard Law School. TABLE OF CONTENTS SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS Descriptions of our 2021 Equity Incentive Plan (the “2021 Plan”) and our 2021 Employee Stock Purchase Plan (the “ESPP”) are contained in Note 2 and Note 11, respectively, of the Notes to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The following table provides certain information with respect to all of the Company’s equity compensation plans in effect as of December 31, 2022. Equity Compensation Plan Information Equity compensation plans approved by stockholders | | | 4,454,086(2) | | | $13.40 | | | 5,072,582(3) | | | | | | | | | | | Equity compensation plans not approved by stockholders | | | __ | | | __ | | | __ | | | | | | | | | | | Total | | | 4,454,086 | | | $13.40 | | | 5,072,582 |
(1)
| The weighted average exercise price excludes restricted stock units, which have no exercise price. |
23(2)
| Includes 2,609,511 shares of Class A common stock issuable pursuant to outstanding stock options under the 2021 Plan, 1,179,075 shares of our Class A common stock issuable pursuant to outstanding stock options, which were issued under the 2016 Equity Awards at Fiscal Year EndIncentive Plan and amended in connection with the IPO, and 665,500 shares of Class A common stock issuable pursuant to outstanding restricted stock units under the 2021 Plan. |
(3)
| Includes 4,511,017 shares of Class A common stock available for issuance under the 2021 Plan and 561,565 shares of Class A common stock available for issuance under the ESPP. The following table showsnumber of shares of Class A common stock reserved for issuance under the fiscal2021 Plan automatically increases on January 1 of each year, ended December 31, 2021, certain information regardingstarting on January 1, 2022 and continuing through January 1, 2031, by 5% of the aggregate number of shares of common stock of all classes issued and outstanding equity awards at fiscal year-end for the Named Executive Officers.Outstanding Equity Awards on December 31 2021
Mir Imran(1) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Talat Imran | | | 6/17/2021(2) | | | 9,868 | | | 69,083 | | | $9.44 | | | 6/16/2031 | | | — | | | — | | | — | | | — | | 9/9/2021(3) | | | — | | | 725,000 | | | $19.56 | | | 9/8/2031 | | | — | | | — | | | — | | | — | Mir Hashim | | | 6/17/2021(2) | | | 26,439 | | | 185,073 | | | $9.44 | | | 6/16/2031 | | | — | | | — | | | — | | | — | | 9/9/2021(4) | | | — | | | — | | | — | | | — | | | — | | | — | | | 117,600 | | | $1,922,760 | Svai Sanford | | | 6/17/2021(2) | | | 26,439 | | | 185,073 | | | $9.44 | | | 6/16/2031 | | | — | | | — | | | — | | | — | | 9/9/2021(4) | | | — | | | — | | | — | | | — | | | — | | | — | | | 106,200 | | | $1,736,370 |
(1)
| Mir Imran resigned from his position as President and Chief Executive Officer in June 2021. |
(2)
| Award issued pursuant to Rani LLC’s 2016 Equity Incentive Plan and assumed by Rani Holdings in connection with the IPO. The shares subject to the option vest over four years, with 1/48th of the shares vesting on each monthly anniversary of the grant date, subject to the Named Executive Officer providing continued service through each such date. |
(3)
| Award issued pursuant to the 2021 Plan and assumed by Rani Holdings in connection with the IPO. The shares subject to the option vest over four years, with 1/48th of the shares vesting on each monthly anniversary of June 14, 2021, subject to the Named Executive Officer providing continued service through each such date. |
(4)
| Award issued pursuant to the 2021 Plan. One-half of the shares subject to the restricted stock unit vest on each yearly anniversary of the grant date, subject to the Named Executive Officer providing continued service through each such date. |
Narrative to Summary Compensation Table
Employment Agreements
Below are descriptions of the offer letters withimmediately preceding calendar year, or a lesser number of shares determined by our Board of Directors prior to the applicable January 1. The maximum number of shares that may be issued upon the exercise of incentive stock options (“ISOs”) under the 2021 Plan is 16,500,000 shares. The number of shares of Class A common stock reserved under the 2021 ESPP for issuance automatically increases on January 1 of each calendar year, beginning on January 1, 2022 and continuing through January 1, 2031, by the lesser of our Named Executive Officers setting forth the terms and conditions of such executive’s employment with Rani Management Services, Inc. (“RMS”), a wholly owned subsidiary(1) 1% of the Company. Mir Imran did not have a formal offer letter or employment agreement with RMS that was in effect during fiscal year 2020 or 2021, while serving as our Presidentaggregate number of shares of common stock of all classes issued and Chief Executive Officer. All of our Named Executive Officers are employed at-will.
Talat Imran
Inoutstanding on December 2019, RMS entered into an offer letter with Talat Imran, our Chief Executive Officer, effective January 1, 2020, which was amended and restated as an employment agreement in June of 2021. The employment agreement provided for an initial annual base salary of $300,000, that was increased to $500,000, effective June 17, 2021 pursuant to the amendment and restatement31 of the employment agreement. The employment agreement also provides Talat Imran with an opportunity to earn an annual bonus withpreceding calendar year, (2) 100,000 shares and (3) a target amount equal to 75%number of his annual base salary. Talat Imran is also entitled to certain benefits upon his terminationshares determined by our Board of employment as discussed below in the section titled “–Potential Payments Upon Termination or Change in Control”Directors.
|
TABLE OF CONTENTS We are an “emerging growth company” under applicable federal securities laws and are therefore permitted to take advantage of certain reduced public company reporting requirements. As an emerging growth company, we provide in this proxy statement the scaled disclosure permitted under the Jumpstart Our Business Startups Act of 2012. In addition, as an emerging growth company, we are not required to conduct votes seeking approval, on an advisory basis, of the compensation of our named executive officers or the frequency that such votes must be conducted. Summary Compensation Table The following table shows, for the fiscal years ended December 31, 2022 and 2021, compensation awarded to or paid to, or earned by, our Chief Executive Officer and our two other most highly-compensated executive officers as of December 31, 2022 (“Named Executive Officers”). Mir Hashim | | | In December 2019, RMS entered into an offer letter with Dr. Hashim, to serve as our 64
| | | Chief Scientific Officer effective January 1, 2020, which was amended and restated as an employment agreement in June of 2021. The employment agreement provided for an annual salary of $315,000, that was increased to $400,000, effective as of | Eric Groen | | | 52 | | | TABLE OF CONTENTS
November 15, 2020. The employment agreement also provides Dr. Hashim with an opportunity to earn an annual bonus with a target amount equal to 75% of his annual base salary. Dr. Hashim is also entitled to certain benefits upon his termination of employment as discussed below in the section titled “–Potential Payments Upon Termination or Change in Control”.
Svai Sanford
In December 2019, RMS entered into an offer letter with Mr. Sanford, our Chief Financial Officer, effective January 1, 2020, which was amended and restated as an employment agreement in June of 2021. The employment agreement provided for an initial annual salary of $300,000, that was increased to $350,000, effective as of November 15, 2020 and increased again to $400,000, effective June 17, 2021. The employment agreement also provides Mr. Sanford with an opportunity to earn an annual bonus with a target amount equal to 75% of his annual base salary. Mr. Sanford is also entitled to certain benefits upon his termination of employment as discussed below in the section titled “–Potential Payments Upon Termination or Change in Control”.
Equity Incentives
We have historically offered equity incentives to our Named Executive Officers in the form of non-vested incentive units (“Profits Interests”) of Rani LLC. In connection with the IPO, all outstanding Profits Interests were recapitalized into a single class of economic nonvoting Class A units of Rani LLC based on an exchange ratio calculated based on the initial public offering price of our Class A common stock. Since the IPO, we have offered equity incentives to our Named Executive Officers in the form of restricted stock unit awards and options to purchase our Class A common stock, each pursuant to the terms of the 2021 Plan which became effective in connection with the IPO.
