| | 20 Firstfield Road Gaithersburg, MD 20878 T 240-268-2000 F 240-268-2100 www.novavax.com | |
20 Firstfield RoadGaithersburg, MD 20878T 240-268-2000F 240-268-2100www.novavax.comNasdaq: NVAX
April 30, 2015
2018
14, 2018
2018
| | IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS ANNUAL MEETING TO BE HELD ON JUNE 14, 2018: Notice of Annual Meeting, Proxy Statement, and Annual Report are available free of charge at http://www.viewproxy.com/Novavax/2018. | | |
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | | | | | | | |
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EXECUTIVE OFFICERS AND COMPENSATION | | | | | | | |
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SECURITY OWNERSHIP INFORMATION | | | | | | | |
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other proxy proposals | | | | | | | |
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ADDITIONAL INFORMATION | | | | | | | |
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Stockholders
The Company knows of no other matters to be submitted to the stockholders at the Annual Meeting.
The Board has fixed Monday, April 20, 2015, as the record date for determining the stockholders entitled to receive notice of and to vote at the Annual Meeting (the “Record Date”).
The Board recommends that you vote your shares:
“FOR” the election of Richard H. Douglas, Ph.D. and Gary C. Evans to serve on the Board for a three-year term expiring at the 2018 Annual Meeting of Stockholders (Proposal No. 1);
“FOR” the approval of the Amended Charter for the purpose of increasing the total number of shares of Common Stock that the Company is authorized to issue from 300,000,000 shares to 600,000,000 shares (Proposal No. 2);
“FOR” the approval of the amendment to the By-Laws for the purpose of adding a forum selection clause (Proposal No. 3);
“FOR” the approval of the 2015 Stock Plan (Proposal No. 4); and
“FOR” the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015 (Proposal No. 5).
Proposal | | | Board Recommendation | |
No. 1 — Election of Directors | | | For all nominees | |
No. 2 — The approval, on an advisory basis, of the compensation paid to our Named Executive Officers | | | For | |
No. 3 — Amendment and Restatement of the 2015 Stock Plan | | | For | |
No. 4 — Amendment and Restatement of the ESPP | | | For | |
No. 5 — Ratification of Ernst & Young LLP as Independent Auditors for 2018 | | | For | |
Election of Directors. Directors are elected by a plurality of the votes. The nominees for director receiving the highest number of votes cast by stockholders entitled to vote for directors will be elected to serve on the Board. Only the number of votes FOR a nominee affect the outcome. Accordingly, votes withheld and broker non-votes will have no effect on the result of the vote on this matter.
Amended Charter. Approval of the Amended Charter for the purpose of increasing the total number of authorized shares of Common Stock from 300,000,000 shares to 600,000,000 shares requires the affirmative vote of a majority of the shares of Common Stock outstanding and entitled to vote at the Annual Meeting. Abstentions and broker non-votes will have the effect of a negative vote.
Company By-Laws. Approval of an amendment to the By-Laws to include a forum selection clause requires the affirmative vote of a majority of the shares of Common Stock outstanding and entitled to vote at the Annual Meeting. Abstentions and broker non-votes will have the effect of a negative vote.
The 2015 Stock Plan. Approval of the 2015 Stock Plan requires the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy and voting on the matter. Abstentions and broker non-votes will not be counted as shares voting on such matter and accordingly will have no effect on the approval of the matter.
Ratification of Independent Registered Public Accounting Firm. The ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year 2015 requires the affirmative vote of the holders of a majority of the votes present in person, represented by proxy and entitled to be cast at the Annual Meeting, or broker non-votes. Abstentions will not be counted as shares voting on such matter and accordingly will have no effect on the approval of the matter.
Proposal | | | Vote Required | | | Broker Non-Votes Allowed | | | Abstentions | | | You May Vote | |
No. 1 — Election of Directors | | | Plurality of Votes Cast | | | No | | | No Effect | | | FOR or WITHHOLD | |
No. 2 — Say-on-Pay, on an advisory basis | | | Majority of Votes Cast | | | No | | | No Effect | | | FOR, AGAINST, ABSTAIN | |
No. 3 — Amendment and Restatement of the 2015 Stock Plan | | | Majority of Votes Cast | | | No | | | No Effect | | | FOR, AGAINST, ABSTAIN | |
No. 4 — Amendment and Restatement of the ESPP | | | Majority of Votes Cast | | | No | | | No Effect | | | FOR, AGAINST, ABSTAIN | |
No. 5 — Ratification of Ernst & Young LLP as Independent Auditors for 2018 | | | Majority of Votes Cast | | | Yes | | | No Effect | | | FOR, AGAINST, ABSTAIN | |
Stockholder proposals for inclusion in the Company’s proxy statement: Stockholders who wish to present proposals for inclusion in the Company’s proxy materials for the Company’s 2016 Annual Meeting of Stockholders should follow the procedures prescribed in Rule 14a-8 under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and the Company’s By-laws. Those procedures require that the Company receive a stockholder proposal in writing at the Company’s principal executive offices no later than January 6, 2016. If the date of next year’s annual meeting is changed by more than 30 days from the anniversary date of this year’s Annual Meeting (June 18, 2015), then the deadline is the close of business on the 10th day following the date on which such notice of the date of the meeting was mailed or public disclosure of the date of such meeting was made, whichever occurs first.
Other stockholder proposals: Under the Company’s By-laws, stockholders who wish to include a proposal in the Company’s 2016 Annual Meeting of Stockholders (but do not wish to include such proposal in the Company’s proxy materials) must give the Company timely written notice. To be timely, the Company’s By-laws provide that such notice must be received by the Company at its principal executive offices not less than 60 days nor more than 90 days prior to the anniversary date of this year’s Annual Meeting (June 18, 2015); provided, however, that in the event that the date of the meeting is more than 30 days before or after the anniversary date of the prior year’s annual meeting of the stockholders of the Company, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the date on which such notice of the date of the meeting was mailed or public disclosure of the date of such meeting was made, whichever occurs first.
In addition to being timely, any such notice must set forth as to each matter the stockholder proposes to bring before the annual meeting:
For purposes of thisNovavax, Inc. | 2018 Proxy Statement a “Stockholder Associated Person” of any stockholder means (i) any “affiliate” or “associate” (as those terms are defined in Rule 12b-2 under the Exchange Act) of the stockholder who owns beneficially or of record any capital stock or other securities of the Company or, through one or more derivative positions, has an economic interest (whether positive or negative) in the price of securities of the Company and (ii) any person acting in concert with such stockholder or any affiliate or associate of such stockholder with respect to the capital stock or other securities of the Company.
Please note that if the stockholder proposes to nominate a director for election to the Company’s Board, the procedures described under the caption “Nomination Procedures” herein relating to director nominations must be followed.
Our executive officers hold office until the first meeting of the Board following the annual meeting of stockholders and until their successors are duly chosen and qualified, or until they resign or are removed from office in accordance with our By-laws.
Our executive officers and their ages and positions as of April 20, 2015 are as follows:
Set forth below is certain information regarding the professional experience of each of the above-named persons.
Stanley C. Erck has served as President and Chief Executive Officer since April 2011 and a Director since June 2009, and previously served as Executive Chairman from February 2010 to April 2011. From 2000 to 2008, Mr. Erck served as President and Chief Executive Officer of Iomai Corporation, a developer of vaccines and immune system therapies, which was acquired in 2008 by Intercell AG. He also previously held leadership positions at Procept, a publicly traded immunology company, Integrated Genetics, now part of Sanofi, and Baxter International. Mr. Erck also serves on the board of directors of BioCryst Pharmaceuticals and MaxCyte, Inc. Mr. Erck received a B.S. in Economics from the University of Illinois and a M.B.A. from the University of Chicago.
Barclay A. Phillips has served as Senior Vice President, Chief Financial Officer and Treasurer since June 2013. Prior to joining the Company, Mr. Phillips served as Senior Vice President and Chief Financial Officer of Micromet, Inc., which was acquired by Amgen in 2012. Previously, he was Managing Director of Vector Fund Management and a Biotechnology Analyst and Director of Venture Investments at Invesco Funds Group, Inc. Mr. Phillips received a B.A. in Economics from the University of Colorado at Boulder.
Gregory M. Glenn, M.D. has served as Senior Vice President, Research and Development since January 2014, and previously served as Senior Vice President, Chief Medical Officer from January 2011 to January 2014, and Senior Vice President and Chief Scientific Officer from July 2010 to January 2011. Prior to joining the Company, Dr. Glenn was the Chief Scientific Officer and founder of Iomai Corporation, which was acquired in 2008 by Intercell AG, an associate in international health at Johns Hopkins University’s School of Public Health and a clinical and basic research scientist at Walter Reed Army Institute of Research. Dr. Glenn received a B.A. in Biology and Chemistry from Whitman College and a M.D. from Oral Roberts University School of Medicine. He also completed the Medical Research Fellowship at the Walter Reed Army Institute of Research.
Timothy J. Hahn, Ph.D. has served as Senior Vice President, Global Manufacturing Operations since April 2014 and, formerly, Senior Vice President, Manufacturing and Process Development from June 2011 to April 2014. Prior to joining the Company, Dr. Hahn was Vice President of Antibody Manufacturing and later Vice President of Vaccine Manufacturing at MedImmune, LLC, with responsibilities for both U.S. and non-U.S. manufacturing sites. Dr. Hahn spent more than 15 years in vaccine manufacturing with Merck & Co. Dr. Hahn received a B.S. in Chemical Engineering from Lehigh University and a Ph.D. in Chemical Engineering from Stanford University.
John A. Herrmann III has served as Senior Vice President, General Counsel and Corporate Secretary since March 2014, and, formerly, Vice President, General Counsel and Corporate Secretary from March 2012 to March 2014, and, formerly, Executive Director, Legal Affairs and Corporate Secretary from March 2010 to March 2012. Prior to joining the Company, Mr. Herrmann was General Counsel at Ore Pharmaceuticals and
Deputy General Counsel at Gene Logic before it became Ore Pharmaceuticals. Mr. Herrmann worked as Senior Counsel for Celera Genomics and prior to that was Senior Corporate Counsel at Baxter Healthcare in its Renal Division. Mr. Herrmann received a B.A. in Political Science and History from Brown University and a J.D. from the University of Illinois.
John J. Trizzino has served as Senior Vice President, Commercial Operations since March 2014. He previously served as the Company’s Senior Vice President, Business Development from June 2010 to September 2011, and its Senior Vice President, International and Government Alliances from July 2009 to June 2010. Prior to joining the Company, Mr. Trizzino was the CEO of Immunovaccine from September 2011 to September 2013, the VP, Vaccine Franchise at Medimmune, LLC, the Senior Vice President, Business Development at ID Biomedical, and Vice President, Business Development in the Medical Group of Henry Schein, Inc. following his position as Vice President, General Manager of its GIV division. Mr. Trizzino received a B.S. from Long Island University, CW Post and a M.B.A. from New York University.
Russell P. Wilson has served as Senior Vice President, Business Development since November 2011. Mr. Wilson was most recently the Chief Financial Officer at Supernus Pharmaceuticals beginning in 2009. He was previously Senior Vice President, Chief Financial Officer and General Counsel of Iomai Corporation, which was acquired in 2008 by Intercell AG. He was the Acting General Counsel of North American Vaccine, Inc. until its acquisition by Baxter International in 2000. Mr. Wilson received a B.A. in History from Princeton University and received a M.B.A. and J.D. from the University of Virginia.
On November 5, 2017, Gail K. Boudreaux resigned from the Board and all committees of the Board on which she served.
Two directors are to be elected at the Annual Meeting.
If elected, each such nominee will serve until the expiration of his term at the 20182021 Annual Meeting of Stockholders and until his successor is elected and qualified. Dr. Douglas and Mr. Evans have consented to being named in this Proxy Statement and to serve if elected. The Board has no reason to believe that Dr. Douglas and Mr. Evans will be unable or unwilling to serve if elected. If any nominee becomes unavailable to serve as a director, the persons named in the proxy will vote the proxy for a substitute nominee or nominees as they, in their discretion, shall determine.
The election of directors requires the affirmative vote of a plurality of the votes cast by stockholders entitled to vote at the Annual Meeting. Accordingly, votes withheld and broker non-votes will not have any effect on the election of a director.
RICHARD H. DOUGLAS, PH.D. | ||||||
| | | | Age: 65 Year First Elected | ||
| | Former Senior Vice President, Corporate Development, Genzyme Corporation. From 1989 to 2011, Dr. Douglas led Genzyme Corporation’s Corporate Development team, and was involved in numerous acquisitions, licenses, financings, joint ventures, and strategic alliances. From 1982 until its merger with Genzyme Corporation in 1989 (now Sanofi Genzyme), Dr. Douglas served in science and corporate development capacities at Integrated Genetics. Dr. Douglas was a postdoctoral fellow in Dr. Leroy Hood’s laboratory at the California Institute of Technology. | | |||
| Other Directorships: | | | Dr. Douglas serves | | |
| Education: | | | Dr. Douglas received | | |
| Skills/Qualifications: | | | We believe that Dr. Douglas is well-suited to serve on our Board due to his significant business experience and scientific background. | | |
GARY C. EVANS | | |||||
| | | | Age: 60 Year First Elected Director: 1998 | | |
| | | Chairman of the Board and Chief Executive Officer of Energy Hunter Resources, Inc., a Dallas based oil and gas exploration and production company, since May 2016. From May 2009 until May 2016, Mr. Evans served as Chairman of the Board and Chief Executive Officer of Magnum Hunter Resources Corporation | | ||
| Other Directorships: | | | Mr. Evans serves as a member of the board of directors of Energy Hunter Resources, Inc., and on the Advisory Board of the Maguire Energy Institute at Southern Methodist University. | | |
| Skills/Qualifications: | | | We believe that Mr. Evans is well-suited to serve on our Board due to his entrepreneurial experience in the development of | |
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Information on the continuing directors follows:
STANLEY C. ERCK | ||||||
| | | | Age: 70 Year First Elected | ||
| | President and Chief Executive Officer of Novavax, Inc. | | |||
| Other Directorships: | | | Mr. Erck serves as a member of the boards of BioCryst Pharmaceuticals, | | |
| Education: | | | Mr. Erck received a B.S. in economics from the University of Illinois and a M.B.A from the University of Chicago. | | |
| Skills/Qualifications: | | | We believe that Mr. Erck is well-suited to serve on our Board due to his leadership experience in the biotechnology industry, having held CEO positions for several companies, and his extensive experience of serving on other companies’ boards. | | |
RAJIV I. MODI, PH.D. | | |||||
| | | | Age: 57 Year First Elected Director: 2009 | | |
| | | Chairman and Managing Director of Cadila Pharmaceuticals, Ltd. (“Cadila”), a company organized in India, since 1995. Dr. Modi was elected to | | ||
| Other Directorships: | | | Dr. Modi serves as a member of the boards of Energy Hunter Resources, Inc. and Cadila Pharmaceuticals, Ltd. | | |
| Education: | | | Dr. Modi received a bachelor’s degree of technology in chemical engineering from the Indian Institute of Technology, a master’s degree in biological engineering from University College, London, and a Ph.D. in biological science from the University of Michigan. | | |
| Skills/Qualifications: | | | We believe that Dr. Modi is well-suited to serve on our Board due to his extensive leadership experience, as well as technical expertise in the development and manufacturing of pharmaceutical products. He also brings broad experience in international joint ventures and pharmaceutical sales. | |
MICHAEL A. MCMANUS, JR., J.D. | ||||||
| | | | Age: 75 Year First Elected | ||
| | Former President and Chief Executive Officer of Misonix, Inc. | | |||
| Other Directorships: | | | Mr. McManus serves as a member of the board of directors of | | |
| Education: | | | Mr. McManus received a B.A. in economics from the University of Notre Dame and a J.D. from the Georgetown University Law Center. | | |
| Skills/Qualifications: | | | We believe that Mr. McManus is well-suited to serve on our Board due to his successful growth and development of businesses and products, |
| JAMES F. YOUNG, PH.D. | | ||||
| | | | Age: 65 Year First Elected | ||
| | Chairman of the Board and Chief Executive Officer of Targeted Microwave Solutions, Inc. since 2016. Former President, Research and Development, at MedImmune, Inc. Dr. Young has been Chairman of the Board of Novavax, Inc. since April 2011 and a Director | | |||
| Other Directorships: | | | Dr. Young | | |
| Education: | | | Dr. Young received B.S. degrees in general science and | | |
| Skills/Qualifications: | | | We believe that Dr. Young is well-suited to serve on our Board due to his |
FOR PROPOSAL 1, THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION OF THE NOMINEES.