On June 17, 2021, and prior to our IPO, each of our Named Executive Officers, other than Mir Imran, was granted an option to purchase common units by Rani LLC under the 2016 Equity Incentive Plan. Talat Imran, Mir Hashim and Svai Sanford were each granted options to purchase 149,309, 400,000 and 400,000 of Rani LLC’s common units, respectively, which were assumed by us in connection with our IPO and converted into options to purchase 78,951, 211,512 and 211,512 shares of our Class A common stock, respectively. Each option had a per-unit exercise price of $4.99, which was the per-unit fair market value of the underlying common units on the grant date. This exercise price was adjusted to a per-share exercise price of $9.44 in connection with the assumption and conversion of each option by us. Each option vests in substantially equal monthly installments from the grant date, subject to the Named Executive Officer’s continuous service to us through each such vesting date.
In September 2021, our Board of Directors granted Talat Imran an option to purchase 725,000 shares of our Class A common stock, with an exercise price of $19.56 per share. The option vests in substantially equal monthly installments from its vesting commencement date, subject to Talat Imran’s continuous service to us through each such vesting date. In addition, in September 2021, our Compensation Committee granted each of Mir Hashim and Svai Sanford restricted stock units with respect to 117,600 and 106,200 shares of our Class A common stock, respectively, which vest in two substantially equal installments on the first and second anniversaries of their grant date, subject in each case to the Named Executive Officer’s continuous service to us through each such vesting date.
Annual Bonus
In December 2020, prior to becoming a public company, our compensation committee approved discretionary annual bonuses for Dr. Hashim and Mr. Sanford for 2020 in the amount equal to 40% of their then-current annual salary, equal to $160,000 and $140,000, respectively, which were paid in December 2020, as reflected in the “Bonus” column of the Summary Compensation Table above. In December 2021, our compensation committee approved discretionary annual bonuses for Talat Imran, Dr. Hashim and Mr. Sanford for 2021 in the amount of $375,000 with respect to Talat Imran and $300,000 with respect to each of Dr. Hashim and Mr. Sanford, which were paid in December 2021, as reflected in the “Bonus” column of the Summary Compensation Table above.
401(k) Plan
The Company’s eligible employees are permitted to participate in InCube Labs, LLC’s 401(k) Plan (“401(k) Plan”). Plan participants are able to defer eligible compensation subject to applicable annual limits pursuant to the Internal Revenue Code of 1986, as amended (the “Code”). The 401(k) Plan is intended to be qualified under Section 401(a) of the Code with the 401(k) Plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a
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tax-qualified retirement plan, contributions to the 401(k) Plan and earnings on those contributions are not taxable to our employees until distributed from the 401(k) Plan. Participation in the 401(k) Plan is offered for the benefit of U.S. employees, including the Company’s Named Executive Officers, who satisfy certain eligibility requirements.
Potential Payments Upon Termination or Change in ControlEach of our Named Executive Officers has been granted options and restricted stock unit awards that are subject to the terms of the 2021 Plan. Stock awards granted under the 2021 Plan may be subject to acceleration of vesting and exercisability upon or after a Change in Control (as defined in the 2021 Plan) as may be provided in the applicable award agreement or in any other written agreement between us or any affiliate and the participant, but in the absence of such provision, no such acceleration will automatically occur.
Severance and Change in Control Plan
Each of our Named Executive Officers is eligible to receive benefits under the terms of the Company’s Severance and Change in Control Plan adopted by the Board of Directors on June 17, 2021 (the “Severance Plan”).
The Severance Plan provides for severance and change in control benefits to the executive officers upon (i) a “change in control termination” or (ii) a “regular termination” (each as described below). Upon a change in control termination, each of our executive officers is entitled to a lump sum payment equal to a portion of his base salary (18 months for Talat Imran and 12 months for each of Dr. Hashim and Mr. Sanford), a lump sum payment equal to 150% (for Talat Imran) or 100% (for each of Dr. Hashim and Mr. Sanford) of his annual target cash bonus, payment of group health insurance premiums for a period of 18 months (for Talat Imran) and 12 months (for each of Dr. Hashim and Mr. Sanford) and accelerated vesting of outstanding time-vesting equity awards. Upon a regular termination, each of the executive officers is entitled to continued payment of his base salary for a period 12 months (for Talat Imran) and nine months (for each of Dr. Hashim and Mr. Sanford) and payment of group health insurance premiums for a period of 12 months (for Talat Imran) and nine months (for each of Dr. Hashim and Mr. Sanford). All severance benefits under the Severance Plan are subject to the executive officer’s execution of an effective release of claims against us.
For purposes of the Severance Plan, a “regular termination” is an involuntary termination (i.e., a termination without “cause” (and not as a result of death or disability) or a resignation for “good reason,” each as defined in the Severance Plan) that does not occur during the period of time beginning three months prior to, and ending 12 months following, a “change in control” (as defined in the 2021 Plan), or the “change in control period.” A “change in control termination” is a regular termination that occurs during the change in control period.
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The following table shows for the fiscal year ended December 31, 2021 certain information with respect to the compensation of all directors of the Company, except Mir Imran, our former Chief Executive Officer and President and the Chairman of our Board of Directors, and Talat Imran, our Chief Executive Officer. Directors who are also our employees receive no additional compensation for their service as directors. Talat Imran did not receive any additional compensation for his services as a director in 2021. Mir Imran did not receive any compensation for his services as an officer. When Mir Imran resigned as our Chief Executive Officer and President on June 14, 2021, he began receiving compensation for his services as a director. The compensation of Talat Imran and Mir Imran is set forth above in the section titled “Executive Compensation.”
Director Compensation for Fiscal Year 2021
Dennis Ausiello | | | $37,917 | | | — | | | $1,045,063 | | | — | | | — | | | — | | | $1,082,980 | Andrew Farquharson | | | $18,750 | | | — | | | $447,398 | | | — | | | — | | | — | | | $466,148 | Maulik Nanavaty | | | $29,792 | | | — | | | $1,026,856 | | | — | | | — | | | — | | | $1,056,648 | Jean-Luc Butel | | | $28,826 | | | — | | | $878,038 | | | — | | | — | | | — | | | $906,864 | Laureen DeBuono | | | $43,750 | | | — | | | $878,038 | | | — | | | — | | | — | | | $921,788 | Lyn Baranowski | | | $7,566 | | | $37,275 | | | $589,042 | | | — | | | — | | | — | | | $633,883 |
(1)
| Amounts reflect the aggregate grant date fair value of Profits Interests granted to our non-employee directors during 2021 under our 2016 Equity Incentive Plan, including certain incremental equity-based compensation expense recognized as a result of a modification in connection with the IPO, and options to purchase our Class A common stock granted to our non-employee directors during 2021 under our 2021 Plan, each computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The assumptions used in calculating the grant date fair value of the award disclosed in this column are set forth in the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. These amounts do not correspond to the actual value that may be recognized by the non-employee directors. |
(2)
| The following table provides information regarding the aggregate number of equity awards granted to our non-employee directors that were outstanding as of December 31, 2021: |
Dennis Ausiello | | | — | | | 79,317 | Andrew Farquharson | | | — | | | — | Maulik Nanavaty | | | — | | | 79,317 | Jean-Luc Butel | | | — | | | 135,896 | Laureen DeBuono | | | — | | | 135,896 | Lyn Baranowski | | | 4,819 | | | 31,695 |
Board Compensation
The Board of Directors has adopted a non-employee director compensation policy, effective as of the Company’s initial public offering, pursuant to which each of the directors who is not an employee or consultant of the Company will be eligible to receive compensation for service on the Board of Directors and committees of the Board of Directors.