Stockholders are being asked to approve the Amended Charter, which increases the number of authorized shares of Common Stock from three hundred million (300,000,000) shares to six hundred million (600,000,000) shares. On March 5, 2015, the Board approved the Amended Charter, subject to stockholder approval, and directed that this Amended Charter be submitted to a vote of the Company’s stockholders at this Annual Meeting. The Board has determined that the Amended Charter is in the best interests of the Company and its stockholders and recommends approval by the stockholders.
The current Amended and Restated Certificate of Incorporation, as amended (the “Current Charter”) authorizes the issuance of up to 300,000,000 shares of Common Stock, each with a par value of $0.01 per share. As of the close of business on April 20, 2015, 267,967,249 shares of Common Stock were outstanding. In addition, as of the close of business on April 20, 2015, the Company had 16,237,272 shares of Common Stock subject to outstanding stock options granted under the 2005 Stock Plan, 6,946,691 shares of Common Stock subject to outstanding stock options granted under the 2015 Stock Plan (subject to approval by the Company’s stockholders of the 2015 Stock Plan and the Amended Charter) and 1,413,388 shares reserved for issuance pursuant to the Company’s Employee Stock Purchase Plan (“ESPP”). This means that as of April 20, 2015, the Company had just 7,435,400 shares of Common Stock available for corporate purposes, including, among other things, the issuance of stock options and stock splits by way of dividend. The Current Charter also authorizes the issuance of 2,000,000 shares of preferred stock, none of which are currently issued or outstanding. The Amended Charter will not increase or otherwise affect the Company’s authorized preferred stock or otherwise affect any other provisions of the Current Charter.
The Board believes it is in the best interest of the Company to increase the number of authorized shares of Common Stock in order to give the Company greater flexibility in considering and planning for future potential business needs.
With the exception of the Company’s routine practice of granting stock options to employees and, in certain instances, its consultants, the Company has no current specific plan, commitment, arrangement, understanding, or agreement regarding the issuance of the additional shares of Common Stock resulting from the proposed increase in authorized shares. The additional shares of Common Stock will be available for issuance by the Board for various corporate purposes, including but not limited to, grants under employee stock plans, financings, potential strategic transactions, including mergers, acquisitions, strategic partnerships, joint ventures, divestitures, business combinations, stock splits, stock dividends, as well as other general corporate transactions.
Having this additional authorized Common Stock available for future use will allow the Company to issue additional shares of Common Stock without the expense and delay of arranging a special meeting of stockholders.
If the Amended Charter is approved, the additional authorized shares would be available for issuance at the discretion of the Board and without further stockholder approval, except as may be required by law or the rules of the NASDAQ. The additional shares of authorized Common Stock would have the same rights and privileges as the shares of Common Stock currently issued and outstanding. The adoption of the Amended Charter would not have any immediate dilutive effect on the proportionate voting power or other rights of existing stockholders. Shares of Common Stock issued otherwise than for a stock split may decrease existing stockholders’ percentage equity ownership and, depending on the price at which they are issued, could be dilutive to the voting rights of existing stockholders and have a negative effect on the market price of the Common Stock. The Common Stock carries no preemptive rights to purchase additional shares of Common Stock.
The Company cannot provide assurances that any such transactions will be consummated on favorable terms or at all, that they will enhance stockholder value or that they will not adversely affect the Company’s business or the trading price of our stock.
The Company has not proposed the increase in the number of authorized shares of Common Stock with the intention of using the additional authorized shares for anti-takeover purposes, but the Company would be able to use the additional shares to oppose a hostile takeover attempt or delay or prevent changes in control or management of the Company. For example, without further stockholder approval, the Board could sell shares of Common Stock in a private transaction to purchasers who would oppose a takeover or favor the current Board. Although this proposal to increase the authorized number of shares of Common Stock has been prompted by business and financial considerations and not by the threat of any known or threatened hostile takeover attempt, stockholders should be aware that approval of this proposal could facilitate future efforts by the Company to oppose changes in control of the Company and perpetuate the Company’s management, including transactions in which the stockholders might otherwise receive a premium for their shares over then current market prices.
If the Company’s stockholders approve the Amended Charter, the Board will have authority to file with the Secretary of State of Delaware the Amended Charter. The Amended Charter will become effective on the date it is filed. The Board reserves the right to abandon or delay the filing of the Amended Charter even if it is approved by our stockholders. The Amended Charter, which differs from the Current Charter only with respect to the number of authorized shares of Common Stock, is attached to this proxy statement asAppendix A. To illustrate the proposed amendments onAppendix A, language that is struck through is proposed to be deleted from the Current Charter, and language that is underlined is proposed to be added to the Current Charter.
Neither Delaware law, the Company’s Amended Charter, nor the Company’s By-laws provides for appraisal or other similar rights for dissenting stockholders in connection with this proposal. Accordingly, the Company’s stockholders will have no right to dissent and obtain payment for their shares.
The affirmative vote of a majority of the outstanding shares of Common Stock is required to approve the Amended Charter. Accordingly, abstentions and broker non-votes will have the effect of a negative vote
FOR PROPOSAL NO. 2, THE BOARD RECOMMENDS THAT STOCKHOLDERSVOTE “FOR” THE AMENDED CHARTER AS SET FORTH HEREIN WHICH INCREASES THETOTAL NUMBER OF SHARES OF ITS COMMON STOCK THAT THE COMPANY ISAUTHORIZED TO ISSUE FROM 300,000,000 SHARES TO 600,000,000 SHARES.
Our Board has deemed it advisable and in the best interests of the Company to amend the By-Laws, subject to stockholder approval, to add a provision making the State of Delaware the exclusive forum for certain disputes. The Board also resolved to submit to stockholders, and to recommend that stockholders approve, a proposal to add such a provision to the By-Laws.
Under the proposed amendment, a new Section 5.9 will be added to the By-laws that will restrict the following disputes to the forum of the courts of the State of Delaware: (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or the Amended Charter or the By-Laws, (iv) any action to interpret, apply, enforce or determine the validity of the Amended Charter or the By-Laws or (v) any action asserting a claim governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware, or, if the Court of Chancery of the State of Delaware does not have jurisdiction, the Superior Court of the State of Delaware.
Our Board supports this amendment to the By-Laws because it will assist the Company in avoiding multiple lawsuits in multiple jurisdictions regarding the same matter. Requiring such claims to be brought in a single forum will help ensure consistent consideration of the issues by courts with expertise in the applicable laws, and will promote efficiency and costs-savings in the resolution of such claims; all to the benefit of the Company’s stockholders. Our Board believes the courts of the State of Delaware are best suited to address disputes given the Company’s incorporation in Delaware and the Delaware courts’ reputation for expertise in corporate law matters. The Board also believes that the courts of the State of Delaware have deep experience and expertise when resolving disputes involving complex corporate issues. The adoption of an exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with directors, officers or other employees, and may discourage lawsuits with respect to such claims.
The full text of the amendment is:
5.9.Forum for Adjudication of Disputes. Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or the Certificate of Incorporation or these By-laws, (iv) any action to interpret, apply, enforce or determine the validity of the Certificate of Incorporation or these By-laws or (v) any action asserting a claim governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware, or, if the Court of Chancery of the State of Delaware does not have jurisdiction, the Superior Court of the State of Delaware (each, a “Covered Action”). Any person purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be (i) deemed to have notice of and consented to the provisions of this Section 5.9, and (ii) deemed to have waived any argument relating to the inconvenience of the forums referenced above in connection with any action or proceeding described in this Section 5.9.
If any Covered Action is filed in a court other than the Court of Chancery of the State of Delaware or the Superior Court of the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the Court of Chancery of the State of Delaware and the Superior Court of the State of Delaware in connection with any action brought in any such courts to enforce the first paragraph of this Section 5.9 (an “Enforcement Action”) and (ii) having service of process made upon such stockholder in any such Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder. Furthermore, except to the extent prohibited by any provision of the Delaware General Corporation Law or the Certificate of Incorporation, in the event that any stockholder shall initiate or assert a Foreign Action without the written consent of the Corporation, then each such stockholder shall be obligated jointly and severally to reimburse the Corporation
and any officer or director of the Corporation made a party to such proceeding for all fees, costs and expenses of every kind and description (including, but not limited to, all reasonable attorneys’ fees and other litigation expenses) that the parties may incur in connection with any successful motion to dismiss, stay or transfer such Foreign Action based upon non-compliance with this Section 5.9.
If any provision or provisions of this Section 5.9 shall be held to be invalid, illegal or unenforceable as applied to any person or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision(s) in any other circumstance and of the remaining provisions of this Section 5.9 (including, without limitation, each portion of any sentence of this Section 5.9 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons and circumstances shall not in any way be affected or impaired thereby.
FOR PROPOSAL NO. 3, THE BOARD RECOMMENDS THAT STOCKHOLDERSVOTE “FOR” THE AMENDMENT TO THE BY-LAWS AS SET FORTH HEREIN TO INCLUDEA FORUM SELECTION CLAUSE.
At the Annual Meeting, stockholders will be asked to approve the adoption of the 2015 Stock Incentive Plan (the “2015 Stock Plan”), including the shares of Common Stock reserved for issuance under the 2015 Stock Plan and the material terms of certain performance awards granted under the 2015 Stock Plan. Our current equity plan, our Amended and Restated 2005 Stock Incentive Plan (the “2005 Stock Plan”), was originally adopted by the Board on February 24, 2005 and approved by our stockholders on May 4, 2005, with amendments thereto approved by stockholders on June 20, 2007, June 15, 2011, June 11, 2012, June 13, 2013, and June 12, 2014. Our 2005 Stock Plan expired on February 23, 2015 and, therefore, we are no longer able to grant awards under the 2005 Stock Plan. In order to enable the Company to grant equity awards, on March 5, 2015, the Board adopted the 2015 Stock Plan, which will become effective upon receiving stockholder approval at this Annual Meeting.
The Board believes that equity grants are an essential element of the Company’s compensation program. Stockholder approval of the 2015 Stock Plan would allow us to continue to attract and retain high quality and high performing directors, executives and other employees with equity incentives. Based upon its review and consideration of:
the Board approved the 2015 Stock Plan and the shares of Common Stock authorized for issuance under it.
The Board believes that the 2015 Stock Plan will promote the interests of our stockholders and is consistent with principals of good corporate governance including:
If the 2015 Stock Plan is approved, a total of 25,000,000 shares of Common Stock will be available for awards under the 2015 Stock Plan (the “Proposed Share Pool”) which includes 4,620,369 shares of Common Stock that were available for issuance under our 2005 Stock Plan immediately prior to its expiration on February 23, 2015. In determining the size of the Proposed Share Pool, our Board considered the importance of equity awards in our compensation program, our historic rates of equity award issuances (commonly referred to as our “burn rate”) and the potential dilutive effect to our stockholders. The following discussion provides information on the shares subject to outstanding awards under our 2005 Stock Plan as of the date our Board adopted the 2015 Stock Plan, and on the Proposed Share Pool. This information is intended to provide stockholders with additional context for evaluating the Proposed Share Pool.
Since its adoption in 2005, we have granted equity awards only under our 2005 Stock Plan. In fiscal 2014, the Company granted stock options under the 2005 Stock Plan covering a total of 6,418,000 shares and restricted stock covering a total of 15,000 shares. Our fiscal year 2014 burn rate was determined to be 2.8%.
The following table provides information regarding the number of shares subject to each type of outstanding award under our 2005 Stock Plan, the number of shares under the Proposed Share Pool and the dilutive impact of each to our stockholders as of March 5, 2015.
Number of shares | As a percentage of stock outstanding on a fully diluted basis | |||||||
Outstanding stock options | 16,530,711 | 6.5 | % | |||||
Outstanding restricted stock | 15,000 | 0.0 | % | |||||
Total shares subject to outstanding awards under the 2005 Stock Plan | 16,545,711 | 6.5 | % | |||||
Proposed Share Pool for future awards under the 2015 Stock Plan | 25,000,000 | 8.9 | % | |||||
Total potential dilution | 41,545,711 | 14.8 | % |
As indicated by the numbers in the table above, as of March 5, 2015, the date our Board adopted the 2015 Stock Plan, the potential dilution under our 2005 Stock Plan was 6.5%. If the 2015 Stock Plan is approved, our potential dilution will be 14.8%.
Our Board believes that the ability to grant equity compensation has been, and will continue to be, essential to the Company’s ability to attract and retain the highest quality and highest performing employees and directors. Our Board also believes that equity compensation motivates our employees, including our executive officers, and our directors to contribute to the achievement of our corporate objectives and encourages the alignment of their interests with the interests of our stockholders. After a review of its routine historical practice and an estimation of the Company’s future growth, the Company believes that the availability of 25,000,000 shares of Common Stock under the Proposed Share Pool would provide a sufficient number of shares to enable the Company to continue to make awards at historical average annual rates for the next three years. The Compensation Committee determined that reserving shares sufficient for approximately three years of new awards at historical grant rates is in line with the practice of our peer public companies.
In addition, approval of the 2015 Stock Plan by our stockholders would preserve our ability to grant stock options, stock appreciation rights and performance-based stock awards under the 2015 Stock Plan that may qualify as “qualified performance-based compensation” within the meaning of Section 162(m). Section 162(m) disallows a deduction to any publicly held corporation and its affiliates for certain compensation paid to “covered employees” in a taxable year to the extent that compensation to a covered employee exceeds $1 million. However, compensation that satisfies the requirements of an exception for “qualified performance-based compensation” is not subject to this deduction limitation. For compensation awarded under a plan to fit within this exception under Section 162(m), among other things, the following terms must be disclosed to and approved by the stockholders before the compensation is paid: (i) a description of the employees eligible to receive such awards; (ii) a per-person limit on the number of shares subject to stock options, stock appreciation rights and performance-based stock awards that may be granted to any employee under the plan in any year; and (iii) a description of the business criteria underlying the performance goals on the basis of which performance-based awards may be granted (or become vested or exercisable). Although stockholder approval is one of the requirements of the exception to the deductibility limits under Section 162(m), even with stockholder approval, the Board and Compensation Committee cannot guarantee that awards under the 2015 Stock Plan will be deductible as qualified performance-based compensation under Section 162(m). In addition, the Compensation Committee has and will continue to have authority to pay or provide compensation (including under the 2015 Stock Plan, if approved by stockholders) that is not deductible under Section 162(m) in order to maintain a competitive compensation program and provide compensation that will attract and retain highly qualified executives.
The following summary describes the material terms of the 2015 Stock Plan. This summary of the 2015 Stock Plan is not a complete description of all provisions of the 2015 Stock Plan and is qualified in its entirety by reference to the 2015 Stock Plan, which is filed as an appendix to this Proxy Statement.