Each non-employee director will receive an annual cash retainer of $45,000 for serving on the Board of Directors, and the chairperson and/or lead independent director of the Board of Directors will each receive an additional annual cash retainer of $35,000. The chairperson of the Audit Committee will be entitled to an annual service retainer of $20,000, and each other member of the Audit Committee will be entitled to an annual service retainer of $7,500. The chairperson of the Compensation Committee will be entitled to an annual service retainer of $15,000, and each other member of the Compensation Committee will be entitled to an annual service retainer of $5,000. The chairperson of
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the Nominating and Corporate Governance Committee will be entitled to an annual service retainer of $10,000, and each other member of the Nominating and Corporate Governance Committee will be entitled to an annual service retainer of $4,000. All annual cash compensation amounts will be payable in equal quarterly installments in arrears, on the last day of each fiscal quarter for which the service occurred, pro-rated for any partial months of service.
On the date of each annual meeting of our stockholders, each continuing non-employee director will receive an option to purchase a number of shares of Class A common stock of the Company under the 2021 Plan with a grant date fair value of $300,000. The grant date fair value of any annual option grant to a non-employee director who is elected or appointed on a date other than the date of an annual meeting of the stockholders will be prorated to reflect the time between the date of such director’s election or appointment and the date of such first annual stockholder meeting. The shares subject to annual option grants will vest upon the earlier of the first anniversary of the grant date or the date of the next annual meeting of stockholders, subject to the non-employee director’s continuous service with the Company through the vesting date.
Each new non-employee director who joins the Board of Directors will be granted an option to purchase a number of shares of Class A common stock of the Company under the 2021 Plan with a grant date fair value of $600,000. The shares subject to this option will vest over a three-year period, with one-third of the shares subject to the option vesting on the first anniversary of the grant date and one thirty-sixth of the shares subject to the option vesting each month thereafter, subject to the non-employee director’s continuous service with the Company through each vesting date.
All options granted under the non-employee director compensation policy will vest upon a change in control of the Company, subject to the non-employee director’s continuous service with the Company through the date of such change in control. The exercise price per share of each option granted under the non-employee director compensation policy will be equal to the closing price of the Company’s Class A common stock on Nasdaq on the date of grant. Each option will have a term of ten years from the grant date, subject to earlier termination in connection with a termination of the non-employee director’s continuous service with the Company.
In addition, the Company will reimburse non-employee directors for ordinary, necessary and reasonable out-of-pocket travel expenses to cover in-person attendance at and participation in board and committee meetings.
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TRANSACTIONS WITH RELATED PERSONS AND INDEMNIFICATIONRelated Person Transactions Policy and ProceduresIn June 2021, the Company adopted a written Related-Person Transactions Policy that sets forth the Company’s policies and procedures regarding the identification, review, consideration and approval or ratification of “related persons transactions.” For purposes of the Company’s policy only, a “related person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company and any “related person” are participants in which the amount involved exceeds (a) $120,000 or (b) if the Company qualifies as a “smaller reporting company” under the rules and regulations of the Securities and Exchange Commission, the lesser of (x) $120,000 or (y) 1% of the average of the Company’s total assets at year-end for the last two completed fiscal years. Transactions involving compensation for services provided to the Company as an employee, director, consultant or similar capacity by a related person are not covered by this policy. A related person is any executive officer, director, or more than 5% stockholder of the Company, including any of their immediate family members, and any entity owned or controlled by such persons.
Certain Related Person TransactionsThe following is a summary of transactions since January 1, 2020, to which the Company has been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest, other than compensation arrangements which are described in the sections titled “Executive Compensation” and “Director Compensation.”
ICL is wholly-owned by the Company’s founder and Chairman and his family. The founder and Chairman is also the father of the Company’s Chief Executive Officer. The Company’s Chief Scientific Officer is the brother of the founder and Chairman and uncle of the Company’s Chief Executive Officer.
Services agreements
In January 2019, Rani LLC entered into a one-year service agreement with ICL. This service agreement was amended in January 2020 to extend the period for an additional year and expired in December 2020. In June 2021, Rani LLC entered into a Service Agreement with ICL effective retrospectively to January 1, 2021 and subsequently amended such agreement in March 2022 (as amended, the “Rani LLC-ICL Service Agreement”), pursuant to which Rani LLC and ICL agreed to provide personnel services to the other upon requests. Under the amendment in March 2022, ICL agreed to rent a specified portion of certain facilities in California and Texas to Rani LLC (“Occupancy Services”). The Rani LLC-ICL Service Agreement has a twelve-month term and will automatically renew for successive twelve-month periods unless terminated; except that the Occupancy Services in California have a term until February 2023, with the potential for two annual renewals, subject to approval by ICL upon a nine months’ notice of renewal prior to the end of the lease term, and the Occupancy Services in Texas continue until either party gives six months’ notice of termination. Except for the Occupancy Services, Rani LLC or ICL may terminate services under the Rani LLC-ICL Service Agreement upon 60 days’ notice to the other party. The Rani LLC-ICL Service Agreement specifies the scope of services to be provided as well as the methods for determining the costs of services. Costs are billed or charged on a monthly basis by ICL or Rani LLC, respectively.
In June 2021, RMS entered into a Service Agreement with ICL (the “RMS-ICL Service Agreement”) effective retrospectively to January 1, 2021, pursuant to which ICL agreed to rent a specified portion of its facility to RMS. Additionally, RMS and ICL agreed to provide personnel services to the other upon requests based on rates specified in the RMS-ICL Service Agreement. The RMS-ICL Service Agreement has a twelve-month term and will automatically renew for successive twelve-month periods unless terminated. RMS or ICL may terminate services under the RMS-ICL Service Agreement upon 60 days' notice to the other party, except for occupancy which requires six months’ notice. The RMS-ICL Service Agreement specifies the scope of services to be provided as well as the methods for determining the costs of services. Costs are billed or charged on a monthly basis by ICL or RMS, respectively, as well as allocations of expenses based upon RMS’s utilization of ICL’s facilities and equipment.
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The table below details the amounts charged by ICL for services and rent, net of the amount that RMS charged ICL of $0.6 million and $0.4 million for the years ended December 31, 2021 and 2020, respectively:
Research and development | | | $1,115 | | | $535 | General and administrative | | | 735 | | | 1,826 | Total | | | $1,850 | | | $2,361 |
As of December 31, 2021, all of the Company’s facilities are owned or leased by an entity affiliated with the Company’s Chairman. The Company pays for the use of these facilities through the RMS-ICL Service Agreement. Rent expense incurred with ICL was $0.8 million for each of the years ended December 31, 2021 and 2020.
Financing activity
From inception to the first half of 2017, the Company advanced funds to ICL, and ICL made payments directly to certain vendors on behalf of Rani, Rani has reimbursed ICL for all such payments at cost on a monthly basis.
In June 2017, the Company converted the outstanding net advances of $6.6 million to ICL into three notes receivable. The notes provide for interest at 1.97% compounded annually, loan fees of 2.75% and are payable upon demand to the Company any time after January 1, 2024. During 2020, the Company received $0.2 million in payments for interest and repayment of principal on the remaining note receivable.
As of December 31, 2020, $1.7 million of the note receivable was outstanding. In March 2021, the outstanding balance due, including all accrued interest, was fully repaid by ICL.