Purpose; Term. The purpose of the 2015 Stock Plan is to secure for the Company and its stockholders the benefits arising from capital stock ownership by employees, officers, and directors of, as well as consultants and advisors to, the Company, its parents and its subsidiaries. Unless sooner terminated in accordance with its terms, the 2015 Stock Plan will terminate upon the close of business on March 4, 2025.
Administration. The 2015 Stock Plan is administered by the Compensation Committee and its authorized delegates. Subject to the terms of the 2015 Stock Plan, the Compensation Committee has the following authority: to determine the individuals to whom, and the time or times at which, awards are made, the number of shares of Common Stock subject to each award, and the terms of all awards and all award agreements; to construe the plan and the award agreements under the plan; to prescribe the forms, rules and procedures relating to the plan; to accelerate the time at which awards may become vested or exercisable; to determine the form of settlement of awards (whether in cash, shares of Common Stock, or other property); and to make all other determinations and take all other actions that are, in the Compensation Committee’s judgment, necessary or desirable for the administration of the 2015 Stock Plan. The Compensation Committee’s construction and interpretation of the terms and provisions of the 2015 Stock Plan and any award agreement are final and conclusive.
Shares Reserved. Subject to adjustment as described below, the number of shares of Common Stock reserved for issuance under the 2015 Stock Plan is 25,000,000 shares (which includes 4,620,369 shares that were available under the 2005 Stock Plan immediately prior to its expiration on February 23, 2015). Shares of Common Stock underlying any award made under the 2015 Stock Plan to the extent the award expires, terminates or is forfeited, in whole or in part, without the issuance of shares will become available for issuance again under the 2015 Stock Plan. Shares of Common Stock that are retained or withheld by or delivered to the Company to satisfy any purchase or exercise price or tax withholding obligation, and the total number of shares of Common Stock subject to a SAR any portion of which is settled in shares of Common Stock will be treated as issued under the 2015 Stock Plan. The shares available for issuance under the 2015 Stock Plan will not be increased by any shares that have been delivered under the 2015 Stock Plan that are subsequently repurchased using the proceeds directly attributable to stock option exercises.
Maximum Number of Shares Available under ISOs. The maximum aggregate number of shares that may be issued under the 2015 Stock Plan upon the exercise of ISOs is 25,000,000.
Individual Limits. The maximum number of shares of Common Stock subject to stock options and the maximum number of shares of Common Stock subject to SARs that may be granted to any person in any calendar year is, in each case, 2,000,000 shares. The maximum number of shares subject to other awards that may be granted to any person in any calendar year is 1,000,000 shares.
Non-Employee Director Limits. A participant in the 2015 Stock Plan who is a non-employee member of our Board may not receive awards under the 2015 Stock Plan in any calendar year in excess of the greater of an aggregate of 750,000 shares of Common Stock. This limit does not apply to any award or shares of Common Stock granted pursuant to a director’s election to receive shares of Common Stock in lieu of cash fees.
Eligible Participants. The Compensation Committee may select recipients of awards from among key employees, officers, or directors of, or consultants or advisors to the Company and its parents and subsidiaries who are expected to contribute to the Company’s future growth and success. Eligibility for stock options intended to be “incentive stock options” within the meaning of Section 422 of the Code is limited to employees of the Company or its parents and subsidiaries, in accordance with Section 422 of the Code. As of April 16, 2015, 329 employees, two consultants, and four directors are eligible to participate in the 2015 Stock Plan.
Awards. The 2015 Stock Plan provides for grants of stock options, restricted stock, unrestricted stock, SARs, stock units, restricted stock units, and performance awards. Dividend equivalents may also be provided in connection with awards under the 2015 Stock Plan.
Termination of Employment or Service. The Compensation Committee determines the effect of the termination of employment or service on an award. Unless otherwise provided by the Compensation Committee, upon a termination of employment or service, all unvested stock options and SARs will terminate, all other unvested awards will be forfeited, and vested stock options and SARs then held by the participant will remain exercisable for a period of three months, or twelve months in the case of death or disability, following such termination of employment or, in each case, until the applicable expiration date, if earlier. All stock options and SARs held by a participant, whether vested or unvested, immediately prior to the participant’s termination of employment or service will terminate if such termination is for cause.
Performance Criteria. The 2015 Stock Plan provides that grants of performance awards may be made based upon and subject to achieving performance objectives over a specified performance period. Performance criteria for awards that are intended to qualify for the performance-based compensation exception under Section 162(m) are limited to an objectively determinable measure or measures of performance relating to any or any combination of the following (measured either absolutely or by reference to an index or indices and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): sales; revenue; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or equity expense, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital, capital employed or assets; one or more operating ratios; operating income or profit, including on an after-tax basis; net income; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; sales of particular products or services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); joint ventures, strategic alliances, licenses or collaborations; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings; manufacturing or process development; or achievement of clinical trial or research objectives, regulatory or other filings or approvals or other product development milestones. A performance criterion and any targets with respect thereto determined by the Compensation Committee need not be based upon an increase, a positive or improved result or avoidance of loss.
To the extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m), the Compensation Committee may provide in the case of any award intended to qualify for such exception that one or more of the performance objectives applicable to the award will be adjusted in an objectively determinable manner to reflect events (for example, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, extraordinary items, and other unusual or non-recurring items, and the cumulative effects of tax or accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the performance period that affect the applicable performance objectives.
Non-transferability of Awards. In general, awards under the 2015 Stock Plan may not be transferred except by will or the laws of descent and distribution, unless, in the case of awards other than incentive stock options, expressly permitted in the agreement evidencing the award. Awards other than incentive stock options may be transferred pursuant to a domestic relations order (within the meaning of Rule 16a-12 of the Exchange Act).
Recovery of Compensation. The Compensation Committee may cancel, rescind, withhold or otherwise limit or restrict any award at any time under the 2015 Stock Plan if the participant is not in compliance with the provisions of the 2015 Stock Plan or the award or if the participant breaches any agreement with the Company with respect to non-competition, non-solicitation or confidentiality. The Compensation Committee also may recover any award or payments or gain in respect of any award under the 2015 Stock Plan in accordance with any applicable Company clawback or recoupment policy, as such policy may be in effect from time to time, or as otherwise required by applicable law or applicable stock exchange listing standards.
Adjustment Provisions. If the outstanding shares of Common Stock are exchanged for a different number or kind of shares or other securities of the Company or increased or decreased as a result of any recapitalization, reclassification, stock dividend, stock split or reverse stock split, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, an appropriate and proportionate adjustment will be made to (a) the maximum number and kind of shares reserved for issuance under the 2015 Stock Plan, (b) the maximum number of shares that can be issued upon exercise of incentive stock options under the 2015 Stock Plan, (c) the limitations on the number of shares of Common Stock that may be delivered through awards granted to any person in any calendar year and the limitations on awards granted to our non-employee directors, (d) the number and kind of shares or other securities subject to any then outstanding awards under the 2015 Stock Plan, and (e) the exercise or purchase prices (or base values) relating to awards and any other provision of awards affected by such change, without (in the case of stock options or SARs) changing the aggregate exercise price (or base values) for such awards.
Change in Control. In the event of a corporate transaction (as defined in the 2015 Stock Plan), the Compensation Committee may provide for any one or more of the following actions: the continuation, assumption or substitution of outstanding awards by the acquiring or succeeding corporation (or an affiliate thereof), the cash-out of outstanding awards, the accelerated vesting or delivery of shares under awards, or the termination of awards that are not exercised prior to the consummation of the transaction. Except as the Compensation Committee may otherwise provide in any case, all awards will terminate automatically or, in the case of restricted stock, will be forfeited automatically upon the consummation of a covered transaction other than awards that are assumed by the acquiring or succeeding corporation. In general, a corporate transaction under the 2015 Stock Plan means consolidation, merger, combination or reorganization of the Company, the sale, lease or other disposition of all or substantially all of the assets of the Company, a transaction or series of related transactions involving a person or entity, or a group of affiliated persons or entities in which such persons or entities become the owners, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction, or a dissolution or liquidation of the Company. The Compensation Committee may also provide for accelerated vesting or exercisability of awards upon the occurrence of a change in the incumbent board, which, in general, will be deemed to occur if the existing members of the Board on the date the 2015 Stock Plan is adopted by the Board (or existing members of the Board on a later date whose appointment, election or nomination for election was endorsed by the incumbent board) cease to constitute at least a majority of the members of the Board.
Prohibition on Repricing. Except in connection with certain corporate transactions involving the Company, the Company may not, without obtaining stockholder approval, amend the terms of outstanding stock options or SARs to reduce the exercise price or base value of such awards, cancel outstanding stock options or SARs in exchange for stock options or SARs with an exercise price or base value that is less than the exercise price or base value applicable to the original award, or cancel outstanding stock options or SARs that have an exercise price or base value greater than the fair market value of a share of Common Stock on the date of such cancellation in exchange for cash or other consideration.
Plan Amendments and Termination. The Board may at any time, and from time to time, modify or amend the 2015 Stock Plan in any respect, except that any such modification or amendment will be subject to stockholder approval to the extent required by applicable tax or securities laws or stock exchange listing requirements and no such modification or amendment may adversely affect the rights under an award previously granted to a participant without such participant’s consent. The Compensation Committee may amend outstanding award agreements only with the consent of the affected participant, except that the Administrator, without the consent of the affected participant, may amend or modify the terms and provisions of the 2015 Stock Plan and of any outstanding incentive stock options granted under the 2015 Stock Plan to the extent necessary to qualify any or all such stock options as incentive stock options or to the extent necessary to ensure the qualification of the 2015 Stock Plan under Rule 16b-3 (if then applicable) or compliance with, or exemption from, Section 409A of the Code.
The Board may at any time suspend or terminate the 2015 Stock Plan except that any such suspension or termination may not adversely affect the rights under an award previously granted to a participant while the 2015 Stock Plan is in effect without the consent of the affected participant.
The following is a summary of some of the material federal income tax consequences associated with the grant and exercise of awards under the 2015 Stock Plan under current federal tax laws and certain other tax considerations associated with awards under the 2015 Stock Plan. The summary does not address tax rates or non-U.S., state, or local tax consequences, nor does it address employment-tax or other federal tax consequences except as noted.
Restricted Stock. A participant who is awarded or purchases shares subject to a substantial risk of forfeiture generally does not have income until the risk of forfeiture lapses. When the risk of forfeiture lapses, the participant has ordinary income equal to the excess of the fair market value of the shares at that time over the purchase price, if any, and a corresponding deduction is generally available to the Company. However, a participant may make an election under Section 83(b) of the Code to be taxed on restricted stock when it is acquired rather than later, when the substantial risk of forfeiture lapses. An 83(b) election must be made not later than thirty (30) days after the transfer of the shares to the participant and must satisfy certain other requirements. A participant who makes an effective 83(b) election will realize ordinary income equal to the fair market value of the shares as of the time of acquisition less any price paid for the shares. A corresponding deduction will generally be available to the Company. Fair market value for this purpose is determined without regard to the forfeiture restrictions. If a participant makes an effective 83(b) election, no additional income results by reason of the lapsing of the restrictions.
For purposes of determining capital gain or loss on a sale of shares awarded under the 2015 Stock Plan, the holding period in the shares begins when the participant realizes taxable income with respect to the transfer. The participant’s tax basis in the shares equals the amount paid for the shares plus any income realized with respect to the transfer. However, if a participant makes an effective 83(b) election and later forfeits the shares, the tax loss realized as a result of the forfeiture is limited to the excess of what the participant paid for the shares (if anything) over the amount (if any) realized in connection with the forfeiture.
Incentive Stock Options. In general, a participant realizes no taxable income upon the grant or exercise of an incentive stock option. However, the exercise of an incentive stock option may result in an alternative minimum tax liability to the participant. With some exceptions, a disposition of shares purchased under an incentive stock option within two years from the date of grant or within one year after exercise produces ordinary income to the participant (and generally a deduction to the Company) equal to the value of the shares at the time of exercise less the exercise price. Any additional gain recognized on the disposition is treated as a capital gain, for which the Company is not entitled to a deduction. If the participant does not dispose of the shares until after the expiration of these one and two-year holding periods, any gain or loss recognized upon a subsequent sale is treated as a long-term capital gain or loss, for which the Company is not entitled to a deduction.
Non-statutory stock options. In general, a participant has no taxable income upon the grant of a non-statutory stock option but realizes income in connection with exercise of the option in an amount equal to the excess (at time of exercise) of the fair market value of the shares acquired upon exercise over the exercise
price. A corresponding deduction is generally available to the Company. Upon a subsequent sale or exchange of the shares, any recognized gain or loss is treated as a capital gain or loss for which the Company is not entitled to a deduction. An incentive stock option that is exercised more than three months after termination of employment (other than termination by reason of death) is generally treated as a non-statutory stock option. Incentive stock options are also treated as non-statutory stock options to the extent they first become exercisable by an individual in any calendar year for shares having a fair market value (determined as of the date of grant) in excess of $100,000.
SARs. The grant of a SAR does not itself result in taxable income, nor does taxable income result merely because a SAR becomes exercisable. In general, a participant who exercises a SAR for shares of stock or receives payment in cancellation of a SAR will have ordinary income equal to the amount of any cash and the fair market value of any stock received. A corresponding deduction is generally available to the Company.
Restricted Stock Units. The grant of a restricted stock unit does not itself generally result in taxable income. Instead, the participant is taxed upon delivery of the underlying shares (and a corresponding deduction is generally available to the Company). If the shares delivered are restricted for tax purposes, the participant will be subject to the rules described above for restricted stock.
Section 162(m). As described above under “Reasons for Seeking Stockholder Approval,” Section 162(m) generally disallows a deduction to a publicly held corporation and its affiliates for certain compensation paid to a “covered employee” in a taxable year in excess of $1 million, unless the compensation satisfies the requirements of the “performance-based compensation” exception under Section 162(m). Stock options, SARs and certain performance awards under the 2015 Stock Plan are generally intended to satisfy the requirements of this exception. However, as discussed above, the Committee will have discretionary authority to grant awards under the 2015 Stock Plan that do not satisfy the requirements of this exception.
Certain Change in Control Payments. Under Section 280G of the Code, the vesting or accelerated exercisability of stock options or the vesting and payment of other awards in connection with a change in control of a corporation may be required to be valued and taken into account in determining whether participants have received compensatory payments contingent on the change in control in excess of certain limits. If these limits are exceeded, a substantial portion of amounts payable to the participant, including income recognized by reason of the grant, vesting or exercise of awards, may be subject to an additional 20% federal tax and may be non-deductible to the Company.
The Board has approved, subject to stockholder approval of the 2015 Stock Plan, the grant of the stock option awards described in the table below. If our stockholders do not approve the 2015 Stock Plan, these awards will terminate. On April 16, 2015, the closing price of our common stock as reflected on the NASDAQ was $8.23.
Except with respect to awards shown in the table below, awards under the 2015 Stock Plan are subject to the discretion of the Compensation Committee and, therefore, are not determinable at this time. The Compensation Committee has full discretion to determine the shares subject to awards to be granted to participants under the 2015 Stock Plan, subject to the limits described above underSummary of the 2015 Stock Plan — Individual Limitsand — Non-employee Director Limits.
The following table provides supplemental information on the Company’s equity compensation plans as of April 20, 2015 in addition to the required information presented under “Equity Compensation Plan Information” included elsewhere in this Proxy Statement. Under the plans included in the table below, the Company’s Common Stock may be issued upon the exercise of options.
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) | Weighted-Average Remaining Term of Outstanding Options, Warrants, and Rights (c) | Number of Restricted Stock Awards Outstanding (d) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities in Column (a)) (e) | |||||||||||||||
Equity compensation plans approved by security holders(1) | 16,237,272 | $3.27 | 7.6 | 15,000 | 1,413,388 | (2) | ||||||||||||||
Equity compensation plans not approved by security holders(3) | — | — | — | — | — | |||||||||||||||
Total.. . . . . . | 16,237,272 | $3.27 | 7.6 | 15,000 | 1,413,388 |
Approval of the 2015 Stock Plan requires the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy and voting on the matter. Abstentions and broker non-votes will not be counted as shares voting on such matter and accordingly will have no effect on the approval of this Proposal No. 4.