In December 2020, we amended the terms of certain expired warrants to purchase Series B units (the “Series B Warrants”), issued to InCube Ventures II, LP (“ICV II”), a related party and entity affiliated with ICL, by extending its exercise period for an additional two years. In December 2020, ICV II elected to cashless exercise all of their Series B Warrants and Rani LLC issued 51,341 Series B units.
During 2020 and 2021, South Lake One LLC, a related party of the Company, and its affiliates purchased 2,100,800 common units of Rani LLC at a price of $7.1471 per unit for a total purchase price of $15.0 million and 7,880,120 Series E Preferred Units of Rani LLC at a price of $7.1471 per unit for a total purchase price of $56.3 million. As part of organizational transactions at the time of the Company’s IPO, the common units and Series E Preferred Units were exchanged for 5,277,729 shares of the Company's Class A common stock.
Exclusive License, Intellectual Property and Common Unit Purchase Agreement
The Company, through Rani LLC, and ICL entered into an exclusive license and an intellectual property agreement and common unit purchase agreement in 2012. Pursuant to the common unit purchase agreement, the Company issued 46.0 million common units to ICL in return for rights to exclusive commercialization, development, use and sale of certain products and services related to the RaniPill™ capsule technology. ICL also granted the Company a fully-paid, royalty-free, sublicensable, exclusive license under the intellectual property made by ICL during the course of providing services to the Company related to the RaniPill capsule technology.
In June 2021, ICL and the Company, through Rani LLC, entered into an Amended and Restated Exclusive License Agreement which replaced a prior Exclusive License Agreement from 2012, as amended in 2013, and terminated an Intellectual Property Agreement from 2012, as amended in June 2013. Under the Amended and Restated Exclusive License Agreement, the Company has a fully paid, exclusive license under certain scheduled patents related to optional features of the device and certain other scheduled patents to exploit products covered by those patents in the field of oral delivery of sensors, small molecule drugs or biologic drugs including, any peptide, antibody, protein, cell therapy, gene therapy or vaccine. The Company covers patent-related expenses and, after a certain period, the Company will have the right to acquire four specified U.S. patent families from ICL by making a one-time payment of $0.3 million to ICL for each U.S. patent family that the Company desires to acquire, up to $1.0 million in the aggregate. This payment will not become an obligation until the fifth anniversary of the Amended and Restated Exclusive License Agreement. The Amended and Restated Exclusive License Agreement will terminate when there
30Talat Imran. For Mr. Imran’s biography please refer to “Proposal 1: Election of Directors” above. Svai Sanford. Mr. Sanford has served as our Chief Financial Officer since November 2018. Prior to joining us, from June 2017 to November 2018, Mr. Sanford served as an executive consultant and acting Chief Financial Officer for pH Pharma Inc., a consumer skin care company. From September 2015 to March 2017, he served as the Chief Financial Officer of SFJ Pharmaceuticals, Inc., a drug development company, and from July 2012 to September 2015, he served as the Chief Financial Officer and Chief Accounting Officer of VIVUS, Inc., a public biopharmaceutical company. Mr. Sanford was a member of the audit practice at KPMG LLP from 1996 to 2002. He earned a B.S. in Accounting from Kansas State University and is a Certified Public Accountant (inactive). Mir Hashim. Dr. Hashim has served as our Chief Scientific Officer since June 2013 and was a member of our board of directors from June 2013 to June 2021. Dr. Hashim has served as Vice President, Research and Development, at InCube Labs, LLC, a medical device research company, since September 2008. Prior to this, he spent 18 years serving in multiple scientific roles at GlaxoSmithKline plc, a global pharmaceutical company, including as Head of Pharmacology. Dr. Hashim earned a B.S. in Biology and Chemistry from Osmania University, a M.S. in Life Sciences from the University of Hyderabad and a Ph.D. in Pharmacology from the School of Medicine, Memorial University of Newfoundland. Dr. Hashim is the brother of Mir Imran, a director and the Chairman of the Company, and uncle of Talat Imran, a director and the Chief Executive Officer of the Company. Eric Groen. Mr. Groen has served as our General Counsel since July 2021. Prior to joining us, Mr. Groen served in various domestic and international roles of increasing responsibility over nearly 20 years at Amgen Inc., a global biotechnology company, including leading the legal teams responsible for business development transactions, operations and manufacturing and clinical trials. Most recently, he served as regional general counsel to Amgen Inc.’s commercial business in Canada, Latin America, Middle East and Africa. Mr. Groen earned a B.A. in Political Science from the University of California, Santa Barbara and a J.D. from Harvard Law School. TABLE OF CONTENTS SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS Descriptions of our 2021 Equity Incentive Plan (the “2021 Plan”) and our 2021 Employee Stock Purchase Plan (the “ESPP”) are contained in Note 2 and Note 11, respectively, of the Notes to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The following table provides certain information with respect to all of the Company’s equity compensation plans in effect as of December 31, 2022. Equity Compensation Plan Information Equity compensation plans approved by stockholders | | | 4,454,086(2) | | | $13.40 | | | 5,072,582(3) | | | | | | | | | | | Equity compensation plans not approved by stockholders | | | __ | | | __ | | | __ | | | | | | | | | | | Total | | | 4,454,086 | | | $13.40 | | | 5,072,582 |
(1)
| The weighted average exercise price excludes restricted stock units, which have no exercise price. |
(2)
| Includes 2,609,511 shares of Class A common stock issuable pursuant to outstanding stock options under the 2021 Plan, 1,179,075 shares of our Class A common stock issuable pursuant to outstanding stock options, which were issued under the 2016 Equity Incentive Plan and amended in connection with the IPO, and 665,500 shares of Class A common stock issuable pursuant to outstanding restricted stock units under the 2021 Plan. |
(3)
| Includes 4,511,017 shares of Class A common stock available for issuance under the 2021 Plan and 561,565 shares of Class A common stock available for issuance under the ESPP. The number of shares of Class A common stock reserved for issuance under the 2021 Plan automatically increases on January 1 of each year, starting on January 1, 2022 and continuing through January 1, 2031, by 5% of the aggregate number of shares of common stock of all classes issued and outstanding on December 31 of the immediately preceding calendar year, or a lesser number of shares determined by our Board of Directors prior to the applicable January 1. The maximum number of shares that may be issued upon the exercise of incentive stock options (“ISOs”) under the 2021 Plan is 16,500,000 shares. The number of shares of Class A common stock reserved under the 2021 ESPP for issuance automatically increases on January 1 of each calendar year, beginning on January 1, 2022 and continuing through January 1, 2031, by the lesser of (1) 1% of the aggregate number of shares of common stock of all classes issued and outstanding on December 31 of the preceding calendar year, (2) 100,000 shares and (3) a number of shares determined by our Board of Directors. |
TABLE OF CONTENTS We are an “emerging growth company” under applicable federal securities laws and are therefore permitted to take advantage of certain reduced public company reporting requirements. As an emerging growth company, we provide in this proxy statement the scaled disclosure permitted under the Jumpstart Our Business Startups Act of 2012. In addition, as an emerging growth company, we are not required to conduct votes seeking approval, on an advisory basis, of the compensation of our named executive officers or the frequency that such votes must be conducted. Summary Compensation Table The following table shows, for the fiscal years ended December 31, 2022 and 2021, compensation awarded to or paid to, or earned by, our Chief Executive Officer and our two other most highly-compensated executive officers as of December 31, 2022 (“Named Executive Officers”). Summary Compensation Table Talat Imran
Chief Executive Officer
| | | 2022 | | | $515,000 | | | $ | | | $1,143,986 | | | $2,340,204 | | | $312,000 | | | — | | | $4,311,190 | | 2021 | | | $408,333 | | | — | | | — | | | $10,999,490 | | | $375,000 | | | — | | | $11,782,823 | Mir Hashim
Chief Scientific Officer
| | | 2022 | | | $412,000 | | | | | | $544,252 | | | $1,114,129 | | | $249,600 | | | — | | | $2,319,981 | | 2021 | | | $396,923 | | | — | | | $2,300,256 | | | $2,010,118 | | | $300,000 | | | — | | | $5,007,297 | Svai Sanford
Chief Financial Officer
| | | 2022 | | | $412,000 | | | — | | | $434,609 | | | $888,460 | | | $249,600 | | | — | | | $1,984,669 | | 2021 | | | $375,737 | | | — | | | $2,077,272 | | | $1,918,675 | | | $300,000 | | | — | | | $4,671,684 |
(1)
| Amounts contain the aggregate grant date fair value of restricted stock units granted to our Named Executive Officers during 2022 and 2021 under the 2021 Plan, each computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (ASC Topic 718). The assumptions used in calculating the grant date fair value of the award disclosed in this column are set forth in the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. These amounts do not correspond to the actual value that may be recognized by the Named Executive Officers.. |
(2)
| Amounts contain the aggregate grant date fair value of Profits Interests granted to our Named Executive Officers during 2021 under the 2016 Equity Incentive Plan, including incremental equity-based compensation expense recognized as a result of a modification in connection with the IPO, and options to purchase Class A common stock granted to our Named Executive Officers during 2022 and 2021 under the 2021 Plan, each computed in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of the award disclosed in this column are set forth in the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. These amounts do not correspond to the actual value that may be recognized by the Named Executive Officers. |
(3)
| Amounts shown represent performance bonuses earned in 2022 and 2021, which were paid in cash in December 2021 and December 2022, respectively. |
TABLE OF CONTENTS Outstanding Equity Awards at Fiscal Year End The following table shows for the fiscal year ended December 31, 2022, certain information regarding outstanding equity awards at fiscal year-end for the Named Executive Officers. Outstanding Equity Awards on December 31, 2022 Talat Imran | | | 3/22/2022(3) | | | 49,387 | | | 214,013 | | | $13.21 | | | 3/21/2032 | | | — | | | — | | | — | | | — | | 3/22/2022(4) | | | — | | | — | | | — | | | — | | | 86,600 | | | $1,143,986 | | | — | | | — | | 6/17/2021(1) | | | 29,606 | | | 49,345 | | | $9.44 | | | 6/16/2031 | | | — | | | — | | | — | | | — | | 9/9/2021(2) | | | 271,876 | | | 453,125 | | | $19.56 | | | 9/8/2031 | | | — | | | — | | | — | | | — | Mir Hashim | | | 3/22/2022(3) | | | 23,512 | | | 101,888 | | | $13.21 | | | 3/21/2032 | | | — | | | — | | | — | | | — | | 3/22/2022(4) | | | — | | | — | | | — | | | — | | | 41,200 | | | $544,252 | | | — | | | — | | 6/17/2021(1) | | | 79,317 | | | 132,195 | | | $9.44 | | | 6/16/2031 | | | — | | | — | | | — | | | — | | 9/9/2021(2) | | | — | | | — | | | — | | | — | | | 58,800 | | | $1,150,128 | | | — | | | — | Svai Sanford | | | 3/22/2022(3) | | | 18,750 | | | 81,250 | | | $13.21 | | | 3/21/2032 | | | — | | | — | | | — | | | — | | 3/22/2022(4) | | | — | | | — | | | — | | | — | | | 32,900 | | | $434,609 | | | — | | | — | | 6/17/2021(1) | | | 79,317 | | | 132,195 | | | $9.44 | | | 6/16/2031 | | | — | | | — | | | — | | | — | | 9/9/2021(2) | | | — | | | — | | | — | | | — | | | 53,100 | | | $1,038,636 | | | | | | — |
(1)
| Award issued pursuant to Rani LLC’s 2016 Equity Incentive Plan and assumed by Rani Holdings in connection with the IPO. The shares subject to the option vest over 4 years, with 1/48th of the shares vesting on each monthly anniversary of the Grant Date, subject to the Named Executive Officer providing continued service through each such date. |
(2)
| Award issued pursuant to the 2021 Plan. One-half of the shares subject to the restricted stock unit vest on each yearly anniversary of the Grant Date, subject to the Named Executive Officer providing continued service through each such date. |
(3)
| Award issued pursuant to the 2021 Plan. The shares subject to the options vest over 4 years, with 1/48th of the shares vesting on each monthly anniversary of the Grant Date, subject to the Named Executive Officer providing continued service through each such date. |
(4)
| Award issued pursuant to the 2021 Plan. One-quarter of the shares subject to the restricted stock unit vest on each yearly anniversary of the Grant Date, subject to the Named Executive Officer providing continued service through each such date. |
Narrative to Summary Compensation Table Employment Agreements Below are descriptions of the offer letters with each of our Named Executive Officers setting forth the terms and conditions of such executive’s employment with Rani LLC, and Rani Management Services, Inc. (“RMS”) prior to transitioning and assigning employment agreements to Rani LLC, each a wholly owned subsidiary of the Company. All of our Named Executive Officers are employed at-will. Talat Imran In December 2019, RMS entered into an offer letter with Talat Imran, our Chief Executive Officer, effective January 1, 2020, which was amended and restated as an employment agreement in June of 2021, as further amended in September 2022 to transfer his employment agreement from RMS to Rani LLC on the same terms and to reflect the then-current salary of $520,000. The employment agreement provides Talat Imran with an opportunity to earn an annual bonus with a target amount equal to 75% of his annual base salary. Talat Imran is also entitled to certain benefits upon his termination of employment as discussed below in the section titled “–Potential Payments Upon Termination or Change in Control”. TABLE OF CONTENTS Mir Hashim In December 2019, RMS entered into an offer letter with Dr. Hashim, to serve as our Chief Scientific Officer, effective January 1, 2020, which was amended and restated as an employment agreement in June of 2021, as further amended in September 2022 to transfer his employment agreement from RMS to Rani LLC on the same terms and to reflect the then-current salary of $416,000. The employment agreement provides Dr. Hashim with an opportunity to earn an annual bonus with a target amount equal to 75% of his annual base salary. Dr. Hashim is also entitled to certain benefits upon his termination of employment as discussed below in the section titled “–Potential Payments Upon Termination or Change in Control”. Svai Sanford In December 2019, RMS entered into an offer letter with Mr. Sanford, our Chief Financial Officer, effective January 1, 2020, which was amended and restated as an employment agreement in June of 2021, as further amended in September 2022 to transfer his employment agreement from RMS to Rani LLC on the same terms and to reflect the then-current salary of $416,000. The employment agreement provides Mr. Sanford with an opportunity to earn an annual bonus with a target amount equal to 75% of his annual base salary. Mr. Sanford is also entitled to certain benefits upon his termination of employment as discussed below in the section titled “–Potential Payments Upon Termination or Change in Control”. Equity Incentives On March 22, 2022, each of our Named Executive Officers was granted an option to purchase Class A common stock of the Company under the 2021 Equity Incentive Plan. Talat Imran, Mir Hashim and Svai Sanford were granted options to purchase 263,400, 125,400 and 100,000 shares of Class A common stock of the Company, respectively. Each option had a per-share exercise price of $13.21, which was the per-share fair market value of the underlying shares of Class A common stock on the grant date. Each option vests in substantially equal monthly installments from the grant date, subject to the Named Executive Officer’s continuous service to us through each such vesting date. In addition, on March 22, 2022, each of Talat Imran, Mir Hashim and Svai Sanford was granted restricted stock units with respect to 86,600, 41,200 and 32,900 shares of our Class A common stock, respectively, which vest in four substantially equal installments on each annual anniversary of their grant date, subject in each case to the Named Executive Officer’s continuous service to us through each such vesting date. Annual Bonus In December 2022, our compensation committee approved annual bonuses for Talat Imran, Dr. Hashim and Mr. Sanford for 2022 in the amount of $312,000 with respect to Talat Imran and $249,600 with respect to each of Dr. Hashim and Mr. Sanford, which were paid in December 2022, as reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above. Each Named Executive Officer is eligible for a performance bonus based upon the achievement of certain corporate performance goals and objectives approved by our board of directors. Bonuses are set based on the executive’s base salary as of the end of the bonus year. The target level for executive bonuses for 2022 was 75% of base salary for each of Talat Imran, Dr. Hashim and Mr. Sanford. The Board of Directors (considering the recommendations of the compensation committee and management) sets corporate goals for each year. These goals and the proportional emphasis placed on each are set by the Board of Directors after considering management