FOR PROPOSAL NO. 4, THE BOARD RECOMMENDS THATSTOCKHOLDERS VOTE “FOR” THE ADOPTION OF THE NOVAVAX, INC.2015 STOCK INCENTIVE PLAN.
The Audit Committee, comprised solely of independent directors, has appointed the firm Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015. The Board recommends that the stockholders of the Company ratify this appointment. Although ratification is not required by the Company’s By-laws or otherwise, the Company believes that it is advisable to give stockholders an opportunity to ratify this selection.
On April 24, 2014, the Audit Committee selected Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2014, and notified Grant Thornton LLP of its dismissal as the Company’s independent registered public accounting firm. The Company formally engaged Ernst & Young LLP on May 7, 2014.
The report of Grant Thornton LLP on the Company’s consolidated financial statements as of and for the year ended December 31, 2013 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal year ended December 31, 2013 and subsequent interim period through May 7, 2014, there were no (a) disagreements (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K) with Grant Thornton LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Grant Thornton LLP, would have caused Grant Thornton LLP to make reference to the subject matter thereof in connection with its reports for such years; or (b) reportable events, as described under Item 304(a)(1)(v) of Regulation S-K.
In connection with its acquisition of Isconova AB in 2013, the Company consulted with and received advice from Ernst & Young that the Company considered in making decisions as to the accounting treatment of the acquisition. However, all such activities were completed in 2013 and were subsequently reviewed by Grant Thornton LLP in its audit of the Company’s annual financial statements for the fiscal year ending December 31, 2013. Except as noted here, during the fiscal year ended December 31, 2013 and the subsequent interim period through May 7, 2014, neither the Company, nor anyone on its behalf, consulted Ernst & Young LLP regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and no written report or oral advice was provided to the Company by Ernst & Young LLP that Ernst & Young LLP concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) or a reportable event (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).
The affirmative vote of the majority of the shares present in person or represented by proxy at the Annual Meeting and voting on the proposal shall constitute ratification of the appointment of Ernst & Young LLP. If the appointment of Ernst & Young LLP as the Company’s independent auditor is ratified, the Audit Committee may, in its discretion, change the appointment at any time during the year should it determine such a change would be in the best interest of the Company and its stockholders. If the stockholders, however, do not ratify the appointment, the Audit Committee will reconsider whether to retain Ernst & Young LLP, but may proceed with the retention of Ernst & Young LLP if it deems it to be in the best interest of the Company and its stockholders.
Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will have an opportunity to address the Annual Meeting if they desire to do so and are expected to be able to respond to appropriate questions from stockholders.
The following table shows the fees billed by Ernst & Young LLP for professional services rendered as the Company’s independent registered public accounting firm during the 2014 and 2013 fiscal years. Ernst & Young LLP replaced Grant Thornton LLP as our independent registered public accounting firm effective May 7, 2014.
Ernst & Young LLP | ||||||||
Fee Category | 2014 ($) | 2013 ($) | ||||||
Audit Fees | 364,454 | — | ||||||
Audit-Related Fees | — | — | ||||||
Tax Fees | — | — | ||||||
All Other Fees | — | — | ||||||
Total Fees | 364,454 | — |
The following table shows the fees billed by Grant Thornton LLP for professional services rendered as the Company’s independent registered public accounting firm during the 2014 and 2013 fiscal years. Ernst & Young LLP replaced Grant Thornton LLP as our independent registered public accounting firm effective May 7, 2014.
Grant Thornton LLP | ||||||||
Fee Category | 2014 ($) | 2013 ($) | ||||||
Audit Fees | 57,828 | (1) | 496,151 | (2) | ||||
Audit-Related Fees | — | 191,079 | (3) | |||||
Tax Fees | 9,450 | 111,431 | (4) | |||||
All Other Fees | — | — | ||||||
Total Fees | 67,278 | 798,661 |
Audit Fees. Consists of fees for professional services rendered in connection with the audit of the Company’s annual consolidated financial statements for 2014 and 2013 and the reviews of the consolidated financial statements included in the Company’s quarterly reports on Forms 10-Q. These amounts included fees billed for annual financial statement and internal control audits, quarterly reviews, and registration statement filings and consents.
Audit-Related Fees. Consists of fees for assurance and related services that were reasonably related to the performance of the independent registered public accounting firm’s audit or review of the Company’s financial statements.
Tax Fees. Consists of fees for professional services rendered for tax compliance, tax advice, and tax planning for the Company. These amounts represent those billed for tax return preparation for the Company and its subsidiary. All material tax fees were pre-approved by the Audit Committee.
All Other Fees. Consists of fees for products and services provided other than those otherwise described above.
As contemplated by applicable law and as provided by the Audit Committee’s charter, the Audit Committee is responsible for the appointment, compensation, retention, and oversight of the work of the Company’s independent registered public accounting firm. In connection with such responsibilities, the Audit Committee is required, and it is the Audit Committee’s policy, to pre-approve the audit and permissible non-audit services (both the type and amount) performed by the Company’s independent registered public accounting firm in order to ensure that the provision of such services does not impair the firm’s independence, in appearance or fact.
Under the policy, unless a type of service to be provided by the independent registered public accounting firm has received general pre-approval, it will require separate pre-approval by the Audit Committee. If fees for a proposed service of a type that has been pre-approved exceed the pre-approved amount, the Audit Committee and the independent registered public accounting firm must confer and the Audit Committee must grant its approval before further work may be performed. For audit services (including the annual financial statement audit, quarterly statement reviews, and other procedures required to be performed by the independent registered public accounting firm to be able to form an opinion on the Company’s consolidated financial statements), the independent registered public accounting firm must provide to the Audit Committee in advance an engagement letter, outlining the scope of audit services proposed to be performed with respect to the audit for that fiscal year and associated fees. If, in advance of its meeting, the Audit Committee agrees to the engagement letter, the engagement will be formally accepted by the Audit Committee at its next regularly scheduled meeting.
All permissible non-audit services not specifically approved in advance must be separately pre-approved by the Audit Committee, as noted above, with the exception of certain services of limited financial expense for which the Audit Committee has authorized the Chairman and the Chief Financial Officer to hire at their discretion. Generally, requests or applications to provide services must be in writing and include a description of the proposed services, the anticipated costs and fees, and the business reasons for engaging the independent registered public accounting firm to perform the services. The request must also include a statement as to whether the request or application is consistent with the SEC rules on registered public accounting firm independence.
To ensure prompt handling of unexpected matters, the Audit Committee has delegated authority to pre-approve audit and permissible non-audit services between regularly scheduled meetings of the committee to its Chairman and, in certain limited instances, to its Chief Financial Officer, who are each responsible for reporting any pre-approval decisions to the Audit Committee at its next scheduled meeting. Except as noted above, the Audit Committee has not and will not delegate to management of the Company the Audit Committee’s responsibilities to pre-approve services performed by the independent registered public accounting firm. The Audit Committee pre-approved all audit services provided to the Company by each independent registered public accounting firm engaged during the fiscal years ended December 31, 2014 and 2013.
FOR PROPOSAL 5, THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR”THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP ASTHE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMFOR THE FISCAL YEAR ENDING DECEMBER 31, 2015
Except as noted below, the following table sets forth certain information as of April 20, 2015, unless otherwise indicated, with respect to the beneficial ownership of our Common Stock by (i) each person (including any group) known to the Company to beneficially own more than 5% of the outstanding shares of our Common Stock, (ii) each director of the Company or nominee for director, (iii) each of the Named Executive Officers of the Company as identified in the “Summary Compensation Table” below, and (iv) all directors and executive officers of the Company as a group.
Name of Beneficial Owner(1) | Shares of Common Stock Beneficially Owned(2) | Percentage of Class Outstanding(3) | ||||||
FMR LLC(4) | 28,902,866 | 10.8 | ||||||
T. Rowe Price Associates, Inc.(5) | 12,377,102 | 6.1 | ||||||
BlackRock, Inc.(6) | 19,132,102 | 7.1 | ||||||
Directors, Nominees, and Executive Officers | ||||||||
Richard H. Douglas, Ph.D.(7) | 380,000 | * | ||||||
Gary C. Evans.(8) | 631,979 | * | ||||||
Michael A. McManus, Jr. J.D.(9) | 237,590 | * | ||||||
Rajiv I. Modi, Ph.D.(10) | 7,500,000 | 2.8 | ||||||
James F. Young, Ph.D.(11) | 890,000 | * | ||||||
Stanley C. Erck.(12) | 2,255,278 | * | ||||||
Barclay A. Phillips.(13) | 149,544 | * | ||||||
Gregory M. Glenn, M.D.(14) | 645,516 | * | ||||||
Timothy J. Hahn, Ph.D.(15) | 479,235 | * | ||||||
John A. Herrmann III.(16) | 358,983 | * | ||||||
John J. Trizzino(17) | 103,611 | * | ||||||
Russell P. Wilson(18) | 383,689 | * | ||||||
All directors and executive officers as a group (12 persons)(19) | 14,015,425 | 5.1 |
The
Dr. Modi was unable to attend two of the seven Board meetings as a result of unavoidable obligations. Dr. Modi has been a member of the Board since 2009, and this is the first year that Dr. Modi did not attend at least 75% of the meetings of the Board. In light of the circumstances relating to Dr. Modi’s meeting attendance in 2017, and the absence of any attendance issues in prior years, the Board does not have any concerns regarding Dr. Modi’s future attendance at the Board and Board committee meetings.
Director | | | Audit Committee | | | Compensation Committee | | | Nominating and Corporate Governance Committee | | ||||||
Richard H. Douglas, Ph.D. | | | Member | | | Member | | | — | | ||||||
Stanley C. Erck | | | — | | | — | | | — | | ||||||
Gary C. Evans | | | Member | | | — | | | Chair | | ||||||
Michael A. McManus, Jr., J.D. | | | Chair | | | Member | | | Member | | ||||||
Rajiv I. Modi, Ph.D. | | | — | | | — | | | — | | ||||||
James F. Young, Ph.D. | | | — | | | Chair | | | Member | |
With the exception of Mr. Erck, each Finance Committee member is a “non-employee director,” as defined by Rule 16b-3 of the Exchange Act, “outside director,” as defined in Section 162(m) of the Code, and an “independent director,” as defined by the listing standards of the NASDAQ. The Finance Committee met one (1) time during the 2014 fiscal year and took no action by written consent in lieu of a meeting.
The Finance Committee acts pursuant to a written charter, a current copy of the charter is available on the Company’s website atwww.novavax.com. The Finance Committee reviews and evaluates the charter annually to ensure its adequacy and accuracy, and is charged with performing an annual self-evaluation with the goal of continuing improvement. In 2014, the Finance Committee did not approve any revisions to its charter.
The purpose of the Finance Committee is to assist the Board with its responsibilities and provide advice to senior management of the Company relating to the financial condition and the equity and debt capital raising strategies and activities of the Company, oversight of the Company’s investment and cash management policies, all in the context of the Company’s overall strategic business plan and to carry out such other functions as the Board may from time to time authorize. In 2014, the Finance Committee met only once as a committee, as the majority of such functional activity was conducted by the Board.
The notice must set forth as to each proposed nominee:
While there are no set minimum requirements, a candidate should:
received regarding accounting, internal accounting controls, or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. The Company currently has such procedures in place. The Code of Business Conduct and Ethics is reviewed at least annually by the Nominating and Corporate Governance Committee. A current copy of the Code of Business Conduct and Ethics, as amended, is postedavailable on Novavax’the Company’s website atwww.novavax.com. NovavaxThe Company intends to disclose on its website the nature of any future amendments to and waivers of the codeCode of Ethics that apply to its Chief Executive Officer, Principal Financial Officer and Principal Accounting Officer, and persons performing similar functions.
March 14, 2018.
No executive officer of the Company currently serves, or during 20142017 served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Company’s Board or Compensation Committee.
During 2014, outside directors were entitled
Fee(s) | | | 2017 Amount | | | 2018 Amount | |
Annual Director Retainer | | | $40,000 – Non-Employee Director | | | $40,000 – Non-Employee Director | |
Annual Chairperson Retainer | | | $35,000 – Board $18,000 – Audit Committee $12,500 – Compensation Committee $9,500 – Nominating and Corporate Governance Committee | | | $35,000 – Board $20,000 – Audit Committee $15,000 – Compensation Committee $10,000 – Nominating and Corporate Governance Committee | |
Committee Member Retainer | | | $10,000 – Audit Committee $7,000 – Compensation Committee $5,000 – Nominating and Corporate Governance Committee | | | $10,000 – Audit Committee $7,500 – Compensation Committee $5,000 – Nominating and Corporate Governance Committee | |
Board and Committee Meetings | | | Directors do not receive compensation for attending meetings. Directors are reimbursed for reasonable costs and expenses incurred in connection with attending any Board or committee meetings or any other Company related business activities. | | | Directors do not receive compensation for attending meetings. Directors are reimbursed for reasonable costs and expenses incurred in connection with attending any Board or committee meetings or any other Company related business activities. | |
Name | | | Annual Retainer | |
Richard H. Douglas, Ph.D. | | | Cash account – 0% Company Common Stock account – 100% | |
At its meeting on
Name | | | Fees Earned or Paid in Cash(1) ($) | | | Option Awards(2) ($) | | | Total ($) | | |||||||||
Gail K. Boudreaux(3) | | | | | 44,056 | | | | | | 87,704 | | | | | | 131,760 | | |
Richard H. Douglas, Ph.D. | | | | | 57,000 | | | | | | 176,512 | | | | | | 233,512 | | |
Gary C. Evans | | | | | 59,500 | | | | | | 176,512 | | | | | | 236,012 | | |
Michael A. McManus, Jr., J.D. | | | | | 70,000 | | | | | | 176,512 | | | | | | 246,512 | | |
Rajiv I. Modi, Ph.D.(4) | | | | | — | | | | | | — | | | | | | — | | |
James Young, Ph.D. | | | | | 92,500 | | | | | | 441,280 | | | | | | 533,780 | | |
Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | Option Awards(2) ($) | All Other Compensation ($) | Total ($) | |||||||||||||||
Richard H. Douglas, Ph.D. | 61,000 | — | 119,415 | — | 180,415 | |||||||||||||||
Stanley C. Erck(3) | — | — | — | — | — | |||||||||||||||
Gary C. Evans | 66,500 | — | 119,415 | — | 185,915 | |||||||||||||||
Jack O. Marsh, Jr. J.D.(4) | 28,400 | — | 119,415 | — | 147,815 | |||||||||||||||
Michael A. McManus, Jr., J.D. | 74,000 | — | 119,415 | — | 193,415 | |||||||||||||||
Rajiv I. Modi, Ph.D.(5) | — | — | — | — | — | |||||||||||||||
James Young, Ph.D. | 92,500 | — | 298,538 | — | 391,038 |
Name | | | Age | | | Title | |
Stanley C. Erck | | | 70 | | | President and Chief Executive Officer and Director | |
John J. Trizzino | | | 58 | | | Senior Vice President, Chief Business Officer and Chief Financial Officer and Treasurer | |
Gregory M. Glenn, M.D. | | | 64 | | | President, Research and Development | |
John A. Herrmann III | | | 52 | | | Senior Vice President, General Counsel and Corporate Secretary | |
The following table provides the Company’s equity compensation plan information as of December 31, 2014. Under these plans, the Company’s Common Stock may be issued upon the exercise of options. See also the information regarding stock options in Note 13 to the Company’s consolidated financial statements for the year ended December 31, 2014, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2015.