input and our overall strategic objectives. The Board of Directors, upon recommendation of the compensation committee, determines the level of achievement of the corporate goals for each year. The actual bonuses awarded in any year, if any, may be more or less than the target, depending on the achievement of corporate objectives and may also vary based on other factors at the discretion of the Board of Directors. For 2022, the corporate goals fell into the following categories: achievement of product development, regulatory and partnering objectives; device platform and manufacturing activities, financial measures; company visibility and reputation; and organizational progress. In evaluating management’s performance against our 2022 corporate goals, our Board of Directors determined to award a corporate achievement level of 80% relative to those goals. Both qualitative and quantitative measures were considered in evaluating performance relative to the corporate objectives TABLE OF CONTENTS during 2022. These performance objectives were used as a guide by the Board of Directors in subjectively determining overall corporate performance as they represented those areas in which the named executive officers and our employees generally were expected to focus their efforts. In determining achievement of corporate goals, our Board of Directors noted our completion of the Phase 1 clinical trial of RT-102, the advancement of our preclinical programs, the development of a high-capacity device (the RaniPill HC), financial performance, advancement of our manufacturing capabilities, business development activities and third-party engagement, and organizational growth and retention. 401(k) Plan Prior to April 2022, the Company’s eligible employees were permitted to participate in ICL’s 401(k) Plan. In April 2022, the Company established its own 401(k) Plan (“401(k) Plan”) and eligible employees are permitted to participate in the Company’s 401(k) Plan. Plan participants are able to defer eligible compensation subject to applicable annual limits pursuant to the Internal Revenue Code of 1986, as amended (the “Code”). The 401(k) Plan is intended to be qualified under Section 401(a) of the Code with the 401(k) Plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) Plan and earnings on those contributions are not taxable to our employees until distributed from the 401(k) Plan. Participation in the 401(k) Plan is offered for the benefit of U.S. employees, including the Company’s Named Executive Officers, who satisfy certain eligibility requirements. Potential Payments Upon Termination or Change in Control Each of our Named Executive Officers has been granted options and restricted stock unit awards that are subject to the terms of the 2021 Plan. Stock awards granted under the 2021 Plan may be subject to acceleration of vesting and exercisability upon or after a Change in Control (as defined in the 2021 Plan) as may be provided in the applicable award agreement or in any other written agreement between us or any affiliate and the participant, but in the absence of such provision, no such acceleration will automatically occur. Severance and Change in Control Plan Each of our Named Executive Officers is eligible to receive benefits under the terms of the Company’s Severance and Change in Control Plan adopted by the Board of Directors on June 17, 2021 (the “Severance Plan”). The Severance Plan provides for severance and change in control benefits to the executive officers upon (i) a “change in control termination” or (ii) a “regular termination” (each as described below). Upon a change in control termination, each of our executive officers is entitled to a lump sum payment equal to a portion of his base salary (18 months for Talat Imran and 12 months for each of Dr. Hashim and Mr. Sanford), a lump sum payment equal to 150% (for Talat Imran) or 100% (for each of Dr. Hashim and Mr. Sanford) of his annual target cash bonus, payment of group health insurance premiums for a period of 18 months (for Talat Imran) and 12 months (for each of Dr. Hashim and Mr. Sanford) and accelerated vesting of outstanding time-vesting equity awards. Upon a regular termination, each of the executive officers is entitled to continued payment of his base salary for a period 12 months (for Talat Imran) and nine months (for each of Dr. Hashim and Mr. Sanford) and payment of group health insurance premiums for a period of 12 months (for Talat Imran) and nine months (for each of Dr. Hashim and Mr. Sanford). All severance benefits under the Severance Plan are subject to the executive officer’s execution of an effective release of claims against us. For purposes of the Severance Plan, a “regular termination” is an involuntary termination (i.e., a termination without “cause” (and not as a result of death or disability) or a resignation for “good reason,” each as defined in the Severance Plan) that does not occur during the period of time beginning three months prior to, and ending 12 months following, a “change in control” (as defined in the 2021 Plan), or the “change in control period.” A “change in control termination” is a regular termination that occurs during the change in control period. TABLE OF CONTENTS The following table shows for the fiscal year ended December 31, 2022 certain information with respect to the compensation of all directors of the Company, except Talat Imran, our Chief Executive Officer. Directors who are also our employees receive no additional compensation for their service as directors. Talat Imran did not receive any additional compensation for his services as a director in 2022. The compensation of Talat Imran is set forth above in the section titled “Executive Compensation.” Director Compensation for Fiscal Year 2022 Dennis Ausiello | | | $49,000 | | | $299,964 | | | $348,964 | Andrew Farquharson | | | $45,000 | | | $299,964 | | | $344,964 | Maulik Nanavaty | | | $67,500 | | | $299,964 | | | $367,464 | Jean-Luc Butel | | | $62,500 | | | $299,964 | | | $362,464 | Laureen DeBuono | | | $105,000 | | | $299,964 | | | $404,964 | Lyn Baranowski | | | $54,000 | | | $161,078(2) | | | $215,078 | Lisa Rometty | | | $46,250 | | | $658,259(3) | | | $704,509 | Mir Imran | | | $80,000 | | | $299,964 | | | $379,964 |
(1)
| Amounts reflect the aggregate grant date fair value of options to purchase our Class A common stock granted to our non-employee directors during 2022 under our 2021 Plan, each computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The assumptions used in calculating the grant date fair value of the award disclosed in this column are set forth in the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. These amounts do not correspond to the actual value that may be recognized by the non-employee directors. |
(2)
| Amount reflects the grant date fair value of an annual option grant to Ms. Baranowski as a non-employee director. Ms. Baranowski was appointed to the Board of Directors in November 2021. Because Ms. Baranowski was appointed after the date of the prior annual meeting of stockholders, the grant date fair value of her annual option grant was prorated to reflect the time between the date of her appointment and the date of the subsequent annual stockholder meeting. |
(3)
| Amount reflects the aggregate grant date fair value of an initial option grant and an annual option grant to Ms. Rometty as a non-employee director. Ms. Rometty was appointed to the Board of Directors in January 2022. Because Ms. Rometty was appointed after the date of the prior annual meeting of stockholders, the grant date fair value of her annual option grant was prorated to reflect the time between the date of her appointment and the date of the subsequent annual stockholder meeting. |
The following table provides information regarding the aggregate number of equity awards granted to our non-employee directors that were outstanding as of December 31, 2022: Dennis Ausiello | | | — | | | 120,733 | Andrew Farquharson | | | — | | | 41,416 | Maulik Nanavaty | | | — | | | 120,733 | Jean-Luc Butel | | | — | | | 177,312 | Laureen DeBuono | | | — | | | 177,312 | Lyn Baranowski | | | 3,298 | | | 53,955 | Lisa Rometty | | | — | | | 65,149 | Mir Imran | | | — | | | 41,416 |
Board Compensation The Board of Directors has adopted a non-employee director compensation policy, effective as of the Company’s initial public offering, pursuant to which each of the directors who is not an employee or consultant of the Company will be eligible to receive compensation for service on the Board of Directors and committees of the Board of Directors. Each non-employee director will receive an annual cash retainer of $45,000 for serving on the Board of Directors, and the chairperson and/or lead independent director of the Board of Directors will each receive an additional annual cash retainer of $35,000. The chairperson of the Audit Committee will be entitled to an annual service retainer of TABLE OF CONTENTS $20,000, and each other member of the Audit Committee will be entitled to an annual service retainer of $7,500. The chairperson of the Compensation Committee will be entitled to an annual service retainer of $15,000, and each other member of the Compensation Committee will be entitled to an annual service retainer of $5,000. The chairperson of the Nominating and Corporate Governance Committee will be entitled to an annual service retainer of $10,000, and each other member of the Nominating and Corporate Governance Committee will be entitled to an annual service retainer of $4,000. All annual cash compensation amounts will be payable in equal quarterly installments in arrears, on the last day of each fiscal quarter for which the service occurred, pro-rated for any partial months of service. On the date of each annual meeting of our stockholders, each continuing non-employee director will receive an option to purchase a number of shares of Class A common stock of the Company under the 2021 Plan with a grant date fair value of $300,000. The grant date fair value of any annual option grant to a non-employee director who is elected or appointed on a date other than the date of an annual meeting of the stockholders will be prorated to reflect the time between the date of such director’s election or appointment and the date of such first annual stockholder meeting. The shares subject to annual option grants will vest upon the earlier of the first anniversary of the grant date or the date of the next annual meeting of stockholders, subject to the non-employee director’s continuous service with the Company through the vesting date. Each new non-employee director who joins the Board of Directors will be granted an option to purchase a number of shares of Class A common stock of the Company under the 2021 Plan with a grant date fair value of $600,000. The shares subject to this option will vest over a three-year period, with one-third of the shares subject to the option vesting on the first anniversary of the grant date and one thirty-sixth of the shares subject to the option vesting each month thereafter, subject to the non-employee director’s continuous service with the Company through each vesting date. All options granted under the non-employee director compensation policy will vest upon a change in control of the Company, subject to the non-employee director’s continuous service with the Company through the date of such change in control. The exercise price per share of each option granted under the non-employee director compensation policy will be equal to the closing price of the Company’s Class A common stock on Nasdaq on the date of grant. Each option will have a term of ten years from the grant date, subject to earlier termination in connection with a termination of the non-employee director’s continuous service with the Company. In addition, the Company will reimburse non-employee directors for ordinary, necessary and reasonable out-of-pocket travel expenses to cover in-person attendance at and participation in board and committee meetings. TABLE OF CONTENTS TRANSACTIONS WITH RELATED PERSONS AND INDEMNIFICATION Related Person Transactions Policy and Procedures In June 2021, the Company adopted a written Related-Person Transactions Policy that sets forth the Company’s policies and procedures regarding the identification, review, consideration and approval or ratification of “related persons transactions.” For purposes of the Company’s policy only, a “related person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company and any “related person” are participants in which the amount involved exceeds (a) $120,000 or (b) if the Company qualifies as a “smaller reporting company” under the rules and regulations of the Securities and Exchange Commission, the lesser of (x) $120,000 or (y) 1% of the average of the Company’s total assets at year-end for the last two completed fiscal years. Transactions involving compensation for services provided to the Company as an employee, director, consultant or similar capacity by a related person are not covered by this policy. A related person is any executive officer, director, or more than 5% stockholder of the Company, including any of their immediate family members, and any entity owned or controlled by such persons. Certain Related Person Transactions The following is a summary of transactions since January 1, 2021, to which the Company has been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest, other than compensation arrangements which are described in the sections titled “Executive Compensation” and “Director Compensation.” ICL is wholly-owned by the Company’s founder and Chairman and his family. The founder and Chairman is the father of the Company’s Chief Executive Officer. The Company’s Chief Scientific Officer is the brother of the founder and Chairman and thus uncle of the Company’s Chief Executive Officer. Services agreements In June 2021, Rani LLC entered into a service agreement with ICL effective retrospectively to January 1, 2021, and subsequently amended such agreement in March 2022 (as amended, the “Rani LLC-ICL Service Agreement”), pursuant to which Rani LLC and ICL agreed to provide personnel services to the other upon requests. Under the amendment in March 2022, Rani LLC has a right to occupy certain facilities leased by ICL in Milpitas, California and San Antonio, Texas (“Occupancy Services”) for general office, research and development, and light manufacturing. The Rani LLC-ICL Service Agreement has a twelve-month term and will automatically renew for a successive twelve-month periods unless terminated; except that the Occupancy Services in Milpitas, California have a term until February 2024, following an extension granted in July 2022, with the potential for one additional annual renewal, subject to approval by the landlord upon a nine months’ notice of renewal prior to the end of the lease term, and the Occupancy Services in San Antonio, Texas continue until either party gives six months’ notice of termination. Except for the Occupancy Services, Rani LLC or ICL may terminate services under the Rani LLC-ICL Service Agreement upon 60 days' notice to the other party. The Rani LLC-ICL Service Agreement specifies the scope of services to be provided as well as the methods for determining the costs of services. Costs are billed or charged on a monthly basis by ICL or Rani LLC, respectively. In June 2021, RMS entered into a service agreement with ICL (the “RMS-ICL Service Agreement”) effective retrospectively to January 1, 2021, pursuant to which ICL agreed to rent a specified portion of its facility in San Jose, California to RMS. Additionally, RMS and ICL agreed to provide personnel services to the other upon requests based on rates specified in the RMS-ICL Service Agreement. In April 2022, RMS assigned the RMS-ICL Service Agreement to Rani LLC. The RMS-ICL Service Agreement has a twelve-month term and will automatically renew for successive twelve-month periods unless terminated. Rani LLC or ICL may terminate services under the RMS-ICL Service Agreement upon 60 days' notice to the other party, except for occupancy which requires six months’ notice. The RMS-ICL Service Agreement specifies the scope of services to be provided as well as the methods for determining the costs of services. Costs are billed or charged on a monthly basis by ICL or Rani LLC, respectively, as well as allocations of expenses based upon Rani LLC’s utilization of ICL’s facilities and equipment. TABLE OF CONTENTS The table below details the amounts charged by ICL for services and rent, net of the amount that the Company charged ICL, which is included in the consolidated statements of operations (in thousands): Research and development | | | $1,170 | | | $1,115 | General and administrative | | | 222 | | | 735 | Total | | | $1,392 | | | $1,850 |