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) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities in Column (a)) (c) | |||||||||
Equity compensation plans approved by security holders(1) | 16,963,098 | $ | 3.23 | 6,150,571 | (2) | |||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 16,963,098 | $ | 3.23 | 6,150,571 |
Officer, Chief Financial Officer and Treasurer of the Company.
Novavax’
The Compensation Committee believes that a significant portion of a Named Executive Officer’san executive officer’s total compensation should reflect overall Company performance. The compensation program rewards the Company’s executive officers for achieving specified corporate performance andgoals, as well as goals that fall within their individual performance.functional areas. Incentives are based on meeting criteria in each of these categories and reflect the Named Executive Officer’sexecutive officer’s overall contribution to the Company.
The compensation program rewards the Company’s Named Executive Officers for achieving specified performance goals, building stockholder value, and maintaining long-term careers
Our Stockholders
Compensation
The Survey is used to determine whether or not a Named Executive Officer’s salary and bonus opportunity are competitive. The Company’s human resources team
| | | | | | | | | | | |
| The Peer Group Utilized in 2017 Consists of the Following 19 Companies: | | | Achaogen | | | Celldex Therapeutics | | | Recro Pharma | |
| Achillion Pharmaceuticals | | | Chimerix | | | Seres Therapeutics | | |||
| Agenus | | | Cytokinetics | | | Tetraphase Pharmaceuticals | | |||
| Alder Biopharmaceuticals | | | ImmunoGen | | | XBiotech | | |||
| Athersys | | | Inovio Pharmaceuticals | | | Zogenix | | |||
| BioCryst Pharmaceuticals | | | MacroGenics | | | | | |||
| BioTime | | | Merrimack Pharmaceuticals | | | | |
In 2014,SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Compensation Committee engaged LCG GroupRadford after assessing Radford’s independence. Based upon this assessment, it was determined that the engagement of Radford in September 2016 did not raise any conflicts of interest or similar concerns. The Compensation & HR Consulting (“LCG”), to reviewCommittee will assess Radford’s independence and analyze its current compensation programs and to make recommendations regarding the appropriatenesspotential conflicts of its current compensation strategy and practices, the competitiveness of each component of compensation, and whether modifications should be made to its annual incentive plan and stock option grant approach. LCG first performed such services for the Company in 2010 and has provided similar services in subsequent years, including 2014. In addition, LCG reviewed the competitiveness of long-term incentives, assessed the metrics used to reward executives and Board members, and assessed the mix of equity grants to correctly align risk and performance with long-term incentives. The consultantinterest on a regular basis, no less than annually.
Company’s performance and the achievement of corporate goals. Because of the key roles the Named Executive Officersexecutive officers play in the success of the Company, a significant portion of the achievement of corporate goals is reflective of the Named Executive Officers’executive officers’ individual performance. During 2014,2017, the Board and the Company’s senior executives jointly developed a set of objectives for 20142017, which were based on the Company’s strategic plan (the “2014“2017 Objectives”). These objectives include:
In addition,the Board, each executive officerNEO had additional individual goals to support the 20142017 Objectives or to further the Company’s strategic plan. More specifically:
Based on the performance evaluations, each Named Executive Officer was given a performance rating.its 2017 Objectives. The performance rating determines the amount of any merit salary increase and adjustments to the incentive cash bonus awards and equity awards. The performance ratings used by the Company include Outstanding, Exceeds Expectations, Meets Expectations, and Improvement Needed. All of the Named Executive Officers received a performance rating of at least “Meets Expectations.”
2017 Objective | | | Weight | | | Achievement | | | Percent | | | Explanation | |
Execute on RSV vaccine development plans | | | 45% | | | Partially met objective | | | 43.75% | | | Phase 3 maternal trial enrollment to target and informational analysis results that de-risk program; Phase 2 older adult trial shows positive adjuvant effect results | |
Execute on influenza vaccine development plans | | | 35% | | | Exceeded objective | | | 43.75% | | | Phase 1/2 trial in older adults demonstrates superiority against drifted H3N2 strain compared immune responses to FluZone HD; comparable in homologous trivalent strains | |
Execute on Zika vaccine development plans | | | 5% | | | Did not meet objective | | | 0% | | | De-emphasis of program based on perceived reduced needs and uncertain funding | |
Support advancement of vaccine candidates at CPLB | | | 5% | | | Met objective | | | 5% | | | JV commercial sale of influenza vaccine and supported rabies vaccine development | |
Complete financing to end 2017 with 18 months of cash | | | 10% | | | Met objective | | | 10% | | | Continued efforts to reduce expenses and preserve cash while accomplishing important objectives | |
Total | | | 100% | | | | | | 102.50% | | | | |
executive officers.
The Company provides an annuallong term.
Executive | | | Base Salary ($) | | | Percentage Increase in Base Salary from December 31, 2016 (%) | | ||||||
Stanley C. Erck | | | | | 624,000 | | | | | | 0.0 | | |
Barclay A. Phillips(1) | | | | | 366,000 | | | | | | 0.0 | | |
Gregory M. Glenn, M.D. | | | | | 450,000 | | | | | | 0.0 | | |
John A. Herrmann III | | | | | 340,000 | | | | | | 0.0 | | |
John J. Trizzino | | | | | 366,000 | | | | | | 0.0 | | |
Executive | Base Salary ($) | Percentage Increase in Base Salary from December 31, 2013(%) | ||||||
Stanley C. Erck | 500,000 | 10.9 | (1) | |||||
Barclay A. Phillips | 340,000 | 13.3 | (2) | |||||
Gregory M. Glenn, M.D. | 395,000 | 5.6 | ||||||
Timothy J. Hahn, Ph.D. | 293,500 | 2.5 | ||||||
Russell P. Wilson | 329,000 | 3.1 |
Program
Board’sits determination as to whether the Company achieved anthat objective, failed to meet anthat objective, partially met anthat objective, or exceeded anthat objective. In some instances, the Board uses its discretion to make such determinations, and in doing so will looklooks at other performance factors, mitigating circumstances, and other material successes or missed opportunities. The Board then assessesBy applying the achievement percentage to the initial weighting percentage, each objective’s weight contribution and the overall cumulative percentage achieved byof corporate performance for the Company against all of its objectives in determining the cumulative percentage.
On March 5, 2015, the Compensation Committee reviewed the Company’s performance related to its 2014 Objectives. The following table summarizes its conclusions regarding these objectives:
2014 Objective | Weight | Achievement | Percent | Explanation | ||||
Advance seasonal and pandemic influenza vaccine programs under development plan | 24% | Mostly met objective | 21% | Initiated seasonal Phase 2 clinical trial and completed successful pandemic Phase 2 clinical trial, triggered BARDA 2-year option period | ||||
Advance the RSV vaccine franchise | 28% | Exceeded objective | 53% | Maternal Phase 2 clinical trial initiated with “fast track” designation, Phase 2 clinical trial in healthy women achieved better than expected results, initiated pediatric clinical trial, and initated Phase 2 clinical trial in the elderly | ||||
Support advancement of vaccine candidates at CPL Biologicals and meet commitments to Cadila | 20% | Mostly met objectives | 17.5% | Successful ongoing support of rabies and influenza programs along with meeting master services agreement obligations | ||||
Advance pre-clinical programs towards Phase 1 | 5% | Exceeded objective | 12.5% | Published positive pre-clinical data on MERS and Ebola vaccines in multiple animal models | ||||
Manage current partnerships and commercial activities | 5% | Met objective | 5% | Evaluation of numerous potential partnerships and managing partnerships with PATH, LGLS, Genocea | ||||
Develop and implement the Novavax AB operational plan | 8% | Mostly met objectives | 6% | Successful operational plan implemented | ||||
Complete financing to end 2014 with 18 months of cash | 10% | Met objective | 10% | Company ended 2014 with approximately $168M | ||||
Total | 100% | 125% |
On March 5, 2015, upon recommendation of the Compensation Committee, the Board determined that incentive bonuses would be awarded for 2014 based on achievement of 125% of the 2014 Objectives. In doing so, the Board exercised discretion in ascribing additional value to the Company’s achievement of a number of critical tasks in 2014. With respect to the Company’s goal related to its RSV programs, the Compensation Committee ascribed significant additional value to the initiation of the RSV elderly vaccine program, the achievement of positive data in an elderly RSV Phase 1 clinical trial and better than expected results in the maternal RSV Phase 2 clinical trial in healthy women of child-bearing age. With respect to the Company’s goal related to its pre-clinical programs, the Compensation Committee ascribed significant additional value to the development of an Ebola vaccine candidate with positive pre-clinical results in multiple animal models including, non-human primates.
TheA target bonus is set at a percentage of the Named Executive Officer’sexecutive officer’s base salary, with such percentages being based on market data. However,data, although the ultimate amount of any bonus payout is at the discretion of the Board. The 2014 bonus targets were as follows:
The Compensation Committee believes that the higher the individual’s position within Novavax, the more closely his or her bonus award should be tied to the Company’s success. TheThus, the CEO’s target bonus is based solelyentirely on the achievementsachievement of the 2014 Objectivesannual corporate objectives and the discretion of the Board. For Named Executive Officers other than the CEO, 80% of theDr. Glenn’s target bonus is based on corporate achievementobjectives and 20% of thehis bonus is based on individual performance. To be eligible for a bonus, a Named Executive Officer must achieve at least a “Meets Expectations” onthe performance of his or her annual performance review, which the Compensation Committee determined was the case with each offunctional area. For the other Named Executive Officers.
Executive | | | Percentage of Base Salary (%) | | |||
Stanley C. Erck | | | | | 60.0 | | |
Barclay A. Phillips | | | | | 40.0 | | |
Gregory M. Glenn, M.D. | | | | | 50.0 | | |
John A. Herrmann III | | | | | 40.0 | | |
John J. Trizzino | | | | | 40.0 | | |
Traditionally, the Company grants stock options as the primary form of equity compensation, but the Company does, at times, grant restricted stock to attract and retain key employees. Generally, stock option grants vest over four years, although certain options granted in 2010 have a three year vesting period, while restricted stock may vest based on either critical milestones to be achieved over a limited period of time or over a similar four year period as stock option grants.
To be eligible to receive an award of stock options, the Named Executive Officer must have an overall performance rating of at least “Meets Expectations.”
With guidance from LCGRadford upon its analysis of Surveycompetitive data, the stock options were awarded to the Named Executive OfficersNEOs in 2014,December 2017, and these options vest over four (4) years.
a four-year period (25% on the first anniversary of the grant date and the remaining 75% monthly thereafter over a three-year period).
| | | Number of Shares | | |||
Non-vested at December 31, 2014 | | | | | — | | |
Granted | | | | | — | | |
Vested | | | | | — | �� | |
Forfeited | | | | | — | | |
Non-vested at December 31, 2015 | | | | | — | | |
Granted | | | | | 1,100,000 | | |
Vested | | | | | — | | |
Forfeited | | | | | — | | |
Non-vested at December 31, 2016 | | | | | 1,100,000 | | |
Granted | | | | | — | | |
Vested | | | | | — | | |
Forfeited | | | | | (125,000) | | |
Non-vested at December 31, 2017 | | | | | 975,000 | | |
|
prescription drug plan, flexible spending accounts, short and long-termlong term disability, life insurance, and a 401(k) plan. These plans are offered to all employees and do not discriminate in favor of Named Executive Officers.
We do not believe that our
Name and Principal Position | | | Year | | | Salary(1) ($) | | | Bonus(2) ($) | | | Option Awards(3) ($) | | | Non-Equity Incentive Plan Compensation(4) ($) | | | All Other Compensation(5) ($) | | | Total ($) | | |||||||||||||||||||||
Stanley C. Erck President, CEO and Interim CFO | | | | | 2017 | | | | | | 624,000 | | | | | | — | | | | | | 1,753,125 | | | | | | 383,760 | | | | | | 10,800 | | | | | | 2,771,685 | | |
| | | 2016 | | | | | | 618,000 | | | | | | — | | | | | | 3,252,440 | | | | | | — | | | | | | 7,379 | | | | | | 3,877,819 | | | ||
| | | 2015 | | | | | | 575,000 | | | | | | — | | | | | | 3,924,000 | | | | | | 345,000 | | | | | | 7,800 | | | | | | 4,851,800 | | | ||
Barclay A. Phillips(6) Former SVP, CFO and Treasurer | | | | | 2017 | | | | | | 316,261 | | | | | | — | | | | | | — | | | | | | — | | | | | | 40,586 | | | | | | 356,847(7) | | |
| | | 2016 | | | | | | 363,250 | | | | | | — | | | | | | 790,315 | | | | | | — | | | | | | 7,500 | | | | | | 1,161,065 | | | ||
| | | 2015 | | | | | | 351,250 | | | | | | — | | | | | | 872,000 | | | | | | 122,938 | | | | | | 6,487 | | | | | | 1,352,675 | | | ||
Gregory M. Glenn, M.D. President, Research and Development | | | | | 2017 | | | | | | 450,000 | | | | | | — | | | | | | 531,250 | | | | | | 229,500 | | | | | | 10,500 | | | | | | 1,221,250 | | |
| | | 2016 | | | | | | 441,250 | | | | | | — | | | | | | 1,193,920 | | | | | | — | | | | | | 7,500 | | | | | | 1,642,670 | | | ||
| | | 2015 | | | | | | 410,000 | | | | | | — | | | | | | 1,308,000 | | | | | | 143,500 | | | | | | 10,514 | | | | | | 1,872,014 | | | ||
John A. Herrmann III SVP, General Counsel and Corporate Secretary | | | | | 2017 | | | | | | 340,000 | | | | | | — | | | | | | 425,000 | | | | | | 138,550 | | | | | | 9,767 | | | | | | 913,317 | | |
| | | 2016 | | | | | | 335,000 | | | | | | — | | | | | | 790,315 | | | | | | — | | | | | | 7,500 | | | | | | 1,132,815 | | | ||
| | | 2015 | | | | | | 315,000 | | | | | | — | | | | | | 872,000 | | | | | | 110,250 | | | | | | 6,811 | | | | | | 1,304,061 | | | ||
John J. Trizzino SVP, Commercial Operations | | | | | 2017 | | | | | | 366,102 | | | | | | — | | | | | | 425,000 | | | | | | 149,145 | | | | | | 7,500 | | | | | | 947,747 | | |
| | | 2016 | | | | | | 359,500 | | | | | | — | | | | | | 790,315 | | | | | | — | | | | | | 7,387 | | | | | | 1,157,202 | | | ||
| | | 2015 | | | | | | 335,000 | | | | | | — | | | | | | 872,000 | | | | | | 117,250 | | | | | | 8,067 | | | | | | 1,332,317 | | |
Name and Principal Position | Year | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) ($) | Option Awards(3) ($) | Non-Equity Incentive Plan Compensation(4) ($) | All Other Compensation(5) ($) | Total ($) | ||||||||||||||||||||||||
Stanley C. Erck President & CEO | 2014 | 487,750 | — | — | 2,280,780 | 304,844 | 7,650 | 3,081,024 | ||||||||||||||||||||||||
2013 | 448,250 | — | — | 900,000 | 239,097 | 7,967 | 1,595,314 | |||||||||||||||||||||||||
2012 | 430,000 | — | — | 612,990 | 198,000 | 1,357 | 1,242,347 | |||||||||||||||||||||||||
Barclay A. Phillips(6) SVP, Chief Financial Officer & Treasurer | 2014 | 330,000 | — | — | 380,130 | 139,755 | 5,507 | 855,392 | ||||||||||||||||||||||||
2013 | 156,346 | — | — | 263,340 | 57,645 | 4,315 | 418,646 | |||||||||||||||||||||||||
Gregory M. Glenn, M.D. SVP, Research and Development | 2014 | 389,783 | — | — | 443,485 | 165,073 | 9,920 | 1,008,261 | ||||||||||||||||||||||||
2013 | 371,850 | — | — | 150,000 | 137,103 | 6,944 | 665,897 | |||||||||||||||||||||||||
2012 | 362,349 | — | — | 102,165 | 116,691 | 1,972 | 583,177 | |||||||||||||||||||||||||
Timothy J. Hahn, Ph.D. SVP, Global Manufacturing Operations | 2014 | 291,688 | — | — | 316,775 | 122,509 | 7,490 | 738,462 | ||||||||||||||||||||||||
2013 | 284,506 | — | — | 150,000 | 99,920 | 6,359 | 540,785 | |||||||||||||||||||||||||
2012 | 278,203 | — | — | 102,165 | 89,581 | — | 469,949 | |||||||||||||||||||||||||
Russell P. Wilson SVP, Business Development | 2014 | 326,566 | — | — | 380,130 | 138,301 | 5,300 | 850,297 | ||||||||||||||||||||||||
2013 | 317,316 | — | — | 150,000 | 116,996 | 8,540 | 592,852 | |||||||||||||||||||||||||
2012 | 311,107 | — | — | 17,028 | 100,176 | 3,605 | 431,916 |
Novavax provides the Named Executive OfficersNEO, such as salary deferrals under the Company’s 401(k) plan.
Name | Company 401(k) Contributions(1) ($) | Other Compensation ($) | Total | |||||||||
Stanley C. Erck | 7,650 | — | 7,650 | |||||||||
Barclay A. Phillips | 5,507 | — | 5,507 | |||||||||
Gregory M. Glenn, M.D. | 9,920 | — | 9,920 | |||||||||
Timothy J. Hahn, Ph.D. | 7,490 | — | 7,490 | |||||||||
Russell P. Wilson | 5,300 | — | 5,300 |
Name | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Grant Date | | | All Other Option Awards: Number of Securities Underlying Options(2) (#) | | | Exercise or Base Price of Option Awards(3) ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards(4) ($) | | |||||||||||||||||||||||||||
| Threshold ($) | | | Target ($) | | | Maximum ($) | | |||||||||||||||||||||||||||||||||||
Stanley C. Erck | | | | | 280,800 | | | | | | 374,400 | | | | | | 468,000 | | | | | | 12/15/2017 | | | | | | 1,650,000 | | | | | | 1.38 | | | | | | 1,753,125 | | |
Barclay A. Phillips | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Gregory M. Glenn, M.D. | | | | | 168,750 | | | | | | 225,000 | | | | | | 281,250 | | | | | | 12/15/2017 | | | | | | 500,000 | | | | | | 1.38 | | | | | | 531,250 | | |
John A. Herrmann III | | | | | 102,000 | | | | | | 136,000 | | | | | | 170,000 | | | | | | 12/15/2017 | | | | | | 400,000 | | | | | | 1.38 | | | | | | 425,000 | | |
John J. Trizzino | | | | | 109,800 | | | | | | 146,400 | | | | | | 183,000 | | | | | | 12/15/2017 | | | | | | 400,000 | | | | | | 1.38 | | | | | | 425,000 | | |
Name | Estimated Future Payments Under Non-Equity Incentive Plan Awards(1) | Grant Date | All Other Stock Awards: Number of Shares of Stock or Unit (#) | All Other Stock and Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards(2) ($/Sh) | Grant Date Fair Value of Stock and Option Awards(3) ($) | ||||||||||||||||||||||||||
Threshold ($) | Target ($) | Over- Achievement ($) | ||||||||||||||||||||||||||||||
Stanley C. Erck | 182,906 | 243,875 | 304,844 | 3/6/14 | — | 900,000 | 6.05 | 2,280,780 | ||||||||||||||||||||||||
Barclay A. Phillips | 86,625 | 115,500 | 144,375 | 3/6/14 | — | 150,000 | 6.05 | 380,130 | ||||||||||||||||||||||||
Gregory M. Glenn, M.D. | 102,318 | 136,424 | 170,530 | 3/6/14 | — | 175,000 | 6.05 | 443,485 | ||||||||||||||||||||||||
Timothy J. Hahn, Ph.D. | 76,568 | 102,091 | 127,614 | 3/6/14 | — | 125,000 | 6.05 | 316,775 | ||||||||||||||||||||||||
Russell P. Wilson | 85,724 | 114,298 | 142,873 | 3/6/14 | — | 150,000 | 6.05 | 380,130 |
Name | Grant Date | Option Awards(1) | Stock Awards | |||||||||||||||||||||||||
Number of Securities Underlying Unexercised Option Exercisable (#) | Number of Securities Underlying Options Unexercisable (#) | Option Exercise Price ($/Sh) | Option Expiration Date | Number of Shares of Stock that Have Not Vested (#) | Market Value of Shares that Have Not Vested ($) | |||||||||||||||||||||||
Stanley C. Erck | 6/24/2009 | 20,000 | — | 2.44 | 6/24/2019 | (2) | ||||||||||||||||||||||
2/15/2010 | 150,000 | — | 2.40 | 2/15/2020 | (3) | |||||||||||||||||||||||
6/22/2011 | 637,500 | 212,500 | 1.99 | 6/22/2021 | ||||||||||||||||||||||||
3/1/2012 | 450,000 | 450,000 | 1.28 | 3/1/2022 | ||||||||||||||||||||||||
3/2/2013 | 225,000 | 675,000 | 1.83 | 3/2/2023 | ||||||||||||||||||||||||
3/6/2014 | — | 900,000 | 6.05 | 3/6/2024 | ||||||||||||||||||||||||
Barclay A. Phillips | 6/24/2013 | 75,000 | 225,000 | 2.03 | 6/24/2023 | |||||||||||||||||||||||
3/6/2014 | — | 150,000 | 6.05 | 3/6/2024 | ||||||||||||||||||||||||
Gregory M. Glenn, M.D. | 7/1/2010 | 350,000 | — | 2.11 | 7/1/2020 | (4) | ||||||||||||||||||||||
3/10/2011 | 48,000 | 12,000 | 2.50 | 3/10/2021 | ||||||||||||||||||||||||
3/1/2012 | 75,000 | 75,000 | 1.28 | 3/1/2022 | ||||||||||||||||||||||||
3/2/2013 | 37,500 | 112,500 | 1.83 | 3/2/2023 | ||||||||||||||||||||||||
3/6/2014 | — | 175,000 | 6.05 | 3/6/2024 | ||||||||||||||||||||||||
Timothy J. Hahn, Ph.D. | 9/22/2011 | 150,000 | 50,000 | 1.42 | 9/22/2021 | |||||||||||||||||||||||
3/1/2012 | 75,000 | 75,000 | 1.28 | 3/1/2022 | ||||||||||||||||||||||||
3/2/2013 | 37,500 | 112,500 | 1.83 | 3/2/2023 | ||||||||||||||||||||||||
3/6/2014 | — | 125,000 | 6.05 | 3/6/2024 | ||||||||||||||||||||||||
Russell P. Wilson | 12/1/2011 | 187,500 | 62,500 | 1.39 | 12/1/2021 | |||||||||||||||||||||||
3/1/2012 | 12,500 | 12,500 | 1.28 | 3/1/2022 | ||||||||||||||||||||||||
3/2/2013 | 37,500 | 112,500 | 1.83 | 3/2/2023 | ||||||||||||||||||||||||
3/6/2014 | — | 150,000 | 6.05 | 3/6/2024 |
| | | | | | | | | Option Awards(1) | | |||||||||||||||||||||||||||
Name | | | Grant Date | | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | ||||||||||||||||||
Stanley C. Erck | | | | | 6/24/2009 | | | | | | 20,000 | | | | | | — | | | | | | | | | | | | 2.44 | | | | | | 6/24/2019(2) | | |
| | | | | 2/15/2010 | | | | | | 150,000 | | | | | | — | | | | | | | | | | | | 2.40 | | | | | | 2/15/2020(3) | | |
| | | | | 6/22/2011 | | | | | | 850,000 | | | | | | — | | | | | | | | | | | | 1.99 | | | | | | 6/22/2021 | | |
| | | | | 3/1/2012 | | | | | | 500,000 | | | | | | — | | | | | | | | | | | | 1.28 | | | | | | 3/1/2022 | | |
| | | | | 3/2/2013 | | | | | | 900,000 | | | | | | — | | | | | | | | | | | | 1.83 | | | | | | 3/2/2023 | | |
| | | | | 3/6/2014 | | | | | | 675,000 | | | | | | 225,000 | | | | | | | | | | | | 6.05 | | | | | | 3/6/2024 | | |
| | | | | 3/5/2015 | | | | | | 450,000 | | | | | | 450,000 | | | | | | | | | | | | 8.94 | | | | | | 3/5/2025 | | |
| | | | | 3/15/2016 | | | | | | 393,750 | | | | | | 506,250 | | | | | | | | | | | | 4.99 | | | | | | 3/15/2026(4) | | |
| | | | | 11/14/2016 | | | | | | 148,958 | | | | | | 401,042 | | | | | | | | | | | | 1.35 | | | | | | 11/14/2026(4) | | |
| | | | | 11/14/2016 | | | | | | — | | | | | | — | | | | | | 550,000 | | | | | | 1.35 | | | | | | 11/14/2026(5) | | |
| | | | | 12/15/2017 | | | | | | — | | | | | | 1,650,000 | | | | | | | | | | | | 1.38 | | | | | | 12/15/2027(4) | | |
Barclay A. Phillips | | | | | 6/24/2013 | | | | | | 300,000 | | | | | | — | | | | | | | | | | | | 2.03 | | | | | | 6/24/2023 | | |
| | | | | 3/6/2014 | | | | | | 112,500 | | | | | | — | | | | | | | | | | | | 6.05 | | | | | | 3/6/2024 | | |
| | | | | 3/5/2015 | | | | | | 100,000 | | | | | | — | | | | | | | | | | | | 8.94 | | | | | | 3/5/2025 | | |
| | | | | 3/15/2016 | | | | | | 98,438 | | | | | | — | | | | | | | | | | | | 4.99 | | | | | | 3/15/2026(4) | | |
| | | | | 11/14/2016 | | | | | | 33,854 | | | | | | — | | | | | | | | | | | | 1.35 | | | | | | 11/14/2026(4) | | |
Gregory M. Glenn, M.D. | | | | | 7/1/2010 | | | | | | 335,000 | | | | | | — | | | | | | | | | | | | 2.11 | | | | | | 7/1/2020(6) | | |
| | | | | 3/10/2011 | | | | | | 64,000 | | | | | | — | | | | | | | | | | | | 2.50 | | | | | | 3/10/2021 | | |
| | | | | 3/1/2012 | | | | | | 150,000 | | | | | | — | | | | | | | | | | | | 1.28 | | | | | | 3/1/2022 | | |
| | | | | 3/2/2013 | | | | | | 88,114 | | | | | | — | | | | | | | | | | | | 1.83 | | | | | | 3/2/2023 | | |
| | | | | 3/6/2014 | | | | | | 131,250 | | | | | | 43,750 | | | | | | | | | | | | 6.05 | | | | | | 3/6/2024 | | |
| | | | | 3/5/2015 | | | | | | 150,000 | | | | | | 150,000 | | | | | | | | | | | | 8.94 | | | | | | 3/5/2025 | | |
| | | | | 3/15/2016 | | | | | | 153,125 | | | | | | 196,875 | | | | | | | | | | | | 4.99 | | | | | | 3/15/2026(4) | | |
| | | | | 11/14/2016 | | | | | | 47,396 | | | | | | 127,604 | | | | | | | | | | | | 1.35 | | | | | | 11/14/2026(4) | | |
| | | | | 11/14/2016 | | | | | | — | | | | | | — | | | | | | 175,000 | | | | | | 1.35 | | | | | | 11/14/2026(5) | | |
| | | | | 12/15/2017 | | | | | | — | | | | | | 500,000 | | | | | | | | | | | | 1.38 | | | | | | 12/15/2027(4) | | |
| | | | | | | | | Option Awards(1) | | |||||||||||||||||||||||||||
Name | | | Grant Date | | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | ||||||||||||||||||
John A. Herrmann III | | | | | 4/15/2010 | | | | | | 75,000 | | | | | | — | | | | | | | | | | | | 2.66 | | | | | | 4/15/2020 | | |
| | | | | 3/10/2011 | | | | | | 20,000 | | | | | | — | | | | | | | | | | | | 2.50 | | | | | | 3/10/2021 | | |
| | | | | 3/1/2012 | | | | | | 150,000 | | | | | | — | | | | | | | | | | | | 1.28 | | | | | | 3/1/2022 | | |
| | | | | 3/2/2013 | | | | | | 150,000 | | | | | | — | | | | | | | | | | | | 1.83 | | | | | | 3/2/2023 | | |
| | | | | 3/6/2014 | | | | | | 112,500 | | | | | | 37,500 | | | | | | | | | | | | 6.05 | | | | | | 3/6/2024 | | |
| | | | | 6/12/2014 | | | | | | 37,500 | | | | | | 12,500 | | | | | | | | | | | | 4.55 | | | | | | 6/12/2024 | | |
| | | | | 3/5/2015 | | | | | | 100,000 | | | | | | 100,000 | | | | | | | | | | | | 8.94 | | | | | | 3/5/2025 | | |
| | | | | 3/15/2016 | | | | | | 98,437 | | | | | | 126,563 | | | | | | | | | | | | 4.99 | | | | | | 3/15/2026(4) | | |
| | | | | 11/14/2016 | | | | | | 33,854 | | | | | | 91,146 | | | | | | | | | | | | 1.35 | | | | | | 11/14/2026(4) | | |
| | | | | 11/14/2016 | | | | | | — | | | | | | — | | | | | | 125,000 | | | | | | 1.35 | | | | | | 11/14/2026(5) | | |
| | | | | 12/15/2017 | | | | | | — | | | | | | 400,000 | | | | | | | | | | | | 1.38 | | | | | | 12/15/2027(4) | | |
John J. Trizzino | | | | | 3/10/2014 | | | | | | 225,000 | | | | | | 75,000 | | | | | | | | | | | | 5.86 | | | | | | 3/10/2024 | | |
| | | | | 3/5/2015 | | | | | | 100,000 | | | | | | 100,000 | | | | | | | | | | | | 8.94 | | | | | | 3/5/2025 | | |
| | | | | 3/15/2016 | | | | | | 98,437 | | | | | | 126,563 | | | | | | | | | | | | 4.99 | | | | | | 3/15/2026(4) | | |
| | | | | 11/14/2016 | | | | | | 33,854 | | | | | | 91,146 | | | | | | | | | | | | 1.35 | | | | | | 11/14/2026(4) | | |
| | | | | 11/14/2016 | | | | | | — | | | | | | — | | | | | | 125,000 | | | | | | 1.35 | | | | | | 11/14/2026(5) | | |
| | | | | 12/15/2017 | | | | | | — | | | | | | 400,000 | | | | | | | | | | | | 1.38 | | | | | | 12/15/2027(4) | | |
The following table sets forth certain information concerning the
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise(1) ($) | Number of Shares Acquired on Vesting (#) | Value Realized Vesting(2) ($) | ||||||||||||
Stanley C. Erck | — | — | — | — | ||||||||||||
Barclay A. Phillips | — | — | — | — | ||||||||||||
Gregory M. Glenn, M.D. | — | — | — | — | ||||||||||||
Timothy J. Hahn, Ph.D. | — | — | — | — | ||||||||||||
Russell P. Wilson | — | — | 16,667 | 62,001 |
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) | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities in Column (a)) (c) | | |||||||||
Equity compensation plans approved by security holders(1) | | | | | 46,494,649 | | | | | $ | 3.51 | | | | | | 3,087,705(2) | | |
Equity compensation plans not approved by security holders | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | | 46,494,649 | | | | | $ | 3.51 | | | | | | 3,087,705 | | |
Treasurer. Each employment agreement provides for a base salary subject to review each year, an incentive bonus, and equity awards. Salary information and the target amount of the incentive bonus are described in greater detail on pages 4120 through 4828 in the Compensation Discussion and Analysis.CD&A. The amount of any incentive bonus and the form of payment (cash, shares of restricted stock, or some combination of the two) are at the discretion of the Board.