As of December 31, 2022, all of the Company's facilities are owned or leased by an entity affiliated with the Company’s Chairman. The Company pays for the use of these facilities through its services agreements with ICL. Financing activity In March 2021, an outstanding notes receivable balance totaling $1.7 million, including all accrued interest, was fully repaid by ICL. In January 2021, a related party of the Company, and its affiliates, purchased 884,276 Series E Preferred Units of Rani LLC at a price of $7.1471 per unit for a total purchase price of $6.3 million. As part of organizational transactions at the time of the Company’s IPO, the Series E Preferred Units were exchanged for 884,276 shares of the Company's Class A common stock. Exclusive License, Intellectual Property and Common Unit Purchase Agreement The Company, through Rani LLC, and ICL entered into an exclusive license and an intellectual property agreement and common unit purchase agreement in 2012. Pursuant to the common unit purchase agreement, the Company issued 46.0 million common units to ICL in return for rights to exclusive commercialization, development, use and sale of certain products and services related to the RaniPill capsule technology. ICL also granted the Company a fully-paid, royalty-free, sublicensable, exclusive license under the intellectual property made by ICL during the course of providing services to the Company related to the RaniPill capsule technology. In June 2021, ICL and the Company, through Rani LLC, entered into an Amended and Restated Exclusive License Agreement which replaced a prior Exclusive License Agreement from 2012, as amended in 2013, and terminated an Intellectual Property Agreement from 2012, as amended in June 2013. Under the Amended and Restated Exclusive License Agreement, the Company has a fully paid, exclusive license under certain scheduled patents related to optional features of the device and certain other scheduled patents to exploit products covered by those patents in the field of oral delivery of sensors, small molecule drugs or biologic drugs including, any peptide, antibody, protein, cell therapy, gene therapy or vaccine. The Company covers patent-related expenses and, after a certain period, the Company will have the right to acquire four specified U.S. patent families from ICL by making a one-time payment of $0.3 million to ICL for each U.S. patent family that the Company desires to acquire, up to $1.0 million in the aggregate. This payment will not become an obligation until the fifth anniversary of the Amended and Restated Exclusive License Agreement. The Amended and Restated Exclusive License Agreement will terminate when there are no remaining valid claims of the patents licensed under the Amended and Restated Exclusive License Agreement. Additionally, the Company may terminate the Amended and Restated Exclusive License Agreement in its entirety or as to any particular licensed patent upon notification to ICL of such intent to terminate. Non-Exclusive License Agreement between Rani and ICL (“Non-Exclusive License Agreement”) In June 2021, the Company, through Rani LLC, entered into the Non-Exclusive License Agreement with ICL a related party, pursuant to which the Company granted ICL a non-exclusive, fully-paid license under specified patents that were assigned from ICL to the Company. Additionally, the Company agreed not to license these patents to a third party in a specific field outside the field of oral delivery of sensors, small molecule drugs or biologic drugs including, any peptide, antibody, protein, cell therapy, gene therapy or vaccine, if ICL can prove that it or its sublicensee has been in active development of a product covered by such patents in that specific field. ICL may grant sublicenses under this license to third parties only with the Company’s prior approval. The Non-Exclusive License Agreement will continue in perpetuity unless earlier terminated. TABLE OF CONTENTS Intellectual Property Agreement with Mir Imran (the “Mir Agreement”) In June 2021, the Company, through Rani LLC, entered into the Mir Agreement, pursuant to which the Company and Mir Imran agreed that the Company would own all intellectual property conceived (a) using any of the Company’s people, equipment, or facilities or (b) that is within the field of oral delivery of sensors, small molecule drugs or biologic drugs including, any peptide, antibody, protein, cell therapy, gene therapy or vaccine. Neither the Company nor Mir Imran may assign the Mir Agreement to any third party without the prior written consent of the other party. The initial term of the Mir Agreement is three years, which can be extended upon mutual consent of the parties. The Mir Agreement may be terminated by either party for any reason within the initial three-year term upon providing three months’ notice to the other party. Tax Receivable Agreement In August 2021, in connection with the IPO and organizational transactions at the time of the IPO, the Company entered into a tax receivable agreement (“TRA”). ICL is a party to the TRA. The TRA provides that the Company pay to the entities and individuals who are party to the TRA 85% of the amount of tax benefits, if any, it is deemed to realize (calculated using certain assumptions) as a result of (i) increases in the tax basis of assets of Rani LLC resulting from (a) any future redemptions or exchanges of Paired Interests and (b) payments underInterests. During the year ended December 31, 2022, these parties to the TRA and (ii) certain otherexchanged 2,317,184 Paired Interests that resulted in tax benefits arising from payments undersubject to the TRA. Registration Rights Agreement In connection with the IPO, the Company entered into a Registration Rights Agreement. ICL is a partyand its affiliates are parties to this agreement. The Registration Rights Agreement provides certain registration rights whereby, at any time following the IPO and the expiration of any related lock-up period, ICL Holders with LLC Interestsand its affiliates can require the Company to register under the Securities Act of 1933, as amended, shares of Class A common stock issuable to such ICL Holdersand its affiliates upon, at the Company’s election, redemption or exchange of their Paired Interests. The Registration Rights Agreement also provides for piggyback registration rights. In March 2022, certain holders of the Company's Class A common stock considered to be related parties were made parties to the Registration Rights Agreement. As a result of certain stockholders exercising their registration rights under the Registration Rights Agreement, in December 2022 the Company filed a registration statement on Form S-3 to register 6,009,542 shares of Class A common stock of the Company held by certain of its stockholders. Rani LLC Agreement The Company operates its business through Rani LLC and, prior to December 15, 2022, its subsidiary. In connection with the IPO, the Company and parties continuing to hold LLC Interests, including ICL and its affiliates, entered into the Rani LLC Agreement. The governance of Rani LLC, and the rights and obligations of the holders of LLC Interests, are set forth in the Rani LLC Agreement. As the holderholders of LLC Interests, ICL isand its affiliates are entitled to exchange, subject to the terms of the Rani LLC Agreement, Paired Interests for Class A common stock of the Company; provided that, at the Company’s election, the Company may effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Paired Interest redeemed. No exchanges with ICL of Paired Interests occurred duringDuring the year ended December 31, 2021.2022, certain parties to the Rani LLC Agreement exchanged 2,317,184 Paired Interests for an equal number of shares of the Company's Class A common stock. TABLE OF CONTENTS
The Company provides indemnification for its directors and executive officers so that they will be free from undue concern about personal liability in connection with their service to the Company. Under the Company’s Bylaws, the Company is required to indemnify its directors and executive officers to the extent not prohibited under Delaware or other applicable law. The Company has also entered into indemnity agreements with certain officers and directors. These agreements provide, among other things, that the Company will indemnify the officer or director, under the circumstances and to the extent provided for in the agreement, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position as a director, officer or other agent of the Company, and otherwise to the fullest extent permitted under Delaware law and the Company’s Bylaws.
TABLE OF CONTENTS HOUSEHOLDING OF PROXY MATERIALS The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices of Internet Availability of Proxy Materials or other Annual Meetingannual meeting materials with respect to two or more stockholders sharing the same address by delivering a single Notice of Internet Availability of Proxy Materials or other Annual Meetingannual meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies. This year, a number of brokers with account holders who are Rani Holdings stockholders will be “householding” the Company’s proxy materials. A single Notice of Internet Availability of Proxy Materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate Notice of Internet Availability of Proxy Materials, please notify your broker or Rani Holdings. Direct your written request to: Rani Therapeutics Holdings, Inc., Secretary
2051 Ringwood Avenue
San Jose, California 95131
408-457-3700 Stockholders who currently receive multiple copies of the Notices of Internet Availability of Proxy Materials at their addresses and would like to request “householding” of their communications should contact their brokers. TABLE OF CONTENTS The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting.annual meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment. | | | By Order of the Board of Directors | | | | | | | | /s/ Talat Imran | | | | Talat Imran | | | | Chief Executive Officer | April 11, 2023 | |
April 13, 2022
A copy of the Company’s Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 20212022 is available without charge upon written request to: Rani Therapeutics Holdings, Inc., Secretary
2051 Ringwood Avenue
San Jose, California 95131 |
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