Plan with the exception of Mr. Barclay A. Phillips, the Company’s former Senior Vice President, Chief Financial Officer and Treasurer.
| | | | Severance(1)(2) | | |||||
Executive | | | Protected Period | | | Payment | | | Continuation of Benefits Period | |
Stanley C. Erck | | | 24 months | |||||||
| 24 months salary | | 18 months | | ||||||
Gregory M. Glenn, M.D. | | | 12 months | |||||||
| 12 months salary | | | 12 months | | |||||
| | 12 months | | | 12 months salary | | | 12 months | | |
John J. Trizzino | | | 12 months | | | 12 months salary | | | 12 months | |
Initially, the Severance Plan provided that all outstanding equity awards held by participants became vested
In December 2008, the Board amended and restated the Severance Plan with the intention to comply with or be exempt from the requirements of Section 409A of the Code. Specifically, the Severance Plan was amended to clarify provisions relating to the types of benefits availableplan balances under the Severance Plan and the timing of the payments of such benefits. Company’s 401(k) plan.
Involuntary Termination without Cause means the termination of an eligible employee’s employment which is initiated by the Company for a reason other than Cause.
Causemeans (i) conviction of, a guilty plea with respect to, or a plea of nolo contendere to a charge that the eligible employee has committed a felony under the laws of the United States or of any state or a crime involving moral turpitude, including, but not limited to, fraud, theft, embezzlement, or any crime that results in or is intended to result in personal enrichment at the expense of the Company; (ii) material breach of any agreement entered into between the eligible employee and the Company that impairs the Company’s interest therein; (iii) willful misconduct, significant failure to perform the eligible employee’s duties, or gross neglect by the eligible employee of the eligible employee’s duties; or (iv) engagement in any activity that constitutes a material conflict of interest with the Company.
Constructive Termination means a termination initiated by an eligible employee because any of the following events or conditions has occurred:
Term | | Definition | | |
Involuntary Termination without Cause | | | The termination of an eligible employee’s employment which is initiated by the Company for a reason other than Cause. | |
Cause | | | • Conviction of, a guilty plea with respect to, or a plea of nolo contendere to a charge that the eligible employee has committed a felony under the laws of the United States or of any state or a crime involving moral turpitude, including, but not limited to, fraud, theft, embezzlement, or any crime that results in or is intended to result in personal enrichment at the expense of the Company; | |
| | | • Material breach of any agreement entered into between the eligible employee and the Company that impairs the Company’s interest therein; | |
| | | • Willful misconduct, significant failure to perform the eligible employee’s duties, or gross neglect by the eligible employee of the eligible employee’s duties; or | |
| | | • Engagement in any activity that constitutes a material conflict of interest with the Company. | |
Constructive Termination | | | A termination initiated by an eligible employee because any of the following events or conditions has occurred: | |
| | | • a change in the eligible employee’s position or responsibilities (including reporting responsibilities) which represents an adverse change from the eligible employee’s position or responsibilities as in effect immediately preceding the effective date of a Change in Control or at any time thereafter; the assignment to the eligible employee of any duties or responsibilities which are inconsistent with the eligible employee’s position or responsibilities as in effect immediately preceding the effective date of a Change in Control or at any time thereafter; except in connection with the termination of the eligible employee’s employment for Cause or the termination of an eligible employee’s employment because of an eligible | |
| | | | employee’s disability or death, or except resulting from a voluntary termination by the employee other than as a result of a Constructive Termination; | |
| | | • a material reduction in the eligible employee’s pay or any material failure to pay the eligible employee any compensation or benefits to which the eligible employee is entitled within five (5) days of the date due; | |
| | | • the Company’s requiring the eligible employee to relocate his principal worksite to any place outside a fifty (50) mile radius of the eligible employee’s current worksite, except for reasonably required travel on the business of the Company or its affiliates which is not materially greater than such travel requirements prior to the Change in Control; | |
| | | • the failure by the Company to | |
|
| • any material breach by the Company of any provision of the Severance Plan; or | |
| | | • the failure of the Company to obtain an agreement, | |
Change in Controlmeans:
| | • A sale, lease, license, or other disposition of all or substantially all of the assets of the Company; | |
| | • A consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger, or reorganization, own less than fifty percent (50%) of the outstanding voting power of the surviving entity and its parent following the consolidation, merger, or reorganization; | |
| | • Any transaction or series of related transactions involving a person or entity, or a group of affiliated persons or entities (but excluding any employee benefit plan or related trust sponsored or maintained by the Company or an affiliate) in which such persons or entities that were not stockholders of the Company immediately prior to their acquisition of the Company securities as part of such transaction become the owners, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation, or similar transaction and other than as part of a private financing transaction by the Company; or | |
| | • A change in the Incumbent Board, which occurs if the existing members of the Board on the date the Severance Plan was initially adopted by the Board (the “Incumbent Board”) cease to constitute at least a majority of the members of the Board, provided, however, that any new Board member shall be considered a member of the Incumbent Board for this purpose if the appointment or election (or nomination for such election) of the new Board member | |
In addition to the benefits described above, the Named Executive Officers are also entitled to certain payments and benefits upon termination of employment that are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include accrued salary and accrued, but unused vacation pay, and distribution of plan balances under the Company’s 401(k) plan.
cause, termination for cause, and termination in connection with a change in control. Mr. Phillips did not receive any severance payments in connection with the termination of his employment with the Company, but did receive a payout of vacation time earned but not used prior to his last day of employment equal to $32,026:
| | | | | | Triggering Event | | |||||||||||||||
Executive | | | Benefit | | | Termination Other Than for Cause(1) ($) | | | Termination For Cause(2) ($) | | | Termination in Connection with a Change in Control(3) ($) | | |||||||||
Stanley C. Erck | | | Severance Payment | | | | | 936,000 | | | | | | — | | | | | | 1,248,000 | | |
| | | Bonus | | | | | — | | | | | | — | | | | | | 748,800(4) | | |
| | | Equity Awards | | | | | — | | | | | | — | | | | | | —(5) | | |
| | | Health Insurance | | | | | — | | | | | | — | | | | | | 28,945(6) | | |
| | | Total | | | | | 936,000 | | | | | | — | | | | | | 2,025,745 | | |
Gregory M. Glenn, M.D. | | | Severance Payment | | | | | 450,000 | | | | | | — | | | | | | 450,000 | | |
| | | Bonus | | | | | — | | | | | | — | | | | | | 225,000(4) | | |
| | | Equity Awards | | | | | — | | | | | | — | | | | | | —(5) | | |
| | | Health Insurance | | | | | — | | | | | | — | | | | | | 19,297(6) | | |
| | | Total | | | | | 450,000 | | | | | | — | | | | | | 694,297 | | |
John A. Herrmann III | | | Severance Payment | | | | | 340,000 | | | | | | — | | | | | | 340,000 | | |
| | | Bonus | | | | | — | | | | | | — | | | | | | 136,000(4) | | |
| | | Equity Awards | | | | | — | | | | | | — | | | | | | —(5) | | |
| | | Health Insurance | | | | | — | | | | | | — | | | | | | 14,642(6) | | |
| | | Total | | | | | 340,000 | | | | | | — | | | | | | 490,642 | | |
John J. Trizzino | | | Severance Payment | | | | | 366,000 | | | | | | — | | | | | | 366,000 | | |
| | | Bonus | | | | | — | | | | | | — | | | | | | 146,400(4) | | |
| | | Equity Awards | | | | | — | | | | | | — | | | | | | —(5) | | |
| | | Health Insurance | | | | | — | | | | | | — | | | | | | 19,297(6) | | |
| | | Total | | | | | 366,000 | | | | | | — | | | | | | 531,697 | | |
|
Cause means (i) the executive’s willful failure or refusal to perform in all material respects the services required to be performed by him; (ii) the executive’s willful failure or refusal to
Each of the Named Executive Officers participates in the Severance Plan. The following table sets forth the payments the Company would have made if eligible Named Executive Officers had been terminated in connection with a Change in Control that occurred on December 31, 2014 in accordance with the Severance Plan:
Management and the Company’s internal and independent auditors also made presentations to the Audit Committee throughout the year on specific topics of interest, that include but are not limited to: (i) information technology systems, controls and security; (ii) critical accounting policies; (iii) the impact of new accounting guidance; (iv) compliance with internal controls required under Section 404 of the Sarbanes-Oxley Act; (v) compliance with Company’s Code of Ethics; (vi) risk management initiatives and controls; (vii) significant legal matters; and (viii) insider and related party transactions. Additionally, the Audit Committee discussed with the Company’s internal and independent auditors the overall scope and plan for their respective audits.
SEC.
Name of Beneficial Owner(1) | | | Shares of Common Stock Beneficially Owned(2) | | | Percentage of Class Outstanding(3) | | ||||||
5% or Greater Stockholders | | | | | | | | | | | | | |
BlackRock, Inc.(4) | | | | | 25,018,622 | | | | | | 6.6 | | |
Directors, Nominees, and Executive Officers | | | | | | | | | | | | | |
Gail K. Boudreaux(5) | | | | | 280,000 | | | | | | * | | |
Richard H. Douglas, Ph.D.(6) | | | | | 840,000 | | | | | | * | | |
Gary C. Evans(7) | | | | | 581,979 | | | | | | * | | |
Michael A. McManus, Jr., J.D.(8) | | | | | 472,590 | | | | | | * | | |
Rajiv I. Modi, Ph.D.(9) | | | | | 2,500,000 | | | | | | * | | |
James F. Young, Ph.D.(10) | | | | | 865,000 | | | | | | * | | |
Stanley C. Erck(11) | | | | | 4,947,237 | | | | | | 1.3 | | |
Barclay A. Phillips(12) | | | | | 38,669 | | | | | | * | | |
Gregory M. Glenn, M.D.(13) | | | | | 1,330,471 | | | | | | * | | |
John A. Herrmann III(14) | | | | | 928,114 | | | | | | * | | |
John J. Trizzino(15) | | | | | 715,007 | | | | | | * | | |
All directors and executive officers as a group (9 persons)(16) | | | | | 13,180,398 | | | | | | 3.4 | | |
| | | Number of shares | | | As a percentage of stock outstanding on a fully diluted basis | | ||||||
Outstanding stock options | | | | | 45,671,725 | | | | | | 11.7% | | |
Outstanding restricted stock | | | | | — | | | | | | 0.0% | | |
Total shares subject to outstanding awards under the 2015 Stock Plan and the 2005 Stock Plan | | | | | 45,671,725 | | | | | | 11.7% | | |
Total shares available for future awards under the 2015 Stock Plan | | | | | 2,603,757 | | | | | | 0.7% | | |
Proposed additional shares available for future awards under the Amended 2015 Stock Plan | | | | | 20,000,000 | | | | | | 4.8% | | |
Total potential dilution | | | | | 68,275,482 | | | | | | 16.5% | | |
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) | | | Weighted- Average Remaining Term of Outstanding Options, Warrants, and Rights (c) | | | Number of Restricted Stock Awards Outstanding (d)(1) | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities in Column (a)) (e) | | |||||||||||||||
Equity compensation plans approved by security holders(1) | | | | | 45,671,725(2) | | | | | $ | 3.52 | | | | | | 7.6 | | | | | | — | | | | | | 2,874,637(3) | | |
Equity compensation plans not approved by security holders(4) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | | 45,671,725 | | | | | $ | 3.52 | | | | | | 7.6 | | | | | | — | | | | | | 2,874,637 | | |
Name and Position | | | Number of Units | | |||
Stanley C. Erck President and Chief Executive Officer | | | | | 1,650,000 | | |
John J. Trizzino SVP, Chief Business Officer and Chief Financial Officer | | | | | 400,000 | | |
Barclay A. Phillips Former SVP, Chief Financial Officer and Treasurer | | | | | — | | |
Gregory M. Glenn, M.D. President, Research and Development | | | | | 500,000 | | |
John A. Herrmann III SVP, General Counsel and Corporate Secretary | | | | | 400,000 | | |
Executive Officer Group | | | | | 2,950,000 | | |
Non-Executive Director Group | | | | | 960,000 | | |
Non-Executive Officer Employee Group | | | | | 8,501,543 | | |
| | | Ernst & Young LLP | | |||||||||
Fee Category | | | 2017 ($) | | | 2016 ($) | | ||||||
Audit Fees | | | | | 758,042(1) | | | | | | 760,758(2) | | |
Audit-Related Fees | | | | | — | | | | | | — | | |
Tax Fees | | | | | 55,600 | | | | | | 44,600 | | |
All Other Fees | | | | | — | | | | | | — | | |
Total Fees | | | | | 813,642 | | | | | | 805,358 | | |
|
stockholder proposals:
Under the Company’s By-Laws, stockholders who wish to include a proposal in the Company’s 2019 Annual Meeting of Stockholders (but do not wish to include such proposal in the Company’s proxy materials) must give the Company timely written notice. To be timely, the Company’s By-laws provide that such notice must be received by the Company at its principal executive offices not less than 60 days nor more than 90 days prior to the anniversary date of this year’s Annual Meeting (June 14, 2018); provided, however, in the event that the date of the meeting is more than 30 days before or after the anniversary date of the prior year’s annual meeting of stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the date on which such notice of the date of the meeting was mailed or public disclosure of the date of such meeting was made, whichever occurs first.15, 2018 Purpose. Administration. Administration. Eligibility.APPENDIX
SECOND AMENDED AND RESTATEDCERTIFICATE OF INCORPORATIONOFNOVAVAX, INC. (the “Corporation”), a corporation originally organized and incorporated under the name MPS, Inc. by the filing of a Certificate of Incorporation in the office of the Secretary of State of the State of Delaware on June 18, 1987, as amended by a Certificate of Amendment dated July 30, 1987 and filed in the Office of the Secretary of State of the State of Delaware on August 3, 1987, a Certificate of Merger dated February 5, 1988 filed in the Office of the Secretary of State of the State of Delaware on February 9, 1988, a Certificate of Amendment dated October 4, 1991 and filed in the Office of the Secretary of State of the State of Delaware on October 7, 1991, and a Certificate of Amendment dated November 20, 1995 and filed in the Office of the Secretary of State of the State of Delaware on November 20, 1995,amended and restated by an Amended and Restated Certificate of Incorporation of the Corporation dated November 20, 1995 and filed in the Office of the Secretary of State of the State of Delaware on November 20, 1995, as further amended by a Certificate of Amendment dated December 18, 2000 and filed in the Office of the Secretary of State of the State of Delaware on December 18, 2000, a Certificate of Amendment dated July 8, 2004 and filed in the Office of the Secretary of State of the State of Delaware on July 9, 2004, a Certificate of Amendment dated May 13, 2009 and filed in the Office of the Secretary of State of the State of Delaware on May 13, 2009 and a Certificate of Amendment dated June 13, 2013 and filed in the Office of the Secretary of State of the State of Delaware on July 3, 2013, and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows:The Board of Directors of the Corporation, at a meeting duly held onMarch 5, 2015, adopted a resolution, pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, setting forth aSecond Amended and Restated Certificate of Incorporation of the Corporation and declaring saidSecond Amended and Restated Certificate of Incorporation advisable. The stockholders of the Corporation duly approved said proposedSecond Amended and Restated Certificate of Incorporation by written consent in accordance with Sections 228, 242, and 245 of the General Corporation Law of the State of Delaware, and written notice of such consent has been given to all stockholders who have not consented in writing to said restatement. The resolution setting forth theSecond Amended and Restated Certificate of Incorporation is as follows:RESOLVED: That the Restated Certificate of Incorporation of the Corporation, as amended, be and hereby is amended and restated in its entirety so that the same shall read as follows:FIRST. The name of the Corporation is:Novavax, Inc.SECOND. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.THIRD. The nature of the business or purposes to be conducted or promoted by the Corporation is as follows:To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.FOURTH. The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i)six hundred million (600,000,000) shares of Common Stock, $.01 par value per share (“Common Stock”), and (ii) two million (2,000,000) shares of Preferred Stock, $.01 par value per share (“Preferred Stock”), which may be issued from time to time in one or more series as set forth in Part B of this Article FOURTH.The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.A.COMMON STOCK.1.General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of the Preferred Stock of any series as may be designated by the Board of Directors upon any issuance of the Preferred Stock of any series.2.Voting. The holders of the Common Stock are entitled to one vote for each share held at all meetings of stockholders (and written actions in lieu of meetings). There shall be no cumulative voting.The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of Delaware.3.Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend rights of any then outstanding Preferred Stock.4.Liquidation. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential rights of any then outstanding Preferred Stock.B.PREFERRED STOCK.Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation as hereinafter provided. Any shares of Preferred Stock which may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law. Differ-ent series of Preferred Stock shall not be construed to constitute different classes of shares for the purposes of voting by classes unless expressly provided.Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issue of the shares thereof, to determine and fix such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by the General Corporation Law of Delaware. Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Preferred Stock of any other series to the extent permitted by law. Except as otherwise specifically provided in this Certificate of Incorporation, no vote of the holders of the Preferred Stock or Common Stock shall be a prerequisite to the issuance of any shares of any series of the Preferred Stock authorized by and complying with the conditions of the Certificate of Incorporation, the right to have such vote being expressly waived by all present and future holders of the capital stock of the Corporation.FIFTH. The Corporation shall have a perpetual existence.SIXTH. In furtherance of and not in limitation of powers conferred by statute, it is further provided that the Board of Directors is expressly authorized to adopt, amend or repeal the By-Laws of the Corporation.SEVENTH. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of section 291 of Title 8 of the DelawareCode or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any promise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation.EIGHTH. Except to the extent that the General Corporation Law of the State of Delaware prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.NINTH. 1.Action, Suits and Proceedings Other than by or in the Right of the Corporation. The Corporation shall indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) (all such persons being referred to hereafter as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees) judgment, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea ofnolocontendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Notwithstanding anything to the contrary in this Article, except as set forth in Section 6 below, the Corporation shall not indemnify an Indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by the Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation.2.Actions or Suits by or in the Right of the Corporation. The Corporation shall indemnify any Indemnitee who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees) and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware shall determine upon application that, despite the adjudication of such liability but inview of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses (including attorneys’ fees) which the Court of Chancery of Delaware shall deem proper.3.Indemnification for Expenses of Successful Party. Notwithstanding the other provisions of this Article, to the extent that an Indemnitee has been successful, on the merits or otherwise, in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article, or in defense of any claim, issue or matter therein, or on appeal from any such action, suit or proceeding, he shall be indemnified against all expenses (including attorneys’ fees) actually and reasonably incurred by him or on his behalf in connection therewith. Without limiting the foregoing, if any action, suit or proceeding is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of guilty ornolocontendere by the Indemnitee, (iv) an adjudication that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that the Indemnitee had reasonable cause to believe his conduct was unlawful, the Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto.4.Notification and Defense of Claim. As a condition precedent to his right to be indemnified, the Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving him for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee. After notice from the Corporation to the Indemnitee of its election so to assume such defense, the Corporation shall not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with such claim, other than as provided below in this Section 4. The Indemnitee shall have the right to employ his own counsel in connection with such claim, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and the Indemnitee in the conduct of the defense of such action or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel for the Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Article. The Corporation shall not be entitled, without the consent of the Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for the Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above.5.Advance of Expenses. Subject to the provisions of Section 6 below, in the event that the Corporation does not assume the defense pursuant to Section 4 of this Article of any action, suit, proceeding or investigation of which the Corporation receives notice under this Article, any expenses (including attorneys’ fees) incurred by an Indemnitee in defending a civil or criminal action, suit, proceeding or investigation or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter;provided,however, that the payment of such expense incurred by an Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article. Such undertaking shall be accepted without reference to the financial ability of the Indemnitee to make such repayment.6.Procedure for Indemnification. In order to obtain indemnification or advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the Indemnitee shall submit to the Corporation a written request, including in such request such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification or advancement of expenses. Any such indemnification or advancement of expenses shall be made promptly, and in any event within 60 days after receipt by the Corporation of the written request of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the Corporation determines, by clear and convincing evidence, within such 60-day period that the Indemnitee did not meet the applicable standard ofconduct set forth in Section 1 or 2, as the case may be. Such determination shall be made in each instance by (a) a majority vote of the directors of the Corporation consisting of persons who are not at that time parties to the action, suit or proceeding in question (“disinterested directors”), even though less than a quorum, (b) a majority vote of a quorum of the outstanding shares of stock of all classes entitled to vote for directors, voting as a single class, which quorum shall consist of stockholders who are not at that time parties to the action, suit or proceeding in question, (c) independent legal counsel (who may be regular legal counsel to the Corporation), or (d) a court of competent jurisdiction.7.Remedies. The right to indemnification or advances as granted by this Article shall be enforceable by the Indemnitee in any court of competent jurisdiction if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within the 60-day period referred to above in Section 6. Unless otherwise provided by law, the burden of proving that the Indemnitee is not entitled to indemnification or advanced of expenses under this Article shall be on the Corporation. Neither the failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because the Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation pursuant to Section 6 that the Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. The Indemnitee’s expenses (including attorneys’ fees) incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Corporation.8.Subsequent Amendment. No amendment, termination or repeal of this Article or of the relevant provisions of the General Corporation Law of Delaware or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal.9.Other Rights. The indemnification and advancement of expenses provided by this Article shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in any other capacity while holding office for the Corporation, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of the Indemnitee. Nothing contained in this Article shall be deemed to prohibit, and the Corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article. In addition, the Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article.10.Partial Indemnification. If an Indemnitee is entitled under any provision of this Article to indemnification by the Corporation for some or a portion of the expenses (including attorneys’ fees), judgments, fines or amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any action, suit, proceeding or investigation and any appeal, therefrom but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify the Indemnitee for the portion of such expenses (including attorneys’ fees), judgments, fines or amounts paid in settlement to which the Indemnitee is entitled.11.Insurance. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) against any expense, liability or loss incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation law of Delaware.12.Merger or Consolidation. If the Corporation is merged into or consolidated with another corporation and the Corporation is not the surviving corporation, the surviving corporation shall assume the obligations of the Corporation under this Article with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the date of such merger or consolidation.13.Savings Clause. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys’ fees) judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law.14.Definitions. Terms used herein and defined in Section 145(h) and Section 145(i) of the General Corporation Law of Delaware shall have the respective meanings assigned to such terms in such Section 145(h) and Section 145(i).15.Subsequent Legislation. If the General Corporation Law of Delaware is amended after adoption of this Article to expand further the indemnification permitted to Indemnitees, then the Corporation shall indemnify such persons to the fullest extent permitted by the General Corporation Law of Delaware, as so amended.TENTH. The Corporation reserves the right to amend, alter, change or repeal any provision contained in thisSecond Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute and thisSecond Amended and Restated Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation.ELEVENTH. This Article is inserted for the management of the business and for the conduct of the affairs of the Corporation.1.Number of Directors. The number of directors of the Corporation shall not be less than three. The exact number of directors within the limitations specified in the preceding sentence shall be fixed from time to time by, or in the manner provided in, the Corporation’s By-Laws.2.Classes of Directors. The Board of Directors shall be and is divided into three classes: Class I, Class II and Class III. No one class shall have more than one director more than any other class. If a fraction is contained in the quotient arrived at by dividing the designated number of directors by three, then, if such fraction is one-third, the extra director shall be a member of Class I, and if such fraction is two-thirds, one of the extra directors shall be a member of Class I and one of the extra directors shall be a member of Class II, unless otherwise provided from time to time by resolution adopted by the Board of Directors.3.Election of Directors. Elections of directors need not be by written ballot except as and to the extent provided in the By-Laws of the Corporation.4.Terms of Office. Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected;provided, that each initial director in Class I shall serve for a term ending on the date of the annual meeting in 1996; each initial director in Class II shall serve for a term ending on the date of the annual meeting in 1997; and each initial director in Class III shall serve for a term ending on the date of the annual meeting in 1998; andprovidedfurther, that the term of each director shall be subject to the election and qualification of his successor and to his earlier death, resignation or removal.5.Allocation of Directors Among Classes in the Event of Increases or Decreases in the Number of Directors. In the event of any increase or decrease in the authorized number of directors, (i) each director then serving as such shall nevertheless continue as a director of the class of which he is a member and (ii) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to ensure that no one class has more than one director more than any other class. To the extent possible, consistent with the foregoing rule, any newly created directorships shall be added to those classes whose terms of office are to expire at the latest dates following such allocation, and any newly eliminated directorships shall be subtracted from those classeswhose terms of offices are to expire at the earliest dates following such allocation, unless otherwise provided from time to time by resolution adopted by the Board of Directors.6.Quorum; Action at Meeting. A majority of the directors at any time in office shall constitute a quorum for the transaction of business. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each director so disqualified, provided that in no case shall less than one-third of the number of directors fixed pursuant to Section 1 above constitute a quorum. If at any meeting of the Board of Directors there shall be less than such a quorum, a majority of those present may adjourn the meeting from time to time. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors unless a greater number is required by law, by the By-Laws of the Corporation or by thisSecond Amended and Restated Certificate of Incorporation.7.Removal. Directors of the Corporation may be removed only for cause by the affirmative vote of the holders of at least two-thirds of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote.8.Vacancies. Any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the board, shall be filled only by a vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected to fill a vacancy shall be elected to hold office until the next election of the class for which such director shall have been chosen, subject to the election and qualification of his successor and to his earlier death, resignation or removal.9.Stockholder Nominations and Introduction of Business, Etc. Advance notice of stockholder nominations for election of directors and other business to be brought by stockholders before a meeting of stockholders shall be given in the manner provided by the By-Laws of the Corporation.10.Amendments to Article. Notwithstanding any other provisions of law, thisSecond Amended and Restated Certificate of Incorporation or the By-Laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the shares of capital stock of the Corporation issued and outstanding and entitled to vote shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article ELEVENTH.TWELFTH. Stockholders of the Corporation may not take any action by written consent in lieu of a meeting. Notwithstanding any other provisions of law, theSecond Amended and Restated Certificate of Incorporation or the By-Laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the shares of capital stock of the Corporation issued and outstanding and entitled to vote shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article TWELFTH.THIRTEENTH. Special meetings of stockholders may be called at any time by only the Chief Executive Officer (or, if there is no Chief Executive Officer, the President) or by the Board of Directors. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. Notwithstanding any other provision of law, thisSecond Amended and Restated Certificate of Incorporation or the Corporation’s By-Laws, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the shares of capital stock of the Corporation issued and outstanding and entitled to vote shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article THIRTEENTH.IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be affixed hereto and thisSecond Amended and Restated Certificate of Incorporation to be signed by its President and CEO this day of June,2015.NOVAVAX, INC.By: President and CEOAPPENDIX BNOVAVAX, INC.2015 STOCK INCENTIVE PLAN
AMENDED AND RESTATED MARCH 15, 20185, 2015Purpose.Administration.Administration. To accelerate the vesting or exercisability of a Stock Award (or Stock Awards) at any time, regardless of any adverse or potentially adverse tax or other consequences resulting from such acceleration;(5) To determine the form of settlement of Stock Awards (whether in cash, shares of Common Stock or other property); and(6)Eligibility.
Company and its “qualifying subsidiaries.” For these purposes, a “qualifying subsidiary” means a subsidiary in which the Company owns a “controlling interest” as described in Treasury Regulations §1.409A-1(b)(5)(iii)(E)(1).
Plan.
receive Stock Awards greater than 750,000 shares of Common Stock.Stock underlying Stock Awards in excess of 750,000 shares. The foregoing limitslimit shall not apply to any Stock Award or shares of Common Stock granted pursuant to a director’s election to receive shares of Common Stock in lieu of cash fees.
extent then vested and exercisable, shall be automatically exercised on the last day of the applicable term, and the number of shares of Common Stock otherwise to be delivered upon exercise of the Option or SAR shall be reduced by, in the case of an Option, a number of shares having a
exercisable for the first time in any one calendar year for shares of Common Stock with an aggregate Fair Market Value (determined as of the respective date or dates of grant) of more than $100,000.
reason and RSUs, whether vested or unvested, will be forfeited immediately upon the termination of the Participant’s employment or other service relationship with the Company if the termination is for Cause.
(c)
(d)
(e)
(f)
(g) (h) Section 162(m). In the case of any Performance Award (other than an Option or SAR) intended to qualify for the performance-based compensation exception under Section 162(m), the Administrator will establish the applicable Performance Criterion or Criteria in writing no later than ninety (90) days after the commencement of the period of service to which the performance relates (or at such earlier time as is required to qualify the Stock Award as performance-based compensation under Section 162(m)) and, prior to the event or occurrence (grant, vesting or payment, as the case may be) that is conditioned on the attainment of such Performance Criterion or Criteria, will certify in writing whether it or they have been attained.
(h) Except as otherwise determined by the Administrator, the provisions of this Section 8(h) relating to Performance Awards shall not apply to Stock Awards granted on or after the Amendment Date.
(i)
11. Merger, Consolidation, Asset Sale, Liquidation, etc.
(c) Substitute Options. The Company may grant Stock Awards under the Plan in substitution for Stock Awards held by employees of another corporation who become employees of the Company, or a subsidiary of the Company, as the result of a merger, consolidation, combination or reorganization of the employing corporation with the Company or a subsidiary of the Company, or as the result of the acquisition by the Company, or one of its subsidiaries, of property or stock of the employing corporation. The Company may direct that substitute Stock Awards be granted on such terms and conditions as the Administrator considers appropriate in the circumstances.
12. No Employment Rights.
Awards.
(b) Notwithstanding the foregoing, in the case of a Reporting Person, no election to use shares for the payment of withholding taxes shall be effective unless made in compliance with any applicable requirements of Rule 16b 316b-3 (unless it is intended that the transaction not qualify for exemption under Rule 16b 3)16b-3).
(b) Limitation of Liability. Notwithstanding anything to the contrary in the Plan, neither the Company nor the Administrator, nor any person acting on behalf of the Company or the Administrator, will be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of a Stock Award by reason of any acceleration of income, or any additional tax (including any interest and penalties), by reason of the failure of a Stock Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code, or otherwise asserted with respect to the Stock Award.
“Code”: Internal Revenue Code of 1986, as amended or replaced from time to time.
Plan, as amended and restated on March 15, 2018.
“Section 162(m)”, as such term is used in Section 8(h) and elsewhere in the Plan in the context of the “performance-based compensation exception”, shall refer to Section 162(m) of the Code as in effect prior to December 22, 2017, including the regulations thereunder and other applicable Internal Revenue Service guidance, whether promulgated or issued before or after December 22, 2017.
“Stock Appreciation Right” or “SAR”: A right entitling the holder upon exercise to receive an amount (payable in cash or in shares of Common Stock of equivalent value) equal to the excess of the Fair Market Value of the shares of Common Stock subject to the right over the base value from which appreciation under the SAR is to be measured.